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HomeMy WebLinkAbout03/05/2019 - Regular Minutes - City Council - Audit CommitteeCOMPREHENSIVE ANNUAL FINANCIAL REPORT(DRAFT) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018 City of College Station, Texas Mission Statement On behalf of the citizens of College Station, home of Texas A&M University, we will promote and advance the community’s quality of life. www.cstx.gov CITY OF COLLEGE STATION, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018 Prepared by: City of College Station Fiscal Services Department Jeff Kersten, Assistant City Manager, CFO Mary Ellen Leonard, CPA, Director of Fiscal Services Accounting Operations & Financial Reporting Division CITY OF COLLEGE STATION, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018 Table of Contents Page INTRODUCTORY SECTION Letter of Transmittal ..................................................................................................................................... 1 City Organization .......................................................................................................................................... 7 Principal City Officials ................................................................................................................................... 8 GFOA Certificate of Achievement for Excellence in Financial Reporting ..................................................... 9 FINANCIAL SECTION Independent Auditors’ Report ................................................................................................................... 10 Management’s Discussion and Analysis (Unaudited) ................................................................................ 13 Basic Financial Statements: Government - Wide Financial Statements: Statement of Net Position .............................................................................................................. 34 Statement of Activities ................................................................................................................... 35 Fund Financial Statements: Governmental Funds: Balance Sheet ........................................................................................................................... 36 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ................................................................................................... 37 Statement of Revenues, Expenditures and Changes in Fund Balances ................................... 38 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities............................... 39 Proprietary Funds: Statement of Net Position ........................................................................................................ 40 Statement of Revenues, Expenses, and Changes in Net Position ............................................ 41 Statement of Cash Flows .......................................................................................................... 42 Fiduciary Funds: Statement of Net Position ........................................................................................................ 43 Statement of Changes in Net Position ..................................................................................... 44 Notes to the Financial Statements ............................................................................................................. 46 Required Supplementary Information: Texas Municipal Retirement System Schedule of City’s Changes in Net Pension Liability and Related Ratios .......................................................................................................... 105 Texas Municipal Retirement System City’s Schedule of Contributions ............................................. 106 CITY OF COLLEGE STATION, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018 Table of Contents-continued Page City of College Station Employees Other Post-Employment Benefits Plan Schedule of Changes in Other Post-Employment Benefits and Related Ratios ........................... 107 City of College Station Employees Other Post-Employment Benefits Plan Schedule of Contributions ............................................................................................................ 108 City of College Station Employees Other Post-Employment Benefits Plan Schedule of Investment Returns……………………………………………………………………………………………. 109 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual – General Fund (reported as part of the General Fund(s)) ............................................... 110 Supplementary Information: Combining and Individual Fund Statements and Schedules: Combining Balance Sheet – General Fund(s) .................................................................................... 111 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – General Fund(s) ................................................................................................ 112 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: General Fund(s): General Fund .......................................................................................................................... 113 Economic Development Fund ................................................................................................ 114 Spring Creek Local Governmental Corporation Fund ............................................................. 115 Efficiency Time Payment Fund ............................................................................................... 116 Combining Balance Sheet – Nonmajor Governmental Funds ...................................................... 117 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds .................................................................. 120 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual: Special Revenue Funds: Court Technology Fee Fund .............................................................................................. 123 Court Security Fee Fund ................................................................................................... 124 Juvenile Case Manager Fee Fund ..................................................................................... 125 Police Seizure Fund ........................................................................................................... 126 Memorial Cemetery Fund ................................................................................................ 127 Memorial Cemetery Endowment Fund ............................................................................ 128 Texas Avenue Cemetery Endowment Fund ..................................................................... 129 Hotel Tax Fund .................................................................................................................. 130 Community Development Fund ....................................................................................... 131 Wolf Pen Creek Tax Increment Financing District Fund ................................................... 132 Parks Escrow Fund ............................................................................................................ 133 Sidewalk Zones Fund ........................................................................................................ 134 CITY OF COLLEGE STATION, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018 Table of Contents-continued Page Drainage Utility Fund ........................................................................................................ 135 Truancy Prevention Fee Fund ........................................................................................... 136 West Medical District Tax Incremental Reinvestment Zone No. 18 Fund ....................... 137 East Medical District Tax Incremental Reinvestment Zone No. 19 Fund ........................ 138 Public, Educational and Governmental Access Channel Fee Fund ................................. 139 R. E. Meyer Estate Restricted Gift Fund ........................................................................... 140 Roadway Maintenance Fee Fund ..................................................................................... 141 Fun For All Playground Fund. ........................................................................................... 142 System-Wide Water Impact Fee Fund .............................................................................. 143 System-Wide Wastewater Impact Fee Fund .................................................................... 144 System-Wide Roadway Impact Fee Fund ......................................................................... 145 Debt Service Fund ............................................................................................................. 146 Capital Projects Funds: Parks and Recreation Projects Fund ................................................................................. 147 General Government Projects Fund ................................................................................. 148 Streets Projects Fund ........................................................................................................ 149 Nonmajor Enterprise Funds: Combining Statement of Net Position .............................................................................. 151 Combining Statement of Revenues, Expenses, and Changes in Net Position .................. 152 Combining Statement of Cash Flows ................................................................................ 153 Internal Service Funds: Combining Statement of Net Position .............................................................................. 155 Combining Statement of Revenues, Expenses, and Changes in Net Position .................. 156 Combining Statement of Cash Flows ................................................................................ 157 STATISTICAL SECTION (Unaudited): FINANCIAL TRENDS Net Position by Component Last Ten Fiscal Years ............................................................................. 159 Changes in Net Position Last Ten Fiscal Years .................................................................................... 160 Program Revenues by Function/Program Last Ten Fiscal Years ........................................................ 162 Fund Balances, Governmental Funds Last Ten Fiscal Years ............................................................... 163 Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years ............................................. 164 REVENUE CAPACITY Tax Revenue by Source, Governmental Funds Last Ten Fiscal Years ................................................. 166 Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years ................... 167 Direct and Overlapping Property Tax Rates Last Ten Fiscal Years ..................................................... 168 CITY OF COLLEGE STATION, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018 Table of Contents-continued Page Principal Property Taxpayers Current Year and Nine Years Ago ........................................................ 169 Property Tax Levies and Collections Last Ten Fiscal Years ................................................................. 170 Taxable Sales by Category Last Ten Calendar Years ........................................................................... 171 Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years ........................................................... 172 Sales Tax Revenue Payers by Industry Calendar Years 2008 and 2017 ............................................. 173 DEBT CAPACITY Outstanding Debt by Type Last Ten Fiscal Years ................................................................................ 174 Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years ............................................ 175 Direct and Overlapping Governmental Activities Debt As of September 30, 2018 ........................... 176 Legal Debt Margin Information .......................................................................................................... 177 Pledged-Revenue Coverage Last Ten Fiscal Years .............................................................................. 178 DEMOGRAPHIC AND ECONOMIC INFORMATION Demographic and Economic Statistics Last Ten Calendar Years ........................................................ 179 Principal Area Employers Last Calendar Year and Nine Years Prior ................................................... 180 Full-Time-Equivalent City Government Employees by Function/Program Last Ten Fiscal Years ...... 181 Operating Indicators by Function/Program Last Ten Fiscal Years...................................................... 182 Capital Asset Statistics by Function/Program Last Ten Fiscal Years ................................................... 184 P.O. BOX 9960 • 1101 TEXAS AVENUE • COLLEGE STATION • TEXAS • 77842 TEL. 979.764.3500 • FAX. 979.764.6377 cstx.gov February 19, 2019 Honorable Mayor, Members of the City Council, and Citizens of the City of College Station, Texas We are pleased to submit the Comprehensive Annual Financial Report for the City of College Station, Texas (the "City") for the fiscal year ended September 30, 2018. This report is published to provide to the City Council, City staff, our citizens, our bondholders and other interested parties detailed information concerning the financial condition and activities of the City government. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the data is accurate in all material aspects, and is organized in a manner designed to fairly present the financial position and results of operations of the City as measured by the financial activity of its various funds. We also believe that all disclosures necessary to enable the reader to gain the maximum understanding of the City's financial affairs have been included. BKD, LLP, the City’s Certified Public Accountants and independent auditors, has issued an unmodified (“clean”) opinion on the city’s financial statements for the year ended September 30, 2018. The independent auditors’ report is located at the front of the financial section of this report. Management’s discussion and analysis (MD&A), which compliments this letter, immediately follows the independent auditors’ report and provides a narrative introduction, overview, and analysis of the basic financial statements. CITY PROFILE Location The City of College Station, incorporated in 1938, is located in Brazos County in East Central Texas, approximately 140 miles north of the Gulf of Mexico, approximately 90 miles northwest of Houston, approximately 165 miles south of Dallas and approximately 100 miles east of Austin, in the Brazos Valley. The City has a land area of 51.16 square miles and estimated population of 117,774 as of December 2017. The City has the power, by state statute, to extend its corporate limits by annexation, which it has done periodically. P.O. BOX 9960 • 1101 TEXAS AVENUE • COLLEGE STATION • TEXAS • 77842 TEL. 979.764.3500 • FAX. 979.764.6377 cstx.gov Structure The City of College Station is a home rule city operating under the Council-Manager form of government. The City Council is composed of a mayor and six council members, elected at large, who enact local laws, determine policies and adopt the annual budget. The City Manager is appointed by the City Council and is responsible for the daily management of the City. The Basic Financial Statements of the City include all government activities, organizations and functions for which the City is financially responsible as defined by the Governmental Accounting Standards Board. Based on these criteria, the City has incorporated the financial activities of two component units into this report. For additional information on the reporting entity, refer to Note 1 to the basic financial statements. Services Provided The City provides its citizens those services that have proven to be necessary and meaningful and which the City can provide at the least cost. Major services provided under general government and enterprise functions are: police and fire protection, emergency medical service, electric services, water and wastewater services, sanitation services, parks and recreation facilities and services, library services, street and drainage improvements and general administrative services. Internal services of the City, accounted for on a cost reimbursement basis are: fleet services, equipment replacement, utility customer service, risk management, employee health, workers’ compensation and unemployment coverage. Accounting System and Budgetary Control The City's accounting records for general governmental operations are maintained on a modified accrual basis, with the revenues recorded when available and measurable, and expenditures recorded when the services or goods are received and the liabilities incurred. Accounting records for the City's utilities and other proprietary activities are maintained on a full accrual basis with revenues recorded when earned and expenses recorded as goods or services are received and the liabilities incurred. In developing and maintaining the accounting system, consideration is given to the adequacy of the internal control structure. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition, and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived, and (2) the evaluation of costs and benefits requires estimates and judgments by management. P.O. BOX 9960 • 1101 TEXAS AVENUE • COLLEGE STATION • TEXAS • 77842 TEL. 979.764.3500 • FAX. 979.764.6377 cstx.gov All internal accounting control evaluations occur within the above framework. We believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. The City charter provides that the City Council shall adopt the annual budget prepared by City Management as revised by the City Council. This budget is reviewed and revised by the City Council and is formally adopted by the passage of a budget ordinance. The City Manager is authorized to transfer budgeted amounts between line items and departments within all funds other than the General Fund. The City Council must authorize transfers between General Fund departments and all increases in total spending in any fund. Budgetary control over spending is at the department level within the City's General Fund and at the individual fund appropriation in all other funds. The City's departments have direct access to review budgets as often as necessary. Quarterly closing reports are prepared and reviewed by management showing revenues, expenditures, and balance sheets. Summarized financial reports and budget reports are prepared on a quarterly basis. FACTORS AFFECTING FINANCIAL CONDITION Economic conditions remain mostly positive in College Station. Property values have continued to increase, with new construction continuing at a strong pace. Growth continues in College Station. In the northern part of the City, development and redevelopment continues along the University Drive Corridor with the construction of mixed use developments including continued development at Century Square. This development along University Drive had several retail establishments open during fiscal year 2018. On the other side of Texas Avenue the new Embassy Suites hotel opened late in fiscal year 2017 and added significant property value to the tax base this fiscal year. Multi-family construction continues to take place around the city as well. Sales tax revenues were at the budgeted amount as the fiscal year 2018 plan was revised to include growing rates, but at a slower pace. Retail development continues in other areas of the City, especially in the Tower Point and Caprock developments in south College Station with new restaurants and other businesses opening and others under construction to serve the ever-growing residential populations in that area of the City. Texas A&M University continues to see growth and development. Enrollment continues to increase at Texas A&M University, although at a slower pace than prior years with a 1.3% increase in College Station enrollment reported for fall 2018. However, construction of new buildings and facilities on campus continues to accommodate the rapid growth from previous years. The growth over the last several years continues to strain city services, such as public safety, the transportation system, the utility services and other core services. In P.O. BOX 9960 • 1101 TEXAS AVENUE • COLLEGE STATION • TEXAS • 77842 TEL. 979.764.3500 • FAX. 979.764.6377 cstx.gov particular, unless measures are taken to address it, the strain on utilities, particularly wastewater, could impact the ability to accommodate future growth in the coming years. The FY 2018 budget set the strategic policy direction for the City and provided the funding to implement that direction for the year. The budget allowed the staff to continue to meet the needs of our citizens and visitors as the City continued to experience a sustained period of growth. This showed itself through continued growth in higher education, through a robust visitor and tourism economy, and all of the ancillary things this growth brings. While growth continues, there is also a need to maintain and improve existing infrastructure throughout the City. As the City continues to grow, we must respond to that growth in a sustainable and measured manner. We must be prudent with the limited available resources in an effort to maximize the services provided to citizens and visitors of College Station. LONG-TERM FINANCIAL PLANNING Long-Term Financial Planning Process • Operations and Maintenance: Each year the City prepares a balanced budget, with the involvement of the City Council, City Managers, Management Team, finance staff and other employees. Planning meetings are held throughout the year long process, during which discussions regarding the future of the City’s financial health are a high priority. Financial forecasts are developed for the coming year, and next five years for each major fund. These forecasts take historical trends, changes in policy, and economic conditions (now and projected) into consideration as applicable. The City also sets aside funds for major purchases in future years (Equipment Replacement Fund) and monitors the fund balances of every fund during the year to ensure adherence to the City’s reserve policy. • Capital Improvement Program: A major component of the budgeting process every year is the Capital Improvement Program (CIP). Approximately one third of the City’s budget is expended on capital projects annually. Extensive planning takes place throughout the year involving every department in the City with input from the City Council and appointed citizen committees and boards (Planning and Zoning Board, Parks Board, Citizen’s Advisory Committee). The focus of this planning is ongoing funding of current CIP projects, and how the City will fund currently unfunded CIP projects in the future. During this process attention is given to the impact the projects will have on future operations & maintenance costs. P.O. BOX 9960 • 1101 TEXAS AVENUE • COLLEGE STATION • TEXAS • 77842 TEL. 979.764.3500 • FAX. 979.764.6377 cstx.gov OTHER INFORMATION Independent Audit Section 37 of the City's Charter requires that not less than thirty (30) days prior to the end of each fiscal year, the City Council shall designate a qualified public accountant or accountants who, as of the end of the fiscal year, shall make an independent audit of accounts and other evidences of financial transactions of the city government and shall submit the report to the City Council. Such accountants shall have no personal interest, direct or indirect, in the fiscal affairs of the city government. They shall not maintain any account or record of the city business, but, within specifications approved by the City Council, shall post-audit the books and documents kept by the Finance Department and any separate or subordinate accounts kept by any other office, department or agency of the city government. The City of College Station has engaged BKD, LLP, formerly Baird, Kurtz & Dobson, headquartered in Springfield, Missouri to perform the audit, and their opinion has been included in this report. It should be noted that the auditors included all funds in their audit, performed their audit in accordance with both U.S. generally accepted auditing standards (GAAS) and governmental auditing standards (GAS), and concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of College Station's financial statements for the fiscal year ended September 30, 2018 are fairly presented in conformity with U.S. generally accepted accounting principles and governmental auditing standards. The independent auditors' report is presented as the first component of the financial section of this report. Certificate of Achievement 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 College Station for its Comprehensive Annual Financial Report for the Fiscal Year ended September 30, 2017. This was the thirty-fourth year the City has received this prestigious award. In order to be awarded, a government must publish an easily readable and efficiently organized comprehensive annual financial report. The report must satisfy both generally accepted accounting principles and applicable legal requirements. The September 30, 2018 report will be submitted to the GFOA to determine eligibility for another certificate. Responsibility for Financial Reporting The City's Senior Management, including the City Manager, Deputy City Manager and Assistant City Manager, accept the responsibility for the accuracy, integrity, consistency, and reliability of the financial statements. They also acknowledge their responsibility for assuring the continuous monitoring of the City's system of internal controls for compliance in order to prevent misappropriation of assets and fraudulent financial P.O. BOX 9960 • 1101 TEXAS AVENUE • COLLEGE STATION • TEXAS • 77842 TEL. 979.764.3500 • FAX. 979.764.6377 cstx.gov reporting. Additionally, they confirm their commitment to fostering a strong ethical climate and communicating those standards to employees through personnel rules, administrative regulations, and City law. Acknowledgement The preparation of this report could not have been accomplished without the efforts and dedicated services of the Finance Department. Appreciation is also expressed to City employees throughout the organization, especially those employees instrumental in the successful completion of this report. Acknowledgement is also given to BKD, LLP. Appreciation is extended to the Mayor and City Council for their interest and support in planning and conducting the financial operations of the City in a responsible and prudent manner. Respectfully submitted, ____________________________ _________________________ Bryan C. Woods Jeff Kersten City Manager Assistant City Manager / CFO ____________________________ Jeff Capps Deputy City Manager City Manager Fire / EOC Police Community Services Human Resources Planning & Development Engineering Public Works Water Services Electric Utility Parks and Recreation Utility Customer Service Budget Purchasing Accounting & Financial Reporting Municipal Court Fiscal Services Information Technology Citizens of College Station City Secretary Municipal Judge Internal Auditor Appointed Boards and Commissions Technology Services E-GOV Business Services GIS Communications Network Services Admin City Attorney Mayor and Council Deputy City Manager Assistant City Manager Assistant City Manager Marketing & Public Communications Economic Development CITY ORGANIZATION Treasury City of College Station, Texas September 30, 2018 Principal City Officials Elected Officials Mayor ............................................................................................................................................. Karl Mooney City Council Place 1 ............................................................................................................................... Bob Brick City Council Place 2 ................................................................................................................... Jerome Rektorik City Council Place 3 ......................................................................................................................... Linda Harvell City Council Place 4 ......................................................................................................................... Barry Moore City Council Place 5 .......................................................................................................................... John Nichols City Council Place 6/Mayor Pro Tem ........................................................................................... James Benham City Administration City Manager ............................................................................................................................................ vacant Deputy City Manager ................................................................................................................................ vacant Assistant City Manager, CFO ............................................................................................................ Jeff Kersten Assistant City Manager/Interim City Manager ................................................................................... Jeff Capps Director of Planning and Development Services ...................................................................................... vacant Director of Fiscal Services .................................................................................................... Mary Ellen Leonard Director of Marketing & Public Communications ................................................................................ Jay Socol Director of Water Services ............................................................................................................ Gary Mechler Director of Electric Utility ............................................................................................................ Timothy Crabb Chief of Police ............................................................................................................................ Scott McCollum Fire Chief .............................................................................................................................. Jonathan McMahan Director of Public Works............................................................................................................ Donald Harmon Director of Parks and Recreation ................................................................................................. David Schmitz Chief Information Officer ............................................................................................................ Sindhu Menon Director of Human Resources .......................................................................................................... Alison Pond Director of Community Services ...................................................................................................... Debbie Eller Director of Economic Development ................................................................................................. Natalie Ruiz City Attorney ................................................................................................................................ Carla Robinson City Secretary ................................................................................................................................... Tanya Smith Internal Auditor ..................................................................................................................................... Ty Elliott INSERT AUDITORS’ REPORT HERE PAGE 1 INSERT AUDITORS’ REPORT HERE PAGE 2 INSERT AUDITORS’ REPORT HERE PAGE 3 Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) This section of the City of College Station’s (the “City”) Comprehensive Annual Financial Report presents a narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2018. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal. FINANCIAL HIGHLIGHTS • The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent Fiscal year by $628,666,223 (net position). Of this amount, $136,080,528 (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors. • The City’s total net position, after restatement, increased by $59,060,718 during the fiscal year. • At the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $161,628,994, a decrease of ($6,635,486) when compared to the prior year, as restated. This decrease is due primarily to the planned cash outlay of contributions for capital projects including the construction of a new police station, transportation and parks capital projects. • The September 30, 2017 Net Position was restated for multiple reasons. The Governmental Net Position was restated for the required implementation of GASB 75 related to Other Post Retirement Benefits (OPEB). In addition, Net Position and governmental funds Fund Balance were revised for an adjustment to accrued Sales Tax and a correction to Community Development Loans. The net impact of these restatements was an increase in Net Position of $170,207 for the Governmental Activities and $2,706,262 for governmental fund balances. The Proprietary Fund Balances were also restated as a result of implementation of GASB 75. The resulting change to the previously reported Net Position was a decrease to Net Position of ($1,971,678). • The implementation for GASB 75, which required the use of a different actuarial method, changes to the OPEB plan structure implemented by the City, and the implementation of an Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) OPEB Trust to pre-fund these expenses, gained the City a benefit of $4,855,026 that is reflected as a reduction of salaries and benefit costs for each department in the September 30, 2018 Government Wide Financial Statements - Statement of Activities. • The City of College Station was the only participant in West Medical District TIRZ No. 18 and no additional development opportunities were available in the area. Therefore, City Council voted to dissolve this TIRZ on May 24, 2018 and the remaining balance of $914,724 was transferred to the General Fund Capital Projects Fund. • Approximately 14.9 percent of the combined governmental funds ending fund balance, or $24,033,874, is available for spending at the City’s discretion (unassigned fund balance). • The City’s total amount of outstanding debt is $322,495,000, which is a net increase of $13,830,000 over last year. This increase is primarily due to the issuance of $18,230,000 of new debt for streets, parks and the design of a new city hall, as well as the issuance of $19,150,000 for capital projects related primarily to water and wastewater infrastructure projects. Additional details on the debt issuance can be found in the Note 14 to the financial statements. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: (1) Government-wide financial statements (2) Fund financial statements (3) Notes to the financial statements This report also contains other supplementary information in addition to the basic financial statements themselves. Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) The following diagram illustrates the relationship between the different components of this report: Relationship between Comprehensive Annual Financial Report (CAFR) and Basic Financial Statements and Required Supplementary Information (RSI) General information on the government structure, services, and environment Pages 1-9 Management’s Discussion and Analysis Pages 13-33 Government-Wide Financial Statements Pages 34-35 Governmental Fund Financial Statements Pages 36-39 Proprietary Fund Financial Statements Pages 40-43 Fiduciary Fund Financial Statements Pages 44-45 Notes to the Financial Statements Pages 46-106 Additional Required Supplementary Information Pages 107-110 Information on individual funds & other supplementary information not required by GAAP Pages 111-155 Trend Data and Nonfinancial Data Pages 156-184 Introductory Section Basic Financial Statements and RSI Financial Section Statistical Section Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) GOVERNMENT-WIDE FINANCIAL STATEMENTS The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City’s assets and liabilities, and deferred inflows/outflows of resources with the differences reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether or not the financial position of the City is improving or declining. The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused vacation. Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, fiscal services, police, information technology, planning and development, fire, streets, drainage, traffic, parks and recreation, and citizen and neighborhood resources. The business-type activities of the City include electric, water, wastewater, sanitation, and the Northgate parking garage. The government-wide financial statements can be found on pages 34- 35. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into governmental funds and proprietary funds. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near- term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in determining what financial resources are available in the near future to finance the City‘s programs. Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) Because the focus of governmental funds is narrower than that of government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains several individual governmental funds organized according to their type (special revenue, debt service and capital projects). 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, Debt Service Fund, General Government Projects Fund and Streets Projects Fund, all of which are considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The governmental fund financial statements can be found on pages 36-39. The City adopts an annual appropriated budget for its General Fund, Debt Service Fund, Special Revenue Funds, and Capital Projects Funds. A budgetary comparison statement has been Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) provided for the General Fund, Debt Service Fund, Special Revenue Funds and Capital Projects Funds to demonstrate each fund’s compliance with its budget. Proprietary Funds Proprietary funds are generally used to account for services for which the City charges customers—either outside customers or internal units or departments of the City. Proprietary funds provide the same type of information as shown in the government-wide financial statements, only in more detail. The City maintains the following 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 the operations of the electric, water, wastewater, sanitation, and parking activities of the City. The Electric, Water, and Wastewater funds are considered to be major funds of the City, while the remaining funds (Sanitation and Northgate Parking Garage) are presented in aggregate as nonmajor enterprise funds. Individual fund data for the nonmajor enterprise funds can be found in the form of combining statements elsewhere in this report. Internal service funds are used to report activities that provide supplies and services for certain City programs and activities. The City uses internal service funds to account for fleet maintenance and utility customer services. It also uses internal service funds to account for equipment replacement, employee benefits, and unemployment, workers’ compensation, and property and casualty insurance. All of these services benefit both the governmental activities and the business-type activities and have been split between governmental activities and business type activities in the government-wide financial statements. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The proprietary fund financial statements can be found on pages 40-43. Notes to the 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 to the financial statements can be found on pages 46-104. Required Supplementary Information In addition to the basic financial statements and accompanying notes, this report presents certain required supplementary information, found on pages 107-110, concerning the City’s progress in Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) funding its obligation to provide pension benefits and other postemployment benefits to its employees and the General Fund budget to actual comparison. Combining Statements The combining statements referred to earlier in connection with the nonmajor governmental funds, the nonmajor enterprise funds, and the internal service funds are found on pages 111- 158. Statistical Section The statistical section containing unaudited financial trend data, revenue capacity, debt capacity, and demographic and economic information, is included on pages 159-184. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve as a useful indicator of a government’s financial position. For the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $628,666,223 at the close of the most recent fiscal year. The largest portion of the City’s net position (70.5 percent) reflects its investment of $435,603,738 in capital assets (e.g., land, buildings, and equipment) less any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be liquidated for these liabilities. Net Position: Governmental Activities Business-Type Activities Total 2018 2017 2018 2017 2018 2017 Assets Current and other assets $ 202,826,249 $ 196,526,619 $ 146,330,630 $ 128,503,744 $ 349,156,879 $ 325,030,363 Capital assets 314,033,397 284,218,940 387,188,442 362,397,093 701,221,839 646,616,033 Total assets 516,859,646 480,745,559 533,519,072 490,900,837 1,050,378,718 971,646,396 Deferred outflows of resources Pensions 6,799,715 14,275,665 1,785,848 3,784,951 8,585,563 18,060,616 OPEB 1,038,570 - 285,053 - 1,323,623 - Refunding 1,338,244 1,577,561 2,130,003 2,206,318 3,468,247 3,783,879 Total deferred outflow of resources 9,176,529 15,853,226 4,200,904 5,991,269 13,377,433 21,844,495 Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) Liabilities Long-term liabilities 205,228,366 216,794,183 155,324,119 151,158,559 360,552,485 367,952,742 Other liabilities 35,136,082 27,876,000 29,492,346 27,551,455 64,628,428 55,427,455 Total liabilities 240,364,448 244,670,183 184,816,465 178,710,014 425,180,913 423,380,197 Deferred inflows of resources Pension 5,418,100 402,342 1,402,674 102,847 6,820,774 505,189 OPEB 2,423,159 - 665,082 - 3,088,241 - Total deferred inflows of resources 7,841,259 402,342 2,067,756 102,847 9,909,015 505,189 Net Position Net Investment in capital assets 200,134,327 185,722,689 235,469,411 228,519,124 435,603,738 414,241,813 Restricted 39,720,716 39,533,053 17,261,241 1,581,501 56,981,957 41,114,554 Unrestricted 37,975,425 26,270,518 98,105,103 87,978,620 136,080,528 114,249,138 Total net position $ 277,830,468 $ 251,526,260 $ 350,835,755 $ 318,079,245 $ 628,666,223 $ 569,605,505 An additional portion of the City’s net position, $56,981,957 (9.1 percent) represents resources that are subject to external restriction on how they may be used. The remaining balance of unrestricted net assets, $136,080,528 (21.6 percent) may be used to meet the government’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City was able to report positive balances in all three categories of net position, both for the government as a whole, as well as for the business-type activities. The same situation held true for the prior fiscal year. The City’s net position increased by $59,060,718 as a result of fiscal year 2018 operations, as compared to the increase of $45,067,247 for fiscal year 2017 operations. The prior period adjustment to the net position at the beginning of the year reflected below relates to the required implementation of GASB 75 - Other Post Retirement Benefits, and corrections to accrued Sales Tax and Community Development Loans. See Note 1 under New Accounting Pronouncements, in the accompanying financial statements for further discussion of GASB 75 and Note 2 for the details related to the restatements of the accrued Sales Tax and Community Development Loan. Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) The following table provides a summary of the City’s operations for the year ended September 30, 2018 and highlights key elements of the change in the City’s net position: Changes in Net Position Governmental Activities Business-Type Activities Total Revenues 2018 2017 2018 2017 2018 2017 Charges for services $ 22,090,286 $ 16,446,405 $ 151,079,241 $ 145,519,567 $173,169,527 $ 161,965,972 Operating contributions 2,692,063 2,949,829 1,542,900 1,032,027 4,234,963 3,981,856 Capital contributions 14,456,341 13,481,280 10,062,900 8,559,043 24,519,241 22,040,323 Property taxes 43,492,512 37,476,196 - 43,492,512 37,476,196 Sales and mixed beverage taxes 28,799,040 28,561,762 - 28,799,040 28,561,762 Other taxes 9,392,804 8,854,726 - 9,392,804 8,854,726 Gain on sale of capital assets - 46,469 - - 46,469 Interest and investment income 2,476,318 1,204,827 1,444,135 855,367 3,920,453 2,060,194 Total revenues 123,399,364 109,021,494 164,129,176 155,966,004 287,528,540 264,987,498 Expenses Police 21,571,950 22,370,803 - 21,571,950 22,370,803 Fire 19,367,032 17,980,949 - 19,367,032 17,980,949 Public works 24,452,406 19,858,859 - 24,452,406 19,858,859 Parks & recreation 11,727,549 10,774,101 - 11,727,549 10,774,101 Library 1,118,522 1,182,331 - 1,118,522 1,182,331 Planning & development 3,517,911 3,967,606 - 3,517,911 3,967,606 Information technology 5,027,435 5,027,015 - 5,027,435 5,027,015 Fiscal services 3,795,099 4,246,886 - 3,795,099 4,246,886 General government 15,155,670 17,018,777 - 15,155,670 17,018,777 Interest on long term debt 6,075,924 4,318,990 - 6,075,924 4,318,990 Unallocated depreciation - 1,390,156 - - 1,390,156 Electric utility - - 78,029,786 75,878,632 78,029,786 75,878,632 Water utility - - 14,041,059 13,652,580 14,041,059 13,652,580 Wastewater utility - - 13,170,661 12,281,262 13,170,661 12,281,262 Sanitation services - - 8,554,011 9,006,946 8,554,011 9,006,946 Parking operations - - 1,061,336 964,358 1,061,336 964,358 Total expenses 111,809,498 108,136,473 114,856,853 111,783,778 226,666,351 219,920,251 Incr (Decr) in net position before transfers 11,589,866 885,021 49,272,323 44,182,226 60,862,189 45,067,247 Transfers net 14,544,135 12,754,258 (14,544,135) (12,754,258) - - Increase in net position 26,134,001 13,639,279 34,728,188 31,427,968 60,862,189 45,067,247 Net position at beginning of year 251,526,260 237,886,981 318,079,245 286,651,277 569,605,505 524,538,258 Prior period adjustment 170,207 - (1,971,678) - (1,801,471) - Net position at end of year $ 277,830,468 $ 251,526,260 $ 350,835,755 $ 318,079,245 $ 628,666,223 $ 569,605,505 Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) Governmental Activities: Governmental activities increased the City of College Station’s net position by $26,134,001. Key elements of this net increase are as follows: • Total governmental revenues increased by 13.2% over the prior year. • Property tax revenues increased by 16.05% over the prior year as a result of increases in the property value and an increase in the ad valorem tax rate. • Sales tax receipts increased 0.83%, which was below the budgeted rate. • Investment income earned increased 105.5% as a result of higher interest rates, a more proactive investing plan instituted in fiscal year 2017, and higher investment balances than anticipated due to slower than planned spending on capital investments. • All other governmental activity revenues increased 15.94% over prior year as a result of planned additional capital grants and contributions increase to fund significant planned capital projects like a new police station. • Total governmental expenditures increased 3.40% over the prior year, in part as a result of an increase in salaries and benefits expense and an addition of 10 new public service personnel. Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) The chart below illustrates the City’s governmental activities revenues by source: This chart depicts governmental activity program revenues relative to program expenses: Business-type Activities: Business-type activities increased the City of College Station’s net position in fiscal year 2018 by $34,728,188 as opposed to a $31,427,968 increase for fiscal year 2017. Key elements of this increase are as follows: • Increases in the population and therefore number of meters resulted in an increase in revenue generated from the Electric Utility. Property Taxes 35.3% Sales and Mixed Beverage Tax 23.3% Other Taxes 7.6% Charges for Services 17.9% Capital, Grants Contrib 11.7% Misc 4.2% Governmental Activities Revenue By Source $123,399,364 - 4,000,000 8,000,000 12,000,000 16,000,000 20,000,000 24,000,000 28,000,000 Police Fire Public Works Parks & Rec Plan & Dev Inform Tech Fiscal Svcs Gen'l Gov't Other Governmental Activities Program Revenue and Expense Revenue Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) • In addition to the population increase, the Water Fund increased rates by 6% in fourth quarter 2018, resulting in an increase in revenue for that fund. • An increase in customers and fourth quarter 2018 rate increase resulted in an increase in revenue for the Solid Waste Fund. • A Wastewater a rate increase of 8% in fiscal year 2017 helped support the projected Wastewater Capital Improvement plan and ongoing operations and maintenance resulting in this fund operating at a break-even level for fiscal 2018. • Capital infrastructure from various developments throughout the City contributed $10,062,900 to the revenue generated by the proprietary funds. Revenues for the City’s business-type activities are presented in the following chart: This chart depicts business-type activity program revenues relative to program expenses: Charges for Services 92.0% Grants & Contributions 7.1% Other 0.9% Business-type Revenue $164,129,176 Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted previously, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of resources that are available for spending. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. The major governmental funds reported by the City include the General Fund, Debt Service Fund, General Government Projects Fund, and Streets Projects Fund. Other governmental funds of the City are reported as nonmajor funds. At of the end of fiscal year 2018, the City’s governmental funds reported combined ending fund balances of $161,628,994. Approximately 14.9 percent, totaling $24,033,874 of this total amount, constitutes unassigned fund balance and is available for spending at the City’s discretion. The remainder of fund balance is reserved to indicate that it is not available for new spending because it has already been committed as follows: Nonspendable $ 628,518 Restricted 115,535,066 - 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 Electric Water Wastewater Solid Waste Parking Business-type Program Revenue and Expense Revenue Expenses Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) Committed 19,303,359 Assigned 2,128,177 A detailed breakdown of the fund balance by fund can be found in Note 17, Components of Fund Balances. Revenues for governmental functions totaled $108,525,709 in the fiscal year ended September 30, 2018, an increase of 10.2 percent or $10,067,787 from the fiscal year ended September 30, 2017. One component of the increase is an 11.41 percent increase in the total taxable assessed property valuations coupled with an increase of 2.5 cents per $100 in valuation in the associated tax rate, to pay for the new Police Station. In January 2017, $408,568,903 in taxable new market value was added to the tax rolls and there was an increase in existing property values of $377,518,213. The total taxable assessed valuation of $7,906,085,439 for the City was assessed at a $0.4975 per one hundred dollars in valuation for fiscal year 2018, which is a rate 2.5 cents higher than the rate for fiscal year 2017. Finally, there was an increase in service fee rates and the creation of a roadway maintenance fee in 2017 that contributed to the increase in governmental revenues. Expenditures for governmental functions totaling $147,959,195 increased by $15,372,632 or 11.6 percent. Salaries and benefits and equipment purchased for the fiscal year ended September 30, 2018 were significant contributions to the increase. An additional $3,738,109 of the increase in expenditures relates to an increase in principal retirement and interest costs on debt service. Other financing sources and uses (net) totaling $32,798,000 account for the transfer into the general fund from business like activities as well as the issuance of debt and related costs. Debt issuance and refunding related to the general fund decreased by $49,285,314 in fiscal 2018 over that of fiscal 2017 as the City issued less debt in 2018. Fiscal year 2017 includes the issuance of debt for the payment of construction of a new police station as well as several major transportation projects. Overall, for fiscal year 2018, expenditures and financing sources for governmental functions exceeded revenues by ($6,635,486) as the City utilized prior year’s resources on planned capital expenditures. The General Fund is the chief operating fund and primary governmental fund of the City of College Station. At the end of the current fiscal year, the unassigned fund balance was $24,033,874, while the total fund balance was $26,790,569. The City’s fiscal and budgetary policies require that the General Fund’s fund balance be at least equal to 15 percent of budgeted Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) expenditures, a percentage equal to 55 days of expenditures. The total fund balance is approximately 32.6 percent of fiscal year 2018 actual expenditures and exceeds the minimum requirement set by policy. As a measure of a fund’s liquidity, it is useful to compare both unassigned and total fund balance to total fund actual expenditures. Unassigned fund balance represents 29.3 percent of total general fund expenditures, while total fund balance represents 32.6 percent of total general fund expenditures. The total fund balance for the general fund continues to meet and exceed the Fiscal and Budgetary Policy. The General Fund’s fund balance ended the fiscal year with an increase of $4,276,046. This was the result of lower expenditures than budgeted and a sales tax prior period adjustment explained in Note 2. The Debt Service Fund ended the fiscal year with a fund balance of $5,272,810. This entire amount is reserved for the payment of debt service. The net increase in the debt service fund balance during the current fiscal year was $211,373. The General Government Projects Fund ended the fiscal year with a balance of $40,236,419, all of which is legally restricted based on the covenants from various bond issuances as of September 30, 2018. The General Government Projects Fund is separately shown in the accompanying financial statements for 2018, as it is considered a major fund requiring separate disclosure. The net increase in fund balance during the current fiscal year was $573,758. This net increase was in part due to bond proceeds received from the current fiscal year debt issuance. The Streets Projects Fund ended the fiscal year with a balance of $39,193,275, all of which is legally restricted based on the covenants from various bond issuances as of September 30, 2018. The net decrease in fund balance during the current fiscal year was ($10,382,052). This decrease was attributable to more being expended on appropriated capital projects, including Lakeway Drive, than long term debt being issued for future street capital projects. The Other Governmental Funds ended the fiscal year with a balance of $50,135,921, of which $30,832,562 is legally restricted and $19,303,359 has been committed for specific purposes by City Council. The remainder of the fund balance is in a nonspendable form as it is held by the City in inventory. The balances’ in the Nonmajor Governmental funds increase of $1,391,651 was attributable to an issuance of debt for parks capitals projects that was not spent in Fiscal year 2018. Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) Proprietary Funds The City’s proprietary funds provide the same type of information found in the government-wide financial statements but in more detail. At the end of the current fiscal year, the City’s proprietary funds reported combined ending net position of $345,184,301. Of this amount, 26.8 percent, totaling $92,453,649 constitutes unrestricted net position. The remainder of net position for the proprietary funds is composed of an amount invested in capital assets of $235,469,411 and $17,261,241 of restricted net position. Operating revenues for proprietary activities totaled $149,608,146 for the fiscal year, which is an increase of 3.8 percent, or $5,472,224, from the previous fiscal year as a result of an increase in the service fees charged for water and solid waste in the fourth quarter of fiscal year 2018. The increase in population for the service areas also contributed to the increase in revenue as more services were provided. Operating expenses decreased ($211,887) or (0.20) percent for the same period. Operating income was $43,888,114 for fiscal year 2018 as compared to $38,204,003 for fiscal year 2017 with the increase attributable to the revenue increase discussed above. Overall, the Proprietary Funds had an overall increase of $32,756,510 in net position for fiscal year 2018 after the effect of the restatement. Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) Electric Fund At the end of the fiscal year, the unrestricted net position for the Electric Fund totaled $54,588,261. The City’s policy with regard to its enterprise funds is to maintain at least 15 percent of annual operating expenses in working capital, a percentage equal to 55 days of expenses. At September 30, 2018, Electric Fund working capital equaled approximately 76.2 percent of annual operating expenses, as compared to 53.6 percent at September 30, 2017. There were no rate changes for the electric utility instituted in fiscal year 2018. Therefore, the entire increase in revenue of $3,545,270 relates to increases in customers. Purchased power and salary and benefits expenses were slightly lower than last year despite the service growth. These factors contributed to an overall increase in net position of $21,148,440 prior to adoption of GASB 75 for fiscal year 2018 as compared to $19,622,392 for fiscal year 2017. Water Fund Unrestricted net position for the Water Fund at September 30, 2018 totaled $11,526,800. At September 30, 2018, Water Fund working capital equaled approximately 88.2 percent of annual operating expense, as compared to 141.2 percent at September 30, 2017. The Water Fund operating revenues increased by 6.1 percent or $936,073 during fiscal year 2018 as a result an increase in rates of 6% in the fourth quarter as well as the population growth within the City. Operating expenses of $11,162,261 decreased 1.74 percent or ($197,454) over fiscal year 2017, due to a decrease in salaries and benefits as well as purchased professional services. This resulted in operating income of $5,117,212 for fiscal year 2018 as compared to $3,983,685 for fiscal year 2017. The operating income, when combined with the net nonoperating expenses, net capital Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) contributions and transfers, resulted in an increase in net position of $4,518,729 in the Water Fund during fiscal year 2018 prior to the adoption of GASB 75. Wastewater Fund The Wastewater Fund’s unrestricted net position at the end of fiscal year 2018 totaled $24,607,343. At September 30, 2018, Wastewater Fund working capital equaled approximately 199.9 percent of annual operating expenses, as compared to 171.2 percent at September 30, 2017. This net position will be utilized in the future for a planned wastewater treatment plant on the south side of College Station. Operating revenues in Wastewater Fund were $17,497,893 or a $455,253 or 2.67 percent increase over the previous fiscal year of $17,042,640. There were no rate changes for the wastewater utility instituted in fiscal year 2018. Therefore, the entire increase in revenue of relates to increases in volume. Operating expenses increased from $10,934,129 to $11,030,646, or 0.88 percent, as a result of an increase in depreciation. The operating income, when combined with the net nonoperating expenses, net capital contributions and transfers, resulted in an increase in net position of $6,811,537 in the Wastewater Fund during the fiscal year prior to adoption of GASB 75. Fiduciary Fund Established in September 2017, the Other Post Employment Benefit Trust Fund reports resources that are held in trust for the members and beneficiaries of the City’s other postemployment benefit plan. With the establishment of the trust, the City can pre-fund (make annual payments in advance of the obligation) and allocate funds for the express purpose of funding future OPEB costs. The investment returns can be used to reduce the ARC and can result in lower long-term costs of the plan. These assets are excluded from the government-wide financial statements as they cannot be used to support the government's own programs. BUDGETARY HIGHLIGHTS The final amended budget for fiscal year 2018 totaled $376,747,538, as amended for all funds. In the General Fund, the final amended budget showed a decrease in fund balance of ($5,060,072) on a budget basis. The actual change in fund balance (GAAP Basis) was an increase of $864,400. The following are some of the key factors in the change in fund balance: • Revenues were higher than the estimate by $1,978,459. • Expenditures were under budget by $4,013,810 due to savings from salaries and benefits. Strategic planning is a driving force in the preparation of the City’s budget. The City Council has identified the following areas of strategic priority: Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) • Good Governance • Financially Sustainable City • Providing Core Services and Infrastructure • Neighborhood Integrity • Diverse Growing Economy • Improving Mobility • Sustainable City Budget resources were included in fiscal year 2018 to address these priorities. CAPITAL ASSETS The City of College Station’s investment in capital assets for its governmental and business-type activities as of September 30, 2018 amounted to $701,221,839 (net of accumulated depreciation), which is a net increase of $54,605,806 for the fiscal year. This investment in capital assets includes land, utility systems, building and building improvements, improvements other than buildings, machinery and equipment, infrastructure, and construction in progress, as detailed below: Governmental Business-Type Activities Activities Total Land $ 34,257,196 $ 690,750 $ 34,947,946 Utility systems - 333,473,880 333,473,880 Buildings and other improvements 25,292,735 3,867,237 29,159,972 Improvements other than buildings 21,796,192 - 21,796,192 Machinery and equipment 15,919,573 2,709,514 18,629,087 Infrastructure 166,213,484 - 166,213,484 Construction in progress 50,554,217 46,447,061 97,001,278 $ 314,033,397 $ 387,188,442 $ 701,221,839 Major capital projects completed by the City during the 2018 fiscal year included the following: • Lick Creek Nature Center • Texas Ave Planter Box Replacement • Northgate Street Meter Upgrade • Raintree-Sidewalks • Central Park-Softball Lighting • Pebble Creek-Lighting • Barracks Park-Various improvements Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) • Castlegate-New Fencing, Exercise Pod and Tennis Court Lights • Gabbard Park-New fence & repairs to pier and bridge • Bachmann Park-Lighting upgrade • Aggie Field of Honor-New sidewalk • Drainage improvements Dominik/Stallings • Extended Electric Infrastructure at Jones Crossing • Electric Distribution Feeder directly to Bio Corridor Additional information on the City’s capital assets can be found in Note 9 to the financial statements. DEBT ADMINISTRATION At the end of the 2018 fiscal year, the City of College Station had total debt outstanding of $322,495,000. All of this amount is comprised of debt backed by the full faith and credit of the City. Certificates of Obligation that fund business-type activities in the Electric, Water, Wastewater, and Northgate Parking Garage Funds are also backed by the surplus of revenue derived from each enterprise fund’s revenue source. 2018 Year-End Outstanding Debt Payable Governmental Activities Business-Type Activities Total General Obligation Bonds $ 89,925,000 $ 55,240,000 $ 145,165,000 Certificates of Obligation 85,495,000 91,835,000 177,330,000 $ 175,420,000 $ 147,075,000 $ 322,495,000 The City’s total debt increased by $13,830,000 during the current fiscal year. The change in total debt was a result of the following: • Issuance of $18,230,000 in Certificates of Obligation for Governmental Activities. • Issuance of $19,150,000 in Certificates of Obligation for Business Type Activities. • Maturity of ($23,550,000) in General Obligation bonds and Certificates of Obligation. The City’s General Obligation and Certificates of Obligation have an underlying rating of AA+ by Standard & Poor’s (“S&P”) and Aa1 by Moody’s Investors Service (“Moody’s”). Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) Additional information on the City’s long-term debt can be found in Note 14 to the financial statements. PENSIONS AND RETIREE HEALTHCARE The City accounts for its pension obligation under Governmental Accounting Standard Board (GASB) Statement No. 68, “Accounting and Financial Reporting for Pensions”. Valuations are important as the reporting valuation provides a rigorous standard measure that can be used to compare the City’s pension liabilities to other governments from around the nation. The funding valuation is important as the actuarial methods used, including strategies for repaying any unfunded actuarial accrued liabilities, combined with the City’s history of making those contributions, provides insights regarding the City’s commitment to and the effectiveness of its funding strategy. Information contained in the financial statements themselves, including the first schedule of Required Supplementary Information (RSI), Schedule of Changes in Net Pension Liability and Related Ratios, is based on the reporting valuation. The second schedule in the RSI, Schedule of Contributions, is based on the funding valuation. On a reporting basis, the City’s financial statements reflect a Net Pension Liability as of September 30, 2018 of $27,095,915, which is 50.31 percent of the City’s annual covered payroll of $53,860,040, as compared to a Net Pension Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) Liability as of September 30, 2017 of $41,650,063, which was 82.32 percent of the City’s annual covered payroll. As required by state laws, in addition to the pension benefits described in Note 22, the City makes available certain postretirement benefits to employees who meet TMRS retirement qualifications, retire from City employment, and enroll in the plan before the effective date of their retirement. The Other Post-Employment Benefits (OPEB) Plan offers medical, dental, vision, drug, and life insurance benefits to retired employees and their eligible dependents and is more fully explained in Note 23. As required, the City adopted GASB Statements No. 75 for its accounting for the retiree healthcare obligation. As a result of this implementation, a prior period adjustment was recognized to decrease beginning net position by ($4,855,024). The financial statements reflect a net post-employment benefits liability of $6,293,976 and $17,822,125 as of September 30, 2018 and 2017, respectively. This decrease in the OPEB obligation of ($11,528,149) is a result of changes in eligibility, actuarial assumptions and prefunding of the Trust. The City continued to fund its retiree healthcare obligation in fiscal year 2018 into an irrevocable trust. A total of $2,646,668 has been prefunded into the trust as of September 30, 2018. More information related to the OPEB Trust can be found in Note 24 of this report. ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES Economic conditions remain mostly positive in College Station. Property values have continued to increase, with new construction continuing at a strong pace. Growth continues in College Station. In the northern part of the City, development and redevelopment continues along the University Drive Corridor with the construction of mixed use developments including continued development at Century Square. This development along University Drive had several retail establishments open during fiscal year 2018. On the other side of Texas Avenue the new Embassy Suites hotel opened late in fiscal year 2017 and added significant property value to the tax base this fiscal year. Multi-family construction continues to take place around the city as well. Sales tax revenues were at the budgeted amount as the fiscal year 2018 plan was revised to include growing rates, but at a slower pace. Retail development continues in other areas of the City, especially in the Tower Point and Caprock developments in south College Station with new restaurants and other businesses opening and others under construction to serve the ever-growing residential populations in that area of the City. Construction is also underway on a Mercedes Benz, BMW and other luxury car dealership, adding to the ad valorem tax base in FY19. The City’s third HEB grocery store opened in August 2018, further attesting to the growth in the area’s population. Texas A&M University continues to see growth and development. Enrollment continues to increase at Texas A&M University, although at a slower pace than prior years with a 1.3% increase Management’s Discussion and Analysis For the Fiscal Year Ended September 30, 2018 (Unaudited) in College Station enrollment reported for fall 2018. However, construction of new buildings and facilities on campus continues to accommodate the rapid growth from previous years. The City’s investment in athletic facilities such as Veterans Park continue to attract significant events including the TAAF Games of Texas for the summers of 2018 and 2019 and the Texas State 7v7 Championships. Construction of two synthetic fields are underway at Veterans Park with construction of two additional fields planned for summer of 2019. The FY19 approved budget includes the appropriation for development of baseball/softball facilities at Southeast Park to further diversify the City’s athletic facilities for citizen’s use and to attract additional events. While the continued growth of the City is positive, the rapid pace strains city services, such as public safety, transportation and utility systems and other core services. TAX RATE AND UTILITY RATES The fiscal year 2019 budget was prepared using a tax rate of 50.5841 cents per $100 assessed valuation. This is 0.8341 cents higher than the fiscal year 2018 tax rate. The increase was to offset the initial offering of a homestead exemption to qualifying residents. The 2019 debt service portion of the tax rate is 22.0339 cents, and the operations and maintenance portion of the tax rate is 28.5502 cents. The 2019 budget includes an increase in Wastewater rates of 5.0 percent to fund Capital projects. REQUEST FOR INFORMATION This financial report is designed to provide a general overview of the City of College Station’s financial position for all who have an interest in the City’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: City of College Station Finance Department ATTN: Director of Fiscal Services PO Box 9960 College Station, Texas 77840-9960 Or visit our website at http://www.cstx.gov/cafr Governmental Business-type Component Activities Activities Total Unit Assets Cash and cash equivalents 85,628,463$ 73,376,752$ 159,005,215$ 680,671$ Equity in investments 28,037,188 11,598,902 39,636,090 - Receivable (net of allow for uncollectible)9,171,875 19,566,866 28,738,741 167,097 Investment interest receivable 139,949 70,854 210,803 - Inventories 5,489,471 4,516,816 10,006,287 - Internal balance (5,651,454) 5,651,454 - - Prepaids 587,962 36,052 624,014 78,363 Restricted assets - Cash and cash equivalents 77,451,704 8,573,745 86,025,449 - Equity in investments - 2,722,948 2,722,948 - Equity in joint venture - 17,261,241 17,261,241 - Loan receivable 1,971,091 2,955,000 4,926,091 - Capital assets (net of accum depreciation) Land and construction in progress 84,811,413 47,137,811 131,949,224 - Other capital assets (net accum depreciation)229,221,984 340,050,631 569,272,615 331,336 Intangible assets (net accum amortization)- - - 22,042 Total assets 516,859,646 533,519,072 1,050,378,718 1,279,509 Deferred outflows of resources Pension 6,799,715 1,785,848 8,585,563 - OPEB 1,038,570 285,053 1,323,623 - Deferred charge on refunding 1,338,244 2,130,003 3,468,247 - Total deferred outflows of resources 9,176,529 4,200,904 13,377,433 - Liabilities and fund balances Accounts payable 9,598,259 10,861,534 20,459,793 184,692 Accrued liabilities 2,652,951 904,478 3,557,429 43,612 Interfund payable 95,331 - 95,331 - Retainage payable 989,763 1,169,811 2,159,574 - Customer construction advances 1,496,379 - 1,496,379 - Claims payable 3,483,498 - 3,483,498 - Unearned revenue 813,477 132,534 946,011 53,923 Accrued interest payable 925,277 802,525 1,727,802 - Refundable deposits 77,043 2,758,926 2,835,969 - Compensated absences - current 253,165 59,042 312,207 - Capital lease - current - - - 11,634 Current portion of long-term debt 14,750,939 12,803,496 27,554,435 - Bonds and certificate of obligation payable 175,743,869 147,630,404 323,374,273 - Compensated absences - long-term 3,071,908 716,413 3,788,321 - Capital lease - long-term - - - 23,467 Net other post employment benefits (OPEB) liability 4,938,503 1,355,473 6,293,976 - Net pension liability 21,474,086 5,621,829 27,095,915 - Total liabilities 240,364,448 184,816,465 425,180,913 317,328 Deferred inflows of resources Pension 5,418,100 1,402,674 6,820,774 - OPEB 2,423,159 665,082 3,088,241 - Total deferred inflows of resources 7,841,259 2,067,756 9,909,015 - Net position Net investment in capital assets 200,134,327 235,469,411 435,603,738 - Restricted for: Debt service 5,272,810 - 5,272,810 - Public safety 856,368 - 856,368 - Community development 2,324,659 - 2,324,659 - Tourism 12,277,170 - 12,277,170 - Capital projects 15,376,226 - 15,376,226 - Other purposes 3,613,483 17,261,241 20,874,724 1,723 Unrestricted 37,975,425 98,105,103 136,080,528 960,458 Total net position 277,830,468$ 350,835,755$ 628,666,223$ 962,181$ The notes to financial statements are an integral part of this statement. CITY OF COLLEGE STATION, TEXAS Statement of Net Position September 30, 2018 Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Business-type Activities Total Component Unit Primary government Governmental Activities Police $ 21,571,950 $ 361,803 $ 146,082 $ - $ (21,064,065) $ - $ (21,064,065)-$ Fire 19,367,032 2,467,765 804,630 - (16,094,637) - (16,094,637)- Public works 24,452,406 11,435,461 464,767 12,676,590 124,412 - 124,412 - Parks and recreation 11,727,549 1,742,638 9,140 1,779,751 (8,196,020) - (8,196,020)- Library 1,118,522 - - - (1,118,522) - (1,118,522)- Planning and development services 3,517,911 2,157,272 - - (1,360,639) - (1,360,639)- Information technology 5,027,435 - - - (5,027,435) - (5,027,435)- Fiscal services 3,795,099 3,435,452 - - (359,647) - (359,647)- General government 15,155,670 489,895 1,267,444 - (13,398,331) - (13,398,331)- Interest on long-term debt 6,075,924 - - - (6,075,924) - (6,075,924)- Total governmental activities 111,809,498 22,090,286 2,692,063 14,456,341 (72,570,808) - (72,570,808)- Business-type activities Electric Fund 78,029,786 105,341,740 - 1,097,232 - 28,409,186 28,409,186 - Water Fund 14,041,059 16,843,347 - 4,251,724 - 7,054,012 7,054,012 - Wastewater Fund 13,170,661 17,882,386 - 4,165,114 - 8,876,839 8,876,839 - Sanitation Fund 8,554,011 9,632,481 1,542,900 548,830 - 3,170,200 3,170,200 - Northgate Parking Fund 1,061,336 1,379,287 - - - 317,951 317,951 - Total business-type activities 114,856,853 151,079,241 1,542,900 10,062,900 - 47,828,188 47,828,188 - Total primary government $ 226,666,351 $ 173,169,527 $ 4,234,963 $ 24,519,241 $ (72,570,808) $ 47,828,188 $ (24,742,620) $ - Component Unit activities Brazos Valley Convention and Visitors Bureau $ 2,214,418 $ - $ 2,254,289 $ - $ 39,871 $ - $ - 39,871$ Total component unit activities $ 2,214,418 $ - $ 2,254,289 $ - $ 39,871 $ - $ - 39,871$ 43,492,512 - 43,492,512 - 28,799,040 - 28,799,040 - 9,392,804 - 9,392,804 - 2,476,318 1,444,135 3,920,453 - 14,544,135 (14,544,135) - - 98,704,809 (13,100,000) 85,604,809 - 26,134,001 34,728,188 60,862,189 39,871 251,526,260 318,079,245 569,605,505 922,310 Prior period adjustment 170,207 (1,971,678) (1,801,471)- $ 277,830,468 $ 350,835,755 $ 628,666,223 $ 962,181 Other taxes CITY OF COLLEGE STATION, TEXAS Statement of Activities For the Year Ended September 30, 2018 Net (Expense) Revenue and Changes in Net Position Program Revenues Primary Government General revenues Property taxes Sales taxes Net position - ending The notes to financial statements are an integral part of this statement. Unrestricted investment earnings Transfers Total general revenues, special items, and transfers Change in net position Net position - beginning General Debt Service General Government Projects Streets Projects Other Governmental Funds Total Governmental Funds Assets Cash and cash equivalents $ 21,315,690 $ 4,492,295 $ 35,675,870 $ 37,299,201 $ 39,691,243 $ 138,474,299 Equity in investments 3,683,863 776,637 6,167,716 6,293,625 6,861,902 23,783,743 Receivable (net of allow for uncollectible) 7,413,536 173,210 - 360,213 896,336 8,843,295 Investments interest receivable 18,187 3,878 30,804 32,085 33,765 118,719 Inventories 44,764 - - - 5,326,560 5,371,324 Prepaid costs 583,754 - - - 1,708 585,462 Loan receivable 95,331 - - - 1,960,079 2,055,410 Total assets $ 33,155,125 $ 5,446,020 $ 41,874,390 $ 43,985,124 $ 54,771,593 $ 179,232,252 Liabilities Accounts payable $ 1,306,762 $ - $ 1,566,242 $ 3,872,690 $ 2,410,237 $ 9,155,931 Accrued liabilities 2,494,811 - - - 54,111 2,548,922 Interfund payable 95,331 - - - - 95,331 Retainage payable 11,815 - 71,729 744,643 161,576 989,763 Customer construction advances 1,496,379 - - - - 1,496,379 Refundable deposits 77,043 - - - - 77,043 Total liabilities 5,482,141 - 1,637,971 4,617,333 2,625,924 14,363,369 Deferred inflows of resources Unavailable revenue-loans receivable - - - - 1,960,079 1,960,079 Unavailable revenue-property taxes 216,179 173,210 - - - 389,389 Unavailable revenue-other 666,236 - - 174,516 49,669 890,421 Total deferred inflow of resources 882,415 173,210 - 174,516 2,009,748 3,239,889 Fund balances Nonspendable 628,518 - - - - 628,518 Restricted - 5,272,810 40,236,419 39,193,275 30,832,562 115,535,066 Committed - - - - 19,303,359 19,303,359 Assigned 2,128,177 - - - - 2,128,177 Unassigned 24,033,874 - - - - 24,033,874 Total fund balances 26,790,569 5,272,810 40,236,419 39,193,275 50,135,921 161,628,994 Total liabilities, deferred inflows of resources, and fund balances $ 33,155,125 $ 5,446,020 $ 41,874,390 $ 43,985,124 $ 54,771,593 $ 179,232,252 The notes to financial statements are an integral part of this statement. CITY OF COLLEGE STATION, TEXAS Balance Sheet Governmental Funds September 30, 2018 Total fund balance per balance sheet:161,628,994$ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources, therefore are not reported in the governmental funds balance sheet 303,233,717 Deferred outflows of resources not reported in governmental funds: Pension contributions after measurement date 4,360,142 Difference in projected and actual earnings - pension 1,310,831 Difference in expected and actual experience - pension 1,128,742 OPEB contributions after measurement date 1,038,570 Deferred charges on debt refundings 1,338,244 9,176,529 Deferred inflows of resources not reported in the governmental funds: Difference in expected and actual experience - pension 5,204,782 Difference in projected and actual earnings - pension 213,318 Difference in projected and actual earnings - OPEB 1,252 Difference in expected and actual experience - OPEB 478,157 Difference in assumption changes - OPEB 1,943,750 (7,841,259) Long-term liabilities are not due and payable in the current period, therefore are not reported in the governmental funds balance sheet. Due within one year (14,992,510)$ Due in more than one year (203,785,308) (218,777,818) Interest payable on long-term debt does not require current financial resources and is not reported in the governmental funds balance sheet.(925,277) Allowance for potentially forgiven loans receivable (84,319) Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds 2,426,412 Internal service funds are used by management to charge the costs of certain activities, such as insurance, fleet maintenance, and equipment replacement to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities of the government-wide statements of net position (net of the amount allocated to business-type activities). Assets 40,129,450 Liabilities (5,484,507) Net amount allocated to business-type activities (5,651,454) 28,993,489 Net position of governmental activities 277,830,468$ The notes to the financial statements are an integral part of this statement. CITY OF COLLEGE STATION, TEXAS Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position September 30, 2018 General Debt Service General Government Projects Streets Projects Other Governmental Funds Total Governmental Funds Revenues Ad valorem taxes $ 24,073,003 $ 19,089,647 $ - $ - $ 248,885 $ 43,411,535 Sales taxes 28,799,040 - - - - 28,799,040 Other taxes 3,457,485 - - - 5,935,319 9,392,804 Licenses and permits 1,772,959 - - - - 1,772,959 Intergovernmental 910,169 - - 464,767 1,309,766 2,684,702 Charges for services 3,940,837 - - - 7,360,945 11,301,782 Fines, forfeits, and penalties 3,211,536 - - - 168,137 3,379,673 Investment income 449,880 126,466 604,689 699,318 595,965 2,476,318 Rents and royalties 219,538 - - - - 219,538 Contributions 7,361 - - - 1,816,331 1,823,692 Other 642,547 - - 152,800 2,468,319 3,263,666 Total revenues 67,484,355 19,216,113 604,689 1,316,885 19,903,667 108,525,709 Expenditures Police 22,631,648 - - - 20,888 22,652,536 Fire 19,624,919 - - - - 19,624,919 Public works 9,575,300 - - 694 5,321,442 14,897,436 Parks and recreation 9,129,079 - - - 881,600 10,010,679 Library 1,118,522 - - - - 1,118,522 Planning and development services 3,740,969 - - - 114,175 3,855,144 Information technology 4,488,885 - - - - 4,488,885 Fiscal services 3,954,488 - - - 200,443 4,154,931 General government 6,165,016 - 20,531 - 3,884,725 10,070,272 Contributions 1,380,580 - - - 3,526,538 4,907,118 Capital outlay 319,406 - 4,464,298 21,617,209 6,078,826 32,479,739 Debt service Principal retirement - 12,435,000 - - - 12,435,000 Interest on long-term debt - 7,024,474 - - - 7,024,474 Debt issuance costs - 9,719 37,177 129,434 63,210 239,540 Total expenditures 82,128,812 19,469,193 4,522,006 21,747,337 20,091,847 147,959,195 Excess (deficit) of revenues over (under) expenditures (14,644,457) (253,080) (3,917,317) (20,430,452) (188,180) (39,433,486) Other financing sources (uses) Issuance of bonds - - 2,950,000 10,275,000 5,005,000 18,230,000 Premium on bonds issued - - 141,532 481,018 268,644 891,194 Transfers in 19,245,943 464,453 1,592,914 - - 21,303,310 Transfers out (3,031,702) - (193,371) (707,618) (3,693,813) (7,626,504) Total other financing source (uses) 16,214,241 464,453 4,491,075 10,048,400 1,579,831 32,798,000 Net change in fund balances 1,569,784 211,373 573,758 (10,382,052) 1,391,651 (6,635,486) Fund balances - beginning 22,514,523 5,061,437 39,662,661 49,575,327 48,744,270 165,558,218 Prior period adjustment 2,706,262 - - - - 2,706,262 Fund balances - ending $ 26,790,569 $ 5,272,810 $ 40,236,419 $ 39,193,275 $ 50,135,921 $ 161,628,994 The notes to financial statements are an integral part of this statement. CITY OF COLLEGE STATION, TEXAS Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended September 30, 2018 Net change in fund balance - total governmental funds (6,635,486)$ Amounts reported for governmental activities in the statement of activities differ as a result of the following: Governmental funds report capital outlays as expenditures. However, in the government-wide statement of activities the cost of those assets are allocated over their estimated useful lives as depreciation expense. This is the amount of capital assets recorded in the current period.32,479,739 Governmental funds do not recognize contributed capital assets. However, in the statement of activities the fair market value of those assets are recognized as revenue, then allocated over their estimated useful lives and reported as depreciation expense.12,640,010 Depreciation expense on capital assets is reported in the statement of activities but does not require the use of current financial resources. Therefore, depreciation expense is not reported as expenditures in the governmental funds.(15,558,900) In the governmental fund financial statements the proceeds from sale of assets are shown as an increase in financial resources. In the government-wide financial statements, the gain or loss is calculated and reported.(22,578) Governmental funds do not recognize the total amount of expense recognized in the government-wide statement of activities related to the sale of redevelopment home properties.(22,242) Some property tax and loan revenues will not be collected for several months after the City's fiscal year end. These are not considered "available" revenues in the governmental funds until received. 2,232,614 Amortization of deferred charges as the result of debt refundings and bond premiums or discounts are reported in the government-wide statement of activities but does not require the use of current financial resources. Therefore, amortized expense is not reported as an expenditure in governmental funds.948,550 The issuance of long-term debt (i.e., 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 position. Certificates of Obligation issued (18,230,000)$ Bond principal retirement 12,435,000 (5,795,000) Long-term estimated liabilities are recognized as expenses in the Statement of Activities but are recognized when current financial resources are used in the government funds. Changes in these long term liabilities are as follows: Compensated absences (249,741) Net pension liability (937,762) Net Other post employment benefits liability 5,801,001 4,613,498 Bond premiums are recognized as an other financing source in the governmental funds, but are combined with bond liabilities on the statement of net position. Premiums are amortized over the life of the bonds.(891,194) Internal service funds are used by management to charge the costs of certain activities, such as insurance, fleet maintenance, and equipment replacement to individual funds. The net revenue of the internal service funds is reported with governmental activities net of the amount allocated to business-type activities. Change in net position 2,687,607 Net amount allocated to business activities (542,617) Change in net position of governmental activities 26,134,001$ The notes to the financial statements are an integral part of this statement. CITY OF COLLEGE STATION, TEXAS Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended September 30, 2018 Governmental Activities Electric Water Wastewater Other Enterprise Funds Total Enterprise Funds Internal Service Funds Assets Current assets Cash and cash equivalents $ 40,721,866 $ 8,885,176 $ 21,644,889 $ 2,124,821 $ 73,376,752 $ 24,605,868 Equity in investments 6,326,154 1,017,663 3,888,345 366,740 11,598,902 4,253,445 Restricted assets Cash and cash equivalents 5,370,396 2,928,152 275,197 - 8,573,745 - Equity in investments 1,645,917 1,077,031 - - 2,722,948 - Receivable (net of allow for uncollectible) 14,088,110 2,198,796 2,020,688 1,259,272 19,566,866 328,580 Loan Receivable - - - 230,000 230,000 Investments interest receivable 39,792 10,236 18,995 1,831 70,854 21,230 Inventories 3,910,228 546,632 30,629 29,327 4,516,816 118,147 Prepaid costs 22,010 6,167 6,167 1,708 36,052 2,500 Total current assets 72,124,473 16,669,853 27,884,910 4,013,699 120,692,935 29,329,770 Noncurrent assets Equity in joint venture - - - 17,261,241 17,261,241 - Loan receivable - - - 2,725,000 2,725,000 - Capital assets Utility plant 222,867,320 200,384,764 156,465,789 - 579,717,873 - Buildings - - - 6,349,242 6,349,242 786,525 Machinery and equipment - - - 7,122,744 7,122,744 26,028,488 Less accumulated depreciation (106,344,533) (71,407,868) (68,491,592) (6,895,235) (253,139,228) (16,015,333) Construction in progress 17,181,902 11,489,375 17,775,318 466 46,447,061 - Land - - - 690,750 690,750 - Total capital assets 133,704,689 140,466,271 105,749,515 7,267,967 387,188,442 10,799,680 Total noncurrent assets 133,704,689 140,466,271 105,749,515 27,254,208 407,174,683 10,799,680 Total assets 205,829,162 157,136,124 133,634,425 31,267,907 527,867,618 40,129,450 Deferred outflows of resources Deferred charge on refunding 873,444 740,500 187,293 328,766 2,130,003 - Pension 854,200 317,622 308,198 305,828 1,785,848 307,361 OPEB 104,800 51,700 68,469 60,084 285,053 60,088 Total deferred outflows of resources 1,832,444 1,109,822 563,960 694,678 4,200,904 367,449 Total assets and deferred outflows of resources 207,661,606 158,245,946 134,198,385 31,962,585 532,068,522 40,496,899 Liabilities Current liabilities Accounts payable 7,947,320 1,046,811 1,522,451 344,952 10,861,534 442,328 Accrued liabilities 506,735 114,226 110,444 173,073 904,478 104,029 Unearned revenue - - - 132,534 132,534 - Compensated absences 26,151 10,772 12,826 9,293 59,042 11,594 Retainage payable 141,498 590,455 437,858 - 1,169,811 - Claims payable - - - - - 3,483,498 Accrued interest payable 285,933 262,553 236,111 17,928 802,525 - Refundable deposits 2,490,543 249,083 19,300 - 2,758,926 - Certificates of obligation 2,435,213 1,801,105 1,505,216 230,000 5,971,534 - General obligation bonds 1,850,385 2,748,251 1,988,918 244,408 6,831,962 - Total current liabilities 15,683,778 6,823,256 5,833,124 1,152,188 29,492,346 4,041,449 Noncurrent liabilities Certificates of obligation 32,260,337 27,033,560 32,348,820 490,000 92,132,717 - General obligation bonds 20,839,480 21,892,876 10,005,801 2,759,530 55,497,687 - Compensated absences 317,314 130,705 155,632 112,762 716,413 140,679 Post employment benefits 498,336 245,845 325,579 285,713 1,355,473 285,712 Net pension liability 2,663,863 1,004,434 959,914 993,618 5,621,829 1,016,667 Total noncurrent liabilities 56,579,330 50,307,420 43,795,746 4,641,623 155,324,119 1,443,058 Total liabilities 72,263,108 57,130,676 49,628,870 5,793,811 184,816,465 5,484,507 Deferred inflows of resources Pension 680,956 238,319 270,915 212,484 1,402,674 202,440 OPEB 244,516 120,627 159,751 140,188 665,082 140,191 Total deferred inflows of resources 925,472 358,946 430,666 352,672 2,067,756 342,631 Total liabilities and deferred inflows of resources 73,188,580 57,489,622 50,059,536 6,146,483 186,884,221 5,827,138 Net Position Net investment in capital assets 79,884,765 89,229,524 59,531,506 6,823,616 235,469,411 10,799,680 Restricted for BVSWMA Investment - - - 17,261,241 17,261,241 - Unrestricted 54,588,261 11,526,800 24,607,343 1,731,245 92,453,649 23,870,081 Total net position $ 134,473,026 $ 100,756,324 $ 84,138,849 $ 25,816,102 345,184,301 $ 34,669,761 Adjustment to reflect the consolidation of internal services fund activities related to enterprise funds 5,651,454 Net position of business-type activities 350,835,755$ The notes to financial statements are an integral part of this statement. CITY OF COLLEGE STATION, TEXAS Statement of Net Position Proprietary Funds September 30, 2018 Business-type Activities Governmental Activities Electric Water Wastewater Other Enterprise Funds Total Enterprise Funds Internal Service Funds Operating revenues Charges for services $ 102,511,712 $ 16,119,429 $ 17,482,702 $ 10,616,137 $ 146,729,980 $ 11,894,699 Fines, forfeits, and penalties - - - 300,551 300,551 - Premiums - - - - - 14,371,014 Rents and royalties - 4,269 - - 4,269 - Other 2,349,369 155,775 15,191 53,011 2,573,346 482,261 Total operating revenue 104,861,081 16,279,473 17,497,893 10,969,699 149,608,146 26,747,974 Operating expenses Electric operations 66,041,602 - - - 66,041,602 - Salaries and benefits - 2,751,019 2,624,323 2,541,961 7,917,303 2,886,753 Supplies - 698,490 627,508 452,644 1,778,642 1,203,916 Maintenance - 133,656 211,296 760,891 1,105,843 49,225 Purchased professional services - 388,023 129,610 1,097,445 1,615,078 756,977 Purchased property services - 1,435,614 1,156,421 1,406,641 3,998,676 53,963 Other purchased services - 319,964 476,820 1,916,163 2,712,947 1,043,414 Claims - - - - - 11,380,948 Administration fees - - - - - 221,723 Contributions - - - - - 1,595,143 Premiums - - - - - 1,597,448 Depreciation 7,513,022 5,219,455 5,728,788 1,176,424 19,637,689 2,763,309 Other 541,807 216,040 75,880 78,525 912,252 1,015,496 Total operating expenses 74,096,431 11,162,261 11,030,646 9,430,694 105,720,032 24,568,315 Operating income 30,764,650 5,117,212 6,467,247 1,539,005 43,888,114 2,179,659 Nonoperating revenues (expenses) Investment income 692,373 231,966 338,212 181,584 1,444,135 427,036 Gain (loss) on disposal of assets (261,738) (189,866) (600,201) - (1,051,805) 140,181 Earnings in joint venture - - - 1,542,900 1,542,900 - Interest payments (2,205,963) (2,168,794) (1,555,232) (203,903) (6,133,892) - Debt issuance cost (80,059) (42,606) (118,755) - (241,420) - Other, net (1,004,224) 58,851 387,204 (223,057) (781,226) (926,598) Total nonoperating revenues (expenses) (2,859,611) (2,110,449) (1,548,772) 1,297,524 (5,221,308) (359,381) Income before capital contributions and transfers 27,905,039 3,006,763 4,918,475 2,836,529 38,666,806 1,820,278 Capital contributions and transfers Capital contributions 1,097,232 4,251,724 4,165,114 548,830 10,062,900 - Transfers in 1,793,420 1,554 (241,155) - 1,553,819 928,674 Transfers out (9,647,251) (2,741,312) (2,030,897) (1,678,494) (16,097,954) (61,345) Total capital contributions and transfers (6,756,599) 1,511,966 1,893,062 (1,129,664) (4,481,235) 867,329 Change in net position 21,148,440 4,518,729 6,811,537 1,706,865 34,185,571 2,687,607 Net position - beginning 114,493,282 96,466,765 77,585,932 24,424,429 32,260,709 Prior period adjustment (1,168,696) (229,170) (258,620) (315,192) (1,971,678) (278,555) Net position - ending $ 134,473,026 $ 100,756,324 $ 84,138,849 $ 25,816,102 $ 34,669,761 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 542,617 Change in net position of business-type activities $ 32,756,510 The notes to financial statements are an integral part of this statement. CITY OF COLLEGE STATION, TEXAS Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the Year Ended September 30, 2018 Business-type Activities Governmental Activities Other Total Internal Enterprise Enterprise Service Electric Water Wastewater Funds Funds Funds Cash flows from operating activities: Cash received from customers 103,712,433$ 15,955,362$ 17,359,487$ 10,801,913$ 147,829,195$ 26,480,224$ Cash payments to suppliers for goods and services (60,281,908) (2,106,396) (2,143,118) (5,428,324) (69,959,746) (15,125,962) Cash payments to employees for services (8,336,884) (3,412,547) (3,380,318) (3,150,227) (18,279,976) (3,493,371) Customer deposits received (returned)(369,311) (49,243) 3,330 - (415,224) - Cash paid for miscellaneous services (541,807) (216,040) (75,880) (78,525) (912,252) (2,834,667) Cash received for miscellaneous revenues 1,499,146 - - - 1,499,146 - Net cash provided (used) by operating activities 35,681,669 10,171,136 11,763,501 2,144,837 59,761,143 5,026,224 Cash flows from noncapital financing activities: Cash (paid) for received from miscellaneous non operating services (1,004,224) 4,318 387,204 (223,055) (835,757) 146,974 Transfers in from other funds 1,793,420 1,554 (241,155) - 1,553,819 928,674 Transfers out to other funds (9,647,250) (2,741,312) (2,030,897) (1,678,494) (16,097,953) (61,345) Net cash provided (used) by noncapital financing activities (8,858,054) (2,735,440) (1,884,848) (1,901,549) (15,379,891) 1,014,303 Cash flows from capital and related financing activities: Acquisition and construction of capital assets (13,647,207) (15,002,937) (16,140,251) (687,429) (45,477,824) (2,393,053) Capital grants and contributions 1,097,232 4,251,724 4,165,114 548,830 10,062,900 - Proceeds from sale of assets 8,697 14,931 27,886 - 51,514 207,697 BVSWMA loan payments received 445,000 445,000 - Bond Issuance Costs (80,059) (42,606) (118,755) - (241,420) - Proceeds received from the issuance of certificates of obligation 6,381,157 3,612,981 10,119,792 - 20,113,930 - Principal paid on certificates of obligation and general obligation bonds (3,705,000) (3,955,000) (3,030,000) (425,000) (11,115,000) - Interest paid on certificates of obligation and general obligation bonds (2,205,963) (2,168,794) (1,555,231) (203,903) (6,133,891) - Net cash provided (used) by capital and related financing activities (12,151,143) (13,289,701) (6,531,445) (322,502) (32,294,791) (2,185,356) Cash flows from investing activities: Purchase of investments (4,251,833) (452,371) (1,738,310) (133,047) (6,575,561) (2,825,495) Proceeds from sale and maturities of investment securities 429,243 450,698 221,678 22,043 1,123,662 247,985 Investment income 664,120 227,551 325,812 180,464 1,397,947 413,453 Net cash provided (used) by investing activities (3,158,470) 225,878 (1,190,820) 69,460 (4,053,952) (2,164,057) Net increase (decrease) in cash and cash equivalents 11,514,002 (5,628,127) 2,156,388 (9,754) 8,032,509 1,691,114 Cash and cash equivalents, Oct. 1 34,578,260 17,441,455 19,763,698 2,134,575 73,917,988 22,914,754 Cash and cash equivalents, Sept. 30 46,092,262$ 11,813,328$ 21,920,086$ 2,124,821$ 81,950,497$ 24,605,868$ Reconciliation of operating income to net cash Provided by operating activities: Operating income 30,764,649$ 5,117,212$ 6,467,247$ 1,539,005$ 43,888,113$ 2,179,659$ Adjustment to reconcile operating income to net cash provided (used) by operating activities: Depreciation 7,513,022 5,219,455 5,728,788 1,176,424 19,637,689 2,763,309 Amortization of Bond Premium (Discount)(434,117) (507,869) (345,955) (34,408) (1,322,349) - Bad debt expense 475,426 33,781 74,700 38,637 622,544 - Inventory loss 65,904 2,086 (702) 8,262 75,550 - (Increases) decreases in assets and deferred outflows: Change in accounts receivable (1,416,615) (357,892) (189,801) (216,183) (2,180,491) (267,750) Change in inventory (989,859) (130,828) 3,274 (19,913) (1,137,326) 5,650 Change in prepaids (22,010) (6,167) (6,167) (1,708) (36,052) - Change in deferred outflow on pensions 310,170 116,981 115,873 106,729 649,753 103,384 Change in deferred outflow on OPEB (104,800) (51,700) (68,469) (60,084) (285,053) (60,088) Change in deferred charge on refunding 116,578 111,631 38,900 (179,592) 87,517 - Increases (decreases) in liabilities and deferred inflows: Change in accounts payable 473,538 669,823 137,849 119,646 1,400,856 (595,709) Change in retainage payable 19,447 322,905 157,169 - 499,521 - Change in unearned revenues / claims payable 20,769 20,769 1,230,129 Change in refundable deposits (369,311) (49,243) 3,330 - (415,224) - Change in accrued liabilities (19,379) 10,273 13,405 20,292 24,591 10,323 Change in accrued vacation (1,537) 12,444 2,245 (6,863) 6,289 16,428 Change in accrued interest payable 12,846 (15,681) 39,857 (5,024) 31,998 - Change in OPEB (761,030) (375,442) (497,207) (436,323) (2,070,002) (436,322) Change in net pension liability (1,478,412) (538,148) (533,053) (490,994) (3,040,607) (475,602) Change in deferred inflow on pensions 1,282,643 466,888 462,467 425,977 2,637,975 412,622 Change in deferred inflow on OPEB 244,516 120,627 159,751 140,188 665,082 140,191 Total adjustments 4,917,020 5,053,924 5,296,254 605,832 15,873,030 2,846,565 Net cash provided (used) by operating activities 35,681,669$ 10,171,136$ 11,763,501$ 2,144,837$ 59,761,143$ 5,026,224$ Noncash investing, capital and financing activities: For the fiscal year ended September 30, 2018, the City of College Station's Enterprise funds received $8,676,165 of noncash capital contributions from developers and assets with a net value of $837,905 from the Governmental Activities. Reconciliation of total cash and cash equivalents: Current assets - cash and cash equivalents 40,721,866$ 8,885,176$ 21,644,889$ 2,124,821$ 73,376,752 24,605,868$ Restricted assets - cash and cash equivalents 5,370,396 2,928,152 275,197 - 8,573,745 - Total cash and cash equivalents 46,092,262$ 11,813,328$ 21,920,086$ 2,124,821$ 81,950,497$ 24,605,868$ The notes to the financial statements are an integral part of this statement. Business-type Activities - Enterprise Funds CITY OF COLLEGE STATION, TEXAS Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended September 30, 2018 Assets Investments 1,521,285$ Total Assets 1,521,285 Liabilities Payables - Total liabilities - Net position restricted for postemployment benefits other than pensions 1,521,285$ The notes to the financial statements are an integral part of this statement. CITY OF COLLEGE STATION, TEXAS Statement of Net Position Fiduciary Funds December 31, 2017 Other Post Employment Benefit (OPEB) Trust Additions Employer contributions 2,081,852$ Investment earnings Net increase in fair value of investments - Interest and dividends 266 Net investment income 28,112 Total additions 2,110,230 Deductions Benefit payments 588,043 Administrative expenses 902 Total deductions 588,945 Net position restricted for postemployment benefits other than pensions Net Position - Beginning 1,474,075 Prior Period Adjustment (1,474,075) Net Position - 12/31/2017 1,521,285$ The notes to the financial statements are an integral part of this statement. CITY OF COLLEGE STATION, TEXAS Statement of Changes in Net Position Fiduciary Funds For the Measurement Period Ended December 31, 2017 Other Post Employment Benefit (OPEB) Trust City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Reporting Entity The City of College Station, Texas (“City”) was incorporated in 1938 as a municipal corporation incorporated under the provisions of H.B. 901 of the Texas Legislature. The City operates under a Council- Manager form of government and provides such services as authorized by its charter to advance the welfare, health, comfort, safety and convenience of the City and its inhabitants. The accompanying financial statements present the City and its component unit, which is an entity for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City’s operations and are appropriately presented as funds of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government-wide financial statements to emphasize that they are legally separate from the City. Based on these criteria, the financial information of the following entities has been blended or discretely presented within the financial statements. The accounting and reporting policies of the City relating to the funds included in the accompanying basic financial statements conform to accounting principles generally accepted in the United States of America (GAAP) applicable to state and local governments. Generally accepted accounting principles for local governments include those principles prescribed by the Governmental Accounting Standards Board (GASB), the American Institute of Certified Public Accountants in the publication entitled State and Local Governments-Audit and Accounting Guide, and by the Financial Accounting Standards Board (when applicable). Blended Component Units On February 2, 2017, the City Council approved the formation of a public non-profit corporation to assist with economic development efforts and oversee the implementation of the Spring Creek Corporate Campus. The Spring Creek Local Government Corporation (Spring Creek LGC) promotes, develops, and encourages employment and economic development to be anchored by the City of College Station’s next business park. The corporation is governed by a Board of Directors appointed by the City Council, with the initial board consisting of five Directors. The Mayor serves as President and the remaining directors are City officers or residents who have special expertise that would be beneficial to the corporation. A total of three City Council members are on the Board of Directors of Spring Creek LGC. The corporation has the power to acquire, own, and dispose of real estate subject to the approval of the City Council. Since the elected officials of the City are financially accountable for Spring Creek LGC, and the primary purpose of the entity is to provide a service to the City, Spring Creek LGC is considered a blended component unit. Spring Creek LGC is located in the Supplementary Information Section as part of the General Fund(s) Statements. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Discretely Presented Component Units The Brazos Valley Convention & Visitors Bureau d/b/a Experience Bryan College Station, is a non-profit corporation originally formed to market events within the Bryan-College Station area. The primary purpose of the entity is to provide a service to the Cities of both Bryan and College Station by marketing tourist events. This 18 board members included elected officials, hoteliers, and business owners, representatives from Texas A&M University, the local media, and tourist attractions. On August 29, 2017, Experience BCS adopted a new set of bylaws that restructured the makeup of the board, cutting its size from eighteen members to nine members. Under the new bylaws, six of the nine Experience BCS’s board of directors are appointed by and serve at the discretion of the College Station City Council. The members of the new board were ratified by Experience BCS at its board meeting on October 30, 2017. The City of College Station, along with the City of Bryan, now also directs and approves the marketing work plan of the entity based on changes to the annual funding agreement. The new annual funding agreement was executed November 8, 2017. Based on the control and funding changes at Experience BCS that occurred in October and November 2017, as well as the City’s existing financial accountability for the entity, Experience BCS and its financial statements is disclosed as a discretely presented component unit. As a discretely presented component unit, Experience BCS will be separately presented in both the Statement of Net Position and Statement of Activities and complete financial statement information will be made publicly available from the Experience BCS entity. Fiduciary Fund The Other Post Employment Benefit (OPEB) Trust Fund reports resources that are held in trust for the members and beneficiaries of the City’s other postemployment benefit plan. These assets are excluded from the government-wide financial statements as they cannot be used to support the government's own programs. Cooperative Efforts In January 2010, the City of College Station entered into an Interlocal Cooperation Agreement with the City of Bryan to create a local government corporation under Subchapter D of Chapter 431, Texas Transportation Code, to be known as the Brazos Valley Solid Waste Management Agency, Inc. (BVSWMA, Inc.). The purpose of this Corporation is to finance, construct, own, manage, and operate the existing and future municipal solid waste landfill facilities on behalf of the two cities. The City’s one-half undivided interest in BVSWMA, Inc. is reported in the Sanitation Fund (see Note 21). Government-Wide and Fund Financial Statements The government-wide financial statements (e.g., the Statement of Net Position and the Statement of Activities) report information on all of the activities of the City. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to the general rule are payments-in-lieu-of taxes, payments for use of rights-of-way, and other charges between the City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 City’s electric, water, and wastewater functions and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Interfund services provided and used are not eliminated in the process of consolidation for government-wide financial statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses for a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. In fund financial statements (the Governmental Funds Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances; the Proprietary Funds Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, and Statement of Cash Flows; and the Fiduciary Fund Statement of Net Position and Statement of Changes in Net Position), the City segregates transactions related to certain functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Separate financial statements are presented for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Non-major funds are aggregated and presented in a single column in the appropriate governmental fund and proprietary fund statements. Governmental funds are those funds through which most governmental functions are typically financed. The City reports the following major governmental funds: The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. All general tax revenues and other receipts that are not restricted by law or contractual agreement to some other fund are accounted for in this fund. General operating expenditures, fixed charges and capital improvement costs that are not paid through other funds are paid from the General Fund. The Debt Service Fund accounts for the financial resources that are restricted, committed, or assigned to expenditure for the payment of principal and interest on long-term debt paid primarily from taxes levied by the City. Financial resources that are being accumulated from principal and interest in future years are also reported in the Debt Service Fund. The General Government Projects Fund accounts for the cost of new building construction, building improvements, technology, and equipment made with funds provided by proceeds from the sale of general obligation bonds, certificates of obligation, and other funding sources. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 The Streets Projects Fund accounts for the costs of new street construction, street and transportation improvements, and traffic signalization made with funds provided primarily by proceeds from the sale of general obligation bonds and sale of certificates of obligation and by investing those proceeds. Proprietary funds include enterprise and internal service funds and are accounted for using the economic resources measurement focus and the accrual basis of accounting. The accounting objectives are a determination of net income, financial position, and cash flow. All assets and liabilities are included in the Statement of Net Position. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services in connection with the fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds are charges for customer services including electric, water, wastewater, and solid waste fees, while internal service funds’ revenues are for equipment purchase transactions, utility customer service, and risk management charges. Operating expenses for enterprise funds and internal service funds include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. At fiscal year-end, the City accrues estimated unbilled revenues (excluding fuel expense) for electric, water, and wastewater customers. The City reports the following major proprietary funds: The Electric Fund accounts for the activities necessary to provide electric services to the residents of the City within the City’s service territory. These activities include administration, distribution system operations and maintenance, transmission system operations and maintenance, new construction, and financing and related debt services. Billing and collection services are accounted for as an internal service fund. The Water Fund accounts for the activities necessary to provide water services to the residents of the City within the City’s service territory. These activities include administrative services, water production and distribution system operation and maintenance, new construction, and financing and related debt services. Billing and collection services are accounted for as an internal service fund. The Wastewater Fund accounts for the activities necessary to provide wastewater services to the residents of the City. These activities include administrative services, wastewater system operation and maintenance, new construction, and financing and related debt services. Billing and collection services are accounted for as an internal service fund. The City reports the following other fund types: Internal Service Funds account for activities related to the administration of health insurance provided to City employees; the City’s risk management activities, including general liability, unemployment and workers’ compensation claims and associated administrative expenses on a cost reimbursement basis; utility billing and collection activities related to the City’s electric, water, and wastewater utilities and residential and commercial garbage collections; activities related to the management of City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 the City’s vehicles and heavy equipment, including preventative maintenance and vehicle repair; and activities related to the purchase and replacement of vehicles and large motorized equipment, telephone and radio systems, and technological infrastructure equipment not budgeted in other funds. Fiduciary Fund accounts for assets held in trust for the members and beneficiaries of the City’s other postemployment benefit plan. These assets are excluded from the government-wide financial statements as they cannot be used to support the government's own programs. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, and then unrestricted resources as they are needed. Measurement Focus and Basis of Accounting Measurement focus refers to the type of information a given fund presents. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. The government-wide financial statements and fund financial statements for proprietary funds and fiduciary fund are reported using the economic resources measurement focus and the accrual basis of accounting. All assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The operating statements present increases (revenues) and decreases (expenses) in net position. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are measurable when the amount of the transaction can be determined. Revenues are available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers tax revenues to be available if they are collected within sixty (60) days of the end of the current fiscal period. A one hundred twenty (120) day availability period is used for recognition of all other governmental fund revenues. Expenditures are recorded when a liability is incurred. However, debt service expenditures, as well as expenditures related to vacation, claims, and judgments are recorded only when payment is due. Property taxes are recognized as revenues in the year for which they are levied. Revenues susceptible to accrual are property taxes, franchise fees, licenses, charges for services, investment income, and intergovernmental revenues. Sales taxes collected and held by the State at year end on behalf of the City are also recognized as revenue. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. All other revenue items are considered to be measurable and available when cash is received by the City. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Assets, Liabilities, and Net Position or Equity Cash and Cash Equivalents Cash and cash equivalents are short-term, highly liquid investments that are (a) readily convertible to known amounts of cash and (b) so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Therefore, for purposes of the statement of cash flows, cash and cash equivalents (including restricted assets) includes demand accounts, investment pools, money market mutual funds, certificates of deposit, and agency securities notes with original maturities of three months or less when purchased. The City uses a pooling method to account for cash and cash equivalents. All cash, except for petty cash accounts, is deposited with the City’s depository bank in a pooled, interest bearing account or it is invested. Equity in cash and cash equivalents and interest income from pooled cash are allocated to the participating funds on a monthly basis. The amount of the allocation is determined by calculating a ratio of each fund’s equity in the pool to the total pool. Investments Investments are made in accordance with the City’s Investment Policy, which was adopted by the City Council in October 2017 for the fiscal year ending September 30, 2018. This policy is applicable to all City funds and permits investment in obligations of the U.S. Government or its agencies, repurchase agreements, commercial paper, certificates of deposit, public funds investment pools, and money market mutual funds. This policy states that the City Manager shall designate the City’s Investment Officer, with whom responsibility and authority for investment transactions resides. The investments purchased under the provisions of the Investment Policy are managed to maintain liquidity for meeting the City’s needs for cash and to limit potential market risks in periods of rising interest rates that depress the market value of securities. As a guideline, maturity of securities should not exceed five years for cash management purposes, with an optimum weighted average maturity of less than two years. Investments in securities with a maturity of more than two years are considered prudent for funds maintained for capital construction and debt service funds, if necessary to meet projected disbursement schedules. As a general guideline, the City’s cash management portfolio is designed with the objective of meeting, over the course of full market cycles, the average return on three-month U.S. Treasury bills, or the average rate of federal funds, whichever is higher. These indices are considered benchmarks for riskless investment transactions and therefore comprise a standard for the portfolio’s rate of return. The investment program seeks to augment rates of return above this level. In a diversified portfolio, measured losses are inevitable and must be considered within the context of the overall portfolio. The objective of investment in construction funds should at least match inflation increases in construction costs. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 State statutes authorize the City to invest in fully insured time deposits, direct debt securities of the United States or its agencies, and fully collateralized repurchase agreements. The repurchase agreements must be purchased pursuant to a master repurchase agreement, which specifies that the transaction be held in a safekeeping account subject to the control and custody of the City. Investments in security repurchase agreements may be made only with the City’s depository bank, with state or national banks domiciled in the state of Texas, or with securities dealers reporting to the Federal Reserve Bank of New York (“Primary Dealers”). All securities are purchased delivery versus payment and are held in the City’s name in a safekeeping account at The Bank of New York. The City uses a pooling method to account for investments. Investments of all funds may consist of Agency securities, money market mutual funds, certificates of deposit, and investments in public funds investment pools. Equity in investments and interest income from the investment pool is allocated to the participating funds on a monthly basis and is determined by calculating a ratio of each fund’s equity in the investment pool to the total pool. Investments are stated at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, GASB Statement No. 72, Fair Value Measurement and Application, GASB Statement No. 59, Financial Instruments Omnibus, and GASB Statement No. 79, Certain External Investment Pools and Pool Participants. Additional information related to investments can be found in Note 7. The City of College Station also has an irrevocable trust relating to its OPEB obligations. The investment strategy for this trust will be dictated by the City’s Investment Committee. This trust does not fall under the Texas Public Funds Investment Act. Inventories Inventories include stock and parts that are on hand and will be utilized in conducting business within the next year. All inventories are valued at cost, using the average cost method. Inventories owned by the Enterprise and Internal Service Funds are accounted for using the consumption method (an expense is recorded when the inventory item is used). Inventories also include cemetery plots, which are in the governmental funds. City ordinance stipulates the percentage of cemetery plot sales to be allocated to the operational fund. These assets held for resale are in the non-major governmental Cemetery funds and are accounted for using the purchase method. Prepaids Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items using the purchases method in both government-wide and fund financial statements. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Interfund Transactions and Receivables and Payables Short-term amounts owed between funds are classified as “Interfund receivable and Interfund payable”. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances”. Transactions between Funds Authorized transfers are treated as interfund transfers and are included in the results of both governmental and proprietary funds. The City allocates to the proprietary funds a percentage of administrative costs paid through the general fund, internal service funds, and other governmental funds. Restricted Assets Proceeds of general obligation bonds and certificates of obligations are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. In addition, customer utility deposits are classified as restricted assets because the deposit remains the property of the customer and is not available for operations. Investment in Joint Venture The Proprietary Funds’ investment in joint venture is recorded using the equity method of accounting. Required disclosures concerning the joint venture are presented in Note 21. Capital Assets Capital assets include property, plant, equipment, and infrastructure assets reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of three years. Assets are recorded at historical cost or estimated historical cost if purchased or constructed. To the extent the construction is performed by the City, the cost includes payroll and related costs and certain general and administrative expenses. Interest is not capitalized during construction of capital assets. Donated capital assets are recorded at estimated acquisition cost on the date of donation. Repairs and maintenance are recorded as expenses. Renewals and betterments are capitalized. Assets owned by the electric utility are capitalized in accordance with Federal Energy Regulatory Commission (FERC) guidelines. The costs of normal maintenance and repairs for electric, water, and wastewater utilities that do not add to the value of the assets or materially extend the asset’s useful life are not capitalized. Interest is not capitalized in these accounts because interest is recovered concurrently in the proprietary fund rate structure. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Depreciation of all assets is recorded and calculated using the straight-line method over the following estimated useful lives: Electric system 1-50 Years Water system 2-50 Years Wastewater system 2-50 Years Infrastructure 10-50 Years Buildings and building improvements 5-50 Years Land improvements 10-45 Years Machinery and equipment 5-20 Years Motor vehicles 3-12 Years Furniture, fixtures and office equipment 5-20 Years Compensated Absences The City accrues vacation when the liability is incurred. Accumulated vacation is accrued when earned in the government-wide and proprietary fund financial statements. No liability has been recorded in the governmental fund financial statements. For the governmental activities, accrued vacation is generally liquidated by the general fund. Employees are credited with vacation at rates of ten (10) to twenty (20) days per year, depending upon length of service. Carryover of unused vacation time from one year to the next is allowed for a maximum of three years. Classified employees in the police department earn vacation at the rate of 15 days (120 hours) per full year until the employee reaches 18 years of employment, at which time the rate of accrual becomes the same rate as that for other City employees. Classified employees in the fire department earn vacation at the rate of 7 shifts (168 hours) per full year until the employee reaches 18 years of employment, at which time the rate of accrual becomes a maximum of 9 shifts (216 hours) per year. Upon termination, all employees are paid for any accrued vacation not taken, up to the three year maximum. Employees who have met the overtime eligibility requirements in accordance with the Fair Labor Standards Act may choose to receive compensatory time off in lieu of overtime pay. The accrual of compensatory time is made at a rate of one and one-half times the number of eligible overtime hours and is limited to sixty (60) hours, unless otherwise specified by the employee’s department. After accruing sixty (60) hours of compensatory time off, an employee will receive overtime pay for excess hours in the designated work week. Upon termination, non-exempt employees are paid for all accrued compensatory time, up to the sixty (60) hours maximum. Employees are credited with sick leave at the rate of one day per month. There is no maximum to the number of sick days that each employee can accumulate. The City does not pay employees for unused accumulated sick leave; therefore, no liability has been recorded in the financial statements related to sick leave as unused leave is not paid at termination. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Changes in compensated absences for the year ending September 30, 2018 were as follows: Activity Type Beginning Balance Earned Paid Total Ending Balance Governmental $ 3,058,903 $ 1,884,051 $ (1,617,881) $ 3,325,073 Business-Type 769,166 438,835 (432,546) 775,455 Total $ 3,828,069 $ 2,322,886 $ (2,050,427) $ 4,100,528 Activity Type Amount Due Within One Year Amount Due Greater Than One Year Governmental $ 253,165 $ 3,071,908 Business-Type 59,042 716,413 Total $ 312,207 $ 3,788,321 Long-Term Obligations In the accompanying financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount and deferred amounts on refunding. In the Schedule of Revenue, Expenditures and Changes in Fund Balance and supplementary information schedules, bond premiums and discounts, as well as bond issuance costs are recognized during the period issued. The face amount of debt issued and premiums received on debt issuances are reported as other financing sources. Discounts on debt issuances are reported as other financing uses. Issuance costs are reported as debt service expenditures. Bond Issuance Expenses According to the financial reporting requirements of GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, bond issuance expenses are to be expensed as incurred. Issuance expenses are reported on the Statement of Activities on the Government-Wide Financial Statements for Governmental Activities in interest on long-term debt expense and on the Statement of Revenues, Expenditures, and Changes in Fund Balances in debt issuance costs. These amounts totaled $239,540 for the fiscal year ended September 30, 2018. Issuance expenses for Business-Type Activities are reported on the Statement of Revenues, Expenses and Changes in Net Position in interest expense and totaled $241,420 for the fiscal year ended September 30, 2018. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions and pension expense, information about the Fiduciary Net City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Position of the Texas Municipal Retirement System (TMRS), and additions to/deductions from TMRS’s Fiduciary Net Position have been determined on the same basis as they are reported by TMRS. For this purpose, plan contributions are recognized in the period that compensation is reported for the employee, which is when contributions are legally due. Benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Detailed information about the pension plan’s Fiduciary Net Position is available in a separately- issued TMRS financial report on the internet at www.tmrs.com. Other Post-Employment Benefits (OPEB) For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the City’s plan and additions to/deductions from City’s fiduciary net position have been determined on the same basis as they are reported by the City. For this purpose, the City recognizes benefit payments when due and payable in accordance with the benefit terms. The OPEB Plan’s investments are measured at the equivalent of Net Assets Value (NAV). Fund Equity In the fund financial statements, governmental funds report fund balance in classifications as follows: Nonspendable Fund Balance includes amounts that cannot be spent because they are not in spendable form. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example, inventories and prepaid amounts. It also includes the long-term amount of loans receivable as well as property acquired for resale. Restricted Fund Balance is reported when constraints placed on the use of resources are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Committed Fund Balance includes amounts that can only be used for specific purposes pursuant to limitations imposed by the government’s highest level of decision-making authority. The City Council is the highest level of decision-making authority for the government that can, by approval of a resolution prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the resolution remains in place until a similar action is taken (the approval of another resolution) to remove or revise the limitation. Assigned Fund Balance includes amounts that are constrained by the government’s intent to be used for specific purposes, but are neither restricted nor committed. The governing body, the City Council, may assign fund balance. Assignments, unlike commitments, are not permanent and a formal action is not required for the removal of an assignment. Finally, assignments may not result in a deficit in Unassigned Fund Balance. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Unassigned Fund Balance is the residual classification for the General Fund. This classification represents fund balance that has not been assigned to other funds nor been restricted, committed, or assigned to specific purposes within the General Fund. In other governmental funds, if expenditures incurred for specific purposes exceeded the amounts restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance. When fund balances are available for use and the usage requirements met, the City reduces the committed amounts first, followed by the assigned amounts and then the unassigned amount lastly. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, and then unrestricted resources as they are needed. Net Position Net position represents the difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used for the acquisition, construction or improvements of those assets. Net position is reported as restricted when there are limitations imposed on their use either through the enabling legislations adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Use of Estimates In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amount of assets, deferred outflows of resources, liabilities, and deferred inflows of resources and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from these estimates. New Accounting Pronouncements For the fiscal year ended September 30, 2018, the City adopted the following pronouncements: GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The primary objective of this statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. The statements result from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and inter period equity, and creating additional transparency. Statement number 75 replaces the requirements of Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Other Than Pensions, as amended, and Statement No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans, for OPEB. Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, establishes new accounting and financial reporting requirements for OPEB plans and is explained in more detail in Note 23 of these financial statements. This new guidance is effective for fiscal years beginning after June 15, 2017. The adoption of this statement required the City to restate its net position. GASB Statement No. 81, Irrevocable Split-Interest Agreements. The objective of this Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. Split-interest agreements are a type of giving agreement used by donors to provide resources to two or more beneficiaries, including governments. Split-interest agreements can be created through trusts—or other legally enforceable agreements with characteristics that are equivalent to split-interest agreements—in which a donor transfers resources to an intermediary to hold and administer for the benefit of a government and at least one other beneficiary. Examples of these types of agreements include charitable lead trusts, charitable remainder trusts, and life- interests in real estate. The requirements of this Statement are effective for financial statements for periods beginning after December 15, 2016, and should be applied retroactively. As applicable, the City implemented this guidance in FY 2018. GASB Statement No. 85, Omnibus 2017. The objective of this Statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits [OPEB]). The requirements of this Statement are effective for reporting periods beginning after June 15, 2017. As applicable, the City implemented this guidance in FY 2018. GASB Statement No. 86, Certain Debt Extinguishment Issues. Statement No. 7, Advance Refundings Resulting in Defeasance of Debt, requires that debt be considered defeased in substance when the debtor irrevocably places cash or other monetary assets acquired with refunding debt proceeds in a trust to be used solely for satisfying scheduled payments of both principal and interest of the defeased debt. The trust also is required to meet certain conditions for the transaction to qualify as an in- substance defeasance. This Statement establishes essentially the same requirements for when a government places cash and other monetary assets acquired with only existing resources in an irrevocable trust to extinguish the debt. However, in financial statements using the economic resources measurement focus, governments should recognize any difference between the reacquisition price (the amount required to be placed in the trust) and the net carrying amount of the debt defeased in substance using only existing resources, as a separately identified gain or loss in the period of the defeasance. The requirements of this Statement are effective for reporting periods beginning after June 15, 2017. As applicable, the City implemented this guidance in FY 2018. The following guidance statements issued by GASB are each effective for FY 2019 or beyond and are expected to be applicable to the City. The impact of these standards on the City’s net position is unknown at this time: City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 GASB Statement No. 83, Certain Asset Retirement Obligations. This statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this statement. This statement establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for AROs. This statement requires that recognition occur when the liability is both incurred and reasonably estimable. The determination of when the liability is incurred should be based on the occurrence of external laws, regulations, contracts, or court judgments, together with the occurrence of an internal event that obligates a government to perform asset retirement activities. Laws and regulations may require governments to take specific actions to retire certain tangible capital assets at the end of the useful lives of those capital assets, such as decommissioning nuclear reactors and dismantling and removing sewage treatment plants. Other obligations to retire tangible capital assets may arise from contracts or court judgments. Internal obligating events include the occurrence of contamination, placing into operation a tangible capital asset that is required to be retired, abandoning a tangible capital asset before it is placed into operation, or acquiring a tangible capital asset that has an existing ARO. The requirements of this statement are effective for reporting periods beginning after June 15, 2018. Therefore, if applicable, the City will implement this guidance in FY 2019. GASB Statement No. 84, Fiduciary Activities. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements. Governments with activities meeting the criteria should present a statement of fiduciary net position and a statement of changes in fiduciary net position. An exception to that requirement is provided for a business-type activity that normally expects to hold custodial assets for three months or less. This Statement describes four fiduciary funds that should be reported, if applicable: (1) pension (and other employee benefit) trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds. The requirements of this Statement are effective for reporting periods beginning after December 15, 2018. Therefore, if applicable, the City will implement this guidance in FY 2020. GASB Statement No. 87, Leases. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. This is a significant change in accounting principles and may impact the net position of the City. The requirements of this Statement are effective for reporting periods City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 beginning after December 15, 2019. Therefore, as applicable, the City will implement this guidance in FY 2021. GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements. The primary objective of this Statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. This Statement defines debt for purposes of disclosure in notes to financial statements as a liability that arises from a contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or more payments to settle an amount that is fixed at the date the contractual obligation is established. This Statement requires that additional essential information related to debt be disclosed in notes to financial statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant events of default with finance-related consequences, significant termination events with finance-related consequences, and significant subjective acceleration clauses. For notes to financial statements related to debt, this Statement also requires that existing and additional information be provided for direct borrowings and direct placements of debt separately from other debt. The requirements of this Statement are effective for reporting periods beginning after June 15, 2018. Therefore, if applicable, the City will implement this guidance in FY 2019. GASB Statement No. 89, Accounting for Interest Cost Incurred Before the end of a Construction Period The objectives of this Statement are (1) to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and (2) to simplify accounting for interest cost incurred before the end of a construction period. This Statement establishes accounting requirements for interest cost incurred before the end of a construction period. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business-type activity or enterprise fund. This Statement also reiterates that in financial statements prepared using the current financial resources measurement focus, interest cost incurred before the end of a construction period should be recognized as an expenditure on a basis consistent with governmental fund accounting principles. The requirements of this Statement are effective for reporting periods beginning after December 15, 2019 and the requirements of this Statement should be applied prospectively. As applicable, the City will implement this guidance in FY 2020. GASB Statement No. 90, Majority Equity Interests – an amendment of GASB Statements No.14 and No. 61. The primary objectives of this Statement are to improve the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. It defines a majority equity interest and specifies that a majority equity interest in a legally separate organization should be reported as an investment if a government’s holding of the equity interest meets the definition of City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 an investment. A majority equity interest that meets the definition of an investment should be measured using the equity method, unless it is held by a special-purpose government engaged only in fiduciary activities, a fiduciary fund, or an endowment (including permanent and term endowments) or permanent fund. Those governments and funds should measure the majority equity interest at fair value. For all other holdings of a majority equity interest in a legally separate organization, a government should report the legally separate organization as a component unit, and the government or fund that holds the equity interest should report an asset related to the majority equity interest using the equity method. This Statement establishes that ownership of a majority equity interest in a legally separate organization results in the government being financially accountable for the legally separate organization and, therefore, the government should report that organization as a component unit. This Statement also requires that a component unit in which a government has a 100 percent equity interest account for its assets, deferred outflows of resources, liabilities, and deferred inflows of resources at acquisition value at the date the government acquired a 100 percent equity interest in the component unit. Transactions presented in flows statements of the component unit in that circumstance should include only transactions that occurred subsequent to the acquisition. The requirements of this Statement are effective for reporting periods beginning after December 15, 2018. The requirements should be applied retroactively, except for certain cases and may require restatement. As applicable, the City will implement this guidance in FY 2019. Budgetary Basis of Accounting The City prepares its annual budget on a basis which differs from GAAP, known as budget basis. The Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual - General Fund is presented in accordance with the City’s method (budget basis) in order to provide a meaningful comparison of actual results with the budget. The differences between budget basis and GAAP basis is that reimbursements and transfers of indirect costs are shown as transfers out and that interfund loan transactions are treated as transfers for budget basis. Consistent with the purchases method, assets held for resale are treated as expenditures for budget purposes. Budgetary Control Formal budgetary integration is legally enacted and employed as a management control device during the year for all funds. Annual budgets are adopted on a consistent basis and are required by City Charter to be balanced for all funds. Additional controls exist for the capital projects funds and these expenditures are controlled through bond indenture provisions. Capital Projects funds are appropriated budgets based on the life of a project and not on an annual basis. Encumbrance accounting is employed in governmental funds. Encumbrances (purchase orders and contracts) outstanding at fiscal year-end are reported as assigned fund balances and do not constitute City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 expenditures or liabilities because the amounts will be re-appropriated and honored in the subsequent year. Other unexpended appropriations including salary expense lapse at fiscal year-end. The City Charter establishes the City’s fiscal year as the twelve-month period beginning October 1. The City follows these procedures in establishing the budgetary data reflected in the financial statements: • City departments submit to the City Manager a budget of estimated expenditures for the coming fiscal year. In addition, the Finance department proposes an estimate of revenues and submits to the City Manager. • Finance analyzes and compiles requests, and as required by the City Charter, balances the budget. • A balanced proposed budget is then presented with comparative and supporting data to the Mayor and City Council for review. • Public hearings are properly advertised and conducted for taxpayer comments. • Prior to September 1, the City Manager submits to the City Council a proposed operating budget of estimated expenditures and revenues. • Prior to September 27, the budget is legally enacted though the passage of an ordinance adopting the budget and authorizing expenditures. The City budgets each year for contingencies which may arise. The City Council has authorized the City Manager to make budget transfers of any unexpended or unencumbered appropriation balance within each of the various departments in the General Fund and within any other fund of the City and to authorize transfers of Contingent Appropriations within a fund up to an amount equal to expenditures that are $100,000 or less. All other transfers must be approved by City Council. Management may not amend the annual approved budget without seeking the approval of the City Council. In accordance with the City Charter, the budget may be amended after: (1) The City Manager certifies that there are available revenues in excess of those estimated in the budget, (2) City Council holds a public hearing on the supplemental appropriation, and (3) City Council approves the supplemental appropriation. 2. ADJUSTMENTS TO FUND BALANCES AND NET POSITION During fiscal year 2018, certain accounting changes and adjustments were made that required the restatement of fund balances or net position. The restatements are presented below. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Government-Wide Net Position: Governmental Activities Business-Type Activities Total Net Position September 30, 2017 $ 251,526,260 $318,079,245 $569,605,505 GASB #75 implementation (2,883,346) (1,971,678) (4,855,024) Community Development Loans 347,291 - 347,291 Sales Tax Revenue 2,706,262 - 2,706,262 Total Restatement 170,207 (1,971,678) (1,801,471) Net Position September 30, 2017 as Restated $ 251,696,467 $316,107,567 $567,804,034 Restated Fund Balances: General Fund Enterprise Fund Internal Service Funds Total Fund Balance/ Net Position September 30, 2017 $ 22,514,523 $312,970,408 $32,260,709 $367,745,640 GASB #75 implementation - (1,971,678) (278,555) (2,250,233) Sales Tax Revenue 2,706,262 - - 2,706,262 Total Restatement 2,706,262 (1,971,678) (278,555) 456,029 Fund Balance/Net Position September 30, 2017 as Restated $ 25,220,785 $310,998,730 $31,982,154 $368,201,669 The restatement of ($2,883,346) in Governmental Activities and ($1,971,678) in the Business-type Activities is due to the implementation of GASB 75. The restatement reduced beginning net position for the Electric Fund by $1,168,696, the Water Fund by $229,170, the Wastewater Fund $258,620 and the Other Enterprise Funds by $315,192. Pursuant to the requirements in GASB 75, a restatement was required to properly report the beginning net OPEB liability and the beginning Deferred Outflow for contributions made after the measurement date. See Note 1 for further information. The restatement of $347,291 in Governmental Activities is for corrections in the prior period of recognition of revenue on the Community Development Loans. The restatement results in an increase in the Change in Net Position of the Governmental Activities for the immediate prior year. The restatement of $2,706,262 in Governmental Activities and General fund to recognize Sales Tax Revenue received from the State Comptroller in November 2017 that was for sales that occurred in September 2017. The restatement results in an increase of $2,706,262 in the Change in Net Position and Change in Fund Balance of the Governmental Activities and General fund, respectively, for the immediate prior year. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 The restatement of $1,474,075 in the Fiduciary Fund is to correct prior year balance as previously reported for the City’s OPEB Trust Fund to report the fund as of the OPEB plan year-end and not the City’s year-end. The restatement results in a decrease in the Change in Net Position for the fiduciary fund for the immediate prior year. 3. MINIMUM FUND BALANCE POLICY AND OPERATING RESERVE POLICIES The City has set financial guidelines regarding the retention of General Fund reserves (fund balance) to ensure that adequate funds are available to cover daily operating expenditures and in anticipation of economic downturns or natural disasters. The unobligated or unassigned fund balance in the General Fund and the working capital (current assets less current liabilities) in the Enterprise Funds should be at least 15% of the annual budgeted expenditures. This percentage is the equivalent of 55 days’ expenditure. An additional amount of 3.0% should be maintained for extraordinary items or contingencies in the General Fund. Cash and investments alone should be equivalent to 30 days’ operating expenditures for both fund types. 4. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgetary Information Budget appropriations are adopted at the fund level for all funds except the General Fund. In the General Fund, budget appropriations are adopted at the department level. Appropriations lapse at the end of the budget year if they have not been expended or lawfully encumbered. The Council approved three budget amendments during fiscal year 2018 to increase appropriations. These budget amendments included the following: Total Encumbrance Roll $ 2,595,965 General Fund 232,182 Parkland Dedication Funds 544,500 Streets and Park CIP Fund 852,800 Fun For All Playground 1,000,000 Internal Service Funds 1,395,885 Wolf Pen Creek TIRZ 1,077,759 Special Revenue Funds 1,423,500 Electric Fund 97,900 HOT Fund 1,826,923 City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Total $ 11,047,414 Excess of Expenditures over Appropriations Expenditures in excess of appropriations for each fund are prohibited by the City Charter. However, certain funds may end up exceeding budgeted appropriations as a result of unforeseen economic events. The funds in which there were amounts of any excesses of expenditures over appropriations during fiscal year 2018 are as follows: Total Workers’ Compensation Insurance Fund $ 250,346 Fleet Maintenance Fund 40,086 Wolf Pen Creek Tax Increment Financing District Fund 200,147 Memorial Cemetery Fund 2,767 Texas Avenue Cemetery Endowment Fund 3,250 Drainage Fund 137,868 Total $ 634,464 5. ENCUMBRANCES Encumbrance accounting is employed in governmental funds. Purchase orders, contracts, and other commitments for expenditures are recorded in order to reserve a portion of the applicable appropriation. Encumbrances lapse at the end of the fiscal year and may be re-encumbered the following year. The following encumbrance amounts were re-encumbered by fund on September 30, 2018 for fiscal year 2019: Amount General Fund $ 270,024 Economic Development 250,000 Equipment Replacement Fund 1,735,592 Hotel Tax Fund 111,381 Memorial Endowment Cemetery 80,217 Northgate Parking Garage Fund 87,500 Water Fund 61,251 Total Encumbrances $ 2,595,965 6. CASH AND CASH EQUIVALENTS Deposits City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 State statutes require that all deposits in financial institutions be fully collateralized by U.S. Government obligations or its agencies and instrumentalities or direct obligations of Texas or its agencies and instrumentalities that have a market value of not less than the principal amount of the deposits. All deposits of the City that exceed the federal depository insurance coverage level of $250,000 per account are covered by collateral held by the Federal Reserve Bank in the City's name under a joint safekeeping agreement with Branch Banking and Trust Company (BB&T). The market value of the collateral held at the Federal Reserve Bank in the City’s name at fiscal year-end was $268,286,650. At September 30, 2018, the carrying amount of the City's deposits was $226,947,362, and the respective bank balances totaled $228,369,099. The City’s cash on hand totaled $245,030,664. Fair Value Weighted Average Maturity (days) Petty Cash $ 13,340 1 Bank Depository Accounts 3,578,263 1 Bank Depository Money Market Account 223,369,099 1 Local Government Investment Pools 18,069,962 31 Total Cash and cash equivalents $ 245,030,664 Credit Risk - Deposits In the case of deposits, this is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The City of College Station's City Council has approved a depository services contract which governs its depository relationship. This contract requires that deposits not covered by depository insurance be collateralized at 105%. The City’s depository bank collateralizes the City’s funds at 110%. Restricted Cash, Cash Equivalents and Investments Below is a reconciliation of the various restricted cash, cash equivalents, and investments reported as of September 30, 2018: Governmental Funds Electric Fund Water Fund Wastewater Fund Total Customer Deposit Payables - 2,435,880 249,083 19,300 2,704,263 Capital Debt Proceeds 77,451,704 4,580,433 3,756,100 255,897 8,592,430 $ 77,451,704 $ 7,016,313 $ 4,005,183 $ 275,197 $ 11,296,693 7. INVESTMENTS Investment Policy Cash and investments are accounted for within the pooled cash fund of the City. The City’s investment program is guided by State statutes, by various City ordinances, and by the City’s investment policy, which City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 amplifies those guidelines and prescribes how the City will operate its investment program in accordance with applicable laws and regulations. The City’s policy, which was adopted by the City Council on October 12, 2017, for the fiscal year ending September 30, 2018, sets forth (1) the basic principles governing the investment of City funds; (2) the objectives of the City’s investment program; and (3) the authority, responsibilities, limitations, documentation and requirements to be used in the administration and operation of the City’s investment program. The City is authorized to invest in the following: • Direct obligations of the United States or its agencies and instrumentalities; • Debentures or discount notes issued by, guaranteed by, or for which the credit of any Federal Agencies and Instrumentalities is pledged for payment; • Direct obligations of the State of Texas or its agencies; • Bonds or other obligations, the principal and interest of which is guaranteed by the full faith and credit of the United States; • Certificates of deposit issued by state and national banks within the state of Texas that are secured by obligations qualified as acceptable collateral; • Bankers’ Acceptances eligible for discounting with the Federal Reserve maturing within 90 days; • Fully collateralized repurchase agreements having a defined termination date of 90 days or less, secured by qualified obligations, pledged with a third party, and placed through a primary government securities dealer as defined by the Federal Reserve, or a bank domiciled in Texas; • Money-market mutual funds that are SEC registered no-load funds with dollar-weighted average portfolio maturity of 90 days or less; • Local government investment pools rated no lower than AAA or AAA-m from at least one nationally recognized rating agency; • Hedging contracts and related security insurance agreements in relation to fuel oil, natural gas, coal, nuclear fuel, and electric energy to protect against loss due to price fluctuations; • Reverse repurchase agreements are allowed only if the term does not exceed 90 days after delivery, and money received is used to acquire additional authorized investments with a maturity date not to exceed the expiration date stated in the agreement. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 The City’s investment policy prohibits the substitution of collateral on repurchase agreements without prior approval of the City Council. For additional information, see the City of College Station Investment Policy at www.cstx.gov. The City’s investments at September 30, 2018 as are follows: Fair Value Weighted Average Maturity (days) US Agencies $ 42,359,038 792 Fair Value Measurements The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 Quoted prices in active markets for identical assets Level 2 Observable inputs other than Level 1 prices; such as quoted prices for similar assets, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets. Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets. The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. If a price for an identical asset or liability is not observable, a government should measure fair value using another valuation technique that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. If the fair value of an asset or a liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement. There have been no changes in the methodologies used between September 30, 2018 and 2017. U.S. Government Agency Securities and U.S. Treasury Bonds and Notes: Classified in Level 2 of the fair value hierarchy and valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. U.S. Government Agency securities held by the City are rated AA+ by Standard and Poor’s. Investment Pools: The City is a voluntary participant in four external investment pools with fair value measured as follows: Investment Pool Measurement Credit Risk Texpool Amortized Cost AAAm Texpool Prime Amortized Cost AAAm TexSTAR Net Asset Value AAAm City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 LOGIC Net Asset Value AAAm The investments in government pools are measured at net asset value or amortized cost and are exempt from reporting in the fair value hierarchy. The City is a voluntary participant in the above four external investment pools. The pools are 2a7-like pools, which are not registered with the Securities and Exchange Commission (SEC) as an investment company, but have a policy that they will, and do, operate in a manner consistent with the SEC’s Rule 2a7 of the Investment Company Act of 1940. Furthermore, the pools in which the City participates seek to maintain a constant $1 objective per share of unit. Accordingly, the City’s position in these pools is substantially the same as the fair value of the shares in each of the pools. The Comptroller maintains oversight of the services provided to the TexPool Portfolios. In addition, the TexPool Advisory Board advises on the Investment Policies for the TexPool Portfolios. The TexPool Advisory Board members serve at the will of the Comptroller. Credit concentration: With the exception of U.S. Treasury securities, authorized pools and the City’s depository accounts, the City's Investment Policy limits the investment in a single security type or with a single financial institution to 30%. It also limits the overall investment in Federal Agency securities to 70% and Certificates of Deposit to 40%. Credit risk: In compliance with the City’s Investment Policy and the Texas Public Funds Investment Act, the City manages credit risk through portfolio diversification by limiting investments to avoid over concentration in securities from a specific issuer; limiting investments in securities with high credit risk; and investing in securities with varying maturities. At September 30, 2018, the City had no single investment category that exceeded 10% of investable funds. The City’s investment in Texpool accounted for 4.5% of investable funds while its investment in the Federal Home Loan Mortgage Corporation accounted for 5.1%, Federal Farm Credit Bank accounted for 4.5%, and Federal Home Loan Bank accounted for 3.5% of investable funds. Custodian credit risk – investments: For an investment, this is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City's investment portfolio requires that all security transactions be conducted on a Delivery-vs.-Payment basis and that all securities be held by a third party custodian and evidenced by safekeeping receipts. Interest rate risk: In accordance with the City's Investment Policy, interest rate risk is managed by limiting the weighted average maturity of the investment portfolio to two years (approximately 720 days) or less and by limiting the maximum maturity of any security purchased to five years or less. Foreign Currency Risk: By virtue of the City’s Investment Policy and the Texas Public Funds Investment Act, the City is not exposed to foreign currency risk because the City is not authorized to maintain deposits or investments denominated in a foreign currency. OPEB Trust Fund Investments: The City has contracted with Public Agency Retirement Services (PARS) for trust administration, and the District’s OPEB Plan investments are held in the PARS PostRetirement Health City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Care Plan Trust by its trustee and custodian Union Bank (the “Trustee”). PARS provides its participants a range of investment strategies, and the City has selected the PARS Balanced HighMark Diversified Portfolio Index PLUS. The goal of the Plan’s investment program is to generate adequate long-term returns that, when combined with contributions, will result in sufficient assets to pay present and future obligations to the Plan. The Balanced Portfolio’s goal is for growth of principal and income. The Plan’s underlying investments are allocated between equity, fixed income securities, and cash. As of December 31, 2017, investments were carried at fair value of $1,521,285 and were registered with and managed by the Trustee. The OPEB Plan’s investments are measured at the equivalent of Net Asset Value (NAV). The OPEB Plan has no unfunded commitments and may redeem investments at anytime to pay for OPEB benefits. 8. RECEIVABLES Receivables as of year-end for the City's individual major funds, non-major, and internal service funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Governmental Activities General Debt Service Street Projects Nonmajor Internal Service Funds Total Taxes: Property $ 216,179 $ 173,210 $ - $ - $ - $ 389,389 Beverage 170,410 - - - - 170,410 Sales 4,973,166 - - - - 4,973,166 Subtotal taxes 5,359,755 173,210 - - - 5,532,965 Grants - - - 116,198 - 116,198 Charges for services 2,144,690 - 360,213 788,406 515,013 3,808,322 Miscellaneous 7,634,276 - - 49,305 - 7,683,581 Total gross governmental 15,138,721 173,210 360,213 953,909 515,013 17,141,066 Less: Allowance for uncollectible accounts (7,725,185) - - (57,573) (186,433) (7,969,191) Net total receivables $ 7,413,536 $ 173,210 $ 360,213 $ 896,336 $ 328,580 $ 9,171,875 Business-type activities Electric Water Wastewater Nonmajor Internal Service Funds Total Charges for services $15,403,347 $2,303,234 $2,224,256 $1,363,633 $ - $21,294,470 Less: Allowance for uncollectible accounts (1,315,237) (104,438) (203,568) (104,361) - (1,727,604) City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Net total receivables $14,088,110 $2,198,796 $2,020,688 $1,259,272 $ - $19,566,866 Loans Receivable in the non-major governmental funds are made up of the following: a $738,405, 40-year loan of HOME Investment Partnership (HOME) funds for Santour Court, an affordable, single-family residential development; $975,218 in HOME down-payment assistance loans for eligible HOME participants whose loans are made with Federal funds from the Department of Housing and Urban Development (HUD); $521,612 in HOME funds for Terrace Pines Apartment Homes, a tenant based rental assistance program that offers security deposit assistance to eligible elderly citizens; and three Community Development Housing Reconstruction Program Lien Notes held by the City which total to $246,456. The allowance for uncollectible accounts for these loans total to $(521,612), resulting in a net amount of $1,960,079. Loans Receivable in the non-major business-type funds represent BVSWMA, Inc.’s obligation to reimburse 2009 College Station Certificate of Obligation debt issued and used to construct the Twin Oaks Landfill. The annual principal and interest receivable amounts are as follows: Due from Related Party Year Ended Sept 30, Principal Interest 2019 $ 230,000 $ 122,963 2020 240,000 113,850 2021 250,000 104,050 2022 230,000 93,300 2023 240,000 81,550 2024-2028 1,440,000 207,350 2029 325,000 4,875 $ 2,955,000 $ 727,938 City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 9. CAPITAL ASSETS Governmental Activities Capital asset activity for the year ended September 30, 2018 was as follows: Governmental Activities Balance Increases Decreases Adjustment Balance Capital assets, not being depreciated Land $ 33,583,975 $ 673,221 $ - $ - $ 34,257,196 Construction in progress 24,132,282 32,444,801 (6,022,866) - 50,554,217 Total capital assets, not being depreciated 57,716,257 33,118,022 (6,022,866) - 84,811,413 Capital assets, being depreciated Buildings and building improvements 39,933,336 2,744,072 (13,261) - 42,664,147 Improvements other than buildings 46,205,468 2,289,436 (56,641) 127,946 48,566,209 Machinery and equipment 47,291,325 2,962,895 (4,462,199) (127,946) 45,664,075 Infrastructure 328,672,109 13,137,576 - - 341,809,685 Total capital assets, being depreciated 462,102,238 21,133,979 (4,532,101) - 478,704,116 Less accumulated depreciation for: Buildings and building improvements 16,212,617 1,167,169 (8,374) - 17,371,412 Improvements other than buildings 24,504,128 2,273,930 (38,949) 30,908 26,770,017 Machinery and equipment 29,722,945 4,444,774 (4,392,309) (30,908) 29,744,502 Infrastructure 165,159,865 10,436,336 - - 175,596,201 Total accumulated depreciation 235,599,555 18,322,209 (4,439,632) - 249,482,132 Total capital assets being depreciated, net 226,502,683 2,811,770 (92,469) - 229,221,984 Total governmental type activities capital assets, net $284,218,940 $35,929,792 $ (6,115,335) $ - $314,033,397 City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Business-Type Activities Capital asset activity for the year ended September 30, 2018 was as follows: Business-Type Activities Beginning Balance Increases Decreases Adjustments Ending Balance Capital assets, not being depreciated Land $ 690,750 $ - $ - $ - $ 690,750 Construction in progress 30,240,705 34,825,833 (18,619,477) - 46,447,061 Total capital assets, not being depreciated 30,931,455 34,825,833 (18,619,477) - 47,137,811 Capital assets, being depreciated Electric system 212,747,068 11,110,988 (990,736) - 222,867,320 Water system 194,374,311 6,430,655 (420,202) - 200,384,764 Wastewater system 146,652,675 11,098,439 (1,285,325) - 156,465,789 Buildings and building improvements 6,349,242 - - - 6,349,242 Machinery and equipment 6,825,402 719,715 (422,373) - 7,122,744 Total capital assets, being depreciated 566,948,698 29,359,797 (3,118,636) - 593,189,859 Less accumulated depreciation for: Electric system 99,551,071 7,513,022 (719,560) - 106,344,533 Water system 66,403,444 5,219,455 (215,031) - 71,407,868 Wastewater system 63,420,113 5,728,788 (657,309) - 68,491,592 Buildings and building improvements 2,298,279 183,726 - - 2,482,005 Machinery and equipment 3,810,153 992,698 (389,621) - 4,413,230 Total accumulated depreciation 235,483,060 19,637,689 (1,981,521) - 253,139,228 Total capital assets being depreciated, net 331,465,638 9,722,108 (1,137,115) - 340,050,631 Total Business type activities capital assets, net $362,397,093 $44,547,941 $(19,756,592) $ - $387,188,442 City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Governmental Activities Depreciation Depreciation expense for the fiscal year ended September 30, 2018 was as follows: Police $ 532,590 Fire 871,526 Public Works 10,249,430 Parks and Recreation 2,395,850 Planning and Development Services 36,034 Information Technology 848,482 Fiscal Services 28,389 General Government 596,599 Capital Assets held by Internal Service Funds 2,763,309 Governmental Activities Depreciation Expense $ 18,322,209 Business-Type Activities Depreciation Depreciation expense for the fiscal year ended September 30, 2018 was as follows: Electric $ 7,513,022 Water 5,219,455 Wastewater 5,728,788 Sanitation 967,300 Northgate Parking Garage 209,124 Business-Type Depreciation Expense $19,637,689 10. INTERFUND TRANSFERS Interfund transfers for the year ended September 30, 2018 are as follows: Transfers In Transfers Out Governmental Activities, net Business-type Activities, net Governmental Activities: General Fund $19,245,943 $ (3,031,702) $ 16,214,241 $ - Debt Service Fund 464,453 - 464,453 - General Government Projects 1,592,914 (193,371) 1,399,543 - Streets Projects - (707,618) (707,618) - Other Nonmajor Governmental Funds - (3,693,813) (3,693,813) - Internal Service Funds 928,674 (61,345) 867,329 - Business-type Activities: Electric 1,793,420 (9,647,251) - (7,853,831) Water 1,554 (2,741,312) - (2,739,758) Wastewater - (2,272,052) - (2,272,052) Other Nonmajor Enterprise Funds - (1,678,494) - (1,678,494) $ 24,026,958 $(24,026,958) $ 14,544,135 $(14,544,135) City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Interfund transfers are used for the following purposes: • move revenues from the funds with collection authorization to the debt service fund as debt service principal and interest payments become due, • move revenues from enterprise funds to the general fund to record the utility transfer in lieu of franchise fees, • move revenues from enterprise funds to the general fund for economic development activity, • move unrestricted general fund revenues to finance various programs that the government must account for in other funds in accordance with budgetary authorizations. 11. INTERFUND BALANCES The interfund receivable and payables at September 30, 2018, result from the General Fund loan to Spring Creek LGC for the purpose of covering expenditures. Fund Receivable Payable Total General Fund $ 95,331 $ - $ 95,331 Spring Creek LGC - (95,331) (95,331) TOTAL $ 95,331 $ (95,331) $ - 12. DEFERRED INFLOWS OF RESOURCES AND UNEARNED REVENUE – OTHER THAN PENSIONS AND OPEB Deferred inflows of resources represents acquisition of net position that applies to a future reporting period and will not be recognized as revenue until the inflow occurs. For the period ended September 30, 2018, the City reported $3,239,889 in Governmental Funds. These deferred inflows of resources and unearned revenues as of September 30, 2018 are as follows: Deferred Inflows of Resources Unearned Revenue Total Delinquent property taxes receivable $ 389,389 $ - $ 389,389 Loans receivable 1,960,079 - 1,960,079 Cemetery plot loans receivable 49,304 - 49,304 Street funds 174,516 - 174,516 Other - general funds 666,601 - 666,601 TOTAL $ 3,239,889 $ - $ 3,239,889 City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 13. DEFERRED OUTFLOWS OF RESOURCES – OTHER THAN PENSIONS AND OPEB In addition to deferred inflows of resources, the financial statements will sometimes report a separate section for deferred outflows of resources. Deferred outflows of resources represents a consumption of net position that applies to future periods and so will not be recognized as an expense until the outflow occurs. For the period ended September 30, 2018, the City reported $1,338,244 of deferred outflows in the Governmental Funds and $2,130,003 of deferred outflows for Business-type activities. These deferred outflows of resources are related to charges on debt refunding, are amortized over the life of the refunded debt, and are reported on the government wide Statement of Net Position. 14. LONG-TERM DEBT A summary of long-term debt transactions, including current portion, for the year ended September 30, 2018 follows: Beginning Balance Incurred/ Issued Matured/ Retired Ending Balance Amount Due Within One Year Governmental activities: General obligation bonds $ 97,355,000 $ - $ 7,430,000 $ 89,925,000 $ 6,855,000 Certificates of obligation 72,270,000 18,230,000 5,005,000 85,495,000 6,705,000 Premium/discount 15,341,136 880,054 1,146,382 15,074,808 1,190,939 Governmental activity Long term debt $184,966,136 $ 19,110,054 $ 13,581,382 $ 190,494,808 $ 14,750,939 Business type activities: General obligation bonds $ 61,565,000 $ - $ 6,325,000 $ 55,240,000 $ 5,860,000 Certificates of obligation 77,475,000 19,150,000 4,790,000 91,835,000 5,585,000 Premium/discount 13,717,318 951,881 1,310,299 13,358,900 1,358,496 Business type activity Long term debt $152,757,318 $ 20,101,881 $ 12,425,299 $160,433,900 $ 12,803,496 Internal service funds predominantly serve the government funds. All internal service funds, except for the utility customer service funds, are included as part of the above totals for governmental activities. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Long-term debt at September 30, 2018 includes the following individual issues (not including unamortized premiums or discounts): General Obligation Bonds: - Governmental Activities: Interest Rate (%) Issue Date Maturity Date Original Issue Net Retirement Outstanding 2008 Issue 4.0-5.0 09/01/08 2/15/28 $ 9,455,000 $ 8,610,000 $ 845,000 2009 Issue 2.0-4.0 07/15/09 2/15/21 3,335,000 2,845,000 490,000 2009 Issue – Refunding 2.0-4.0 11/15/09 2/15/20 4,265,000 3,785,000 480,000 2010 Issue 2.0-3.5 08/15/10 2/15/30 19,635,000 6,125,000 13,510,000 2010 Issue – Refunding 3.0-5.0 11/15/10 2/15/22 11,245,000 8,160,000 3,085,000 2011 Issue .25-1.6 09/15/11 2/15/18 1,960,000 1,960,000 - 2012 Issue & Refunding 2.0-5.0 06/01/12 2/15/32 11,515,000 4,720,000 6,795,000 2013 Issue & Refunding 2.0-5.0 08/15/13 2/15/33 14,505,000 4,085,000 10,420,000 2014 Issue & Refunding 2.0-5.0 09/01/14 2/15/34 21,230,000 3,920,000 17,310,000 2016 Issue & Refunding 2.0-5.0 07/01/16 2/15/36 22,180,000 3,020,000 19,160,000 2017 Issue & Refunding 2.0-5.0 06/01/17 2/15/37 18,320,000 490,000 17,830,000 $ 137,645,000 $ 47,720,000 $ 89,925,000 General Obligation Bonds – Business-type Activities: Interest Rate (%) Issue Date Maturity Date Original Issue Net Retirement Outstanding 2009 Issue – Refunding 2.0-4.0 11/15/09 2/15/20 $ 3,830,000 $ 3,400,000 $ 430,000 2010 Issue – Refunding 3.0-5.0 11/15/10 2/15/22 25,905,000 16,175,000 9,730,000 2012 Issue – Refunding 2.0-5.0 06/01/12 2/15/24 9,570,000 4,850,000 4,720,000 2013 Issue – Refunding 2.0-5.0 08/15/13 2/15/25 6,255,000 2,635,000 3,620,000 2014 Issue – Refunding 2.0-5.0 09/01/14 2/15/26 14,635,000 6,545,000 8,090,000 2016 Issue – Refunding 2.0-5.0 07/01/16 2/15/28 18,710,000 1,540,000 17,170,000 2017 Issue – Refunding 2.0-5.0 06/01/17 2/15/29 11,480,000 - 11,480,000 90,385,000 35,145,000 55,240,000 Total General Obligation Bonds $ 228,030,000 $ 82,865,000 $ 145,165,000 Certificates of Obligation – Governmental Activities: Interest Rate (%) Issue Date Maturity Date Original Issue Net Retirement Outstanding 2008 Issue 3.25-5.0 09/01/08 2/15/20 $ 10,515,000 $ 9,580,000 $ 935,000 2009 Issue 3.0-5.0 07/15/09 2/15/29 3,260,000 3,160,000 100,000 2014 Issue 2.0-5.0 09/01/14 2/15/34 10,665,000 2,935,000 7,730,000 2016 Issue 2.0-5.0 07/01/16 2/15/36 18,470,000 2,505,000 15,965,000 2017 Issue 2.0-5.0 06/01/17 2/15/37 45,585,000 3,050,000 42,535,000 2018 Issue 2.0-5.0 06/01/18 2/15/38 18,230,000 - 18,230,000 $ 106,725,000 $ 21,230,000 $ 85,495,000 City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Certificates of Obligation – Business-type Activities: Interest Rate (%) Issue Date Maturity Date Original Issue Net Retirement Outstanding 2008 Issue 3.25-5.0 09/01/08 2/15/20 $ 15,925,000 $ 14,325,000 $ 1,600,000 2009 Issue 3.0-5.0 07/15/09 2/15/29 28,055,000 24,485,000 3,570,000 2010 Issue 2.0-3.5 08/15/10 2/15/30 2,850,000 855,000 1,995,000 2011 Issue 2.0-3.6 09/15/11 2/15/31 7,935,000 2,055,000 5,880,000 2012 Issue 2.0-5.0 06/01/12 2/15/32 16,415,000 3,760,000 12,655,000 2013 Issue 2.0-5.0 08/15/13 2/15/33 10,230,000 1,895,000 8,335,000 2014 Issue 2.0-5.0 09/01/14 2/15/34 23,340,000 3,205,000 20,135,000 2016 Issue 2.0-5.0 07/01/16 2/15/36 7,250,000 565,000 6,685,000 2017 Issue 2.0-5.0 06/01/17 2/15/37 12,140,000 310,000 11,830,000 2018 Issue 2.0-5.0 06/01/18 2/15/38 19,150,000 - 19,150,000 143,290,000 51,455,000 91,835,000 Total General Obligation Bonds $ 250,015,000 $ 72,685,000 $ 177,330,000 Total Outstanding Bonds $ 322,495,000 The annual requirements to amortize debt outstanding as of September 30, 2018 are as follows: Governmental Activities General Obligation Certificates of Obligation Year Ended September 30, Principal Interest Principal Interest 2019 $ 6,855,000 $ 3,396,795 $ 6,705,000 $ 3,570,524 2020 7,175,000 3,095,048 4,445,000 3,183,969 2021 6,670,000 2,817,906 4,170,000 2,983,019 2022 6,565,000 2,553,531 4,350,000 2,776,306 2023 6,895,000 2,253,781 4,550,000 2,553,806 2024-2028 31,190,000 6,830,219 20,810,000 9,527,781 2029-2033 17,780,000 2,415,463 21,445,000 5,065,040 2034-2038 6,795,000 356,710 19,020,000 1,269,861 $ 89,925,000 $ 23,719,453 $ 85,495,000 $ 30,930,306 Business-Type Activities General Obligation Certificates of Obligation Year Ended September 30, Principal Interest Principal Interest 2019 $ 5,860,000 $ 2,310,906 $ 5,585,000 $ 3,744,000 2020 6,170,000 2,041,556 5,965,000 3,392,878 2021 6,915,000 1,756,406 5,370,000 3,170,151 2022 6,375,000 1,467,356 4,305,000 2,969,339 2023 5,665,000 1,183,481 4,520,000 2,774,569 2024-2028 22,565,000 2,175,341 25,535,000 10,745,382 2029-2033 1,690,000 25,275 27,995,000 5,041,706 2034-2038 - - 12,560,000 880,455 $ 55,240,000 $ 10,960,321 $ 91,835,000 $ 32,718,480 City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 The City intends to retire all of its general long-term liabilities, plus interest, from the collection of ad valorem taxes. Proprietary fund type long-term debt issued for Northgate Parking Garage, Electric, Water, and Wastewater projects will be repaid, plus interest, from the operating revenues of their respective funds. General Obligation Bonds and Certificates of Obligation The City issues General Obligation Bonds and Certificates of Obligation to provide funds for the acquisition and construction of major capital facilities. These types of bonds have been issued by the City for both governmental activities as well as business-type activities. These bonds are reported in the proprietary funds if they are expected to be repaid from proprietary fund revenue. General Obligation Bonds are direct obligations, for which the City has pledged the full faith and credit of the City. These bonds generally are issued as 20-year serial bonds with varying amounts of principal maturing each year. The City is required by bond covenants to create from ad valorem tax revenues a sinking fund sufficient to pay the current interest and principal installments as they become due. In addition to the sinking fund, there are a number of limitations and restrictions contained in the various general obligation bonds and certificate indentures. The City is in compliance with the significant limitations and restrictions at September 30, 2018. In 2009, the City issued $31,315,000 in Certificates of Obligation. $2,600,000 of the proceeds were used to purchase land for a convention center site. Council no longer intends to build a convention center, therefore, causing a change in use to the property. In order to maintain the tax-exempt status of the 2009 Certificates of Obligation, Council approved to defease the convention center bonds on November 21, 2011. On December 1, 2011 the bonds were defeased. $2,728,149 was placed in an escrow account with Bank of New York to cover the principal and interest amount of the bonds until their call date of February 15, 2019. Also, in 2009, the City issued $5,145,000 in Certificates of Obligation to pay for a portion of the construction of a new municipal landfill. BVSWMA, Inc. has pledged to repay the $5,145,000 plus interest to the City of College Station. A portion of the Certificates of Obligation were refunded in 2017 and as of September 30, 2018, BVSWMA, Inc. owed the City $2,955,000. Arbitrage Compliance Arbitrage provisions of the Internal Revenue Tax Act of 1986 require the City to rebate to the federal government excess arbitrage earnings from bond proceeds. As of September 30, 2018, the City did not have an arbitrage rebate liability. Defeasance In prior years, the City issued refunding bonds to defease certain outstanding bonds for the purpose of consolidation and to achieve debt service savings. The City has placed the proceeds from the refunding City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 issues in irrevocable escrow accounts with a trust agent to ensure payment of debt service on the refunded bonds. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the City’s financial statements. Although defeased, the refunded debt from these earlier issues will not be retired until the call dates have come due or until maturity if they are not callable issues. On September 30, 2018, the City’s escrow balance for bonds defeased on December 1, 2011 was $1,552,165 and defeased bond principal of $1,425,000 is callable February 15, 2019. On September 30, 2018, the City’s escrow balance for bonds defeased on June 1, 2017 was $14,832,828 and defeased bond principal of $14,660,000 is callable February 15, 2019. 15. BONDS AVAILABLE FOR SALE Authorized general obligation bonds available for future issue are as follows: Year Unissued Authorized Amount Public Buildings 1984 $ 700,000 1 Street Improvements 1984 500,000 1 Municipal Complex Improvements 2003 3,655,000 Parks and Recreation 2008 645,000 Total $ 5,500,000 1. Contains projects which may have been completed or abandoned; therefore, these bonds are not likely to ever be issued. 16. OPERATING LEASES During fiscal-year 2016, the City of College Station entered into a three-year operating lease for office space with an optional one-year renewal. The lease was amended in 2018 to expire in February of 2021. Rent cost totaled $118,804 for fiscal year 2018. The following is a schedule, by year, of the future minimum rental payments under the office space lease: Year Ended September 30 2019 $ 122,352 2020 $ 126,013 2021 $ 53,147 Thereafter $ - City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 17. COMPONENTS OF FUND EQUITY The City’s classification of governmental fund balances is as follows at September 30, 2018: General Debt Service General Government Projects Street Projects Special Revenue Total Nonspendable: Inventories $ 44,764 - - - - $ 44,764 Prepaids 583,754 - - - - 583,754 Restricted: Community and Neighborhood Parks - - - - 7,167,276 7,167,276 Community Development - - - - 687,305 687,305 Court Security Fee - - - - 32,074 32,074 Court Technology Fee - - - - 465,633 465,633 Debt Service - 5,272,810 - - - 5,272,810 General Government Capital Projects - - 40,236,419 39,193,275 - 79,429,694 Hotel Occupancy Tax - - - - 12,277,170 12,277,170 Juvenile Case Manager - - - - 166,010 166,010 Parks and Recreation Capital Projects - - - - 6,230,960 6,230,960 Police Seizure - - - - 128,083 128,083 Wolf Pen Creek TIF - - - - 11,968 11,968 Truancy Prevention - - - - 64,568 64,568 East Medical District TIRZ No. 19 - - - - 18,222 18,222 PEG Access Channel - - - - 734,658 734,658 City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 General Debt Service General Government Projects Street Projects Special Revenue Total Meyer Estate Gift - - - - 153,642 153,642 City-Wide Water Impact Fee Fund - - - - 26,767 26,767 City Wide Wastewater Impact Fee Fund - - - - 1,443,642 1,443,642 City Wide Transportation Impact Fee Fund - - - - 264,840 264,840 Fun For All Playground - - - - 959,744 959,744 Committed: Texas Avenue Cemetery Endowment - - - - 1,946,323 1,946,323 Memorial Cemetery - - - - 5,189,453 5,189,453 Memorial Cemetery Endowment - - - - 2,896,103 2,896,103 Drainage Infrastructure Improvements - - - - 1,716,249 1,716,249 Parks Infrastructure Improvements - - - - 6,766,028 6,766,028 Roadway Maintenance Fund - - - - 789,203 789,203 Assigned: Other Purposes 2,128,177 - - - - 2,128,177 Unassigned: 24,033,874 - - - - 24,033,874 TOTAL $ 26,790,569 $ 5,572,810 $ 40,236,419 $ 39,193,275 $ 50,135,921 $161,628,994 City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 The City’s classification of business-type net position balances is as follows at September 30, 2018: Electric Water Wastewater Other Enterprise Total Net Investment in Capital Assets: Capital Assets $ 133,704,689 $ 140,466,271 $ 105,749,515 $ 7,267,967 $ 387,188,442 Deferred charge on refunding (873,444) (740,500) (187,293) (11,177) (1,812,414) Debt (57,385,415) (53,475,792) (45,848,755) (433,174) (157,143,136) Retainage Payable, related to Capital Assets (141,498) (590,455) (437,858) - (1,169,811) Unspent Proceeds 4,580,433 3,570,000 255,897 - 8,406,330 Total Net Investment in Capital Assets 79,884,765 89,229,524 59,531,506 6,823,616 235,469,411 Restricted - - - 17,261,241 17,261,241 Unrestricted 54,588,261 11,526,800 24,607,343 1,731,245 92,453,649 TOTAL $ 134,473,026 $ 100,756,324 $ 84,138,849 $ 25,816,102 $ 345,184,301 18. REVENUE RECOGNITION Property Taxes Property tax is levied each October 1 on the assessed (appraised) value listed as of the prior January 1 for all real and business personal property located in the City. Taxable assessed value represents the appraisal value less applicable exemptions authorized by the City Council. Taxpayers have two options for paying property taxes: the full payment option or the split payment option. • Taxpayers electing the full payment option have from October 1 of the tax year to January 31 of the following year to pay the full amount of taxes without penalty or interest. Tax liens are automatic and become enforceable as of January 1 of each year. Taxes become delinquent on February 1 and any unpaid balance will accrue penalty and interest. • Taxpayers electing the split payment option have from October 1 to November 30 of the tax year to pay half of the tax amount. The remaining half may be paid without penalty or interest any time on or before June 30 of the following year. Taxes become delinquent on July 1. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 The tax rate to finance general governmental services including debt service was 49.7500 cents per $100 of assessed valuation for the year ended September 30, 2018. Under current state statutes, the City's ability to increase the levy for property taxation is subject to a maximum rate of $2.50 per $100 valuation. Taxpayers who were 65 years of age or older on January 1, and have filed an application for exemption, may pay the taxes on their homestead in four equal installments. Quarterly payments are due January 31, March 31, May 31, and July 31. The Brazos Central Appraisal District ("Appraisal District") is responsible for the recording and appraisal of property for all taxing units in Brazos County. The Appraisal District is required to assess property at 100 percent of its appraised value. Real property must be reappraised at least every three years. The City may, at its own expense, require annual reviews by the Appraisal District through various appeals and, if necessary, legal action. Under this system, if the rate, excluding tax rates for bonds and other contractual obligations adjusted for new improvements, exceeds the rate for the previous year by more than eight (8) percent, qualified voters of the City may petition for an election to determine whether to limit the tax rate to no more than eight (8) percent above the tax rate of the previous year. Brazos County bills and collects the property taxes for the City. Tax Increment Financing Zones Tax increment financing is a statutory tool as allowed by Chapter 311 of the Texas Tax Code available to municipalities to publicly finance needed improvements to infrastructure and buildings within a designated area known as a reinvestment zone. The cost of improvements to the reinvestment zone is repaid by the future tax revenues of each taxing unit that levies taxes against the property. Each taxing unit can choose to dedicate all, a portion of, or none of the tax revenue gained as a result of improvements within the reinvestment zone. A reinvestment zone can be initiated by petition of the affected property owners or a municipality can initiate a reinvestment zone without the need for a petition. Once a city has begun the process of establishing a tax increment financing reinvestment zone, other taxing units, (the county or school district) are allowed to consider participating in the tax increment financing agreement. These zones are commonly referred to as either a tax increment financing (TIF) zone or a tax increment reinvestment zone (TIRZ). Once established, a base value for the property located within the zone is determined. At the date of creation the appraised value is normally accepted as the base value. As the property within the zone develops, the County collects taxes based on the appreciated appraised values at the ad valorem tax rate established annually. Once the taxes have been paid each year the County remits the amount of taxes attributable to the increase in the appraised values (captured value) to the local government unit managing the funds. Funds are then restricted to be used in the designated area on approved projects. Project plans normally include the creation of infrastructure such as roads, street improvements, light systems, sewer systems, landscaping, parks, etc. A TIF can be terminated either on the date designated in the ordinance creating the zone, or the date on which all project costs, tax increment bonds, and City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 interest on the bonds have been paid. A TIRZ may also be terminated by a subsequent ordinance providing for an earlier or later termination date. As of September 30, 2018, the City had one expired, one dissolved and one active Tax Increment Reinvestment Zones (TIRZ): Wolf Pen Creek TIF (TIRZ No. 1) Established in 1989, the Wolf Pen Creek (WPC) TIF Fund accounts for ad valorem tax and other revenues that are accrued to the WPC TIF District. The fund also accounts for expenditures on projects that take place in the WPC District. The TIRZ received ad valorem taxes from the City of College Station, College Station Independent School District and Brazos County on the incremental increase in assessed valuation (captured value) over the base year. The TIRZ expired on December 31, 2009; therefore, no ad valorem revenue was received in FY18. Funds were repaid to CSISD during fiscal year 2018 when the school district determined that they could utilize the funds locally. The remaining fund balance totals $11,968 and represents allocated interest on the funds due to the City of College Station. The fund balance will be liquidated to the City’s general fund by September 30, 2019. West Medical District TIRZ No. 18 Established in December 2012, the West Medical District TIRZ #18 encompasses the area near the State Highway 6/Rock Prairie Road Bridge and includes both The Med Hospital and the Baylor Scott & White Hospital. To realize the vision and economic development opportunities included in the October 2012 College Station Medical District Master Plan, significant barriers to development must be overcome. These barriers include, but are not limited to, lack of basic infrastructure (potable water, fire flow, sanitary sewer, etc.) to serve development in the area and lack of transportation capacity (vehicular, pedestrian, etc.) to meet the mobility needs present in the area. Development projects in this area include Rock Prairie Road (East and West), Normand Drive Extension, and other public works projects. As the City of College Station is the only participant in this TIRZ and no additional development opportunities were available in the area, this TIRZ was dissolved on May 24, 2018 and the remaining balance of $914,724 was transferred to the General Government Projects Fund. East Medical District TIRZ No. 19 Established in December 2012, the East Medical District TIRZ #19 encompasses the area east of the State Highway 6/Rock Prairie Road Bridge and includes most of the undeveloped properties within the District. To realize the vision and economic development opportunities included in the October 2012 College Station Medical District Master Plan, significant barriers to development must be overcome. These barriers include, but are not limited to, lack of basic infrastructure (potable water, fire flow, sanitary sewer, etc.) to serve development in the area and lack of transportation capacity (vehicular, pedestrian, etc.) to meet the mobility needs present in the area. Development projects in City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 this area include Rock Prairie Road (East), Barron Road, Lakeway Drive, potable water, fire flow water supply, greenway trails, sanitary sewer service, and other public works projects. It is projected that new development in this portion of the District will meet or exceed $283 million over a twenty year period. This development activity would yield an increment of approximately $30.8 million in tax proceeds. These proceeds would be used to fund the required improvement projects, either through reimbursement to private developers, repayment of issued debt, on a “pay as you go” basis, or a combination of these options. The City of College Station is the only participant in this TIRZ at this time. The following schedule is a ten year history of relevant data with regard to these TIRZ: Zone/ Fiscal Year Base Value Ne t Taxable Value Captured Value Tax Rate Per $100 Valuation Captured Tax Revenue West Medical District TIRZ No 18 2018 (closed 5/24/2018) 1 5 $ 155,965,264 $ 203,490,330 $ 47,525,066 $ 0.497500 $ 236,437 2017 155,965,264 203,142,083 48,176,819 0.472500 218,201 2016 155,965,264 196,089,330 40,124,066 0.452500 181,735 2015 155,965,264 198,414,950 42,449,686 0.452500 191,936 2014 152,561,604 169,852,535 17,290,931 0.425958 75,131 2013 155,965,264 155,965,264 - - - East Medical District TIRZ No 19 2018 $ 3,105,476 $ 5,607,537 $ 2,502,061 $ 0.497500 $ 12,448 2017 3,105,476 3,723,760 618,284 0.472500 2,798 2016 3,105,476 3,287,180 181,704 0.452500 822 2015 3,105,476 3,327,550 222,074 0.452500 1,005 2014 3,105,476 3,348,890 243,414 0.425958 1,037 2013 3,105,476 3,105,476 - - - System Wide Impact Fees The City records impact fees received in excess of the cost of physical connection to the Water and Wastewater system as revenues. Corresponding cash is recorded as a restricted asset for future expansion of the Water and Wastewater systems. The City also records transportation impact fees received as revenues. Roadway impact fees help pay for infrastructure extensions and improvements that are needed as the result of new development. Road impact fee calculations consider the anticipated burden a development will place upon existing roadways, and are based on location and type of development. Corresponding cash is recorded as a restricted asset for future expansion of the transportation systems. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Roadway Maintenance Fees An ordinance authorizing a user fee related to the transportation system to be paid by all residents and businesses in College Station was approved by the College Station City Council on November 16, 2016. Effective January 1, 2017, this fee is restricted to be used for preventative maintenance, to fix potholes, and to properly maintain streets throughout College Station. The City conducts a pavement management assessment to prioritize roadway maintenance projects to be funded with this fee. 19. TAX ABATEMENTS The City is authorized under Chapter 380 of the Texas Local Government Code to provide economic development incentives to support the expansion of local business activity. The terms of each agreement are limited by the underlying agreements approved by the City Council. The City may recapture the abated taxes in case the party subject to the agreement is in default. For the fiscal year ended September 30, 2018, the City abated property taxes of $29,880 and provided cash incentives totaling $23,212. The following tax abatements and incentive agreements each exceeded 10% of the total amount abated: • Strategic Behavioral Health - an annual tax abatement based on a reduction in assessed value ranging from 100% to 20% over the term of the agreement on improvements to property valuation beginning 2012 for an eight year period. Strategic Behavioral Health agrees to continuously own the premises for a period of at least 8 years, beginning with the first year of abatement. Total amount abated for the fiscal year ended September 30, 2018 was $29,880. • Kalon, Inc. – an annual cash incentive beginning 2014 for a seven year period not to exceed $1,093,549. Kalon agrees to employ no fewer than a total of 100 FTE’s with a total Gross Payroll no less than $6,000,000. Total amount paid for the fiscal year ended September 30, 2018 was $0. • Science Park - an annual cash incentive equal to the incremental taxable value for each year beginning 2015 for a ten year period not to exceed $1,000,000. Science Park agrees to aggressively pursue new commercial and industrial tenants and to add value to the property and create new jobs. Total amount paid for the fiscal year ended September 30, 2018 was $23,212. • ViaSat, Inc. - an annual cash incentive based on a percentage of city ad valorem taxes paid beginning 2016 for an eight year period not to exceed $450,000. ViaSat agrees to employ a minimum total of 280 FTE’s to have and maintain for a total of 5 years. Total amount paid for the fiscal year ended September 30, 2018 was $0. 20. RISK MANAGEMENT The City of College Station is partially self-insured for property & casualty and general liability, workers’ compensation, and unemployment compensation risks. In January 2004, the City became self-funded for employee and dependent health care costs. All risk management activities are accounted for in separate City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Internal Service Funds. Actuarially-based charges are made to each of these funds using relevant bases to allow the City to reflect the cost of claims more accurately against the various funds and to minimize potential risks. Self-Insured Retention The self-insured retention for fiscal year 2018 was $500,000 per claim for workers’ compensation and general, auto and employer liability; and $650,000 for fire and police liability. Settlements have not exceeded self-insured retention in each of the past three fiscal years. The City experienced no losses above the self-insured retention in fiscal year 2018. Employee Benefits The Employee Benefits health plan was administered by Blue Cross Blue Shield of Texas from October 2017 to December 2017 and transitioned to Cigna in January 2018. This fund is funded biweekly from employee contributions and City operating funds. The City’s stop loss insurance policy limits the City’s liability to $200,000 per individual per year. The liability for outstanding losses includes $1,689,249 for claims incurred but not reported as of September 30, 2018. Property & Casualty The City self-insures for liability coverage lines. Licensed adjusters employed by the City process liability claims utilizing the services of a third party administrator. To protect the City from catastrophic loss over the self-insured retention amount, the City carries excess liability coverage through Allied World Insurance Company and Colony Insurance Company. Excess liability premiums are funded by calculated contributions from the City’s operating funds. For fiscal year 2018, City real and personal property and equipment was insured by Affiliated FM Insurance Company. Premiums are funded annually from contributions from the City's operating funds. The City carried a property insurance policy with a deductible between two percent of the Total Insured Value per property per occurrence, depending on type of loss and location of property. Direct and indirect losses have been paid out of the Property Casualty fund with losses exceeding the City’s deductible for a hail damage event that occurred City-wide on March 18, 2018. The settlement for that claim event is pending. Workers’ Compensation The City self-insures for Workers’ Compensation coverage. Licensed adjusters employed by the City process claims utilizing the services of a third party administrator. To protect the City, from catastrophic loss over the self-insured retention amount, an excess Workers’ Compensation policy is carried through Colony Insurance Company. Excess workers’ compensation policy premiums are funded by calculated contributions from the City’s operating funds as well as biweekly contributions via payroll based on risk codes established by the Texas Department of Insurance. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Unemployment As a reimbursing employer, the City uses the Unemployment Insurance Fund to pay qualified claims filed under the Texas Unemployment Compensation Act. Biweekly contributions to fund this activity are based on a percentage of payroll determined annually during the budget process. In fiscal year 2018, the Unemployment Insurance Fund did not receive contributions as a percentage of payroll due to the adequate working capital balance at the end of the prior year. Liability Recognition Liabilities in the insurance funds are reported to the carrier when a covered loss can be reasonably estimated to approach one-half of the City’s self-insured retention and recorded in the financial statements when it is a probable liability and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims incurred but not reported. Based on the most recent actuarial study, the City has recorded a potential liability of $1,075,078 in the property and casualty fund and a potential liability of $719,171 in the Workers’ Compensation fund. Changes in the balances of claims liabilities for the self-insurance funds accounted for as Internal Service Funds for fiscal years 2018 and 2017 are as follows: 2018 2017 Unpaid claims, October 1 $ 2,253,369 $ 2,394,706 Incurred claims (including IBNR’s) 12,611,077 8,313,925 Claims paid (11,380,948) (8,455,262) Unpaid claims, September 30 $ 3,483,498 $ 2,253,369 Amounts due in one year $ 3,483,498 $ 2,253,369 21. BRAZOS VALLEY SOLID WASTE MANAGEMENT AGENCY, Inc. (BVSWMA, Inc.) In February 2010, the City Councils for the City of Bryan and the City of College Station approved Articles of Incorporation for BVSWMA, Inc., a Local Government Corporation under the provisions of Subchapter D of Chapter 431, Texas Transportation Code; and Chapter 394, Texas Local Government Code. Subsequent to the end of the fiscal year ended September 30, 2010, BVSWMA transferred all of its assets to BVSWMA, Inc. College Station reports BVSWMA, Inc. as a joint venture with the City of Bryan and recognizes 50% ownership in BVSWMA, Inc. in the City’s financial statements. The powers of BVSWMA, Inc. are vested in a seven member Board of Directors, with each City Council appointing three members and the seventh member to be selected by an approval process set forth in the Articles of Incorporation. The bylaws for BVSWMA, Inc. establish powers that include the issuance of debt, acquisition of land and equipment, the hiring of a general manager and staff to maintain and operate the facilities, and the establishment of tipping fees. BVSWMA, Inc. revenues are derived from tipping fees paid by landfill customers that include the Cities of Bryan and College Station, other unaffiliated businesses and the general public. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 A primary government is obligated in some manner for the debt of an organization if it is legally obligated to assume all or part of the debt in the event of default. Per Article XIV, paragraph 14.03, of the Articles of Incorporation of BVSWMA, Inc., upon dissolution of the corporation the assets of the Corporation shall be distributed equally between the Cities and any remaining liabilities of the corporation shall be shared equally between the Cities. In 2010, the City issued $5,145,000 in Certificates of Obligation, Series 2010, to finance the construction of the Twin Oaks Landfill site. BVSWMA, Inc. has agreed to pay the City an amount equal to the future debt service requirements of these certificates of obligation. At September 30, 2018, the City reported a receivable in the amount of $2,955,000, of which $230,000 is due and payable to the City within one year. BVSWMA, Inc. owns two landfill sites: • The initial landfill site known as Rock Prairie Landfill, located in College Station, was closed in 2011 as it reached operating capacity. Certain maintenance and monitoring functions will be performed at the site for thirty years after closure. Although closure and post closure care costs will be paid only near or after the date that the landfill stopped accepting waste, BVSWMA, Inc. reports a portion of these closure and post closure care costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. • The Twin Oaks Landfill, located in Grimes County, was opened in 2011 and has an expected capacity of over 50 years. A summary of BVSWMA’s audited annual financial statements for September 30, 2018 and 2017 and the years then ended are as follows: 2018 2017 Current assets and other assets $ 15,591,168 $ 13,066,289 Capital assets 31,445,828 31,628,653 Total assets 47,036,996 44,694,942 Current liabilities 1,012,084 1,528,640 Noncurrent liabilities 11,326,399 11,518,819 Total liabilities 12,338,483 13,047,459 Deferred gain on refunding 176,028 210,797 Total deferred inflows of resources 176,028 210,797 Net investment in capital assets 24,879,800 24,557,854 Unrestricted 9,642,685 6,878,832 Total net position $ 34,522,485 $ 31,436,686 City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Revenues Landfill charges $ 10,470,981 $ 9,434,698 Compost facility revenue 294,501 366,063 Miscellaneous revenue 33,991 26,146 Total revenues 10,799,473 9,826,907 Operating expenses (7,647,151) (7,513,953) Interest expense (255,067) (281,527) Other non-operating revenues 188,544 32,627 Change in net position 3,085,799 2,064,054 Net position, beginning of year 31,436,686 29,372,632 Net position, end of year $ 34,522,485 $ 31,436,686 The City’s undivided 50% share of BVSWMA, Inc.’s net position for fiscal year 2018 was $17,261,241 and is reflected in the Sanitation Fund. A copy of BVSWMA, Inc.’s financial statements may be obtained from the City’s Fiscal Services Department. 22. PENSION PLAN Plan Description The City accounts for pension cost under GASB Statement No. 68, Accounting and Financial Reporting for Pensions. The City of College Station participates as one of over 880 plans in the multi-employer, nontraditional, joint contributory, hybrid defined benefit pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple-employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the System with a six-member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS’s defined benefit pension plan is a tax-qualified plan under Section 401 (a) of the Internal Revenue Code. TMRS issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.com. All eligible employees of the city are required to participate in TMRS. TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. At retirement, the benefit is calculated as if the sum of the employee’s contributions, with interest, and the city-financed monetary credits, with interest, were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven actuarially equivalent payment options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member’s deposits and interest. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Plan provisions for the City were as follows: Employee deposit rate 7.00% Matching ratio (City to Employee) 2 to 1 Years required for vesting 5 Service retirement eligibility 20 years at any age; 5 years at age 60 and above Updated service credit 75% repeating transfers Annuity increase (to retirees) 50% of CPI repeating Employees covered by benefit terms at the December 31, 2017 valuation and measurement date are as follows: Inactive employees or beneficiaries currently receiving benefits 445 Inactive employees entitled to but not yet receiving benefits 520 Active employees 905 Total Covered Employees 1,870 Contributions The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross earnings, and the city matching percentages are either 100%, 150%, or 200%, both as adopted by the governing body of the city. Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost method. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees for the City of College Station were required to contribute 7% of their annual gross earnings during the fiscal year. The contribution rates for the City of College Station were 13% and 13% in calendar years 2018 and 2017, respectively. The City’s contributions to TMRS for fiscal year 2018 were $7,501,446 and were greater than the required contributions of $7,483,465. Net Pension Liability The City’s Net Pension Liability (NPL) was measured as of December 31, 2017, and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. Actuarial Assumptions The Total Pension Liability in the December 31, 2017 actuarial valuation was determined using the following actuarial assumptions: City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Inflation 2.5% per year Overall payroll growth 3.00% Investment rate of return 6.75%, net of pension plan investment expense including inflation Salary increases were based on service-related tables. Mortality rates for active members, retirees, and beneficiaries were based on the gender-distinct RP2000 Combined Mortality Table with Blue Collar Adjustment, with male rates multiplied by 109% and female rates multiplied by 103%. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For disabled annuitants, the gender-distinct RP2000 Disabled Retiree Mortality Table is used, with slight adjustments. Actuarial assumptions used in the December 31, 2017 valuation were based on the results of actuarial experience studies. Assumptions are reviewed annually. The long-term expected rate of return on pension plan investments is 6.75%. The pension plan’s policy with regard to the allocation of invested assets is established and may be amended by the TMRS Board of Trustees. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short-term and long-term funding needs of TMRS. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Target Allocation Long-Term Expected Real Rate of Return (Arithmetic) Domestic Equity 17.5% 4.55% International Equity 17.5% 6.35% Core Fixed Income 10.0% 1.00% Non-Core Fixed 20.0% 3.90% Real Return 10.0% 3.80% Real Estate 10.0% 4.50% Absolute Return 10.0% 3.75% Private Equity 5.0% 7.50% Total 100.0% Discount Rate City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows used to determine the discount rate assumed that employee contributions will remain at the current 7.0% and employer contributions will be made at the rates specified in statute. Based on that assumption, the pension plan’s Fiduciary Net Position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. Increase (Decrease) Total Pension Liability (a) Plan Fiduciary Net Position (b) Net Pension Liability (a) – (b) Balances at 12/31/2016 $ 267,674,838 $ 226,024,775 $ 41,650,063 Changes for the year: Service cost 8,418,324 - 8,418,324 Interest 17,986,722 - 17,986,722 Differences between expected and actual 1,192,275 - 1,192,275 Changes of assumptions - - - Contributions—employer - 7,223,267 (7,223,267) Contributions—employee - 3,773,603 (3,773,603) Net investment income - 31,325,172 (31,325,172) Benefit payments, including refunds of employee contributions (10,828,101) (10,828,101) - Administrative expense - (162,346) 162,346 Other changes - (8,228) 8,228 Net changes 16,769,220 31,323,367 (14,554,147) Balances at 12/31/2017 $ 284,444,058 $ 257,348,143 $ 27,095,915 Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the City, as well as what the City’s net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage- point higher than the current rate: City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 1% Decrease 5.75% Current Discount Rate 6.75% 1% Increase 7.75% City’s Net Pension Liability (Asset) $69,618,084 $27,095,915 ($7,527,694) Pension Plan Fiduciary Net Position Detailed information about the pension plan’s Fiduciary Net Position is available in a separately-issued TMRS financial report. That report may be obtained on the Internet at www.tmrs.com. Pension Expense For the year ended September 30, 2018, the City recognized pension expense of $8,761,018. Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension At September 30, 2018, the City reported deferred outflows and inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Differences between actuarial assumptions and actual experience $ 1,657,969 $ 266,287 Changes of assumptions 1,434,725 - Differences between projected earnings and actual earnings - 6,554,487 Contributions subsequent to the measurement date 5,492,869 - Total $ 8,585,563 $ 6,820,774 Deferred outflows of resources, of $5,492,869 related to pensions resulting from contributions subsequent to the measurement date, will be recognized as a reduction of the net pension liability for the measurement year ending December 31, 2018 and recognized in the City’s financial statements as of September 30, 2019. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense in the following years indicated below: Fiscal Year Ending September 30 Net deferred outflows (inflows) of resources 2019 $ 1,215,672 2020 885,422 2021 (2,857,280) 2022 (2,971,894) Thereafter - Total $ (3,728,080) City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 23. OTHER POST EMPLOYMENT BENEFITS Plan Description Plan administration: As required by state laws, in addition to the pension benefits described in Note 22, the City makes available certain postretirement benefits to employees who meet TMRS retirement qualifications, retire from City employment, and enroll in the plan before the effective date of their retirement. The City’s OPEB Plan is a single employer defined benefit plan, defined by City policy. The OPEB Plan does not issue a separate report that includes financial statements and required supplementary information for the OPEB Plan. Plan membership. At September 30, 2018 membership consisted of the following: Medical and/or Dental Benefits Life Insurance Benefits Retirees and Retiree Spouses 82 180 Actives Employees 887 887 969 1,067 Benefits provided: The City’s defined benefit Other Post-Employment Benefits (OPEB) Plan offers medical, dental, vision, drug, and life insurance benefits to retired employees and their eligible dependents. The OPEB Plan is a single employer defined benefit OPEB plan administered by the City. The benefit levels offered to retired employees and eligible dependents are the same as those afforded to active employees as the City’s group health insurance plan covers both active and retired members. All medical, dental, vision and drug care benefits are provided through the City’s self-insured health plan. As long as monthly premium payments are made, the healthcare plan provides coverage until age 65 for retired employees and eligible dependents enrolled in the City’s OPEB Plan. The life insurance offered though the OPEB Plan provides a $10,000, fully insured death benefit coverage upon retirement, which ceases upon attainment of age 65. The Life insurance benefit for eligible retirees is paid entirely by the City. Contributions: Benefit provisions, as well as retiree premium contributions, are established by City management. The City determines the employer and participant contribution rates annually, based on recommendations of City staff and the City’s benefit consultant. For the year ended September 30, 2018, the City’s average contribution rate was 2.6 percent of covered-employee payroll. Investments Investment policy: The goal of the Plan’s investment program is to generate adequate long-term returns that, when combined with contributions, will result in sufficient assets to pay the present and future obligations of the Plan. The Plan has a Balanced Risk Tolerance with a Strategic Asset Allocation of the following: City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Asset Target Allocation Class Allocation Range Cash 5.0% 0 - 20% Fixed Income 35.0% 30% - 50% Equity 60.0% 50% - 70% Total 100.0% Concentrations: Assets of the OPEB plan are held in Trust by PARS which is fully discussed in Note 24 to these financial statements. Rate of return: For the year ended December 31, 2017, the annual money-weighted rate of return on investments, net of investment expense, was 1.88 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Receivables The OPEB plan has no receivables from long-term contracts with the City for contributions at September 30, 2018. Allocated Insurance Contracts The OPEB plan has no allocated insurance contracts excluded from OPEB plan assets at September 30, 2018. Reserves The OPEB plan has no reserves recorded at September 30, 2018. Net OPEB Liability The components of the net OPEB liability of the City at September 30, 2018 based on the December 31, 2017 measurement and actuarial valuation date, were as follows: Total OPEB liability - ending $7,815,261 Plan fiduciary net position - ending (1,521,285) Net OPEB liability - ending $6,293,976 City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Plan fiduciary net position as a percentage of total of total OPEB liability 19.47% Changes in the Net OPEB Liability For the year ended September 30, 2018, the City recognized reduction in the OPEB liability of $11,528,149. Effective January 1, 2018, the City has made the following changes to the benefits offered under its Other Post Employment Benefit Plan. To be eligible for premium pricing for medical, dental, vision, and drug benefits at the time of retirement, employees must: • Meet TMRS retirement qualifications, • Be 55 years of age or older, • Have five (5) years of employment at the City of College Station, • Be enrolled in the plan before the effective date of their retirement. In addition, certain actuarial changes were made when enacting GASB 75 that affected the Net OPEB Liability. Those changes included: • The Entry Age Normal Actuarial Cost Method must be used to attribute the actuarial present value of benefits to service periods in determining the OPEB Liability. This differed from the Projected Unit Credit Cost Method previously used by the City. • Discount Rate changes were allowed under GASB 75. Those changes included that for the unfunded portion of the plan, the discount rate is based on yields of 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. For the funded portion, however, the City could continue to use an assumption similar to the current discount rate. • Instead of recording expense equal to the Annual Required Contribution (ARC), GASB No. 75 required expensing the change in Net OPEB Liability from one period to the next. Some sources of this change are expensed immediately, while others are amortized over a period of approximately ten to twenty years depending on plan demographics. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Components of the change in the Net OPEB Liability is as follows: Increase (Decrease) Total OPEB Liability Plan Fiduciary Net Position Net OPEB Liability Balances as of December 31, 2016 $ 17,822,125 $ - $ 17,822,125 Changes for the year: Service cost 941,652 - 941,652 Interest 698,156 - 698,156 Changes of benefit terms (7,476,535) - (7,476,535) Differences between expected and actual experience (707,212) - (707,212) Changes of assumptions or other inputs (2,874,882) - (2,874,882) Contributions—employer - 2,081,852 (2,081,852) Net investment income - 28,378 (28,378) Administrative expenses (902) 902 Benefit payments, including refunds of employee contributions (588,043) (588,043) - Net changes (10,006,864) 1,521,285 (11,528,149) Balances as of December 31, 2017 $ 7,815,261 $ 1,521,285 $ 6,293,976 Actuarial assumptions. The total OPEB liability for the year ended September 30, 2018 as measured as of December 31, 2017 was determined by an actuarial valuation as of that date using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Inflation 3.0% Salary increases 4% to 11% including inflation Discount rate 7.00% (3.78% in prior year before establishment of Trust) Healthcare cost trend rates 8.0% in FY19 declining by 0.5% per year to rate of 4.75% in FYE 2026 and beyond Mortality rates were based on the RP-2000 Combined Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale BB. The actuarial assumptions used in the December 31, 2017 valuation were based on the results of an actuarial experience study for the period December 31, 2010 to December 31, 2014. The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the target asset allocation are summarized in the following table: Expected Asset Target Real Rate of Weighted Class Allocation Return Average Cash 5.0% 0.75% 0.04% Fixed Income 35.0% 3.56% 1.25% Equity 60.0% 5.75% 3.45% Total 100.0% N/A 4.74% Discount rate. The discount rate used to measure the total OPEB liability was 7.0 percent. The discount rate used to determine the total OPEB Liability as of the beginning of the measurement year prior to the establishment of the OPEB trust was 3.78%. The weighted average of the Expected Real Rate of Return is added to the Expected Long-Term Inflation assumption and reduced by expected investment expenses (4.74% + 3.00% - 0.75% = 6.99%). This result is then rounded to the nearest 25 basis points to obtain the Expected Long-Term Rate of Return of 7.00%. The projected cash flows into the plan are equal to projected benefit payments out of the plan plus prefunding contributions that have been approved by the City Council. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates. The assumed rate of general inflation has been updated since the valuation used for the September 30, 2017 liability to reflect the actuary’s best expectation of future plan experience. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 The long-term expected rate of return for the plan is 7.0 percent. The plan operates on a pay as you go basis and accumulates assets in trust in addition to the pay as you go amount. Based on the discount rate assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long- term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability. Sensitivity of the net OPEB liability to changes in the discount rate. The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.0 percent) or 1-percentage-point higher (8.0 percent) than the current discount rate: 1% Decrease (6.00%) Current Discount Rate (7.00%) 1% Increase (8.00%) Net OPEB liability $6,841,856 $6,293,976 $5,798,335 Sensitivity of the net OPEB liability to changes in the healthcare cost trend rates. The following presents the net OPEB liability of the City, as well as what the City’s net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower (7.0 percent decreasing to 3.75 percent) or 1-percentage-point higher (9.0 percent decreasing to 5.75 percent) than the current healthcare cost trend rates: 1% Decrease (7.00% decreasing to 3.75%) Current Healthcare Cost Trend Rates (8.00% decreasing to 4.75% 1% Increase (9.00% decreasing to 5.75%) Net OPEB liability $5,535,091 $6,293,976 $7,184,860 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the fiscal year ended September 30, 2018, the City recognized OPEB expense/(income) of $(6,358,056). At September 30, 2018, the City reported changes to deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources as follows: City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 Deferred Outflows of Resources Deferred Inflows of Resources Differences between actuarial assumptions and actual experience $ - $ 609,396 Changes of assumptions - 2,477,250 Differences between projected and actual - 1,595 Contribution subsequent to the measurement date 1,323,623 - Total $ 1,323,623 $ 3,088,241 Deferred outflows of resources, of $1,323,623 related to OPEB resulting from contributions subsequent to the measurement date, will be recognized as a reduction of the net OPEB liability for the measurement year ending December 31, 2018 and recognized in the City’s financial statements as of September 30, 2019. Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Fiscal Year Ending September 30 Deferred inflows of resources 2019 (495,847) 2020 (495,847) 2021 (495,847) 2022 (495,846) 2023 (495,448) Thereafter (609,406) Total $ 3,088,241 24. OPEB TRUST On September 11, 2017, the City Council approved a resolution adopting the Public Agencies Retirement Services (PARS) Post-Retirement Health Care Plan Trust and on September 25, 2017, the City Council passed resolution 2017-0564 appropriating the funds. Effective September 27, 2017, the City entered into a section 115 Irrevocable Exclusive Benefit agent multiple-employer trust to fund its Other Postemployment Benefits Obligation. Trust and Investment Management Services are provided by Public Agency Retirement Services (PARS) and is administered by the City. The investment manager that executes investment transactions is Highmark Capital Management, Inc. and the custodian of the trust’s funds is US Bank. City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 With the establishment of the trust, the City can pre-fund (make annual payments in advance of the obligation) and allocate funds for the express purpose of funding future OPEB costs. The investment returns can be used to reduce the actuarial contributions and can result in lower long-term costs of the plan. As of September 30, 2018 the trust’s balance was $2,646,668. 25. DEFERRED COMPENSATION PLAN The City offers its employees two deferred compensation plans created in accordance with Internal Revenue Code ("IRC") 457. The plans, as amended, are available to all employees and permits them to defer a portion of their salary until future years. Participation in either plan is optional. The deferred compensation is not available to employees until termination, retirement, death, or emergency. All amounts of compensation deferred under the plans (until paid or made available to the employee or other beneficiary) were placed in trusts for the exclusive benefit of the participants and the beneficiaries. This action is in accordance with changes made to IRC Section 457. The City does not have any fiduciary responsibility or administrative duties relating to the deferred compensation plan other than remitting employees’ contribution to the trustees. Accordingly, the City has not presented the assets and liabilities of the Plans in these basic financial statements. 26. COMMITMENTS AND CONTINGENCIES Litigation The City is a party to legal proceedings, many of which occur in the normal course of operations. It is not possible at the present time to estimate the ultimate outcome or liability, if any, of the City with respect to the various proceedings. Management believes any unfavorable outcomes would not be material. Contingencies The City participates in a number of federal and state assisted grant programs. These programs are subject to program compliance audits by the grantors or their representatives. Any liability for reimbursement which may arise as the result of these audits is not believed to be material. Construction Commitments The City accounts for construction contracts as costs are incurred and has contractual commitments of $41,952,954 in the Capital Projects Funds, $3,028,547 in the Water Fund, $6,361,388 in the Wastewater Fund, and $6,116,641 in the Electric Fund related to construction projects. These commitments will be funded primarily from long-term debt. Financial Hedging According to the Public Funds Investment Act, a municipality that owns a municipal electric utility that is engaged in the distribution and sale of electric energy or natural gas to the public may enter into a City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 hedging contract and related security and insurance agreements in relation to fuel oil, natural gas, coal, nuclear fuel, and electric energy to protect against loss due to price fluctuations. In fiscal year 2014, the City signed a contract with the City of Garland under which the City of Garland will serve as the qualified scheduling entity that will formulate and discuss the hedging strategies and options available to the City to manage its power supply portfolio and price. Congestion Revenue Rights (CRRs) function as a mitigation against the cost of resolving congestion in the Electric Reliability Council of Texas (ERCOT) market. The City participates in the CRRs auctions to procure CRRs for use in normal operations of delivery of electricity to its customers. These purchases are recorded as a prepaid purchased power expense in the Electric Fund. The City has not yet engaged in any hedging activity. Tax Abatements As mentioned in Note 19, the City is authorized under Chapter 380 of the Texas Local Government Code to provide economic development incentives to support the expansion of local business activity. The terms of each agreement are limited by the underlying agreements approved by the City Council. The City may recapture the abated taxes in case the party subject to the agreement is in default and typically requires that certain economic conditions be met before any abatement is received from the City. For the fiscal year ended September 30, 2018, the City had the following commitments under economic development incentive agreements: • Strategic Behavioral Health – Annual tax abatement based on improvements to property valuation beginning 2015 for an eight year period. A total of $6,005,946 remains committed under this agreement. • Kalon, Inc. – Annual cash incentive beginning 2014 for a seven year period not to exceed $1,093,549. A total of $984,195 remains committed under this agreement. • Science Park – Annual cash incentive equal to 50% of the incremental taxable value for the year with a total amount to be paid out not to exceed $1,000,000. A total of $1,000,000 remains committed under this agreement. • ViaSat, Inc. – Annual cash incentive based on taxes assessed and collected by the City and then shared with the City of Bryan pursuant to a Joint Agreement with a total amount to be paid out not to exceed $450,000 over a six year period. A total of $450,000 remains committed under this agreement. • CTX Land Investments, LLC – (Dartmouth Extension) – Upon completion of construction of Phase 1 of the Dartmouth Extension project, cash incentive equal to 25% of the cost of construction up to a maximum of $250,000. A total of $250,000 remains committed under this agreement. In addition, upon completion of Phase 1 of construction, any third party developer of designated land will be City of College Station Notes to the Financial Statements For the Fiscal Year Ended September 30, 2018 entitled to a dollar for dollar credit up to the maximum amount paid for roadway impact fees. A total of $0 is committed under this agreement. • College Station Town Center, LP – Contract Payments calculated as a tax abatement based on completion of specified capital projects and improvements to property valuation beginning 2017 for a twenty year period. The amount of the tax abated is limited by and tied to the completion of the specified capital projects. 27. SUBSEQUENT EVENTS Subsequent events have been evaluated through the date of the auditors’ report, March 8, 2019, which is the date the financial statements were available to be issued. 2014 2015 2016 2017 6,408,154$ 7,447,204$ 7,927,963$ 8,418,324$ 15,448,489 16,281,185 16,959,936 17,986,722 Changes of benefit terms - - - - and actual experience (1,163,171)969,442 520,233 1,192,275 - 3,565,506 - - (9,022,396)(9,612,289) (10,055,239) (10,828,101) 11,671,076 18,651,048 15,352,893 16,769,220 221,999,821 233,670,897 252,321,945 267,674,838 Total pension liability - ending (a) $ 233,670,897 252,321,945$ 267,674,838$ 284,444,058$ Plan fiduciary net position: Contributions - employer 5,916,175$ 6,435,064$ 6,465,626$ 7,223,267$ Contributions - employee 3,060,843 3,420,245 3,542,203 3,773,603 Net investment income 11,457,666 312,181 14,322,932 31,325,172 Benefit payments, including refunds of employee contributions (9,022,396) (9,612,289) (10,055,239) (10,828,101) Administrative expense (119,620) (190,146) (161,748) (162,346) Other (9,835) (9,391) (8,715) (8,228) Net change in plan fiduciary net position 11,282,833 355,664 14,105,059 31,323,367 Plan fiduciary net position - beginning 200,281,220 211,564,053 211,919,716 226,024,775 Plan fiduciary net position - ending (b)211,564,053 211,919,716 226,024,775 257,348,143 Net pension liability - ending (a) - (b)22,106,844$ 40,402,229$ 41,650,063$ 27,095,915$ Plan fiduciary net position as a percentage of total pension liability 90.54%83.99%84.44%90.47% Covered payroll 43,726,328$ 48,579,284$ 50,593,256$ 53,860,040 Net pension liability as a percentage of covered employee payroll 50.56%83.17%82.32%50.31% Note: This schedule is intended to present information for ten years. However, previous years' information is not available. CITY OF COLLEGE STATION, TEXAS Benefit payments, including refunds of employee contributions Net change in total pension liability Total pension liability - beginning Total pension liability: Service cost Interest Differences between expected Change in assumptions Required Supplementary Information Texas Municipal Retirement System Schedule of City's Changes in Net Pension Liability and Related Ratios Last Four Fiscal Years, Ended December 31 (Unaudited) (5) (2)Actuarially (6) Contribution determined Contributions as in relation to (3)contributions as a percentage (1)the Contribution a percentage of covered Actuarially actuarially excess (4)of covered employee Fiscal determined determined (deficiency)Covered payroll payroll Year contribution contribution (2) - (1)payroll (1)/(4)(2)/(4) 2015 5,881,274$ 6,068,368$ 187,094$ 45,654,271$ 12.88%13.29% 2016 6,447,330 6,447,328 (2) 49,982,796 12.90%12.90% 2017 6,969,939 7,018,244 48,305 53,016,848 13.15%13.24% 2018 7,483,465 7,501,446 17,981 53,860,040 13.89%13.93% Notes to Schedule Valuation date:Actuarially determined contribution rates are calculated as of December 31 and become effective in January 13 months later. Method and assumptions used to determine contribution rates: Actuarial cost method Entry age Normal Amortization method Level percentage of payroll, closed Remaining amortization period 28 years Asset valuation method 10-years smoothed market; 15% soft corridor Inflation 2.50% Salary increases 3.50% to 10.5% inlcuding inflation Investment rate of return 6.75% Retirement age Experience-based table of rates that are specific to the City's plan of benefits. Last updated for the 2015 valuation pursuant to an experience study of the period 2010 - 2014. Mortality RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and females rates multiplied by 103% and projected on a fully generational basis with scale BB. Other information:There were no benefit changes during the year. The data in this schedule is based on the City's fiscal year-end, not the valuation/measurement date as provided in other schedules of this report. CITY OF COLLEGE STATION, TEXAS Required Supplementary Information (Unaudited) Texas Municipal Retirement System Schedule of City's Contributions Last Ten Fiscal Years 2017 941,652$ 698,156 Changes of benefit terms (7,476,535) and actual experience (707,212) (2,874,882) (588,043) (10,006,864) 17,822,125 Total OPEB liability - ending (a)7,815,261$ Plan fiduciary net position: Contributions - employer 2,081,852 Net investment income 28,378 Administrative expense (902) Benefit payments (588,043) Net change in plan fiduciary net position 1,521,285 Plan fiduciary net position - beginning - Plan fiduciary net position - ending (b)1,521,285 Net OPEB liability - ending 1 - 2 6,293,976$ Plan fiduciary net position as a percentage of total OPEB liability 19.47% Covered payroll 54,714,253$ Net pension OPEB as a percentage of covered employee payroll 11.50% Note: This schedule is intended to present information for ten years. However, previous years' information is not available. The following assumptions have been changed since the previous valuation: a. The assumed rateof general inflation has been updated since the previous valuation to reflect the actuary's best expectation of future plan experience. b. Assumptions for Per Capita Health Benefit Costs, Health Benefit Cost and Retiree Contribution trends and the Expense Trend rate have been updated since the previous valuation to reflect the recent experience and its effect on our short-term expectations. c. The Administrative and Stop-Loss Expense assumptions, for expenses which are directly related to the payment of benefits, were updated to reflect current expense levels. d. The discount rate was changed as a result of requirements by GASB No. 75. e. The actuarial funding method has been changed to Entry Age as a result of the requirements of GASB No. 75. Benefit revisions have been adopted since the prior valuation. The benefit changes for future retirees include the addition of age 55 and 5 years of City of College Station Service requirement to be eligible for OPEB provided by the City. Total OPEB liability - beginning Change in assumptions Total OPEB liability: Service cost Interest Differences between expected Benefit payments Net change in total OPEB liability CITY OF COLLEGE STATION, TEXAS Required Supplementary Information City of College Station Employees Other Post-Employment Benefits Plan Schedule of Changes in Other Post-Employement Benefits and Related Ratios Fiscal Year, Ended December 31 Last 10 Fiscal Years (Unaudited) (2) Contribution (6) in relation to (3)Contributions as (1)the Contribution a percentage Actuarially actuarially excess (4)of covered Fiscal determined determined (deficiency)Covered payroll Year contribution contribution (2) - (1)payroll (2)/(4) 2018 516,572$ 1,489,139$ 972,567$ 57,246,277$ 2.60% Notes to Schedule Valuation date:December 31, 2017 Actuarially determined contribution rates are calculated as of Measurement date:December 31, 2017 Method and assumptions used to determine contribution rates: Actuarial cost method Entry age Amortization method Level percentage of payroll, open Remaining amortization period 30 years Asset valuation method Market value Inflation 3.00% Healthcare cost trend rates 8.00% for FY19 decreasing 0.50% per year to an ultimate rate of 4.75% for FY26 and later years Salary increases 4.00% to 11.00% inlcuding inflation Discount rate 7.00% Aggregate payroll growth 3.50% Retirement age Experience-based tables of rates that are specific to the class of employee Mortality i. Active Paricipants: RP2000 Combined Mortality Table for healthy lives with Blue Collar Adjustment with male rates multiplied by 54.5% and females rates multiplied by 51.5%. These rates are projected on a fully generational basis by scale BB. ii. Retirees and Retiree Spouses: RP-2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 103%. These rates are projected on a fully generataional basis by scale BB. iii. Disabled Retirees: RP-2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and females rates multiplied by 103% with a 3-year set-forward for both males and females. In addition, a 3% minimum mortality rate is applied. These rates are projected on a fully generational basis by scale BB. The data in this schedule is based on the City's fiscal year-end, not the valuation/measurement date as provided in other schedules of this report. Note: This schedule is intended to present information for ten years. However, previous years' information is not available. Schedule of Contributions Last Ten Fiscal Years CITY OF COLLEGE STATION, TEXAS Required Supplementary Information (Unaudited) City of College Station Employees Other Post-Employment Benefit Plan Annual Money-Weighted Year Rate of Return 2017 1.88% The information in this schedule has been determined as of the measurement date (December 31) of the City's net OPEB liability and is intended to show information for 10 years. However, until a full 10-year trend is compiled in accordance with the provision, only periods for which such information is available are presented. Last 10 Years* (Unaudited) City of College Station Employees Other Post-Employment Benefits Plan CITY OF COLLEGE STATION, TEXAS Schedule of Investment Returns Required Supplementary Information Year Ended December 31 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Ad valorem taxes $ 23,976,222 $ 23,976,222 $ 24,073,003 $ - $ 24,073,003 $ 96,781 Sales taxes 28,526,512 28,526,512 28,799,040 - 28,799,040 272,528 Other taxes 3,067,573 3,067,573 3,457,485 - 3,457,485 389,912 Licenses and permits 1,870,750 1,870,750 1,772,959 - 1,772,959 (97,791) Intergovernmental 415,720 629,366 910,169 - 910,169 280,803 Charges for services 3,590,631 3,590,631 3,940,837 - 3,940,837 350,206 Fines, forfeits, and penalties 3,049,650 3,049,650 3,206,835 - 3,206,835 157,185 Investment income 200,000 200,000 423,608 28,725 452,333 252,333 Rents and royalties 174,500 174,500 219,538 - 219,538 45,038 Contributions - - 7,361 - 7,361 7,361 Other 394,350 418,444 642,547 - 642,547 224,103 Total revenues 65,265,908 65,503,648 67,453,382 28,725 67,482,107 1,978,459 Expenditures Police 23,026,482 23,142,565 22,631,648 - 22,631,648 (510,917) Fire 18,975,543 19,147,255 19,624,919 - 19,624,919 477,664 Public works 10,069,849 10,260,643 9,575,300 - 9,575,300 (685,343) Parks and recreation 9,612,989 9,816,446 9,033,748 - 9,033,748 (782,698) Library 1,122,463 1,122,463 1,118,522 - 1,118,522 (3,941) Planning and development services 4,290,509 4,318,684 3,740,969 - 3,740,969 (577,715) Information technology 5,392,172 5,392,172 4,488,885 - 4,488,885 (903,287) Fiscal services 4,042,380 4,056,885 3,947,830 - 3,947,830 (109,055) General government 6,903,947 7,104,800 6,066,416 - 6,066,416 (1,038,384) Contributions 1,363,624 1,363,624 1,380,580 - 1,380,580 16,956 Other 150,000 52,471 - - - (52,471) Capital outlay 162,709 164,025 319,406 - 319,406 155,381 Total expenditures 85,112,667 85,942,033 81,928,223 - 81,928,223 (4,013,810) Excess (deficit) of revenues over (under) expenditures (19,846,759) (20,438,385) (14,474,841) 28,725 (14,446,116) 5,992,269 Other financing sources (uses) Transfers in 18,585,855 18,585,855 18,370,943 (366,811) 18,004,132 (581,723) Transfers out (3,031,702) (3,031,702) (3,031,702) - (3,031,702) - Contingency (303,000) (175,840) - - - 175,840 Total other financing sources (uses) 15,251,153 15,378,313 15,339,241 (366,811) 14,972,430 (405,883) Net change in fund balances (4,595,606) (5,060,072) 864,400 (338,086) 526,314 5,586,386 Fund balances - beginning 21,159,564 21,159,564 21,159,564 - 21,159,564 - Prior period adjustment - - 2,706,262 - - - Fund balances - ending $ 16,563,958 $ 16,099,492 $ 24,730,226 $ (338,086) $ 21,685,878 $ 5,586,386 Note: The City prepares its annual budget on a budget basis which differs from a GAAP basis. The budget and all transactions are presented in accordance with the budget basis in the Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund to provide a relevant comparison of actual results with the budget. See the sections titled Budgetary Basis of Accounting and Budgetary Control in Note 1, for further explanation of budget information. CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual General Fund For the Fiscal Year Ended September 30, 2018 COMBINING FINANCIAL STATEMENTS General Fund(s) General Fund - the City's primary operating fund, which accounts for all financial resources of the general government, except those required to be accounted for in another fund. All general tax revenues and other receipts that are not restricted by law or contractual agreement to some other fund are accounted for in this fund. General operating expenditures, fixed charges and capital improvement costs that are not paid through other funds are paid from the General Fund. The General Fund Type has historically incorporated several funds, which have been reported collectively as the General Fund in the City’s Comprehensive Annual Financial Report. For the fiscal year ending September 30, 2018, the General Funds include: Economic Development Fund – accounts for funds used for business attraction and retention. Monies for this purpose are transferred to the Economic Development Fund from the General Fund. Spring Creek Local Government Corporation Fund – accounts for the revenue and expenditure associated with the Spring Creek Corporate Campus. Unclaimed Property Fund – accounts for checks issued but not cashed. After the abandonment period of 1 year for payroll checks over $100 and 3 years for accounts payable checks over $100, these funds are sent to the State Comptroller. Efficiency Time Payment Fund – accounts for unrestricted revenue collected by the Municipal Court pursuant to Texas Local Government Code, Section 133.103. General Fund Economic Development Spring Creek Local Government Corporation Unclaimed Property Efficiency Time Payment Total General Fund(s) Assets Cash and cash equivalents $ 19,225,098 $ 1,786,186 $ 12,878 $ 241,121 $ 50,407 21,315,690$ Equity in investments 3,322,438 308,799 2,226 41,685 8,715 3,683,863 Receivable (net of allow for uncollectible) 7,413,536 - - - - 7,413,536 Investments interest receivable 16,590 1,542 11 - 44 18,187 Inventories 44,764 - - - - 44,764 Prepaid costs 583,754 - - - - 583,754 Loan receivable 95,331 - - - - 95,331 Total assets $ 30,701,511 $ 2,096,527 $ 15,115 $ 282,806 $ 59,166 $ 33,155,125 Liabilities Accounts payable $ 1,291,628 $ - $ 15,134 $ - $ - 1,306,762$ Accrued liabilities 2,212,005 - - 282,806 - 2,494,811 Interfund Payable - - 95,331 - - 95,331 Retainage payable 11,815 - - - - 11,815 Customer construction advances 1,496,379 - - - - 1,496,379 Refundable deposits 77,043 - - - - 77,043 Total liabilities 5,088,870 - 110,465 282,806 - 5,482,141 Deferred inflows of resources Unavailable revenue-property taxes 216,179 - - - - 216,179 Unavailable revenue-other 666,236 - - - - 666,236 Total deferred inflow of resources 882,415 - - - - 882,415 Fund Balances Nonspendable 628,518 - - - - 628,518 Assigned 2,128,177 - - - - 2,128,177 Unassigned 21,973,531 2,096,527 (95,350)- 59,166 24,033,874 Total fund balances (deficit) 24,730,226 2,096,527 (95,350) - 59,166 26,790,569 Total liabilities, deferred inflows of resources, and fund balances $ 30,701,511 $ 2,096,527 $ 15,115 $ 282,806 $ 59,166 $ 33,155,125 September 30, 2018 CITY OF COLLEGE STATION, TEXAS Combining Balance Sheet General Fund(s) General Economic Development Spring Creek Local Government Corporation Unclaimed Property Efficiency Time Payment Total General Fund(s) Revenues Ad valorem taxes $ 24,073,003 $ - $ - $ - $ - $ 24,073,003 Sales taxes 28,799,040 - - - - 28,799,040 Other taxes 3,457,485 - - - - 3,457,485 Licenses and permits 1,772,959 - - - - 1,772,959 Intergovernmental 910,169 - - - - 910,169 Charges for services 3,940,837 - - - - 3,940,837 Fines, forfeits, and penalties 3,206,835 - - - 4,701 3,211,536 Investment income (loss) 423,608 25,414 (19) - 877 449,880 Rents and royalties 219,538 - - - - 219,538 Contributions (Revenue) 7,361 - - - - 7,361 Other 642,547 - - - - 642,547 Total revenues 67,453,382 25,414 (19) - 5,578 67,484,355 Expenditures Police 22,631,648 - - - - 22,631,648 Fire 19,624,919 - - - - 19,624,919 Public works 9,575,300 - - - - 9,575,300 Parks and recreation 9,033,748 - 95,331 - - 9,129,079 Library 1,118,522 - - - - 1,118,522 Planning and development services 3,740,969 - - - - 3,740,969 Information technology 4,488,885 - - - - 4,488,885 Fiscal services 3,947,830 - - - 6,658 3,954,488 General government 6,066,416 98,600 - - - 6,165,016 Contributions 1,380,580 - - - - 1,380,580 Capital outlay 319,406 - - - - 319,406 Total expenditures 81,928,223 98,600 95,331 - 6,658 82,128,812 Excess (deficit) of revenues over (under) expenditures (14,474,841) (73,186) (95,350) - (1,080) (14,644,457) Other financing sources (uses) Transfers in 18,370,943 875,000 - - - 19,245,943 Transfers out (3,031,702) - - - - (3,031,702) Total other financing sources (uses) 15,339,241 875,000 - - - 16,214,241 Net change in fund balances 864,400 801,814 (95,350) - (1,080) 1,569,784 Fund balances - beginning 21,159,564 1,294,713 - - 60,246 22,514,523 Prior period adjustment 2,706,262 - - - - 2,706,262 Fund balances (deficit) - ending $ 24,730,226 $ 2,096,527 $ (95,350) $ - $ 59,166 $ 26,790,569 CITY OF COLLEGE STATION, TEXAS Combining Statement of Revenues, Expenditures, and Changes in Fund Balances General Fund(s) For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Ad valorem taxes $ 23,976,222 $ 23,976,222 $ 24,073,003 $ - $ 24,073,003 $ 96,781 Sales taxes 28,526,512 28,526,512 28,799,040 - 28,799,040 272,528 Other taxes 3,067,573 3,067,573 3,457,485 - 3,457,485 389,912 Licenses and permits 1,870,750 1,870,750 1,772,959 - 1,772,959 (97,791) Intergovernmental 415,720 629,366 910,169 - 910,169 280,803 Charges for services 3,590,631 3,590,631 3,940,837 - 3,940,837 350,206 Fines, forfeits, and penalties 3,049,650 3,049,650 3,206,835 - 3,206,835 157,185 Investment income 200,000 200,000 423,608 28,725 452,333 252,333 Rents and royalties 174,500 174,500 219,538 - 219,538 45,038 Contributions - - 7,361 - 7,361 7,361 Other 394,350 418,444 642,547 - 642,547 224,103 Total revenues 65,265,908 65,503,648 67,453,382 28,725 67,482,107 1,978,459 Expenditures Police 23,026,482 23,142,565 22,631,648 - 22,631,648 (510,917) Fire 18,975,543 19,147,255 19,624,919 - 19,624,919 477,664 Public works 10,069,849 10,260,643 9,575,300 - 9,575,300 (685,343) Parks and recreation 9,612,989 9,816,446 9,033,748 - 9,033,748 (782,698) Library 1,122,463 1,122,463 1,118,522 - 1,118,522 (3,941) Planning and development services 4,290,509 4,318,684 3,740,969 - 3,740,969 (577,715) Information technology 5,392,172 5,392,172 4,488,885 - 4,488,885 (903,287) Fiscal services 4,042,380 4,056,885 3,947,830 - 3,947,830 (109,055) General government 6,903,947 7,104,800 6,066,416 - 6,066,416 (1,038,384) Contributions 1,363,624 1,363,624 1,380,580 - 1,380,580 16,956 Other 150,000 52,471 - - - (52,471) Capital outlay 162,709 164,025 319,406 - 319,406 155,381 Total expenditures 85,112,667 85,942,033 81,928,223 - 81,928,223 (4,013,810) Excess (deficit) of revenues over (under) expenditures (19,846,759) (20,438,385) (14,474,841) 28,725 (14,446,116) 5,992,269 Other financing sources (uses) Transfers in 18,585,855 18,585,855 18,370,943 (366,811) 18,004,132 (581,723) Transfers out (3,031,702) (3,031,702) (3,031,702) - (3,031,702) - Contingency (303,000) (175,840) - - - 175,840 Total other financing sources (uses) 15,251,153 15,378,313 15,339,241 (366,811) 14,972,430 (405,883) Net change in fund balances (4,595,606) (5,060,072) 864,400 (338,086) 526,314 5,586,386 Fund balances - beginning 21,159,564 21,159,564 21,159,564 - 21,159,564 - Prior period adjustment - - 2,706,262 - - - Fund balances - ending $ 16,563,958 $ 16,099,492 $ 24,730,226 $ (338,086) $ 21,685,878 $ 5,586,386 Note: The City prepares its annual budget on a budget basis which differs from a GAAP basis. The budget and all transactions are presented in accordance with the budget basis in the Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund to provide a relevant comparison of actual results with the budget. See the sections titled Budgetary Basis of Accounting and Budgetary Control in Note 1, for further explanation of budget information. CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual General Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Investment income $ 7,940 $ 7,940 $ 25,414 $ 2,669 $ 28,083 $ 20,143 Total revenues 7,940 7,940 25,414 2,669 28,083 20,143 Expenditures General government 1,008,168 1,028,468 98,600 - 98,600 (929,868) Other 20,000 20,000 - - - (20,000) Total expenditures 1,028,168 1,048,468 98,600 - 98,600 (949,868) Excess (deficit) of revenues over (under) expenditures (1,020,228) (1,040,528) (73,186) 2,669 (70,517) 970,011 Other financing sources (uses) Transfers in 875,000 875,000 875,000 - 875,000 - Total other financing sources (uses) 875,000 875,000 875,000 - 875,000 - Net change in fund balances (145,228) (165,528) 801,814 2,669 804,483 970,011 Fund balances - beginning 1,294,713 1,294,713 1,294,713 - 1,294,713 - Fund balances - ending $ 1,149,485 $ 1,129,185 $ 2,096,527 $ 2,669 $ 2,099,196 $ 970,011 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Economic Development Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Investment income (loss) $ - $ - $ (19) $ 19 $ - $ - Total revenues - - (19) 19 - Expenditures Parks and recreation - 229,700 95,331 - 95,331 (134,369) Total expenditures - 229,700 95,331 - 95,331 (134,369) Excess (deficit) of revenues over (under) expenditures - (229,700) (95,350) 19 (95,331) 134,369 Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances - (229,700) (95,350) 19 (95,331) 134,369 Fund balances - beginning - - - - - - Fund balances - ending $ - $ (229,700) $ (95,350) $ 19 $ (95,331) $ 134,369 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Spring Creek Local Government Corporation Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Fines, forfeits, and penalties $ 5,805 $ 5,805 $ 4,701 $ - $ 4,701 $ (1,104) Investment income 485 485 877 76 953 468 Total revenues 6,290 6,290 5,578 76 5,654 (636) Expenditures Fiscal services 8,660 8,660 6,658 - 6,658 (2,002) Total expenditures 8,660 8,660 6,658 - 6,658 (2,002) Excess (deficit) of revenues over (under) expenditures (2,370) (2,370) (1,080) 76 (1,004) 1,366 Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances (2,370) (2,370) (1,080) 76 (1,004) 1,366 Fund balances - beginning 60,246 60,246 60,246 - 60,246 - Fund balances - ending $ 57,876 $ 57,876 $ 59,166 $ 76 $ 59,242 $ 1,366 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Efficiency Time Payment Fund For the Fiscal Year Ended September 30, 2018 COMBINING FINANCIAL STATEMENTS NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted or committed to expenditures for particular purposes other than debt service or capital projects. Court Technology Fee Fund – account for funds collected by municipal court to be used to finance the purchase of or to maintain technological enhancements for a municipal court. Court Security Fee Fund – account for funds collected by municipal court used to finance security personnel for a municipal court or to finance items when used for the purpose of providing security services. Juvenile Case Manager Fee Fund – account for funds collected by municipal court used to finance the salary and benefits of a juvenile case manager. Police Seizure Fund – account for funds obtained through forfeiture provisions under federal laws; seized money from delivery of controlled substance in accordance with Public Health Laws. These monies are to be used for training and other law enforcement activities. Memorial Cemetery Fund – account for sales of plots (and options of plots) in the Aggie Field of Honor & Municipal Cemetery. Memorial Cemetery Endowment Fund – account for principal trust amounts received and related interest income for the College Station Memorial Cemetery. Texas Avenue Cemetery Endowment Fund – to account for principal trust amounts received and related interest income for the College Station Cemetery. Hotel Tax Fund – account for the receipt and expenditure of funds received by the City from the assessment of hotel and motel occupancy tax. Usage of funds is restricted to the construction and maintenance of convention and civic facilities and to the promotion of tourism and arts within the City. Community Development Fund – account for funds granted to the City by the Federal Department of Housing and Urban Development for use on various community improvement projects. Wolf Pen Creek Tax Increment Financing District Fund – account for the receipt and expenditure of funds received by the City from the creation of a tax increment financing district for the Wolf Pen Creek area. Parks Escrow Fund – account for the receipt and expenditure of funds received by the City from residential land developers, who dedicate land, or money in lieu of land, for use in the development of community and neighborhood parks in residential areas. Sidewalk Zones – account for the receipt and expenditure of funds received by the City from residential land developers, who dedicate land, or money in lieu of land, for use in the development of community and neighborhood sidewalks. Drainage Utility Fund – to account for the cost of drainage maintenance and drainage improvements made with funds provided by a drainage utility fee and proceeds from the sale of general obligation bonds. Truancy Prevention Fund – accounts for funds collected by municipal court used to fund truancy prevention and intervention services. West Medical District Tax Increment Reinvestment Zone No. 18 Fund – account for the receipt and expenditure of funds received by the City from the creation of a tax increment financing district for the West Medical District. East Medical District Tax Increment Reinvestment Zone No. 19 Fund – account for the receipt and expenditure of funds received by the City from the creation of a tax increment financing district for the East Medical District. Public, Educational and Government Access Channel Fee Fund – account for fees collected to fund educational and governmental broadcasting on the local access channel. R.E. Meyer Estate Restricted Gift Fund – account for gift bequest to be used for programs designed to benefit senior citizens. Roadway Maintenance Fee Fund – account for funds which will help fix potholes and properly maintain streets throughout College Station. Fun For All Playground Fund – account for receipt and expenditure of funds for the construction of the inclusive playground located at Central Park. System-Wide Water Impact Fee Fund – account for fees collected to fund existing and future capital improvement water projects that serve or will serve new developments within the City’s service area in lieu of water utility rate increases. System-Wide Wastewater Impact Fee Fund – account for fees collected to fund existing and future capital improvement wastewater projects that serve or will serve new developments within the City’s service area in lieu of water utility rate increases. System-Wide Roadway Impact Fee Fund – account for fees collected to fund existing and future capital improvement roadway projects that serve or will serve new developments within the City. CAPITAL PROJECTS FUNDS Capital Projects Funds are used to account for the acquisition and construction of major capital improvements other than those financed by proprietary funds and trust funds. Parks and Recreation Projects Fund – to account for the costs of new parks and improvements to existing parks made with funds provided from the sale of general obligation bonds, certificates of obligation and by investing those proceeds. Court Technology Fee Court Security Fee Juvenile Case Manager Fee Police Seizure Memorial Cemetery Memorial Cemetery Endowment Texas Avenue Cemetery Endowment Hotel Tax Community Development Assets Cash and cash equivalents $ 396,707 $ 28,746 $ 145,253 $ 111,722 $ 1,380,820 $ 1,058,934 $ 1,659,177 $ 17,281,021 $ 576,729 Equity in investments 68,584 4,970 25,112 19,315 238,719 183,071 286,842 2,987,578 99,706 Receivable (net of allow for uncollectible) - - - - 32,953 16,231 121 - 116,198 Investments interest receivable 342 25 125 96 1,192 914 1,432 14,918 - Inventories - - - - 3,568,722 1,757,729 109 - - Prepaid Costs - - - - - - - - - Loans receivable - - - - - - - - 1,960,079 Total assets $ 465,633 $ 33,741 $ 170,490 $ 131,133 $ 5,222,406 $ 3,016,879 $ 1,947,681 $ 20,283,517 $ 2,752,712 Liabilities Accounts payable $ - $ - $ - $ 3,050 $ - $ 97,353 $ 1,238 $ 1,167,044 $ 84,322 Accrued liabilities - 1,667 4,480 - - - - - 11,038 Retainage payable - - - - - 7,192 - 73,275 9,968 Total liabilities - 1,667 4,480 3,050 - 104,545 1,238 1,240,319 105,328 Deferred inflows of resources Unavailable revenue-loans receivable - - - - - - - - 1,960,079 Unavailable revenue-other - - - - 32,953 16,231 120 - - Total deferred inflow of resources - - - - 32,953 16,231 120 - 1,960,079 Fund balances Restricted 465,633 32,074 166,010 128,083 - - - 12,277,170 687,305 Committed - - - - 5,189,453 2,896,103 1,946,323 6,766,028 - Total fund balances 465,633 32,074 166,010 128,083 5,189,453 2,896,103 1,946,323 19,043,198 687,305 Total liabilities, deferred inflows of recources, and fund balances $ 465,633 $ 33,741 $ 170,490 $ 131,133 $ 5,222,406 $ 3,016,879 $ 1,947,681 $ 20,283,517 $ 2,752,712 September 30, 2018 Special Revenue CITY OF COLLEGE STATION, TEXAS Combining Balance Sheet Nonmajor Governmental Funds Wolf Pen Creek Tax Increment Financing District Parks Escrow Sidewalk Zones Drainage Utility Truancy Prevention Fee West Medical District Tax Increment Reinvestment Zone No. 18 East Medical District Tax Increment Reinvestment Zone No. 19 Public, Educational and Governmental Access Channel Fee Assets Cash and cash equivalents $ 180,717 $ 6,098,111 $ 87,484 $ 1,298,360 $ 55,011 $ - $ 15,525 $ 625,909 Equity in investments 31,242 1,054,254 15,124 224,463 9,510 - 2,684 108,208 Receivable (net of allow for uncollectible) - - - 261,837 - - - - Investments interest receivable 156 5,264 76 1,121 47 - 13 541 Inventories - - - - - - - - Prepaid Costs - - - 1,708 - - - - Loans receivable - - - - - - - - Total assets $ 212,115 $ 7,157,629 $ 102,684 $ 1,787,489 $ 64,568 $ - $ 18,222 $ 734,658 Liabilities Accounts payable $ 200,147 $ 63,423 $ - $ 34,314 $ - $ - $ - $ - Accrued liabilities - - - 36,926 - - - - Retainage payable - 29,614 - - - - - - Total liabilities 200,147 93,037 - 71,240 - - - - Deferred inflows of resources Unavailable revenue-loans receivable - - - - - - - - Unavailable revenue-other - - - - - - - - Total deferred inflow of resources - - - - - - - - Fund balances Restricted 11,968 7,064,592 102,684 - 64,568 - 18,222 734,658 Committed - - - 1,716,249 - - - - Total fund balances 11,968 7,064,592 102,684 1,716,249 64,568 - 18,222 734,658 Total liabilities, deferred inflows of recources, and fund balances $ 212,115 $ 7,157,629 $ 102,684 $ 1,787,489 $ 64,568 $ - $ 18,222 $ 734,658 CITY OF COLLEGE STATION, TEXAS Combining Balance Sheet - continued Nonmajor Governmental Funds September 30, 2018 Capital Projects R.E. Meyer Estate Restricted Gift Roadway Maintenance Fee Fun For All Playground System-Wide Water Impact Fee System-Wide Wastewater Impact Fee System-Wide Roadway Impact Fee Parks and Recreation Projects Total Other Governmental Funds Assets Cash and cash equivalents $ 130,899 $ 632,944 $ 850,607 $ 22,805 $ 1,229,945 $ 225,637 $ 5,598,180 $ 39,691,243 Equity in investments 22,630 109,425 147,055 3,942 212,635 39,008 967,825 6,861,902 Receivable (net of allow for uncollectible) - 468,996 - - - - - 896,336 Investments interest receivable 113 546 734 20 1,062 195 4,833 33,765 Inventories - - - - - - - 5,326,560 Prepaid Costs - - - - - - - 1,708 Loans receivable - - - - - - - 1,960,079 Total assets $ 153,642 $ 1,211,911 $ 998,396 $ 26,767 $ 1,443,642 $ 264,840 $ 6,570,838 $ 54,771,593 Liabilities Accounts payable $ - $ 422,708 $ 36,719 $ - $ - $ - $ 299,919 $ 2,410,237 Accrued liabilities - - - - - - - 54,111 Retainage payable - - 1,933 - - - 39,594 161,576 Total liabilities - 422,708 38,652 - - - 339,513 2,625,924 Deferred inflows of resources Unavailable revenue-loans receivable - - - - - - - 1,960,079 Unavailable revenue-other - - - - - - 365 49,669 Total deferred inflow of resources - - - - - - 365 2,009,748 Fund balances Restricted 153,642 - 959,744 26,767 1,443,642 264,840 6,230,960 30,832,562 Committed - 789,203 - - - - - 19,303,359 Total fund balances 153,642 789,203 959,744 26,767 1,443,642 264,840 6,230,960 50,135,921 Total liabilities, deferred inflows of recources, and fund balances $ 153,642 $ 1,211,911 $ 998,396 $ 26,767 $ 1,443,642 $ 264,840 $ 6,570,838 $ 54,771,593 Special Revenue CITY OF COLLEGE STATION, TEXAS Combining Balance Sheet - continued Nonmajor Governmental Funds September 30, 2018 Court Technology Fee Court Security Fee Juvenile Case Manager Fee Police Seizure Memorial Cemetery Memorial Cemetery Endowment Texas Avenue Cemetery Endowment Hotel Tax Community Development Revenues Ad valorem taxes $ - $ - $ - $ - $ - $ - $ - $ - $ - Sales taxes - - - - - - - - - Other taxes - - - - - - - 5,737,743 - Intergovernmental - - - 42,405 - - - - 1,267,361 Charges for services - - - - 352,579 176,004 9,605 - - Fines, forfeits, and penalties 52,197 39,145 65,241 - - - - - - Investment income 6,877 509 2,908 1,859 23,273 17,385 28,952 301,212 - Contributions - - - - - - - - - Other - - - - - - 210 10,436 26,537 Total revenues 59,074 39,654 68,149 44,264 375,852 193,389 38,767 6,049,391 1,293,898 Expenditures Police - - - 20,888 - - - - - Public works - - - - - - - - - Parks and recreation - - - - 230,365 197,661 3,279 447,378 - Planning and development services - - - - - - - - - Fiscal services 42,217 37,029 121,033 - - - - - - General government - - - - - - - 418 2,446,868 Contributions - - - - - - - 3,526,538 - Capital outlay 19,217 - - - - 117,342 - 1,527,894 164,233 Debt issuance cost - - - - - - - - - Total expenditures 61,434 37,029 121,033 20,888 230,365 315,003 3,279 5,502,228 2,611,101 Excess (deficit) of revenues over (under) expenditures (2,360) 2,625 (52,884) 23,376 145,487 (121,614) 35,488 547,163 (1,317,203) Other financing sources (uses) Issuance of bonds - - - - - - - - - Premium on bonds issued - - - - - - - - - Transfers out - - - - (264,453) - - (494,605) (7,784) Total other financing source (uses) - - - - (264,453) - - (494,605) (7,784) Net change in fund balances (2,360) 2,625 (52,884) 23,376 (118,966) (121,614) 35,488 52,558 (1,324,987) Fund balances - beginning 467,993 29,449 218,894 104,707 5,308,419 3,017,717 1,910,835 18,990,640 2,012,292 Fund balances - ending $ 465,633 $ 32,074 $ 166,010 $ 128,083 $ 5,189,453 $ 2,896,103 $ 1,946,323 $ 19,043,198 $ 687,305 Special Revenue CITY OF COLLEGE STATION, TEXAS Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Fiscal Year Ended September 30, 2018 Wolf Pen Creek Tax Increment Financing District Parks Escrow Sidewalk Zones Drainage Utility Truancy Prevention Fee West Medical District Tax Increment Reinvestment Zone No. 18 East Medical District Tax Increment Reinvestment Zone No. 19 Public, Educational and Governmental Access Channel Fee Revenues Ad valorem taxes $ - $ - $ - $ - $ - $ 236,437 $ 12,448 $ - Sales taxes - - - - - - - - Other taxes - - - - - - - 197,576 Intergovernmental - - - - - - - - Charges for services - - - 2,323,471 - - - - Fines, forfeits, and penalties - - - - 11,554 - - - Investment income 11,968 50,785 1,680 25,011 870 5,280 70 10,250 Contributions - 779,751 36,580 - - - - - Other - - - - - - - - Total revenues 11,968 830,536 38,260 2,348,482 12,424 241,717 12,518 207,826 Expenditures Police - - - - - - - - Public works - - - 1,292,884 - - - - Parks and recreation - - - - - - - - Planning and development services - - - 114,175 - - - - Fiscal services - - - - 164 - - - General government 1,277,906 - - 97,739 - - - 61,794 Contributions - - - - - - - - Capital outlay - 1,226,986 32,124 472,742 - - - 19,984 Debt issuance cost - - - - - - - - Total expenditures 1,277,906 1,226,986 32,124 1,977,540 164 - - 81,778 Excess (deficit) of revenues over (under) expenditures (1,265,938) (396,450) 6,136 370,942 12,260 241,717 12,518 126,048 Other financing sources (uses) Issuance of bonds - - - - - - - - Premiums on bonds issued - - - - - - - - Transfers out - (41,229) - (527,575) - (914,724) - - Total other financing source (uses) - (41,229) - (527,575) - (914,724) - - Net change in fund balances (1,265,938) (437,679) 6,136 (156,633) 12,260 (673,007) 12,518 126,048 Fund balances - beginning 1,277,906 7,502,271 96,548 1,872,882 52,308 673,007 5,704 608,610 Fund balances - ending $ 11,968 $ 7,064,592 $ 102,684 $ 1,716,249 $ 64,568 $ - $ 18,222 $ 734,658 CITY OF COLLEGE STATION, TEXAS Combining Statement of Revenues, Expenditures, and Changes in Fund Balances-continued Nonmajor Governmental Funds For the Fiscal Year Ended September 30, 2018 Capital Projects R.E. Meyer Estate Restricted Gift Roadway Maintenance Fee Fun For All Playground System-Wide Water Impact Fee System-Wide Wastewater Impact Fee System-Wide Roadway Impact Fee Parks and Recreation Projects Total Other Governmental Funds Revenues Ad valorem taxes $ - $ - $ - $ - $ - $ - $ - $ 248,885 Sales taxes - - - - - - - - Other taxes - - - - - - - 5,935,319 Intergovernmental - - - - - - - 1,309,766 Charges for services - 4,375,386 - - - - 123,900 7,360,945 Fines, forfeits, and penalties - - - - - - - 168,137 Investment income 6,591 23,508 (1,271) 1,519 12,216 1,737 62,776 595,965 Contributions - - 1,000,000 - - - - 1,816,331 Other - 222,683 - 339,325 1,606,025 263,103 - 2,468,319 Total revenues 6,591 4,621,577 998,729 340,844 1,618,241 264,840 186,676 19,903,667 Expenditures Police - - - - - - - 20,888 Public works - 4,028,558 - - - - - 5,321,442 Parks and recreation - - - - - - 2,917 881,600 Planning and development services - - - - - - - 114,175 Fiscal services - - - - - - - 200,443 General government - - - - - - - 3,884,725 Contributions - - - - - - - 3,526,538 Capital outlay - - 38,985 - - - 2,459,319 6,078,826 Debt issuance cost - - - - - - 63,210 63,210 Total expenditures - 4,028,558 38,985 - - - 2,525,446 20,091,847 Excess (deficit) of revenues over (under) expenditures 6,591 593,019 959,744 340,844 1,618,241 264,840 (2,338,770) (188,180) Other financing sources (uses) Issuance of bonds - - - - - - 5,005,000 5,005,000 Premium on bonds issued - - - - - - 268,644 268,644 Transfers out (573,190) (134,457) - (359,152) (330,075) - (46,569) (3,693,813) Total other financing source (uses) (573,190) (134,457) - (359,152) (330,075) - 5,227,075 1,579,831 Net change in fund balances (566,599) 458,562 959,744 (18,308) 1,288,166 264,840 2,888,305 1,391,651 Fund balances - beginning 720,241 330,641 - 45,075 155,476 - 3,342,655 48,744,270 Fund balances - ending $ 153,642 $ 789,203 $ 959,744 $ 26,767 $ 1,443,642 $ 264,840 $ 6,230,960 $ 50,135,921 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances-continued Nonmajor Governmental Funds For the Fiscal Year Ended September 30, 2018 Special Revenue CITY OF COLLEGE STATION, TEXAS Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Fines, forfeits, and penalties $ 73,318 $ 73,318 $ 52,197 $ - $ 52,197 $ (21,121) Investment income 3,622 3,622 6,877 593 7,470 3,848 Total revenues 76,940 76,940 59,074 593 59,667 (17,273) Expenditures Fiscal services 81,619 81,619 42,217 - 42,217 (39,402) Capital outlay - 25,000 19,217 - 19,217 (5,783) Total expenditures 81,619 106,619 61,434 - 61,434 (45,185) Excess (deficit) of revenues over (under) expenditures (4,679) (29,679) (2,360) 593 (1,767) 27,912 Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances (4,679) (29,679) (2,360) 593 (1,767) 27,912 Fund balances - beginning 467,993 467,993 467,993 - 467,993 - Fund balances - ending $ 463,314 $ 438,314 $ 465,633 $ 593 $ 466,226 $ 27,912 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Court Technology Fee Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Fines, forfeits, and penalties $ 64,366 $ 64,366 $ 39,145 $ - $ 39,145 $ (25,221) Investment income 181 181 509 43 552 371 Total revenues 64,547 64,547 39,654 43 39,697 (24,850) Expenditures Fiscal services 40,711 40,711 37,029 - 37,029 (3,682) Total expenditures 40,711 40,711 37,029 - 37,029 (3,682) Excess (deficit) of revenues over (under) expenditures 23,836 23,836 2,625 43 2,668 (21,168) Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances 23,836 23,836 2,625 43 2,668 (21,168) Fund balances - beginning 29,449 29,449 29,449 - 29,449 - Fund balances - ending $ 53,285 $ 53,285 $ 32,074 $ 43 $ 32,117 $ (21,168) CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Court Security Fee Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Fines, forfeits, and penalties $ 105,890 $ 105,890 $ 65,241 $ - $ 65,241 $ (40,649) Investment income 1,891 1,891 2,908 217 3,125 1,234 Total revenues 107,781 107,781 68,149 217 68,366 (39,415) Expenditures Fiscal services 125,218 125,218 121,033 - 121,033 (4,185) Total expenditures 125,218 125,218 121,033 - 121,033 (4,185) Excess (deficit) of revenues over (under) expenditures (17,437) (17,437) (52,884) 217 (52,667) (35,230) Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances (17,437) (17,437) (52,884) 217 (52,667) (35,230) Fund balances - beginning 218,894 218,894 218,894 - 218,894 - Fund balances - ending $ 201,457 $ 201,457 $ 166,010 $ 217 $ 166,227 $ (35,230) CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Juvenile Case Manager Fee Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Intergovernmental $ 25,000 $ 25,000 $ 42,405 $ - $ 42,405 $ 17,405 Investment income 686 686 1,859 167 2,026 1,340 Total revenues 25,686 25,686 44,264 167 44,431 18,745 Expenditures Police 30,000 30,000 20,888 - 20,888 (9,112) Total expenditures 30,000 30,000 20,888 - 20,888 (9,112) Excess (deficit) of revenues over (under) expenditures (4,314) (4,314) 23,376 167 23,543 27,857 Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances (4,314) (4,314) 23,376 167 23,543 27,857 Fund balances - beginning 104,707 104,707 104,707 - 104,707 - Fund balances - ending $ 100,393 $ 100,393 $ 128,083 $ 167 $ 128,250 $ 27,857 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Police Seizure Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Charges for services $ 266,352 $ 266,352 $ 352,579 $ - $ 352,579 $ 86,227 Investment income 11,000 11,000 23,273 2,064 25,337 14,337 Total revenues 277,352 277,352 375,852 2,064 377,916 100,564 Expenditures Parks and recreation - - 230,365 (227,598) 2,767 2,767 Total expenditures - - 230,365 (227,598) 2,767 2,767 Excess (deficit) of revenues over (under) expenditures 277,352 277,352 145,487 229,662 375,149 97,797 Other financing sources (uses) Transfers out (264,453) (264,453) (264,453) - (264,453) - Total other financing sources (uses) (264,453) (264,453) (264,453) - (264,453) - Net change in fund balances 12,899 12,899 (118,966) 229,662 110,696 97,797 Fund balances - beginning 5,308,419 5,308,419 5,308,419 - 5,308,419 - Fund balances - ending $ 5,321,318 $ 5,321,318 $ 5,189,453 $ 229,662 $ 5,419,115 $ 97,797 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Memorial Cemetery Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Charges for services $ 131,188 $ 131,188 $ 176,004 $ - $ 176,004 $ 44,816 Investment income 8,000 8,000 17,385 1,583 18,968 10,968 Total revenues 139,188 139,188 193,389 1,583 194,972 55,784 Expenditures Parks and recreation 15,000 24,000 197,661 (112,101) 85,560 61,560 Capital outlay 40,000 193,717 117,342 - 117,342 (76,375) Total expenditures 55,000 217,717 315,003 (112,101) 202,902 (14,815) Excess (deficit) of revenues over (under) expenditures 84,188 (78,529) (121,614) 113,684 (7,930) 70,599 Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances 84,188 (78,529) (121,614) 113,684 (7,930) 70,599 Fund balances - beginning 3,017,717 3,017,717 3,017,717 - 3,017,717 - Fund balances - ending $ 3,101,905 $ 2,939,188 $ 2,896,103 $ 113,684 $ 3,009,787 $ 70,599 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Memorial Cemetery Endowment Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Charges for services $ 5,000 $ 5,000 $ 9,605 $ - $ 9,605 $ 4,605 Investment income 16,000 16,000 28,952 2,480 31,432 15,432 Other - - 210 - 210 210 Total revenues 21,000 21,000 38,767 2,480 41,247 20,247 Expenditures Parks and recreation - - 3,279 (29) 3,250 3,250 Total expenditures - - 3,279 (29) 3,250 3,250 Excess (deficit) of revenues over (under) expenditures 21,000 21,000 35,488 2,509 37,997 16,997 Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances 21,000 21,000 35,488 2,509 37,997 16,997 Fund balances - beginning 1,910,835 1,910,835 1,910,835 - 1,910,835 - Fund balances - ending $ 1,931,835 $ 1,931,835 $ 1,946,323 $ 2,509 $ 1,948,832 $ 16,997 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Texas Avenue Cemetery Endowment Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Other taxes $ 5,125,000 $ 5,125,000 $ 5,737,743 $ - $ 5,737,743 $ 612,743 Investment income 140,000 140,000 301,212 25,829 327,041 187,041 Other 10,000 10,000 10,436 - 10,436 436 Total revenues 5,275,000 5,275,000 6,049,391 25,829 6,075,220 800,220 Expenditures Parks and recreation 336,850 336,850 447,378 - 447,378 110,528 General government 285,000 85,000 418 - 418 (84,582) Contributions 3,792,235 3,986,658 3,526,538 - 3,526,538 (460,120) Capital outlay 2,574,479 4,318,360 1,527,894 - 1,527,894 (2,790,466) Total expenditures 6,988,564 8,726,868 5,502,228 - 5,502,228 (3,224,640) Excess (deficit) of revenues over (under) expenditures (1,713,564) (3,451,868) 547,163 25,829 572,992 4,024,860 Other financing sources (uses) Transfers out (721,336) (721,336) (494,605) 14,244 (480,361) 240,975 Total other financing sources (uses) (721,336) (721,336) (494,605) 14,244 (480,361) 240,975 Net change in fund balances (2,434,900) (4,173,204) 52,558 40,073 92,631 4,265,835 Fund balances - beginning 18,990,640 18,990,640 18,990,640 - 18,990,640 - Fund balances - ending $ 16,555,740 $ 14,817,436 $ 19,043,198 $ 40,073 $ 19,083,271 $ 4,265,835 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Hotel Tax Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Intergovernmental $ 2,632,620 $ 2,632,620 $ 1,267,361 $ 61,475 $ 1,328,836 $ (1,303,784) Other - - 26,537 295 26,832 26,832 Total revenues 2,632,620 2,632,620 1,293,898 61,770 1,355,668 (1,276,952) Expenditures General government 1,825,862 1,825,862 2,446,868 (1,316,986) 1,129,882 (695,980) Capital outlay 806,758 806,758 164,233 - 164,233 (642,525) Total expenditures 2,632,620 2,632,620 2,611,101 (1,316,986) 1,294,115 (1,338,505) Excess (deficit) of revenues over (under) expenditures - - (1,317,203) 1,378,756 61,553 61,553 Other financing sources (uses) Transfers out - - (7,784) - (7,784) (7,784) Total other financing sources (uses) - - (7,784) - (7,784) (7,784) Net change in fund balances - - (1,324,987) 1,378,756 53,769 53,769 Fund balances - beginning 2,012,292 2,012,292 2,012,292 - 2,012,292 - Fund balances - ending $ 2,012,292 $ 2,012,292 $ 687,305 $ 1,378,756 $ 2,066,061 $ 53,769 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Community Development Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Investment income $ 9,500 $ 9,500 $ 11,968 $ 270 $ 12,238 $ 2,738 Total revenues 9,500 9,500 11,968 270 12,238 2,738 Expenditures General government - 1,077,759 1,277,906 - 1,277,906 200,147 Total expenditures - 1,077,759 1,277,906 - 1,277,906 200,147 Excess (deficit) of revenues over (under) expenditures 9,500 (1,068,259) (1,265,938) 270 (1,265,668) (197,409) Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances 9,500 (1,068,259) (1,265,938) 270 (1,265,668) (197,409) Fund balances - beginning 1,277,906 1,277,906 1,277,906 - 1,277,906 - Fund balances - ending $ 1,287,406 $ 209,647 $ 11,968 $ 270 $ 12,238 $ (197,409) CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Wolf Pen Creek Tax Increment Financing District Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Investment income $ 10,000 $ 10,000 $ 50,785 $ 9,115 $ 59,900 $ 49,900 Contributions 400,000 400,000 779,751 - 779,751 379,751 Total revenues 410,000 410,000 830,536 9,115 839,651 429,651 Expenditures Capital outlay 5,493,225 6,037,725 1,226,986 - 1,226,986 (4,810,739) Total expenditures 5,493,225 6,037,725 1,226,986 - 1,226,986 (4,810,739) Excess (deficit) of revenues over (under) expenditures (5,083,225) (5,627,725) (396,450) 9,115 (387,335) 5,240,390 Other financing sources (uses) Transfers out (34,489) (34,489) (41,229) 6,740 (34,489) - Total other financing sources (uses) (34,489) (34,489) (41,229) 6,740 (34,489) - Net change in fund balances (5,117,714) (5,662,214) (437,679) 15,855 (421,824) 5,240,390 Fund balances - beginning 7,502,271 7,502,271 7,502,271 - 7,502,271 - Fund balances - ending $ 2,384,557 $ 1,840,057 $ 7,064,592 $ 15,855 $ 7,080,447 $ 5,240,390 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Parks Escrow Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Investment income $ 1,000 $ 1,000 $ 1,680 $ 131 $ 1,811 $ 811 Contributions - - 36,580 - 36,580 36,580 Total revenues 1,000 1,000 38,260 131 38,391 37,391 Expenditures Capital outlay 92,300 92,300 32,124 - 32,124 (60,176) Total expenditures 92,300 92,300 32,124 - 32,124 (60,176) Excess (deficit) of revenues over (under) expenditures (91,300) (91,300) 6,136 131 6,267 97,567 Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances (91,300) (91,300) 6,136 131 6,267 97,567 Fund balances - beginning 96,548 96,548 96,548 - 96,548 - Fund balances - ending $ 5,248 $ 5,248 $ 102,684 $ 131 $ 102,815 $ 97,567 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Sidewalk Zones Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Charges for services $ 2,295,700 $ 2,295,700 $ 2,323,471 $ - $ 2,323,471 $ 27,771 Investment income 15,000 15,000 25,011 1,940 26,951 11,951 Total revenues 2,310,700 2,310,700 2,348,482 1,940 2,350,422 39,722 Expenditures Public works 1,412,597 1,412,597 1,292,884 - 1,292,884 (119,713) Planning and development services 129,336 129,336 114,175 - 114,175 (15,161) General government 87,284 87,284 97,739 (10,455) 87,284 - Capital outlay 200,000 200,000 472,742 - 472,742 272,742 Total expenditures 1,829,217 1,829,217 1,977,540 (10,455) 1,967,085 137,868 Excess (deficit) of revenues over (under) expenditures 481,483 481,483 370,942 12,395 383,337 (98,146) Other financing sources (uses) Transfers out (517,470) (517,470) (527,575) 10,105 (517,470) - Total other financing sources (uses) (517,470) (517,470) (527,575) 10,105 (517,470) - Net change in fund balances (35,987) (35,987) (156,633) 22,500 (134,133) (98,146) Fund balances - beginning 1,872,882 1,872,882 1,872,882 - 1,872,882 - Fund balances - ending $ 1,836,895 $ 1,836,895 $ 1,716,249 $ 22,500 $ 1,738,749 $ (98,146) CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Drainage Utility Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Fines, forfeits, and penalties $ 17,552 $ 17,552 $ 11,554 $ - $ 11,554 $ (5,998) Investment income 445 445 870 82 952 507 Total revenues 17,997 17,997 12,424 82 12,506 (5,491) Expenditures Fiscal services 6,000 6,000 164 - 164 (5,836) Total expenditures 6,000 6,000 164 - 164 (5,836) Excess (deficit) of revenues over (under) expenditures 11,997 11,997 12,260 82 12,342 345 Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances 11,997 11,997 12,260 82 12,342 345 Fund balances - beginning 52,308 52,308 52,308 - 52,308 - Fund balances - ending $ 64,305 $ 64,305 $ 64,568 $ 82 $ 64,650 $ 345 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Truancy Prevention Fee Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Ad valorem taxes $ 261,877 $ 261,877 $ 236,437 $ - $ 236,437 $ (25,440) Investment income 3,336 3,336 5,280 1,165 6,445 3,109 Total revenues 265,213 265,213 241,717 1,165 242,882 (22,331) Expenditures Total expenditures - - - - - - Excess (deficit) of revenues over (under) expenditures 265,213 265,213 241,717 1,165 242,882 (22,331) Other financing sources (uses) Transfers out - (916,000) (914,724) - (914,724) 1,276 Total other financing sources (uses) - (916,000) (914,724) - (914,724) 1,276 Net change in fund balances 265,213 (650,787) (673,007) 1,165 (671,842) (21,055) Fund balances - beginning 673,007 673,007 673,007 - 673,007 - Fund balances - ending $ 938,220 $ 22,220 $ - $ 1,165 $ 1,165 $ (21,055) CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual West Medical District Tax Increment Reinvestment Zone No. 18 Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Ad valorem taxes $ 12,448 $ 12,448 $ 12,448 $ - $ 12,448 $ - Investment income 21 21 70 24 94 73 Total revenues 12,469 12,469 12,518 24 12,542 73 Expenditures Total expenditures - - - - - - Excess (deficit) of revenues over (under) expenditures 12,469 12,469 12,518 24 12,542 73 Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances 12,469 12,469 12,518 24 12,542 73 Fund balances - beginning 5,704 5,704 5,704 - 5,704 - Fund balances - ending $ 18,173 $ 18,173 $ 18,222 $ 24 $ 18,246 $ 73 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual East Medical District Tax Increment Reinvestment Zone No. 19 Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Other taxes $ 204,020 $ 204,020 $ 197,576 $ - $ 197,576 $ (6,444) Investment income 4,322 4,322 10,250 935 11,185 6,863 Total revenues 208,342 208,342 207,826 935 208,761 419 Expenditures General government 65,640 65,640 61,794 - 61,794 (3,846) Capital outlay 61,500 61,500 19,984 - 19,984 (41,516) Total expenditures 127,140 127,140 81,778 - 81,778 (45,362) Excess (deficit) of revenues over (under) expenditures 81,202 81,202 126,048 935 126,983 45,781 Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances 81,202 81,202 126,048 935 126,983 45,781 Fund balances - beginning 608,610 608,610 608,610 - 608,610 - Fund balances - ending $ 689,812 $ 689,812 $ 734,658 $ 935 $ 735,593 $ 45,781 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Public, Educational and Governmental Access Channel Fee Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Investment income $ 500 $ 500 $ 6,591 $ 196 $ 6,787 $ 6,287 Total revenues 500 500 6,591 196 6,787 6,287 Expenditures Total expenditures - - - - - - Excess (deficit) of revenues over (under) expenditures 500 500 6,591 196 6,787 6,287 Other financing sources (uses) Transfers out (573,190) (573,190) (573,190) - (573,190) - Total other financing sources (uses) (573,190) (573,190) (573,190) - (573,190) - Net change in fund balances (572,690) (572,690) (566,599) 196 (566,403) 6,287 Fund balances - beginning 720,241 720,241 720,241 - 720,241 - Fund balances - ending $ 147,551 $ 147,551 $ 153,642 $ 196 $ 153,838 $ 6,287 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual R.E. Meyer Estate Restricted Gift Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Charges for services $ 4,216,000 $ 4,216,000 $ 4,375,386 $ - $ 4,375,386 $ 159,386 Investment income 1,000 1,000 23,508 946 24,454 23,454 Other - - 222,683 - 222,683 222,683 Total revenues 4,217,000 4,217,000 4,621,577 946 4,622,523 405,523 Expenditures Public works 4,083,128 4,083,128 4,028,558 (16,099) 4,012,459 (70,669) Total expenditures 4,083,128 4,083,128 4,028,558 (16,099) 4,012,459 (70,669) Excess (deficit) of revenues over (under) expenditures 133,872 133,872 593,019 17,045 610,064 476,192 Other financing sources (uses) Transfers out (134,457) (134,457) (134,457) - (134,457) - Total other financing sources (uses) (134,457) (134,457) (134,457) - (134,457) - Net change in fund balances (585) (585) 458,562 17,045 475,607 476,192 Fund balances - beginning 330,641 330,641 330,641 - 330,641 - Fund balances - ending $ 330,056 $ 330,056 $ 789,203 $ 17,045 $ 806,248 $ 476,192 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Roadway Maintenance Fee Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Investment income $ - $ - $ (1,271) $ 1,271 $ - $ - Contributions - 1,000,000 1,000,000 - 1,000,000 - Total revenues - 1,000,000 998,729 1,271 1,000,000 - Expenditures Capital outlay - 1,000,000 38,985 - 38,985 (961,015) Total expenditures - 1,000,000 38,985 - 38,985 (961,015) Excess (deficit) of revenues over (under) expenditures - - 959,744 1,271 961,015 961,015 Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances - - 959,744 1,271 961,015 961,015 Fund balances - beginning - - - - - - Fund balances - ending $ - $ - $ 959,744 $ 1,271 $ 961,015 $ 961,015 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Fun For All Playground Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Investment income $ 1,000 $ 1,000 $ 1,519 $ 34 $ 1,553 $ 553 Other 377,417 377,417 339,325 - 339,325 (38,092) Total revenues 378,417 378,417 340,844 34 340,878 (37,539) Expenditures Total expenditures - - - - - - Excess (deficit) of revenues over (under) expenditures 378,417 378,417 340,844 34 340,878 (37,539) Other financing sources (uses) Transfers out (359,152) (359,152) (359,152) - (359,152) - Total other financing sources (uses) (359,152) (359,152) (359,152) - (359,152) - Net change in fund balances 19,265 19,265 (18,308) 34 (18,274) (37,539) Fund balances - beginning 45,075 45,075 45,075 - 45,075 - Fund balances - ending $ 64,340 $ 64,340 $ 26,767 $ 34 $ 26,801 $ (37,539) CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual System-Wide Water Impact Fee Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Investment income $ 10,000 $ 10,000 $ 12,216 $ 1,838 $ 14,054 $ 4,054 Other 2,264,500 2,264,500 1,606,025 - 1,606,025 (658,475) Total revenues 2,274,500 2,274,500 1,618,241 1,838 1,620,079 (654,421) Expenditures Total expenditures - - - - - - Excess (deficit) of revenues over (under) expenditures 2,274,500 2,274,500 1,618,241 1,838 1,620,079 (654,421) Other financing sources (uses) Transfers out (330,075) (330,075) (330,075) - (330,075) - Total other financing sources (uses) (330,075) (330,075) (330,075) - (330,075) - Net change in fund balances 1,944,425 1,944,425 1,288,166 1,838 1,290,004 (654,421) Fund balances - beginning 155,476 155,476 155,476 - 155,476 - Fund balances - ending $ 2,099,901 $ 2,099,901 $ 1,443,642 $ 1,838 $ 1,445,480 $ (654,421) CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual System-Wide Wastewater Impact Fee Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Investment income $ 1,000 $ 1,000 $ 1,737 $ 337 $ 2,074 $ 1,074 Other 416,667 416,667 263,103 - 263,103 (153,564) Total revenues 417,667 417,667 264,840 337 265,177 (152,490) Expenditures - - - - - - Total expenditures - - - - - - Excess (deficit) of revenues over (under) expenditures 417,667 417,667 264,840 337 265,177 (152,490) Other financing sources (uses) Total other financing sources (uses) - - - - - - Net change in fund balances 417,667 417,667 264,840 337 265,177 (152,490) Fund balances - beginning - - - - - - Fund balances - ending $ 417,667 $ 417,667 $ 264,840 $ 337 $ 265,177 $ (152,490) CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual System-Wide Roadway Impact Fee Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Ad valorem taxes $ 18,985,125 $ 18,985,125 $ 19,089,647 $ - $ 19,089,647 $ 104,522 Investment income 50,000 50,000 126,466 6,714 133,180 83,180 Total revenues 19,035,125 19,035,125 19,216,113 6,714 19,222,827 187,702 Expenditures Principal retirement 14,694,893 14,694,893 12,435,000 - 12,435,000 (2,259,893) Interest on long-term debt 4,765,708 4,765,708 7,024,474 - 7,024,474 2,258,766 Debt issuance costs 150,000 150,000 9,719 - 9,719 (140,281) Total expenditures 19,610,601 19,610,601 19,469,193 - 19,469,193 (141,408) Excess (deficit) of revenues over (under) expenditures (575,476) (575,476) (253,080) 6,714 (246,366) 329,110 Other financing sources (uses) Transfers in 464,453 464,453 464,453 - 464,453 - Total other financing sources (uses) 464,453 464,453 464,453 - 464,453 - Net change in fund balances (111,023) (111,023) 211,373 6,714 218,087 329,110 Fund balances - beginning 5,061,437 5,061,437 5,061,437 - 5,061,437 - Fund balances - ending $ 4,950,414 $ 4,950,414 $ 5,272,810 $ 6,714 $ 5,279,524 $ 329,110 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Debt Service Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Charges for services $ 96,000 $ 96,000 $ 123,900 $ - $ 123,900 $ 27,900 Investment income 25,000 25,000 62,776 8,368 71,144 46,144 Other 23,675 23,675 - - - (23,675) Total revenues 144,675 144,675 186,676 8,368 195,044 50,369 Expenditures Parks and recreation - - 2,917 - 2,917 2,917 Capital outlay 3,726,500 4,126,500 2,459,319 - 2,459,319 (1,667,181) Debt issuance costs 23,675 23,675 63,210 - 63,210 39,535 Total expenditures 3,750,175 4,150,175 2,525,446 - 2,525,446 (1,624,729) Excess (deficit) of revenues over (under) expenditures (3,605,500) (4,005,500) (2,338,770) 8,368 (2,330,402) 1,675,098 Other financing sources (uses) Issuance of bonds 4,735,000 5,135,000 5,005,000 - 5,005,000 (130,000) Premiums on bonds issued - - 268,644 - 268,644 268,644 Transfers out (34,490) (34,490) (46,569) 12,079 (34,490) - Total other financing sources (uses) 4,700,510 5,100,510 5,227,075 12,079 5,239,154 138,644 Net change in fund balances 1,095,010 1,095,010 2,888,305 20,447 2,908,752 1,813,742 Fund balances - beginning 3,342,655 3,342,655 3,342,655 - 3,342,655 - Fund balances - ending $ 4,437,665 $ 4,437,665 $ 6,230,960 $ 20,447 $ 6,251,407 $ 1,813,742 *Capital Investment Projects Budgets are Life to Date. CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Parks and Recreation Projects Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Investment income $ 235,000 $ 235,000 $ 604,689 $ 52,171 $ 656,860 $ 421,860 Other 10,000 10,000 - - - (10,000) Total revenues 245,000 245,000 604,689 52,171 656,860 411,860 Expenditures General government - - 20,531 - 20,531 20,531 Capital outlay 3,763,190 4,463,190 4,464,298 - 4,464,298 1,108 Debt issuance costs 15,625 15,625 37,177 - 37,177 21,552 Total expenditures 3,778,815 4,478,815 4,522,006 - 4,522,006 43,191 Excess (deficit) of revenues over (under) expenditures (3,533,815) (4,233,815) (3,917,317) 52,171 (3,865,146) 368,669 Other financing sources (uses) Issuance of bonds 3,125,000 3,825,000 2,950,000 - 2,950,000 (875,000) Premiums on bonds issued - - 141,532 - 141,532 141,532 Transfers in 678,190 1,594,190 1,592,914 - 1,592,914 (1,276) Transfers out (113,667) (113,667) (193,371) 79,704 (113,667) - Total other financing sources (uses) 3,689,523 5,305,523 4,491,075 79,704 4,570,779 (734,744) Net change in fund balances 155,708 1,071,708 573,758 131,875 705,633 (366,075) Fund balances - beginning 39,662,661 39,662,661 39,662,661 - 39,662,661 - Fund balances - ending $ 39,818,369 $ 40,734,369 $ 40,236,419 $ 131,875 $ 40,368,294 $ (366,075) *Capital Investment Projects Budgets are Life to Date. CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual General Government Projects Fund For the Fiscal Year Ended September 30, 2018 Variance with Actual GAAP Adjustments Actual Budget Final Budget Original Budget Final Budget Basis Budget Basis Basis Over (Under) Revenues Intergovernmental $ - $ - $ 464,767 $ - $ 464,767 $ 464,767 Investment income 400,000 400,000 699,318 55,553 754,871 354,871 Other 176,888 329,688 152,800 - 152,800 (176,888) Total revenues 576,888 729,688 1,316,885 55,553 1,372,438 642,750 Expenditures Public works - - 694 - 694 694 Capital outlay 15,497,500 15,650,300 21,617,209 - 21,617,209 5,966,909 Debt issuance costs 76,888 76,888 129,434 - 129,434 52,546 Total expenditures 15,574,388 15,727,188 21,747,337 - 21,747,337 6,020,149 Excess (deficit) of revenues over (under) expenditures (14,997,500) (14,997,500) (20,430,452) 55,553 (20,374,899) (5,377,399) Other financing sources (uses) Issuance of bonds 15,377,500 15,377,500 10,275,000 - 10,275,000 (5,102,500) Premium on bonds issued - - 481,018 - 481,018 481,018 Transfers out (454,007) (454,007) (707,618) 253,611 (454,007) - Total other financing sources (uses) 14,923,493 14,923,493 10,048,400 253,611 10,302,011 (4,621,482) Net change in fund balances (74,007) (74,007) (10,382,052) 309,164 (10,072,888) (9,998,881) Fund balances - beginning 49,575,327 49,575,327 49,575,327 - 49,575,327 - Fund balances - ending $ 49,501,320 $ 49,501,320 $ 39,193,275 $ 309,164 $ 39,502,439 $ (9,998,881) *Capital Investment Projects Budgets are Life to Date. CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Streets Projects Fund For the Fiscal Year Ended September 30, 2018 COMBINING FINANCIAL STATEMENTS NONMAJOR ENTERPRISE FUNDS Solid Waste Fund - account for all solid waste collection and disposal activities by the City for both residential and commercial customers. Northgate Parking Garage Fund - account for revenues and expenses related to the operation and maintenance of the Northgate parking garage and parking lot. Solid Waste Northgate Parking Garage Total Nonmajor Enterprise Funds Assets Current assets Cash and cash equivalents $ 1,085,561 $ 1,039,260 $ 2,124,821 Equity in investments 187,674 179,066 366,740 Receivable (net of allow for uncollectible) 1,183,272 76,000 1,259,272 Loan receivable 230,000 - 230,000 Investments interest receivable 937 894 1,831 Inventories 29,327 - 29,327 Prepaid costs 1,708 - 1,708 Total current assets 2,718,479 1,295,220 4,013,699 Noncurrent assets Equity in joint venture 17,261,241 - 17,261,241 Loan receivable 2,725,000 - 2,725,000 Capital assets Buildings - 6,349,242 6,349,242 Machinery and equipment 6,406,630 716,114 7,122,744 Less accummulated depreciation (3,877,019) (3,018,216) (6,895,235) Construction in progress - 466 466 Land - 690,750 690,750 Total capital assets 2,529,611 4,738,356 7,267,967 Total noncurrent assets 22,515,852 4,738,356 27,254,208 Total assets 25,234,331 6,033,576 31,267,907 Deferred outflows of resources Deferred charge on refunding 317,589 11,177 328,766 Pension 272,290 33,538 305,828 OPEB 51,701 8,383 60,084 Total deferred outflows of resources 641,580 53,098 694,678 Liabilities Current liabilities Accounts payable 275,298 69,654 344,952 Accrued liabilities 145,824 27,249 173,073 Unearned Revenue - 132,534 132,534 Compensated absences 8,168 1,125 9,293 Accrued interest payable 15,909 2,019 17,928 Certificates of obligation 230,000 - 230,000 General obligation bonds 31,234 213,174 244,408 Total current liabilities 706,433 445,755 1,152,188 Noncurrent liabilities Certificates of obligation 490,000 - 490,000 General obligation bonds 2,539,530 220,000 2,759,530 Compensated absences 99,110 13,652 112,762 Post employment benefits 245,846 39,867 285,713 Net pension liabillity 895,057 98,561 993,618 Total noncurrent liabilities 4,269,543 372,080 4,641,623 Total liabilities 4,975,976 817,835 5,793,811 Deferred inflows of resources Pension 178,761 33,723 212,484 OPEB 120,627 19,561 140,188 Total deferred inflows of resources 299,388 53,284 352,672 Net position Net investment in capital assets 2,529,611 4,294,005 6,823,616 Restricted for BVSWMA Investment 17,261,241 - 17,261,241 Unrestricted 809,695 921,550 1,731,245 Total net position $ 20,600,547 $ 5,215,555 $ 25,816,102 CITY OF COLLEGE STATION, TEXAS Combining Statement of Net Position Nonmajor Enterprise Funds September 30, 2018 Solid Waste Northgate Parking Garage Total Nonmajor Enterprise Funds Operating revenues Charges for services $ 9,548,331 $ 1,067,806 $ 10,616,137 Fines, forfeits, and penalties - 300,551 300,551 Other 52,916 95 53,011 Total operating revenues 9,601,247 1,368,452 10,969,699 Operating expenses Salaries and benefits 2,181,304 360,657 2,541,961 Supplies 435,136 17,508 452,644 Maintenance 690,732 70,159 760,891 Purchased professional services 922,959 174,485 1,097,444 Purchased property services 1,363,579 43,063 1,406,642 Other purchased services 1,825,980 90,183 1,916,163 Depreciation 967,300 209,124 1,176,424 Other 78,525 - 78,525 Total operating expenses 8,465,515 965,179 9,430,694 Operating income 1,135,732 403,273 1,539,005 Nonoperating revenues (expenses) Investment income 161,977 19,607 181,584 Earnings in joint venture 1,542,900 - 1,542,900 Interest payments (173,885) (30,018) (203,903) Other, net (159,959) (63,098) (223,057) Total nonoperating revenues (expenses) 1,371,033 (73,509) 1,297,524 Income before contributions and transfers 2,506,765 329,764 2,836,529 Capital contributions and transfers Capital contributions 548,830 - 548,830 Transfers out (1,406,477) (272,017) (1,678,494) Total capital contributions and transfers (857,647) (272,017) (1,129,664) Change in net position 1,649,118 57,747 1,706,865 Net position - beginning 19,172,089 5,252,340 24,424,429 Prior period adjustment (220,660) (94,532) (315,192) Net position - ending $ 20,600,547 $ 5,215,555 $ 25,816,102 CITY OF COLLEGE STATION, TEXAS Combining Statement of Revenues, Expenses, and Changes in Net Position Nonmajor Enterprise Funds For the Fiscal Year Ended September 30, 2018 Total Northgate Nonmajor Parking Enterprise Solid Waste Garage Funds Cash flows from operating activities: Cash received from customers 9,481,567 1,320,346$ 10,801,913$ Cash payments to suppliers for goods and services (5,076,525) (351,799) (5,428,324) Cash payments to employees for services (2,772,614) (377,613) (3,150,227) Cash paid for miscellaneous services (78,525) - (78,525) Net cash provided (used) by operating activities 1,553,903 590,934 2,144,837 Cash flows from noncapital financing activities: Cash (paid) for received from miscellaneous non operating services (159,957) (63,098) (223,055) Transfers in from other funds - - - Transfers out to other funds (1,406,477) (272,017) (1,678,494) Net cash provided (used) by noncapital financing activities (1,566,434) (335,115) (1,901,549) Cash flows from capital and related financing activities: Acquisition and construction of capital assets (548,831) (138,598) (687,429) Capital grants and contributions 548,830 - 548,830 BVSWMA loan payments received 445,000 445,000 Principal paid on certificates of obligation and general obligation bonds (220,000) (205,000) (425,000) Interest paid on certificates of obligation and general obligation bonds (173,885) (30,018) (203,903) Net cash provided (used) by capital and related financing activities 51,114 (373,616) (322,502) Cash flows from investing activities: Purchase of investments (83,394) (49,653) (133,047) Proceeds from sale and maturities of investment securities 10,718 11,325 22,043 Investment income 161,360 19,104 180,464 Net cash provided (used) by investing activities 88,684 (19,224) 69,460 Net increase (decrease) in cash and cash equivalents 127,267 (137,021) (9,754) Cash and cash equivalents, Oct. 1 958,294 1,176,281 2,134,575 Cash and cash equivalents, Sept. 30 1,085,561 1,039,260$ 2,124,821$ Reconciliation of operating income to net cash Provided by operating activities: Operating income 1,135,732 403,273$ 1,539,005$ Adjustment to reconcile operating income to net cash provided (used) by operating activities: Depreciation 967,300 209,124 1,176,424 Amortization of Bond Premium (Discount)(31,234) (3,174) (34,408) Bad debt expense 38,637 - 38,637 Inventory loss 8,262 - 8,262 (Increases) decreases in assets and deferred outflows:- Change in accounts receivable (147,308) (68,875) (216,183) Change in inventory (19,913) - (19,913) Change in prepaids (1,708) - (1,708) Change in deferred outflow on pensions 92,905 13,824 106,729 Change in deferred outflow on OPEB (51,701) (8,383) (60,084) Change in deferred charge on refunding (190,770) 11,178 (179,592) Increases (decreases) in liabilities and deferred inflows:- Change in accounts payable 65,060 54,586 119,646 Change in unearned revenues - 20,769 20,769 Change in accrued liabilities 15,127 5,165 20,292 Change in accrued vacation (10,951) 4,088 (6,863) Change in accrued interest payable (4,127) (897) (5,024) Change in OPEB (375,440) (60,883) (436,323) Change in net pension liability (427,393) (63,601) (490,994) Change in deferred inflow on pensions 370,798 55,179 425,977 Change in deferred inflow on OPEB 120,627 19,561 140,188 Total adjustments 418,171 187,661 605,832 Net cash provided (used) by operating activities 1,553,903 590,934$ 2,144,837$ Reconciliation of total cash and cash equivalents: Current assets - cash and cash equivalents 1,085,561 1,039,260$ 2,124,821$ Restricted assets - cash and cash equivalents - - -$ Total cash and cash equivalents 1,085,561 1,039,260$ 2,124,821$ The notes to the financial statements are an integral part of this statement. CITY OF COLLEGE STATION, TEXAS Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Fiscal Year Ended September 30, 2018 COMBINING FINANCIAL STATEMENTS INTERNAL SERVICE FUNDS Employee Benefits Fund – to account for self-insurance activity related to administration of the City's health benefits plan. Equipment Replacement Fund – to account for the purchase of City equipment such as vehicles and large motorized equipment, telephone and radio systems, and replacement assets for existing technological infrastructure equipment not budgeted in other funds. Fleet Maintenance Fund – to account for all activities related to the management of the City’s vehicles and heavy equipment, including preventive maintenance and vehicle repair activities. Property and Casualty Fund – to account for insurance activity relating to all claims filed for liability cases (both injury and property) and property losses incurred for City property. Unemployment Fund – to account for self-insurance activity on claims filed under unemployment compensation laws. Utility Customer Service Fund – to account for the billing and collection activities relating to the City’s electric, water, and sewer utilities and residential and commercial garbage collection. Workers' Compensation Fund – to account for self-insurance activity relating to administration of the City's workers' compensation plan. Employee Benefits Equipment Replacement Fleet Maintenance Property and Casualty Unemployment Utility Customer Service Workers' Compensation Total Internal Service Funds Assets Current assets Cash and cash equivalents $ 7,509,532 $ 12,132,654 $ 226,847 $ 1,765,898 $ 318,878 $ 188,733 $ 2,463,326 $ 24,605,868 Equity in investments 1,298,263 2,097,518 39,217 305,292 55,128 32,162 425,865 4,253,445 Receivable (net of allow for uncollectible) - - - 270,278 - 58,302 - 328,580 Investments interest receivable 6,483 10,473 196 1,524 275 153 2,126 21,230 Inventories - - 118,147 - - - - 118,147 Prepaids - - - - - - 2,500 2,500 Total current assets 8,814,278 14,240,645 384,407 2,342,992 374,281 279,350 2,893,817 29,329,770 Noncurrent assets Buildings - - 786,525 - - - - 786,525 Machinery and equipment - 24,866,372 402,866 - - 759,250 - 26,028,488 Less accummulated depreciation - (14,544,070) (833,270) - - (637,993) - (16,015,333) Total noncurrent assets - 10,322,302 356,121 - - 121,257 - 10,799,680 Total assets 8,814,278 24,562,947 740,528 2,342,992 374,281 400,607 2,893,817 40,129,450 Deferred outflows of resources Pension 7,348 - 118,304 13,891 - 153,927 13,891 307,361 OPEB 1,398 22,358 2,096 - 32,140 2,096 60,088 Total deferred outflows of resources 8,746 - 140,662 15,987 - 186,067 15,987 367,449 Liabilities Current liabilities Accounts payable 129,254 68,270 38,883 152,591 5,095 46,094 2,141 442,328 Accrued liabilities 2,554 - 39,428 6,125 - 50,408 5,514 104,029 Compensated absences 71 - 6,243 1,435 - 3,845 - 11,594 Claims payable 1,689,249 - - 1,075,078 - - 719,171 3,483,498 Total current liabilities 1,821,128 68,270 84,554 1,235,229 5,095 100,347 726,826 4,041,449 Noncurrent liabilities Compensated absences 859 - 75,747 17,414 - 46,659 - 140,679 Post employment benefits 6,644 - 106,311 9,967 - 152,823 9,967 285,712 Net pension liability 23,633 - 391,639 40,095 - 521,207 40,093 1,016,667 Total noncurrent liabilities 31,136 - 573,697 67,476 - 720,689 50,060 1,443,058 Total liabilities 1,852,264 68,270 658,251 1,302,705 5,095 821,036 776,886 5,484,507 Deferred inflows of resources Pension 6,143 - 75,427 14,731 - 91,407 14,732 202,440 OPEB 3,261 - 52,164 4,890 - 74,986 4,890 140,191 Total deferred inflows of resources 9,404 - 127,591 19,621 - 166,393 19,622 342,631 Net position Net investment in capital assets - 10,322,302 356,121 - - 121,257 - 10,799,680 Unrestricted 6,961,356 14,172,375 (260,773) 1,036,653 369,186 (522,012) 2,113,296 23,870,081 Total net position $ 6,961,356 $ 24,494,677 $ 95,348 $ 1,036,653 $ 369,186 $ (400,755) $ 2,113,296 $ 34,669,761 CITY OF COLLEGE STATION, TEXAS Combining Statement of Net Position Internal Service Funds September 30, 2018 Employee Benefits Equipment Replacement Fleet Maintenance Property and Casualty Unemployment Utility Customer Service Workers' Compensation Total Internal Service funds Operating revenues Charges for services $ - $ 6,615,319 $ 2,288,036 $ - $ - $ 2,991,344 $ - $ 11,894,699 Premiums 12,807,559 - - 1,001,886 - - 561,569 14,371,014 Other - - - 322,737 - 159,524 - 482,261 Total operating revenues 12,807,559 6,615,319 2,288,036 1,324,623 - 3,150,868 561,569 26,747,974 Operating expenses Salaries and benefits 475,562 - 952,328 153,043 - 1,171,478 134,342 2,886,753 Supplies - - 1,164,697 - - 39,219 - 1,203,916 Maintenance - - 30,564 - - 18,661 - 49,225 Purchased professional services 149,028 - 1,903 15,382 - 579,664 11,000 756,977 Purchased property services - - 16,032 - - 37,931 - 53,963 Other purchased services 497 - 56,092 9,000 - 977,825 - 1,043,414 Claims 9,639,778 - - 1,149,981 20,570 - 570,619 11,380,948 Administration fees 51,915 - - 142,033 - - 27,775 221,723 Contributions - 1,595,143 - - - - - 1,595,143 Premiums 1,087,251 - - 351,910 - - 158,287 1,597,448 Depreciation - 2,701,587 37,471 - - 24,251 - 2,763,309 Other 854,177 - 9,192 95,639 - 56,488 - 1,015,496 Total operating expenses 12,258,208 4,296,730 2,268,279 1,916,988 20,570 2,905,517 902,023 24,568,315 Operating income (loss) 549,351 2,318,589 19,757 (592,365) (20,570) 245,351 (340,454) 2,179,659 Nonoperating revenues (expenses) Investment income 155,102 189,738 4,646 28,165 5,715 2,727 40,943 427,036 Gain (loss) on disposal of assets - 137,756 2,425 - - - - 140,181 Other, net (1,066,817) (55,921) - 196,140 - - - (926,598) Total nonoperating revenues (expenses) (911,715) 271,573 7,071 224,305 5,715 2,727 40,943 (359,381) Income (loss) contributions and transfers (362,364) 2,590,162 26,828 (368,060) (14,855) 248,078 (299,511) 1,820,278 Capital contributions and transfers Transfers in - 919,000 - - - 9,674 - 928,674 Transfers out (61,345) - - - - - - (61,345) Total capital contributions and transfers (61,345) 919,000 - - - 9,674 - 867,329 Change in net position (423,709) 3,509,162 26,828 (368,060) (14,855) 257,752 (299,511) 2,687,607 Net position - beginning 7,400,821 20,985,515 162,400 1,428,346 384,041 (536,853) 2,436,439 32,260,709 Prior period adjustment (15,756) - (93,880) (23,633) - (121,654) (23,632) (278,555) Net position - ending $ 6,961,356 $ 24,494,677 $ 95,348 $ 1,036,653 $ 369,186 $ (400,755) $ 2,113,296 $ 34,669,761 CITY OF COLLEGE STATION, TEXAS Combining Statement of Revenues, Expenses, and Changes in Net Position Internal Service Funds For the Fiscal Year Ended September 30, 2018 Total Internal Employee Equipment Fleet Property and Utility Customer Workers'Service Benefits Replacement Maintenance Casualty Unemployment Service Compensation Funds Cash flows from operating activities: Cash received from customers 12,807,559$ 6,615,319$ 2,288,036$ 1,098,511$ -$ 3,109,230 561,569$ 26,480,224$ Cash payments to suppliers for goods and services (10,004,697) (1,901,668) (1,164,579) (451,796) (15,851) (1,494,593) (92,779) (15,125,962) Cash payments to employees for services (481,710) - (1,192,581) (168,481) - (1,497,993) (152,605) (3,493,371) Cash paid for miscellaneous services (1,993,343) - (9,192) (589,582) - (56,488) (186,062) (2,834,667) Net cash provided (used) by operating activities 327,809 4,713,651 (78,316) (111,348) (15,851) 60,156 130,123 5,026,224 Cash flows from noncapital financing activities: Cash (paid) or received from miscellaneous non operating services 6,755 (55,921) - 196,140 - - - 146,974 Transfers in from other funds - 919,000 - - 9,674 - 928,674 Transfers out to other funds (61,345) - - - - - - (61,345) Net cash provided (used) by noncapital financing activities (54,590) 863,079 - 196,140 - 9,674 - 1,014,303 Cash flows from capital and related financing activities: Acquisition and construction of capital assets - (2,393,053) - - - - - (2,393,053) Proceeds from sale of assets - 205,272 2,425 - - - - 207,697 Net cash provided (used) by capital and related financing activities - (2,187,781) 2,425 - - - - (2,185,356) Cash flows from investing activities: Purchase of investments (1,440,450) (1,070,201) (5,735) (113,621) (17,362) (18,237) (159,890) (2,825,495) Proceeds from sale and maturities of investment securities 81,854 114,718 2,669 18,244 3,410 1,692 25,399 247,985 Investment income 151,437 182,441 4,551 27,225 5,555 2,617 39,627 413,453 Net cash provided (used) by investing activities (1,207,159) (773,042) 1,485 (68,152) (8,397) (13,928) (94,864) (2,164,057) Net increase (decrease) in cash and cash equivalents (933,940) 2,615,907 (74,406) 16,640 (24,248) 55,902 35,259 1,691,114 Cash and cash equivalents, Oct. 1 8,443,472 9,516,747 301,253 1,749,258 343,126 132,831 2,428,067 22,914,754 Cash and cash equivalents, Sept. 30 7,509,532$ 12,132,654$ 226,847$ 1,765,898$ 318,878$ 188,733 2,463,326$ 24,605,868$ Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss)549,351$ 2,318,589$ 19,757$ (592,365)$ (20,570)$ 245,351 (340,454)$ 2,179,659$ Adjustment to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation - 2,701,587 37,471 - - 24,251 - 2,763,309 (Increases) decreases in assets and deferred outflows: Change in accounts receivable - - - (226,112) - (41,638) - (267,750) Change in inventory - - 5,650 - - - - 5,650 Change in deferred outflow on pensions 2,600 - 39,796 5,920 - 49,148 5,920 103,384 Change in deferred outflow on OPEB (1,398) - (22,358) (2,096) - (32,140) (2,096) (60,088) Increases (decreases) in liabilities and deferred inflows: Change in accounts payable (308,019) (306,525) (35,494) 55,260 4,719 (7,791) 2,141 (595,709) Change in claims payable 93,547 - - 658,596 - - 477,986 1,230,129 Change in accrued liabilities 231 - 2,123 616 - 6,790 563 10,323 Change in accrued vacation (34) - 9,171 2,770 - 4,521 - 16,428 Change in OPEB (10,147) - (162,353) (15,220) - (233,382) (15,220) (436,322) Change in net pension liability (11,955) - (183,075) (27,237) - (226,098) (27,237) (475,602) Change in deferred inflow on pensions 10,372 - 158,832 23,630 - 196,158 23,630 412,622 Change in deferred inflow on OPEB 3,261 - 52,164 4,890 - 74,986 4,890 140,191 Total adjustments (221,542) 2,395,062 (98,073) 481,017 4,719 (185,195) 470,577 2,846,565 Net cash provided (used) by operating activities 327,809$ 4,713,651$ (78,316)$ (111,348)$ (15,851)$ 60,156 130,123$ 5,026,224$ CITY OF COLLEGE STATION, TEXAS Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended September 30, 2018 STATISTICAL SECTION - UNAUDITED This section of the City of College Station’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 condition. Financial Trends These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the factors affecting the City’s ability to generate its property and sales taxes. Debt Capacity 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 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place and to help make comparisons over time and with other governments. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 54 in 2009; schedules presenting governmental fund balance reclassifications begin in that year. 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Governmental activities Net investment in capital assets 143,530,290$ 153,397,767$ 145,546,799$ 149,875,513$ 153,214,549$ 125,012,201$ 167,101,930$ 176,171,787$ 185,722,689$ 200,134,327$ Restricted 8,077,876 10,201,722 25,565,107 13,606,487 16,751,846 15,608,417 55,374,914 48,362,842 39,533,053 39,720,716 Unrestricted 37,712,097 37,359,741 27,695,418 39,065,396 40,964,678 76,502,627 7,685,763 13,352,352 26,270,518 37,975,425 Total governmental activities net position 189,320,263$ 200,959,230$ 198,807,324$ 202,547,396$ 210,931,073$ 217,123,245$ 230,162,607$ 237,886,981$ 251,526,260$ 277,830,468$ Business-type activities Net investment in capital assets 147,627,129$ 161,365,075$ 175,059,669$ 179,123,899$ 189,315,182$ 165,180,775$ 200,468,509$ 209,331,986$ 228,519,124$ 235,469,411$ Restricted 3,119,691 1,588,631 1,588,631 1,580,992 1,580,992 1,580,992 1,581,186 1,581,501 1,581,501 17,261,241 Unrestricted 47,397,414 38,818,705 35,213,377 38,597,823 36,847,830 61,775,551 47,781,620 75,737,790 87,978,620 98,105,103 Total business-type activities net position 198,144,234$ 201,772,411$ 211,861,677$ 219,302,714$ 227,744,004$ 228,537,318$ 249,831,315$ 286,651,277$ 318,079,245$ 350,835,755$ Primary government Net investment in capital assets 291,157,419$ 314,762,842$ 320,606,468$ 328,999,412$ 342,529,731$ 290,192,976$ 367,570,439$ 385,503,773$ 414,241,813$ 435,603,738$ Restricted 11,197,567 11,790,353 27,153,738 15,187,479 18,332,838 17,189,409 56,956,100 49,944,343 41,114,554 56,981,957 Unrestricted 85,109,511 76,178,446 62,908,795 77,663,219 77,812,508 138,278,178 55,467,383 89,090,142 114,249,138 136,080,528 Total primary government net position 387,464,497$ 402,731,641$ 410,669,001$ 421,850,110$ 438,675,077$ 445,660,563$ 479,993,922$ 524,538,258$ 569,605,505$ 628,666,223$ Source: City of College Station Fiscal Year CITY OF COLLEGE STATION, TEXAS Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (unaudited) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Expenses Governmental activities: Police 13,945,079$ 16,063,347$ 15,082,452$ 16,696,975$ 16,831,233$ 17,768,724$ 18,601,237$ 20,858,704$ 22,370,803$ 21,571,950$ Fire 11,778,585 13,301,029 11,749,054 13,706,222 13,748,434 14,245,690 15,095,073 17,663,825 17,980,949 19,367,032 Public works 16,804,436 17,026,827 20,629,662 13,717,564 15,371,773 21,348,088 18,793,401 21,028,954 19,858,859 24,452,406 Parks and recreation 10,136,521 11,202,863 10,146,043 9,638,581 8,983,919 9,197,308 9,884,737 11,161,966 10,774,101 11,727,549 Library 1,052,838 1,103,864 1,130,433 1,142,580 1,064,293 1,149,616 1,213,820 1,177,291 1,182,331 1,118,522 Planning and development services 2,823,296 2,952,177 3,364,877 4,912,517 4,334,608 5,012,992 3,225,321 3,440,211 3,967,606 3,517,911 Information technology 3,471,714 5,048,720 4,165,064 4,268,524 4,565,385 4,663,939 4,416,190 4,907,473 5,027,015 5,027,435 Fiscal services 3,821,996 4,127,990 3,384,388 3,313,726 3,263,269 3,419,923 3,594,382 4,146,833 4,246,886 3,795,099 General government 8,631,908 11,534,705 9,455,960 8,348,922 9,167,476 9,602,139 10,194,285 16,152,324 17,018,777 15,155,670 Capital projects 476,462 256,177 648,589 819,296 733,974 731,621 - - - - Interest on long-term debt 4,135,146 4,111,523 4,079,379 3,273,938 2,949,240 3,962,347 3,943,972 3,425,529 4,318,990 6,075,924 Unallocated depreciation 789,074 1,047,906 1,130,283 1,149,609 1,146,119 1,161,675 1,235,340 1,299,794 1,390,156 - Total governmental activities expense 77,867,055 87,777,128 84,966,184 80,988,454 82,159,723 92,264,062 90,197,758 105,262,904 108,136,473 111,809,498 Business-type activities: Electric 77,441,351 88,685,699 93,277,853 87,221,859 88,438,115 98,269,576 79,828,415 73,880,232 75,878,632 78,029,786 Water 9,287,343 10,190,159 9,960,837 11,132,787 11,662,862 11,517,915 13,082,761 13,062,768 13,652,580 14,041,059 Wastewater 9,829,813 10,604,983 10,114,867 10,952,853 11,370,918 11,205,770 12,437,020 11,995,045 12,281,262 13,170,661 Sanitation 5,776,002 6,527,724 6,558,278 7,825,491 6,301,053 7,497,493 7,786,244 8,216,958 9,006,946 8,554,011 Northgate parking 909,167 1,019,393 944,125 924,532 1,053,839 1,051,901 953,681 946,325 964,358 1,061,336 Total business-type activities expense 103,243,676 117,027,958 120,855,960 118,057,522 118,826,787 129,542,655 114,088,121 108,101,328 111,783,778 114,856,853 Total primary government expense 181,110,731$ 204,805,086$ 205,822,144$ 199,045,976$ 200,986,510$ 221,806,717$ 204,285,879$ 213,364,232$ 219,920,251$ 226,666,351$ Program revenues Governmental activities: Charges for services: Fines, forfeits and penalties 4,491,960$ 4,500,447$ 4,120,077$ 3,896,477$ 3,462,197$ 3,231,069$ 2,900,197$ 3,518,538$ 3,149,197$ 3,379,673$ Licenses and permits 1,007,151 964,344 1,091,983 1,496,989 1,240,300 1,438,082 1,500,777 2,132,802 2,127,142 1,772,959 Public works 1,793,174 1,895,263 2,910,293 2,480,140 2,489,828 2,437,986 2,254,382 2,250,367 5,532,646 11,435,461 Parks and recreation 1,838,810 1,722,840 2,007,032 1,909,008 1,773,554 1,608,329 1,652,014 1,713,907 1,559,905 1,742,638 Other activities 4,494,627 3,378,603 2,516,446 2,506,187 2,903,460 3,532,847 5,832,527 3,260,482 4,077,515 3,759,555 Operating grants and contributions 1,896,623 1,694,228 1,875,849 2,766,187 1,753,970 3,234,317 2,995,401 2,943,080 2,949,829 2,692,063 Capital grants and contributions 2,644,629 19,587,921 3,964,442 4,216,095 7,016,449 7,404,520 3,542,528 14,549,415 13,481,280 14,456,341 Total governmental activities program revenues 18,166,974 33,743,646 18,486,122 19,271,083 20,639,758 22,887,150 20,677,826 30,368,591 32,877,514 39,238,690 Business-type activities: Charges for services: Electric sales 82,904,777 91,162,890 101,617,743 96,787,784 95,737,007 97,814,129 101,432,340 101,753,428 101,783,609 105,341,740 Water sales 17,312,431 12,745,173 17,253,787 15,274,883 15,775,334 13,848,402 15,069,720 15,503,526 15,936,976 16,843,347 Sewer service 11,655,528 11,522,025 13,099,783 13,697,532 14,566,975 14,575,907 13,864,099 15,547,324 17,319,645 17,882,386 Garbage collection fees 7,988,795 7,299,273 7,143,536 7,204,013 7,205,029 8,014,628 8,845,145 8,854,342 9,180,351 9,632,481 Parking garage fees 990,735 1,140,833 1,189,443 1,149,277 1,234,799 1,298,034 1,435,290 1,235,798 1,298,986 1,379,287 Operating grants and contributions 17,792 - 3,746 9,718 982 291,366 668,322 1,114,008 1,032,027 1,542,900 Capital grants and contributions 6,846,033 11,703,025 3,857,585 6,890,916 5,345,176 7,309,230 9,596,813 14,192,226 8,559,043 10,062,900 Total business-type activities program revenues 127,716,091 135,573,219 144,165,623 141,014,123 139,865,302 143,151,696 150,911,729 158,200,652 155,110,637 162,685,041 Total primary government program revenues 145,883,065$ 169,316,865$ 162,651,745$ 160,285,206$ 160,505,060$ 166,038,846$ 171,589,555$ 188,569,243$ 187,988,151$ 201,923,731$ Source: City of College Station Fiscal Year CITY OF COLLEGE STATION, TEXAS Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (unaudited) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Net (expense)/revenue Governmental activities (59,700,081)$ (54,033,482)$ (66,480,062)$ (61,717,371)$ (61,519,965)$ (69,376,912)$ (69,519,932)$ (74,894,314)$ (75,258,959)$ (72,570,808)$ Business-type activities 24,472,415 18,545,261 23,309,663 22,956,601 21,038,515 13,609,041 36,823,608 50,099,324 43,326,859 47,828,188 Total primary government net expense (35,227,666)$ (35,488,221)$ (43,170,399)$ (38,760,770)$ (40,481,450)$ (55,767,871)$ (32,696,324)$ (24,794,990)$ (31,932,100)$ (24,742,620)$ General revenues and other changes in net position Governmental activities: Taxes Property taxes 22,769,699$ 24,745,344$ 24,333,373$ 24,978,388$ 26,451,943$ 27,349,234$ 30,936,581$ 32,706,952$ 37,476,196$ 43,492,512$ Sales and mixed beverage taxes 19,873,213 19,751,004 20,717,598 21,878,057 23,506,772 25,141,825 27,302,178 27,813,236 29,207,865 28,799,040 Franchise taxes 2,217,618 2,210,902 2,153,827 2,171,277 2,209,091 2,407,344 2,653,641 3,330,088 3,056,286 3,655,061 Hotel taxes 3,574,649 3,387,041 3,558,042 3,643,887 4,393,867 5,127,808 5,336,661 5,277,314 5,152,337 5,737,743 Unrestricted investment earnings 1,413,431 265,424 368,868 283,648 252,308 195,863 379,537 576,209 1,204,827 2,476,318 Gain (Loss) on sale of capital assets - (24,596) - - 1,827,783 6,818,583 (75,177) 46,469 - Transfers 12,778,642 15,337,330 13,562,095 12,502,186 12,039,798 12,935,733 13,037,208 13,639,821 12,754,258 14,544,135 Total governmental activities 62,627,252 65,672,449 64,693,803 65,457,443 68,853,779 74,985,590 86,464,389 83,268,443 88,898,238 98,704,809 Business-type activities: Unrestricted investment earnings 654,882 420,236 341,698 316,035 174,170 120,006 187,322 360,459 855,367 1,444,135 Transfers (12,778,642) (15,337,330) (13,562,095) (12,502,186) (12,039,798) (12,935,733) (13,037,208) (13,639,821) (12,754,258) (14,544,135) Total business-type activities (12,123,760) (14,917,094) (13,220,397) (12,186,151) (11,865,628) (12,815,727) (12,849,886) (13,279,362) (11,898,891) (13,100,000) Total primary government 50,503,492$ 50,755,355$ 51,473,406$ 53,271,292$ 56,988,151$ 62,169,863$ 73,614,503$ 69,989,081$ 76,999,347$ 85,604,809$ Change in net position Governmental activities 2,927,171$ 11,638,967$ (1,786,259)$ 3,740,072$ 7,333,814$ 5,608,678$ 16,944,457$ 7,724,373$ 13,639,279$ 26,134,001$ Business-type activities 12,348,655 3,628,167 10,089,266 10,770,450 9,172,887 793,314 23,973,722 36,819,962 31,427,968 34,728,188 Total primary government 15,275,826$ 15,267,134$ 8,303,007$ 14,510,522$ 16,506,701$ 6,401,992$ 40,918,179$ 44,544,335$ 45,067,247$ 60,862,189$ Source: City of College Station Fiscal Year CITY OF COLLEGE STATION, TEXAS Changes in Net Position - continued Last Ten Fiscal Years (accrual basis of accounting) (unaudited) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Function/Program Governmental activities: Police 5,004,712$ 5,161,486$ 4,596,713$ 4,174,931$ 3,650,964$ 3,498,374$ 663,419$ 994,565$ 981,168$ 507,885$ Fire 3,551,620 2,199,375 1,952,851 1,936,311 1,948,961 1,777,507 2,259,979 2,720,224 2,836,228 3,272,395 Public works 4,445,595 15,313,779 5,796,384 5,609,036 8,711,394 8,578,862 4,798,615 15,064,553 16,179,433 24,576,818 Parks and recreation 2,117,227 3,816,773 3,330,986 3,196,969 2,576,020 2,934,766 3,103,886 3,628,318 4,402,398 3,531,529 Library - - - 13,200 - - - - - - Planning and development services 1,051,943 1,075,342 1,296,213 1,650,017 1,493,021 1,730,441 1,885,563 2,579,587 2,554,194 2,157,272 Information technology - - 15,500 - - - 72 8,835 113 - Fiscal services 38,377 100,495 215,626 542,689 666,103 1,028,531 2,956,304 3,572,710 3,226,884 3,435,452 General government 1,957,500 5,124,710 1,281,849 2,095,173 1,593,295 3,338,669 5,009,988 1,799,799 2,697,096 1,757,339 Capital improvement program - 951,686 - 52,757 - - - - - - Subtotal governmental activities 18,166,974 33,743,646 18,486,122 19,271,083 20,639,758 22,887,150 20,677,826 30,368,591 32,877,514 39,238,690 Business-type activities: Electric 84,552,573 92,530,434 102,516,252 98,200,411 96,283,238 98,872,262 105,438,676 107,111,511 103,150,410 106,438,972 Water 19,065,662 17,118,922 18,710,635 16,905,503 19,167,542 15,854,663 17,157,749 20,205,838 19,567,653 21,095,071 Wastewater 15,100,534 15,208,551 14,584,557 15,844,190 15,946,613 17,072,780 15,871,321 19,112,180 20,033,058 22,047,500 Sanitation 8,006,587 9,574,489 7,147,282 8,914,742 7,233,110 10,053,957 10,985,994 10,535,325 11,060,530 11,724,211 Northgate parking 990,735 1,140,833 1,206,897 1,149,277 1,234,799 1,298,034 1,457,989 1,235,798 1,298,986 1,379,287 Subtotal business-type activities 127,716,091 135,573,229 144,165,623 141,014,123 139,865,302 143,151,696 150,911,729 158,200,652 155,110,637 162,685,041 Total primary government 145,883,065$ 169,316,875$ 162,651,745$ 160,285,206$ 160,505,060$ 166,038,846$ 171,589,555$ 188,569,243$ 187,988,151$ 201,923,731$ Fiscal Year CITY OF COLLEGE STATION, TEXAS Program Revenues by Function/Program Last Ten Fiscal Years (accrual basis of accounting) (unaudited) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 General fund Nonspendable 62,390$ 70,516$ 58,548$ -$ 59,426$ 64,594$ 63,679$ 71,318$ 334,307$ 628,518$ Restricted 95,220 849,622 925,798 868,799 266,573 - - - - - Assigned 1,663,400 1,794,416 537,586 436,979 972,632 1,457,390 2,433,744 2,171,129 1,647,732 2,128,177 Unassigned 7,557,419 11,101,327 12,871,125 15,186,915 14,626,901 18,722,265 19,925,641 16,890,755 20,532,484 24,033,874 Total general fund 9,378,429$ 13,815,881$ 14,393,057$ 16,492,693$ 15,925,532$ 20,244,249$ 22,423,064$ 19,133,202$ 22,514,523$ 26,790,569$ All other governmental funds Nonspendable 859,654$ 8,235,642$ 7,890,137$ 6,943,250$ 6,667,812$ 6,485,508$ 6,244,189$ 5,989,904$ 5,666,288$ -$ Restricted 39,375,368 54,421,910 27,404,127 35,688,123 39,327,653 58,993,882 55,139,903 45,521,097 123,531,962 115,535,066 Committed 2,627,403 2,764,227 3,149,243 3,618,354 4,008,439 4,130,069 14,792,873 14,050,264 13,845,445 19,303,359 Assigned 609,113 - - - - - - 31,183,615 - - Unassigned 545,024 - - - - - - - - - Total all other governmental funds 44,016,562$ 65,421,779$ 38,443,507$ 46,249,727$ 50,003,904$ 69,609,459$ 76,176,965$ 96,744,880$ 143,043,695$ 134,838,425$ Note: The City implemented GASB Statement 54 in 2009; schedules presenting governmental fund balance reclassifications begin in that year. Source: City of College Station Fiscal Year CITY OF COLLEGE STATION, TEXAS Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (unaudited) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Revenues Taxes 48,435,179$ 49,901,803$ 50,762,840$ 52,671,608$ 55,652,419$ 59,018,199$ 65,141,780$ 68,129,771$ 74,584,272$ 81,603,379$ Licenses and permits 1,007,151 964,344 1,091,983 1,496,989 1,240,300 1,438,082 1,500,777 2,132,802 2,127,142 1,772,959 Intergovernmental 1,896,623 5,022,822 2,143,573 2,759,219 1,749,805 3,234,317 2,734,763 2,998,133 3,058,940 2,684,702 Charges for services 3,543,064 6,042,105 6,113,497 5,616,379 5,918,397 6,236,531 6,318,722 6,568,428 9,931,519 11,301,782 Fines, forfeits and penalties 4,491,960 4,500,447 4,120,077 3,896,477 3,462,197 3,231,069 2,900,196 3,518,538 3,149,197 3,379,673 Special assessments 1,793,174 - - - - - - - - - Investment income 1,125,382 206,648 368,868 283,648 252,308 195,863 379,540 576,209 1,204,827 2,476,318 Rents and royalties 769,150 749,635 589,528 852,738 753,401 639,267 136,228 187,328 284,351 219,538 Contributions 26,997 605,953 825,532 1,244,973 799,048 1,263,644 1,445,953 1,953,045 2,875,254 1,823,692 Reimbursed expenditures 413,751 - - - - - - - - - Other revenues 403,548 267,695 730,747 426,218 312,473 674,439 3,386,931 486,037 1,242,420 3,263,666 Total revenues 63,905,979 68,261,452 66,746,645 69,248,249 70,140,348 75,931,411 83,944,890 86,550,291 98,457,922 108,525,709 Expenditures Police 14,107,740 13,816,620 14,931,212 15,521,284 16,550,111 17,093,860 18,547,794 20,184,487 21,418,030 22,652,536 Fire 11,754,088 11,418,948 11,444,702 12,578,396 13,297,527 13,585,022 14,881,983 16,916,819 17,001,580 19,624,919 Public works 7,920,003 7,123,885 6,677,986 7,343,092 7,397,942 8,632,149 10,272,535 12,459,544 9,837,009 14,897,436 Parks and recreation 9,355,301 8,930,388 9,388,765 8,131,413 7,883,904 7,712,597 8,547,083 9,684,568 9,227,811 10,010,679 Library 1,119,771 1,080,030 1,061,581 1,072,551 994,476 1,078,851 1,138,568 1,098,326 1,097,876 1,118,522 Planning and development services 2,871,341 2,568,464 3,327,495 4,698,749 4,268,854 4,933,780 3,246,431 3,352,961 3,839,117 3,855,144 Information systems 3,299,105 3,887,102 3,902,082 3,844,107 4,271,209 4,214,958 4,112,987 4,491,009 4,600,556 4,488,885 Fiscal services 3,836,786 3,635,009 3,353,387 3,106,265 3,205,204 3,260,242 3,568,357 3,986,352 4,083,402 4,154,931 General government 5,435,355 7,401,157 6,438,313 4,102,550 3,825,760 5,108,448 5,916,111 6,748,354 10,734,954 10,070,272 Capital improvement projects 476,462 132,880 648,589 788,032 733,974 731,621 - - - - Contributions 2,489,562 2,266,558 2,063,489 2,435,820 2,800,159 3,281,991 3,611,760 4,047,885 4,713,975 4,907,118 Claims - 1,600,000 - - - - - - - - Other expenditures 487,163 438,757 750,135 1,380,837 1,964,156 679,772 222,057 5,895 242,433 - Capital outlay 31,931,401 9,765,151 11,501,926 14,341,717 8,802,719 12,636,334 9,654,509 13,783,130 29,828,915 32,479,739 CITY OF COLLEGE STATION, TEXAS Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (unaudited) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Debt service Principal 7,935,000 8,050,000 8,085,412 8,120,000 8,245,000 8,650,000 9,110,000 8,660,000 10,680,000 12,435,400 Interest 4,114,356 4,133,633 3,698,324 3,696,245 3,747,520 3,707,799 4,220,656 3,769,711 4,627,678 7,024,074 Issuance costs - - - - 154,660 39,719 7,862 311,975 593,227 239,540 Fiscal charges 46,551 227,765 384,196 127,671 - - - - - - Intergovernmental 745,908 - 924,941 294,103 301,061 489,817 151,289 2,105,813 60,000 - Total expenditures 107,925,893 86,476,347 88,582,535 91,582,832 88,444,236 95,836,960 97,209,982 111,606,829 132,586,563 147,959,195 Deficiency of revenues under expenditures (44,019,914) (18,214,895) (21,835,890) (22,334,583) (18,303,888) (19,905,549) (13,265,092) (25,056,538) (34,128,641) (39,433,486) Other financing sources (uses) Proceeds from long-term debt 9,815,000 20,685,000 1,977,134 11,727,994 14,505,000 31,895,000 - 26,735,000 62,090,000 18,230,000 Proceeds from refunding bonds - 4,265,000 11,250,000 - - - - 13,915,000 1,815,000 - Payment to bond escrow agent - (4,283,647) (12,322,570) - - - - (16,087,122) (2,102,205) - Advance Refunding - - - (11,432,308) (6,054,452) (9,755,695) - - - - Premium on bonds issued - 75,183 1,172,234 1,132,812 951,174 3,624,222 - 4,329,506 6,603,713 891,194 Sale of capital assets 505,606 5,615 8,690 - - 4,582,111 8,974,205 - 2,438,422 - Transfers in 22,680,922 16,054,544 19,382,145 22,313,561 18,629,471 20,798,696 27,852,930 21,098,702 21,595,923 21,303,310 Transfers out (8,494,139) (673,081) (7,783,625) (9,385,160) (6,540,298) (7,314,513) (14,815,722) (7,656,495) (8,632,076) (7,626,504) Total other financing sources 24,507,389 36,128,614 13,684,008 14,356,899 21,490,895 43,829,821 22,011,413 42,334,591 83,808,777 32,798,000 Net change in fund balances (19,512,525)$ 17,913,719$ (8,151,882)$ (7,977,684)$ 3,187,007$ 23,924,272$ 8,746,321$ 17,278,053$ 49,680,136$ (6,635,486)$ Debt services as a percentage of noncapital expenditures 15.9%15.9%15.3%15.3%15.1%14.9%15.2%12.7%14.9%16.9% Source: City of College Station Fiscal Year CITY OF COLLEGE STATION, TEXAS Changes in Fund Balances, Governmental Funds - continued Last Ten Fiscal Years (modified accrual basis of accounting) (unaudited) Fiscal Year Property Sales Hotel Franchise Mixed Drink Total 2009 22,769,698$ 19,438,179$ 3,574,649$ 2,217,619$ 435,034$ 48,435,179$ 2010 24,523,184 19,328,578 3,416,713 2,210,902 422,426 49,901,803 2011 24,333,373 20,292,871 3,558,042 2,153,827 424,727 50,762,840 2012 24,978,388 21,498,319 3,643,887 2,171,277 379,737 52,671,608 2013 25,542,689 23,064,035 4,393,867 2,209,091 442,737 55,652,419 2014 26,341,222 24,565,649 5,127,808 2,407,344 576,176 59,018,199 2015 29,849,300 26,687,963 5,336,661 2,653,641 614,215 65,141,780 2016 32,358,889 27,163,480 5,277,314 2,680,332 649,756 68,129,771 2017 37,167,784 28,561,762 5,152,337 3,056,286 646,103 74,584,272 2018 43,411,535 28,799,040 5,737,743 2,918,519 736,542 81,603,379 Change 2009-2018 90.7%48.2%60.5%31.6%69.3%68.5% Notes: Source: City of College Station Property taxes include general fund, debt service fund, Northgate TIF (2009), Wolf Pen Creek TIF (2009-2010), and Medical District TIRZ (2013-2017). CITY OF COLLEGE STATION, TEXAS Tax Revenue by Source, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (unaudited) Taxable Assessed Commercial Personal, Inventory Value as a Residential and Industrial and Other Less Exemptions Less TIF (a)Total Taxable Total Direct Estimated Actual Percentage of Fiscal Year Property Property Property and Abatements Captured Value Assessed Value Tax Rate Taxable Value Actual Taxable Value 2009 3,200,809,497$ 1,141,458,255$ 881,095,548$ 677,645,852$ 68,644,309$ 4,477,073,139$ 0.439400 4,477,073,139$ 100.00% 2010 3,606,901,737 1,191,974,529 927,276,877 701,998,930 78,082,864 4,946,071,349 0.439400 4,946,071,349 100.00% 2011 3,941,112,015 1,236,193,238 1,069,742,963 856,257,215 69,373,412 5,321,417,589 0.447543 5,321,417,589 100.00% 2012 4,087,540,319 1,209,126,533 1,029,151,665 870,386,056 - 5,455,432,461 0.437995 5,455,432,461 100.00% 2013 4,280,768,585 1,295,254,729 1,069,727,466 907,135,778 - 5,738,615,002 0.430687 5,738,615,002 100.00% 2014 4,466,234,632 1,321,942,044 1,185,964,447 1,029,828,136 - 5,944,312,987 0.425958 5,944,312,987 100.00% 2015 4,713,785,311 1,350,665,951 1,323,614,835 1,156,947,087 17,534,345 6,213,584,665 0.452500 6,213,584,665 100.00% 2016 5,408,910,135 1,539,037,597 939,669,648 1,233,016,546 42,671,760 6,611,929,074 0.452500 6,611,929,074 100.00% 2017 5,904,997,312 1,546,479,664 1,017,433,729 1,308,606,612 40,305,770 7,119,998,323 0.472500 7,119,998,323 100.00% 2018 7,008,645,868 1,715,267,579 713,721,785 1,482,754,690 48,795,103 7,906,085,439 0.497500 7,906,085,439 100.00% Notes: Assessed value is 100% of the estimated actual value. (a) Tax Increment Financing district (TIF) Source: Brazos County Appraisal District CITY OF COLLEGE STATION, TEXAS Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (unaudited) Effective General Total College Fiscal Tax Basic Obligation Direct Station Brazos Year Rate (used)Rate Debt Service Rate ISD County 2009 No 0.193352 0.246048 0.439400 1.241050 0.465000 2010 No 0.209967 0.229433 0.439400 1.221100 0.480000 2011 Yes 0.227349 0.220194 0.447543 1.253413 0.480000 2012 Yes 0.236459 0.201536 0.437995 1.309933 0.485600 2013 Yes 0.235052 0.195635 0.430687 1.335033 0.485000 2014 Yes 0.232905 0.193053 0.425958 1.320000 0.487500 2015 No 0.259447 0.193053 0.452500 1.380000 0.485000 2016 No 0.259448 0.193052 0.452500 1.362900 0.485000 2017 No 0.277161 0.195339 0.472500 1.396000 0.485000 2018 No 0.277161 0.220339 0.497500 1.398000 0.485000 Notes: Source: Brazos County Appraisal District Tax rates are established by each taxing jurisdiction on an annual basis for revenues to be collected in the following fiscal year. The City must publish its effective and rollback tax rates before adopting an actual tax rate. If the City adopts a rate that exceeds the rollback rate, voters may petition for an election to limit the rate to the rollback rate. If the City adopts a rate that exceeds its effective rate, additional public hearings and notices are required. Rates for debt service are set based on each year's requirements. The date that taxes are due for all jurisdictions is October 1. Taxes for all jurisdictions become delinquent on February 1. The penalty is set by state law at 6% in February, and an additional 1% per month up to 12%. The interest is accrued at 1% per month. The upper limit of the tax rate is set at $2.50/$100 of assessed value for each jurisdiction by State Statute. This limit is for both operations and debt service combined. CITY OF COLLEGE STATION, TEXAS Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per $100 of assessed value) (unaudited) City Direct Rates Overlapping Rates Percent of Percent of of Total City of Total City Taxable Taxable Taxable Taxable 2018 Assessed Assessed 2009 Assessed Assessed Taxpayer Value Rank Value Value Rank Value CCP College Station I, LLC 74,768,400$ 1 0.95% College Station Hospital, LP 69,000,000 2 0.87%61,308,070$ 1 1.37% Post Oak Mall - College Station LLC 68,000,000 3 0.86%55,651,375 2 1.24% Woodridge College Station Phase II, LLC 56,954,300 4 0.72% SHP-The Callaway House, LP 55,510,436 5 0.70% Woodridge College Station Phase I, LLC 54,997,208 6 0.70% Midway Hospitality, LP 54,727,080 7 0.69% Culpepper Family, LP 52,322,094 8 0.66% SW Meadows Point, LP 52,241,125 9 0.66% TAM The Rise Property, LLC 49,686,952 10 0.63% Weinburg, Israel & David Alkosser 42,388,230 3 0.95% Woodlands of College Station 38,790,529 4 0.87% ACC Op (Callaway Villas) LP 36,846,840 5 0.82% Commonwealth Austin LP 30,736,980 6 0.69% Wal-Mart Stores East Inc.30,628,460 7 0.68% University Heights - CS Acquisitions LP Etal 28,803,300 8 0.64% Verizon Communications, Inc.28,789,920 9 0.64% SCI Gateway at CS Fund LLC Etal 27,246,180 10 0.61% Total 588,207,595$ 7.44%381,189,884$ 8.51% Source: Brazos County Appraisal District CITY OF COLLEGE STATION, TEXAS Principal Property Taxpayers Current Year and Nine Years Ago (unaudited) 2018 2009 Fiscal Year Taxes Levied Collections Ended for the Percentage in Subsequent Percentage Sept 30 Fiscal Year Amount of Levy Years Amount of Levy 2009 22,076,134 21,795,748 98.73%271,290$ 22,067,038$ 99.96% 2010 23,623,086 23,435,105 99.20%177,161 23,612,266 99.95% 2011 24,323,279 24,136,088 99.23%172,093 24,308,181 99.94% 2012 24,979,685 24,762,625 99.13%201,292 24,963,917 99.94% 2013 25,503,096 25,326,360 99.31%158,767 25,485,127 99.93% 2014 26,407,915 26,213,476 99.26%172,208 26,385,685 99.92% 2015 29,803,314 29,414,950 98.70%358,486 29,773,436 99.90% 2016 32,065,351 31,727,823 98.95%299,302 32,027,125 99.88% 2017 37,007,711 36,815,300 99.48%81,673 36,896,973 99.70% 2018 43,300,209 42,824,284 98.90%- 42,824,284 98.90% Sources: City of College Station and Brazos County Tax Office Fiscal Year of the Levy Total Collections to Date CITY OF COLLEGE STATION, TEXAS Property Tax Levies and Collections Last Ten Fiscal Years (unaudited) Collected within the 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Utilities 25,483$ 26,442$ 27,724$ 32,048$ 29,102$ 29,956$ 29,451$ 15,820$ 28,679$ 29,448$ Construction 15,768 10,617 10,070 10,900 12,743 12,053 14,804 15,126 18,780 13,900 Manufacturing 16,391 12,221 9,620 6,823 7,433 7,941 9,013 11,962 12,212 14,854 Wholesale Trade 13,761 9,856 10,770 19,556 23,573 26,941 23,240 30,976 39,300 43,876 Retail Trade 693,673 653,561 678,041 699,715 738,897 777,632 829,563 844,066 831,603 822,526 Information 15,427 15,654 16,907 16,984 18,261 21,546 28,076 31,483 31,901 34,132 Finance and Insurance 752 706 840 1,043 1,044 1,336 1,702 2,238 2,105 2,025 Real Estate and Rental/Leasing 18,326 9,288 9,456 9,314 9,785 11,411 13,781 14,260 14,819 13,309 Professional, Scientific and Tech Services 26,234 25,694 13,142 12,901 12,716 14,518 13,942 15,320 16,953 13,942 Administrative, Support, Waste Mgmt, Remediation 18,362 17,610 16,831 17,381 19,645 21,080 23,538 24,743 25,516 26,083 Educational Services 27,645 35,351 34,952 37,434 43,135 43,173 40,762 41,409 40,650 50,184 Health Care and Social Assistance 2,888 2,301 2,049 1,920 2,116 3,103 3,933 3,467 2,774 2,766 Arts, Entertainment and Recreation 9,168 8,671 8,470 9,325 9,488 11,070 14,400 15,927 16,479 16,452 Accommodation and Food Services 205,967 204,731 208,597 217,445 238,186 256,716 293,803 312,834 315,274 326,208 Other Services 15,782 15,338 15,890 16,274 18,594 22,322 25,305 25,339 28,716 40,586 Total 1,105,627$ 1,048,041$ 1,063,359$ 1,109,063$ 1,184,718$ 1,260,798$ 1,365,313$ 1,404,970$ 1,425,761$ 1,450,291$ City direct sales tax rate 1.50%1.50%1.50%1.50%1.50%1.50%1.50%1.50%1.50%1.50% Notes: Source: Texas State Comptroller of Public Accounts CITY OF COLLEGE STATION, TEXAS Taxable Sales by Category Last Ten Calendar Years (in thousands of dollars) (unaudited) Taxable sales information is not available on a fiscal-year basis. City Brazos State of Fiscal Year Direct Rate County Texas 2009 1.50%0.50%6.25% 2010 1.50%0.50%6.25% 2011 1.50%0.50%6.25% 2012 1.50%0.50%6.25% 2013 1.50%0.50%6.25% 2014 1.50%0.50%6.25% 2015 1.50%0.50%6.25% 2016 1.50%0.50%6.25% 2017 1.50%0.50%6.25% 2018 1.50%0.50%6.25% Source: Texas State Comptroller of Public Accounts CITY OF COLLEGE STATION, TEXAS Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years (unaudited) Number Percentage Tax Percentage Number Percentage Tax Percentage of Outlets of Total Liability of Total of Outlets of Total Liability of Total Retail trade 1,207 55.98%13,485$ 83.21%1,394 52.03%17,231$ 79.20% Services 243 11.27%625 3.86%301 11.24%721 3.31% Wholesale trade 61 2.83%224 1.38%76 2.84%659 3.03% Utilities, transportation, communications 18 0.83%3 0.02%19 0.71%469 2.16% Manufacturing 70 3.25%258 1.59%112 4.18%223 1.03% Construction 97 4.50%237 1.46%143 5.34%209 0.96% Agriculture, forestry, and fishing 6 0.28%2 0.01%12 0.45%1 0.00% Finance, insurance, real estate 52 2.41%281 1.73%69 2.58%230 1.06% All other outlets 402 18.65%1,091 6.73%553 20.64%2,013 9.25% Total 2,156 100.00%16,206$ 100.00%2,679 100.00%21,756$ 100.00% Notes: Tax liability information is not available on a fiscal-year basis. Source: Texas State Comptroller of Public Accounts at https://mycpa.cpa.state.tx.us/allocation/qtrsalesreportbyresults Due to confidentiality issues, the names of the ten largest revenue payers are not available. The categories presented are intended to provide alternative information regarding the sources of the City's revenue. CITY OF COLLEGE STATION, TEXAS Sales Tax Revenue Payers by Industry Calendar Years 2008 and 2017 (dollars are in thousands) (unaudited) Calendar Year 2008 Calendar Year 2017 General Premiums on Premiums on General Premiums on Premiums on Total Percentage Fiscal Obligation General Certificates of Certificates of Revenue Obligation General Certificates Certificates of Primary of Personal Per Year Bonds Obligation Bonds Obligation Obligation Bonds Bonds Obligation Bonds of Obligation Obligation Government Income Capita 2009 59,145,000 - 38,575,000 - 93,755,000 - - 52,285,000 - 243,760,000 14.04%2,682 2010 75,020,000 - 35,675,000 - 87,745,000 3,830,000 - 53,940,000 - 256,210,000 15.08%2,742 2011 78,055,000 - 26,085,000 - 54,495,000 28,655,000 - 54,950,000 - 242,240,000 15.20%2,560 2012 75,695,000 - 21,415,000 - 45,060,000 36,280,000 - 63,085,000 - 241,535,000 12.77%2,492 2013 79,710,000 3,043,121 17,160,000 - 34,765,000 39,230,000 3,777,922 71,025,000 845,571 249,556,613 14.39%2,583 2014 89,050,000 3,949,973 21,805,000 1,468,916 14,920,000 49,900,000 5,099,362 91,310,000 4,301,539 281,804,790 13.35%2,770 2015 81,855,000 3,533,635 19,890,000 1,391,281 13,395,000 44,670,000 4,537,503 87,305,000 4,068,926 260,646,344 10.88%2,495 2016 88,380,000 6,592,456 30,080,000 3,035,934 - 57,115,000 7,002,044 82,185,000 4,548,153 278,938,587 11.15%2,556 2017 97,355,000 7,274,385 72,270,000 8,066,751 - 61,565,000 8,061,609 77,475,000 5,655,709 337,723,455 11.72%2,882 2018 89,925,000 6,555,914 85,495,000 8,518,894 - 55,240,000 7,089,648 91,835,000 6,269,252 350,928,708 12.48%2,932 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Personal income information for the City of College Station is only available for calendar years 2005 - 2012. In 2009, the Parking Garage Fund began paying for the Parking Garage debt. In 2010, the Parking Garage Certificates of Obligation were refunded and became General Obligation Debt. In 2017, the Landfill Obligation partially refunded the Certificates of Obligation portion and now consists of Certificates of Obligation as well as General Obligation Debt. For the years 2009 to 2012, premiums on general obligation bonds and premiums on certificates of obligation were not broken out in the legacy system. Sources: First Southwest City of College Station Planning and Development Services CITY OF COLLEGE STATION, TEXAS Outstanding Debt by Type Last Ten Fiscal Years (unaudited) Business-Type ActivitiesGovernmental Activities General Percentage of Obligation Less Debt Service Net Actual Taxable Fiscal Year Bonds *Cash Funds Bonded Debt Value of Property Per Capita 2009 59,145,000 3,125,126 56,019,874 1.13%611 2010 75,020,000 4,115,689 70,904,311 1.33%759 2011 78,055,000 4,007,146 74,047,854 1.36%782 2012 75,695,000 3,320,293 72,374,707 1.26%750 2013 86,531,042 3,032,594 83,498,448 1.29%794 2014 98,099,335 2,839,310 95,260,025 1.39%847 2015 134,596,137 2,560,216 132,035,921 1.89%1,187 2016 159,089,500 3,753,179 155,336,321 2.18%1,423 2017 174,255,995 4,517,783 169,738,212 2.22%1,448 2018 158,810,562 4,492,295 154,318,267 1.73%1,289 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Source: City of College Station CITY OF COLLEGE STATION, TEXAS Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years (unaudited) * The amounts for General Obligation Bonds include principal and premiums for fiscal years 2013 to 2018. For prior periods the amount is only principal due to limited acessibility of data. Estimated Estimated Share Debt Percentage of Direct and Governmental Unit Outstanding Applicablea Overlapping Debt Debt repaid with property taxes: College Station I.S.D.342,500,000$ 88.85%304,311,250$ Brazos County 79,135,000 49.18%38,918,593 Bryan I.S.D.213,345,000 2.55%5,440,298 Other debt: College Station I.S.D.- 0.00%- Brazos County - 0.00%- Bryan I.S.D. capital lease - 0.00%- Subtotal, overlapping debt 348,670,141 City direct debt 190,494,808 Total direct and overlapping debt 539,164,949$ Notes: Source: Debt outstanding data provided by each governmental unit. Assessed value data used to estimate applicable percentages provided by the Brazos County Appraisal District. CITY OF COLLEGE STATION, TEXAS Direct and Overlapping Governmental Activities Debt As of September 30, 2018 (unaudited) Overlapping governments are those that coincide, at least in part, with the geographical boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of College Station. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident and therefore responsible for repaying the debt of each overlapping government. a For debt repaid with property taxes, the percentage of overlapping debt is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of another governmental unit's taxable assessed value that is within the City's boundaries and dividing it by each unit's total assessed value. CITY OF COLLEGE STATION, TEXAS Legal Debt Margin Information September 30, 2018 (unaudited) The City has no general obligation legal debt limit other than a ceiling on the ad valorem tax rate as specified by the State of Texas. The prescribed maximum is $2.50 per $100.00 at 100% valuation. Utility Less:Net Average Maximum Service Operating Available Debt Service Annual Debt Service Annual Fiscal Year Charges Expenses Revenue Total Coverage Total Coverage 2009 108,367,552 80,848,570 27,518,982 9,834,136 2.80 13,870,272 1.98 2010 115,430,088 91,551,103 23,878,985 8,976,011 2.66 13,669,444 1.75 2011 127,985,835 96,938,864 31,046,971 8,675,457 3.58 13,635,526 2.28 2012 124,905,906 88,927,662 35,978,244 7,009,717 5.13 10,670,889 3.37 2013 125,581,359 90,519,871 35,061,488 9,111,927 3.85 15,372,461 2.28 2014 126,118,088 100,235,329 25,882,759 10,048,709 2.58 16,029,505 .1.61 2015 131,021,388 82,116,301 48,905,087 9,733,931 5.02 16,195,604 3.02 2016 132,025,959 76,364,434 55,661,525 9,233,111 6.03 16,121,947 3.45 2017 133,701,997 78,765,869 54,936,128 8,778,260 *6.26 16,314,728 3.37 2018 138,638,447 77,828,073 60,810,374 9,331,199 6.52 16,991,184 3.58 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest, depreciation, or amortization expense. * The Average Debt Service Total for 2017 was incorrectly caculated at $21,063,278 but restated here correctly at $8,778,260. Source: City of College Station Maximum Debt Service Total includes Utility Revenue Bonds, Certificates of Obligation and GO Refunding Bonds that have been issued for Utility projects. The coverage ratios presented in this schedule are formulas required by bond resolutions. The bond resolutions require that net revenues equal at least 1.4 times the average annual debt service on all revenue bonds and other indebtedness payable from those revenues. The bond resolutions also require that net revenues equal at least 1.25 times the maximum annual debt service on all revenue bonds and other indebtedness payable from those revenues. CITY OF COLLEGE STATION, TEXAS Pledged-Revenue Coverage Last Ten Fiscal Years (unaudited) Utility Revenue Bonds, Certificates of Obligation, and General Obligation Refunding Bonds Personal Income Calendar (thousands Per Capita Unemployment Year Population of dollars)Personal Income Rate % 2008 90,897 1,699,361$ 18,695$ 4.1 2009 93,450 1,594,056 17,058 5.3 2010 94,642 1,891,621 19,987 5.9 2011 96,603 1,734,731 17,957 6.3 2012 97,534 1,945,242 19,944 5.9 2013 99,918 2,110,139 21,119 4.9 2014 102,117 2,270,453 22,234 3.1 2015 106,465 2,502,787 23,508 2.8 2016 109,895 2,880,812 26,214 3.2 2017 117,774 2,811,048 23,868 2.6 Sources: City of College Station Planning Division (population) U. S. Census Bureau, American Community Survey (personal income) Texas Workforce Commission (unemployment rate) CITY OF COLLEGE STATION, TEXAS Demographic and Economic Statistics Last Ten Calendar Years (unaudited) 2018 2009 Employer Employer Blinn College Brazos County Bryan ISD Bryan ISD CHI St. Joseph's Regional Hospital CHI St. Joseph's Regional Hospital College Station ISD City of Bryan HEB Grocery City of College Station Reynolds & Reynolds College Station ISD Sanderson Farms Reynolds & Reynolds Texas A&M Health Science Center Sanderson Farms Texas A&M University Texas A&M University Wal-Mart/Sam's Wal-Mart Source: Notes: Data includes principal employers in Brazos County. The Texas Workforce Commission ranking and number of employees data is confidential. CITY OF COLLEGE STATION, TEXAS Principal Area Employers Last Calendar Year and Nine Years Prior (unaudited) Texas Workforce Commission, Labor Market/Career Information Department, Research Valley Partnership Employers are listed in alphabetical order and do not reflect any ranking. 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Function/Program Police 176.0 169.0 180.5 182.5 192.5 196.5 206.5 206.5 213.5 220.5 Fire 121.0 118.0 120.5 139.0 139.0 140.0 152.0 152.0 157.0 160.0 Public Works 113.0 94.0 96.0 114.0 116.0 118.0 124.0 128.0 128.5 130.5 Parks and Recreation 133.0 133.0 119.0 117.0 111.5 105.5 106.5 107.0 106.8 109.8 Planning and Development Services 37.0 41.0 54.0 58.5 56.5 56.0 52.0 51.5 55.5 58.0 Information Services 32.0 30.5 30.0 30.5 29.5 30.5 30.5 31.5 31.5 31.5 Fiscal Services 70.5 70.0 66.5 69.8 68.8 69.8 72.8 76.8 70.3 71.3 General Government 79.5 75.0 61.5 37.5 36.5 37.5 47.0 49.5 53.5 56.5 Electric 65.0 64.0 63.5 67.5 69.5 70.5 74.5 74.5 76.5 80.5 Water / Sewer Services 76.5 70.5 74.0 77.0 77.0 78.0 84.5 84.5 86.5 87.0 BVSWMA 25.0 23.5 22.0 22.0 -- - - - - Capital Project 10.0 9.0 9.0 --- - - - - Total 938.5 897.5 896.5 915.3 896.8 902.3 950.3 961.8 979.6 1005.5 Source: City of College Station Notes: Full-time-equivalent employees include full time, part time, and seasonal/temporary employees on staff as of September 30. During the fiscal year ended September 30, 2012, management of BVSWMA, Inc. negotiated the end of the borrowed employee agreement with the City of College Station. A majority of the employees covered under the "Borrowed Employee Agreement" are now employees of BVSWMA, Inc. CITY OF COLLEGE STATION, TEXAS Full-Time-Equivalent City Government Employees by Function/Program Last Ten Fiscal Years (unaudited) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Function/Program General Government Open records requests 164 123 240 194 233 432 531 703 796 1,227 Economic development prospects 23 55 31 25 36 35 37 55 57 64 Code enforcement cases processed 6,248 5,268 4,701 5,011 4,517 7,941 9,600 7,383 12,169 11,115 Non-profit agencies/contracts monitored 9 10 8 7 8 7 7 4 7 6 Applicants receiving homebuyers assistance 4 6 3 15 8 4 4 2 2 7 Police DUI/DWI arrests 430 449 571 551 473 474 400 408 266 345 Citations processed 17,275 22,224 42,690 39,145 31,348 29,187 25,070 36,977 34,742 29,042 Uniform patrol calls handled 48,297 58,656 61,283 63,000 75,988 71,373 53,259 62,067 96,479 85,416 Average response time on high priority calls 6:18 mins 6:52 mins 6:41 mins 6:38 mins 4:31 mins 7:10 mins 7:46 mins 7:54 mins 7:54 mins 6:31 mins Criminal investigation new cases assigned 2,590 2,098 2,582 2,089 2,158 1,894 2,196 1,942 1,756 1,635 Fire Fire incidents (fire, rescue, and hazmat)2,008 2,301 1,813 1,751 2,608 2,974 2,489 2,640 2,834 267 Business safety inspections 760 1,364 1,151 907 889 1,345 563 233 422 1,170 EMS incidents 5,367 5,414 5,407 6,814 4,846 5,170 5,959 6,020 7,073 6,770 EMS unit responses 5,051 5,646 6,090 6,295 8,188 9,435 10,099 6,990 7,073 12,440 Public Works Street overlay lane miles 9 2 11 10 13 13 12 18 26 15 Potholes repaired 18,000 68,548 67,448 70,515 62,596 61,439 25,392 75,574 43,741 18,632 Curb miles swept 5,620 5,595 6,244 7,131 5,826 6,311 6,672 6,863 6,283 5,819 Note: In FY10 number of potholes repaired went to number of square feet repaired. Parks and Recreation Instructional participants 3,077 3,112 2,765 1,835 1,600 2,495 2,598 2,191 2,288 2,060 Pool customers 138,785 93,302 114,458 144,059 128,081 73,229 81,083 89,980 53,685 52,304 CITY OF COLLEGE STATION, TEXAS Operating Indicators by Function/Program Last Ten Fiscal Years (unaudited) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Function/Program Planning and Development Services Permits processed 5,819 5,972 6,026 5,600 3,991 4,446 7,766 5,797 7,863 2,465 Building inspections performed 12,938 12,379 11,583 12,100 12,945 13,859 16,069 19,860 23,609 16,900 Parking citations issued 9,686 6,763 4,488 6,530 6,868 7,320 7,515 9,899 7,877 8,060 Community enhancement cases 11,622 11,408 8,632 8,900 6,518 7,941 9,600 * Electric Number of connections 37,818 38,255 37,829 39,123 38,138 19,000 38,224 32,000 39,300 39,435 Average monthly consumption (KWH)64,065,679 65,049,732 68,191,018 65,266,563 64,568,405 66,715,908 69,577,111 68,840,787 69,814,277 72,239,944 Water Number of units 37,344 37,596 37,565 39,338 40,767 24,847 41,540 41,709 43,199 44,995 Average monthly consumption (MGW)345,170 301,399 408,327 356,791 380,558 343,360 339,840 352,253 382,020 383,830 Sewer Number of units 34,743 35,853 35,510 36,908 38,688 32,065 40,806 40,866 42,840 46,031 Average daily sewage treatment 6,625 6,700 6,242 6,453 6,500 7,129 7,598 7,584 7,436 7,468 (thousands of gallons) New services completed 604 377 301 376 319 555 623 590 461 412 Sanitation Number of users (units)30,750 30,779 30,455 31,573 32,551 23,239 22,210 22,442 22,897 24,716 Residential tons collected 21,406 28,451 22,775 28,991 25,493 26,290 25,573 21,577 22,248 24,950 Residential tons recycled 1,064 1,053 1,173 1,124 1,010 982 4,809 1,999 2,690 2,659 Commercial tons collected 36,245 36,558 35,133 34,608 36,751 37,856 39,272 40,302 39,136 39,048 Parking garage Active contract customers 333 524 482 460 354 410 364 335 585 662 Hourly cash customers 104,342 85,210 83,048 80,127 81,624 80,555 80,012 77,511 73,196 74,537 Utility Customer Service Payments processed 461,557 467,262 436,936 476,999 498,703 495,659 502,752 531,138 506,308 521,190 Incoming calls 96,876 85,212 84,861 94,986 93,075 93,862 94,037 93,970 82,956 81,336 Meters read 694,270 708,672 719,749 732,631 744,298 758,306 776,279 795,871 815,105 834,712 Source: City of College Station various departments Notes: *The City discontinued tracking Community Enhancement cases separately from Code Enforcement cases processed. Operating Indicators by Function/Program - continued Last Ten Fiscal Years (unaudited) Fiscal Year CITY OF COLLEGE STATION, TEXAS 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Function/Program Police Patrol units 29 27 33 32 39 39 39 39 41 41 Jail capacity 17 17 17 17 17 17 17 17 17 17 Fire stations 4 4 4 5 6 6 6 6 6 6 Note: The Fire Department operates an additional fire station located at the airport. Public Works Streets (linear miles)428 453 474 482 482 493 505 543 559 566 Sidewalks (miles)119 130 138 150 156 162 181 184 202 220 Traffic signals 66 69 70 75 76 77 77 79 81 87 Storm sewers (miles)80 83 83 89 89 95 104 106 108 111 Note: Storm sewer mileage includes both underground pipes and valley gutters. Parks and Recreation Acreage 1,306 1,327 1,327 1,327 1,328 1,412 1,448 1,448 1,449 1,429 Play units 54 56 57 57 56 61 64 63 63 69 Softball/baseball fields 35 36 36 36 36 41 41 43 22 41 Soccer fields 29 30 30 30 30 35 26 33 29 31 Jogging/walking trails 33 34 34 34 34 41 42 42 42 49 Community centers 3 3 3 3 2 2 2 2 3 3 Pools 3 3 3 3 3 3 3 3 3 3 Pavilions (rentable)6 6 7 7 7 7 6 8 7 7 Note: Some parks have multiple play units. Softball/baseball fields include practice fields. Electric Peak demand (megawatts)355 305 305 325 325 204 208 208 207 217 Number of substations 5 6 6 6 6 6 7 7 7 7 Distribution lines (miles)432 440 444 438 458 458 471 471 490 506 Water Water mains (miles)385 396 402 410 415 420 430 438 444 454 Fire hydrants 2,494 2,562 2,614 2,682 2,741 2,798 2,869 2,946 3,013 3,104 Number of wells 8 9 9 9 9 9 9 9 9 9 Water production capacity 26,000 32,000 27,000 30,000 29,000 29,000 31,400 35,000 29,000 29,000 (thousands of gallons per day) Sewer Sanitary sewer lines (miles)305 313 319 324 324 324 338 348 350 363 Treatment capacity 11,500 11,500 11,500 11,500 11,500 11,500 11,500 11,509 11,509 11,509 (thousands of gallons per day) Sanitation Collection trucks 25 25 25 25 25 26 27 27 28 28 Residential collection containers 20,275 20,671 20,550 21,547 22,470 23,239 24,253 24,881 25,180 25,915 Commercial collection containers 1,644 1,669 1,694 1,719 1,744 1,894 1,916 1,916 1,916 1,994 Fleet number of vehicles 647 662 662 576 570 596 600 663 775 775 Source: City of College Station CITY OF COLLEGE STATION, TEXAS Capital Asset Statistics by Function/Program Last Ten Fiscal Years (unaudited) cstx.gov/cafr Independent Auditor’s Report The Mayor and City Council City of College Station, Texas Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of College Station, Texas (City), as of and for the year ended September 30, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of Brazos Valley Solid Waste Management Agency, Inc. (BVSWMA), a joint venture between the City of College Station and City of Bryan, which statements reflect total net position of $34,522,485 of which 50% ($17,261,241) is recorded in the City’s statement of net position and represents 3.20% of the business type activities total assets and 13.5% of the aggregate remaining funds total assets. We did not audit the financial statements of Experience BCS, the discretely presented component unit of the City. The financial statements of Experience BCS and BVSWMA were audited by other auditors whose reports have been furnished to us, and our opinions, insofar as they relate to the amounts included as equity in joint venture and the discretely presented component unit, are based solely on the reports of other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The financial statements of Experience BCS and BVSWMA were not audited in accordance with Government Auditing Standards.DRAFT The Mayor and Council City of College Station, Texas Page 11 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of College Station, Texas, as of September 30, 2018, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Notes 1 and 2 to the financial statements, in 2018 the City adopted Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Our opinions are not modified with respect to this matter. The 2017 financial statements, before they were restated for the matters discussed in Note 2, were audited by other auditors, and their report thereon, dated February 19, 2018, expressed unmodified opinions. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, pension and other postemployment benefit information, and the schedule of revenues, expenditures and changes in fund balance budget and actual – general fund as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. DRAFT The Mayor and Council City of College Station, Texas Page 12 Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of College Station's basic financial statements. The introductory section, combining and individual fund statements and schedules and statistical section as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund statements and schedules are the responsibility of management, and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we also have issued our report dated March __, 2019, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Houston, Texas March __, 2019 DRAFT Audit Committee Honorable Mayor, Karl Mooney and Members of City Council Mr. Bryan Woods, City Manager Mr. Jeff Kersten, Assistant City Manager and Chief Financial Officer City of College Station College Station, Texas As part of our audits of the financial statements and compliance of the City of College Station (City) as of and for the year ended September 30, 2018, we wish to communicate the following to you. AUDIT SCOPE AND RESULTS Auditor’s Responsibility Under Auditing Standards Generally Accepted in the United States of America and the Standards Applicable to Financial Audits Contained in Government Auditing Standards Issued by the Comptroller General of the United States and U.S. Office of Management and Budget (OMB) Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) An audit performed in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States and U.S. Office of Management and Budget (OMB) Uniform Guidance is designed to obtain reasonable, rather than absolute, assurance about the financial statements and about whether noncompliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on a major federal program occurred. In performing auditing procedures, we establish scopes of audit tests in relation to the financial statements taken as a whole. Our engagement does not include a detailed audit of every transaction. Our engagement letter more specifically describes our responsibilities. These standards require communication of significant matters related to the financial statement and compliance audits that are relevant to the responsibilities of those charged with governance in overseeing the financial reporting process. Such matters are communicated in the remainder of this letter or have previously been communicated during other phases of the audit. The standards do not require the auditor to design procedures for the purpose of identifying other matters to be communicated with those charged with governance. Audits of the financial statements and compliance do not relieve management or those charged with governance of their responsibilities. Our engagement letter more specifically describes your responsibilities. DRAFT -2- Qualitative Aspects of Significant Accounting Policies and Practices Significant Accounting Policies The City’s significant accounting policies are described in Note 1 of the audited financial statements. Alternative Accounting Treatments No matters are reportable. Management Judgments and Accounting Estimates Accounting estimates are an integral part of financial statement preparation by management, based on its judgments. The following areas involve significant areas of such estimates for which we are prepared to discuss management’s estimation process and our procedures for testing the reasonableness of those estimates:  Allowance for doubtful accounts  Unbilled accounts receivable  Insurance and risk management liability  Actuarial assumptions used to estimate the net pension liability and related deferred inflows and outflows of resources  Actuarial assumptions used to estimate the net other postemployment benefits liability and related deferred inflows and outflows of resources Financial Statement Disclosures The following areas involve particularly sensitive financial statement disclosures for which we are prepared to discuss the issues involved and related judgments made in formulating those disclosures:  Other postemployment benefits  Defined benefit pension plan  Adjustments to fund balances and net position  Commitments and contingencies Audit Adjustments During the course of any audit, an auditor may propose adjustments to financial statement amounts. Management evaluates our proposals and records those adjustments which, in its judgment, are required to prevent the financial statements from being materially misstated. Some adjustments proposed were not recorded because their aggregate effect is not currently material; however, they involve areas in which adjustments in the future could be material, individually or in the aggregate. DRAFT -3- Areas in which adjustments were proposed include: Proposed Audit Adjustments Recorded  Accounts receivable  Provision for doubtful accounts  Deferred inflows of resources  Fiduciary fund net position  Beginning net position  Sales tax revenue Proposed Audit Adjustments Not Recorded  Attached is a summary of uncorrected misstatements we aggregated during the current engagement and pertaining to the latest period presented that were determined by management to be immaterial, both individually and in the aggregate, to the financial statements as a whole. Auditor’s Judgments About the Quality of the City’s Accounting Principles No matters are reportable. Significant Issues Discussed with Management During the audit process, the following issues were discussed or were the subject of correspondence with management:  Implementation of Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions  Various restatements to the financial statements Other Material Communications Listed below are other material communications between management and us related to the audit:  Management representation letter (attached)  We orally communicated to management other deficiencies in internal control identified during our audit that are not considered material weaknesses or significant deficiencies. DRAFT -4- INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements of the City as of and for the year ended September 30, 2018, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, we considered the City’s internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses and, therefore, there can be no assurance that all deficiencies, significant deficiencies or material weaknesses have been identified. However, as discussed below, we identified a deficiency in internal control that we consider to be a significant deficiency. A deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements of the City’s financial statements on a timely basis. A deficiency in design exists when a control necessary to meet a control objective is missing or an existing control is not properly designed so that, even if the control operates as designed, a control objective would not be met. A deficiency in operation exists when a properly designed control does not operate as designed or when the person performing the control does not possess the necessary authority or competence to perform the control effectively. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We observed the following matters that we consider to be a significant deficiency. Significant Deficiency Refer to the Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. DRAFT -5- OTHER MATTERS We observed the following matters and offer these comments and suggestions We can discuss these matters further at your convenience and may provide implementation assistance for changes or improvements. Future Accounting Standards GASB Statement No. 84, Fiduciary Activities (GASB 84) GASB 84 establishes criteria for identifying fiduciary activities. It presents separate criteria for evaluating component units, pension and other postemployment benefit arrangements and other fiduciary activities. The focus is on a government controlling the assets of the fiduciary activity and identification of the beneficiaries of those assets. Fiduciary activities are reported in one of four types of funds: pension (and other employee benefit) trust funds, investment trust funds, private-purpose trust funds or custodial funds. Custodial funds are used to report fiduciary activities that are not held in a trust. The agency fund designation will no longer be used. GASB 84 also provides guidance on fiduciary fund statements and timing of recognition of a liability to beneficiaries. GASB 84 is effective for the City’s 2020 fiscal year. Earlier application is encouraged. GASB Statement No. 87, Leases (GASB 87) GASB 87 provides a new framework for accounting for leases under the principle that leases are financings. No longer will leases be classified between capital and operating. Lessees will recognize an intangible asset and a corresponding liability. The liability will be based on the payments expected to be paid over the lease term, which includes an evaluation of the likelihood of exercising renewal or termination options in the lease. Lessors will recognize a lease receivable and related deferred inflow of resources. Lessors will not derecognize the underlying asset. An exception to the general model is provided for short-term leases that cannot last more than 12 months. Contracts that contain lease and non-lease components will need to be separated so each component is accounted for accordingly. GASB 87 is effective for financial statements for fiscal years beginning after December 15, 2019. Earlier application is encouraged. Governments will be allowed to transition using the facts and circumstances in place at the time of adoption, rather than retroactive to the time each lease was begun. DRAFT -6- Other Industry Trends and Observations: A Structured Approach to Managing Public Sector Industry Risks Risk management is an integral part of all public sector processes. Increasing regulatory pressures, constantly evolving technological changes, higher costs and calls for greater transparency require public sector organizations to ensure risks are being managed and mitigated appropriately. The adoption of a structured approach and utilization of a risk management framework can help public sector organizations transition from the traditional siloed approach of managing risks to a more holistic, integrated approach. To advance safety, reduce uncertainty, minimize risks and maximize value, we recommend public sector organizations perform an evaluation of their current risk management process. As a best practice, we recommend the City consider the implementation of a comprehensive framework for enterprise-wide risk management. Meeting the Increasing Challenges of Cybersecurity The increasing value of electronic protected health information (ePHI), payment card data and intellectual property (e.g. trade secrets) is driving more organizations of all sizes to prepare for the potential of a cyberattack. Hackers and cyber-thieves have become adept at pilfering confidential information, using ransomware to extort money and leveraging social engineering techniques to trick employees into wiring funds.  As a first step to improving their cyber-readiness, organizations need to perform a cybersecurity risk assessment to determine the current state of cybersecurity processes, controls and technology. This effort can determine how well the organization can prevent, detect and respond to cyber-attacks.  Key to the assessment process is choosing an appropriate framework against which the organization may be evaluated. In fact, two nationally recognized organizations have developed cybersecurity frameworks.  The National Institute of Standards and Technology (NIST) has developed a Cybersecurity Framework to assist organizations manage cybersecurity-related risk more effectively. The NIST Cybersecurity Framework provides a prioritized, flexible, repeatable and a cost-effective approach that can be used in any industry or organization.  For organizations that store, process or transmit ePHI, there is an additional industry- specific framework. The Health Information Trust (HITRUST) Alliance—in collaboration with health care and information security professionals—has developed the HITRUST Common Security Framework (CSF). The CSF rationalizes relevant health care regulations and standards into a single overarching security framework. Once the framework has been chosen, we recommend that management consider performing a cybersecurity risk assessment to gauge the overall readiness and maturity of existing controls and perform appropriate testing of the IT infrastructure and employee awareness. DRAFT -7- Risk of Manipulation of Payee within an Accounts Payable System Recent fraud trends have shown an increase in the manipulation of the payee within an accounts payable system. In these frauds, the payee on the actual check cashed by the financial institution was different than the payee within the accounts payable system. Within the accounting system, the payment appears to be legitimate, including an approved payee and appropriate postings to related expense accounts. However, when looking at the physical check, the payee does not agree to the payee within the accounts payable system. Various organizations have observed the following manipulations:  Certain systems allow for the payee to be modified during the processing of accounts payable, just prior to the printing of the check. The payee within the system does not change and the coding to the expense accounts is not modified. The manipulation simply modifies the payee on the check upon printing.  In circumstances where the accounts payable system will not allow for the modification discussed above prior to printing, there have been instances where the system-generated check is voided and a manual check for the same amount is generated, to allow for the manipulation of the payee. The check is not actually voided in the system, therefore, not causing reconciliation issues.  Use of manual checks – when a manual check is generated, the check is entered using a legitimate payee within the system, but the payee is changed on the check itself. Each of the above manipulations results in the payee on the physical check differing from the payee within the accounting system. Therefore, if a review is performed based solely on system- generated reports, the manipulation would likely not be identified. As many companies have moved away from obtaining physical check copies from their financial institutions, the identification of this fraud has become extremely difficult. A physical review of a canceled check is the strongest form of detection. We recommend the City request copies of cancelled checks from its financial institutions on a random basis, for example, on a semiannual or quarterly basis, and have someone without accounts payable or cash disbursement responsibilities perform a review of the cancelled checks, focusing on the legitimacy of the payee. DRAFT -8- Capital Construction Internal Auditing Organizations who undertake construction projects are financially at risk and often experience cost overruns, excessive change orders and project delays. Engaging a Certified Construction Auditor (CCA) can be an effective method for monitoring risk and controlling construction costs. A CCA will work with your team to provide assistance from the project inception through closeout as follows:  Before construction, the internal audit team can help navigate negotiations of terms and conditions to help protect the organization’s financial interest. In addition, the internal auditor can review budgetary information, subcontractors, cost recovery risks, ambiguous language risks and other various contractual clauses.  During construction, the internal audit team analyzes project billings to consider whether the project charges are adequately supported and in accordance with the terms and conditions of the contract. Items typically reviewed include: equipment rentals, insurance certificates and bonds, subcontractors pay applications, job cost data, payroll registers, labor burdens, lien waivers, project schedules and more.  After construction, the internal audit team will conduct a closeout review. During a closeout internal audit engagement, the organization’s accounting records are reconciled to the general contractor’s records. Areas reviewed typically include the following: job cost data, change orders, allowance and contingencies, equipment charges, labor and labor burdens, overhead rates and re-compute shared savings (if applicable). We recommend conducting construction internal audits on all significant construction projects to help reduce risk and control costs. This communication is intended solely for the information and use Audit Committee, City Council and management, and is not intended to be and should not be used by anyone other than these specified parties. March __, 2019 DRAFT Before Subsequent to Misstatements Misstatements Misstatements % Change Total Assets & Deferred Outflows 526,036,175 526,036,175 Total Liabilities & Deferred Inflows (248,205,707)(248,205,707) Total Net Position (277,830,468)(277,830,468) General Revenues & Transfers (98,704,809)(98,704,809) Net Program Revenues/ Expenses 72,570,808 498,465 73,069,273 0.69% Change in Net Position (26,134,001)498,465 (25,635,536)-1.91% CITY OF COLLEGE STATION TEXAS ATTACHMENT This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflects the effects on the financial statements if the uncorrected misstatements identified were corrected. Governmental Activities (Government-Wide Statements) QUANTITATIVE ANALYSIS Governmental Activities (Government-Wide Statements)SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)Assets LiabilitiesGeneral Revenues & TransfersNet Program Revenues/ Expenses Net PositionChange in Net PositionNet PositionDescription Financial Statement Line ItemDR (CR)DR (CR)DR (CR)DR (CR)DR (CR)DR (CR)DR (CR)Turnaround effect of prior year passed adjustment to record prepaid expense as of 9/30/17.F0 0 0 498,465 (498,465) 0 0 Beginning net position(498,465)Expense498,465Total passed adjustments000498,465(498,465)00Impact on Change in Net Position498,465Impact on Net Position0Client: CITY OF COLLEGE STATION TEXASPeriod Ending: September 30, 2018Net Effect on Following YearFactual (F), Judgmental (J), Projected (P) Before Subsequent to Misstatements Misstatements Misstatements % Change Total Assets & Deferred Outflows 128,752,362 128,752,362 Total Liabilities & Deferred Inflows (16,609,293)(16,609,293) Total Fund Balance (112,143,069)(112,143,069) Revenues (61,984,058) (475,128) (62,459,186)0.77% Expenditures 55,445,316 (1,425,549) 54,019,767 -2.57% Change in Fund Balance (7,307,408) (1,900,677) (9,208,085)26.01% CITY OF COLLEGE STATION TEXAS ATTACHMENT This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflects the effects on the financial statements if the uncorrected misstatements identified were corrected. Aggregate Remaining Funds QUANTITATIVE ANALYSIS Aggregate Remaining FundsSCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)Assets & Deferred OutflowsLiabilities & Deferred InflowsChange in Fund BalanceFundBalanceDescriptionFinancial Statement Line ItemDR (CR)DR (CR)DR (CR)DR (CR)DR (CR)DR (CR)DR (CR)To record community development loans receivable balances as deferred inflow of resources as of the beginning of the year.F0 0 (475,128) (1,425,549) 1,900,677 0 0 Beginning fund balance1,900,677 0 General government expense(1,425,549)Intergovernmental revenue(475,128)Total passed adjustments0 0 (475,128) (1,425,549) 1,900,677 0 0Impact on Change in Fund Balance(1,900,677)Impact on Fund Balance 0Client: CITY OF COLLEGE STATION TEXASPeriod Ending: September 30, 2018RevenuesExpendituresFund BalanceNet Effect on Following YearFactual (F), Judgmental (J), Projected (P) Before Subsequent to Misstatements Misstatements Misstatements % Change Total Assets & Deferred Outflows 537,719,976 537,719,976 Total Liabilities & Deferred Inflows (186,884,221)(186,884,221) Total Net Position (350,835,755)(350,835,755) General Revenues & Transfers 13,100,000 13,100,000 Net Program Revenues/ Expenses (47,828,188) (246,064) (48,074,252)0.51% Change in Net Position (34,728,188) (246,064) (34,974,252)0.71% CITY OF COLLEGE STATION TEXAS ATTACHMENT This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflects the effects on the financial statements if the uncorrected misstatements identified were corrected. Business Type Activities (Government-Wide Statements) QUANTITATIVE ANALYSIS Governmental Activities (Government-Wide Statements)SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)Assets LiabilitiesGeneral Revenues & TransfersNet Program Revenues/ Expenses Net PositionChange in Net PositionNet PositionDescription Financial Statement Line ItemDR (CR)DR (CR)DR (CR)DR (CR)DR (CR)DR (CR)DR (CR)Turnaround effect of prior year passed adjustment to record accumulated depreciation for WF1369909.F0 0 0 (246,064) 246,064 0 0 Beginning Net Position246,064Depreciation expense(246,064)Total passed adjustments000(246,064)246,06400Impact on Change in Net Position(246,064)Impact on Net Position0Client: CITY OF COLLEGE STATION TEXASPeriod Ending: September 30, 2018Net Effect on Following YearFactual (F), Judgmental (J), Projected (P) Before Subsequent to Misstatements Misstatements Misstatements % Change Current Assets 16,669,853 16,669,853 Non-Current Assets & Deferred Outflows 141,576,093 141,576,093 Current Liabilities (6,823,256) (6,823,256) Non-Current Liabilities & Deferred Inflows (50,666,366) (50,666,366) Current Ratio 2.443 2.443 Total Assets & Deferred Outflows 158,245,946 158,245,946 Total Liabilities & Deferred Inflows (57,489,622) (57,489,622) Total Net Position (100,756,324) (100,756,324) Operating Revenues (16,279,473) (16,279,473) Operating Expenses 11,162,261 (246,064) 10,916,197 -2.20% Nonoperating (Revenues) Exp 598,483 598,483 Change in Net Position (4,518,739) (246,064) (4,764,803) 5.45% CITY OF COLLEGE STATION TEXAS ATTACHMENT This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflects the effects on the financial statements if the uncorrected misstatements identified were corrected. Water Fund QUANTITATIVE ANALYSIS Water FundSCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)CurrentNon-CurrentCurrentNon-CurrentOperating RevenuesOperating ExpensesNonoperating (Revenues) ExpNet PositionChange in Net PositionNet PositionDescription Financial Statement Line ItemDR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR) DR (CR)Turnaround effect of prior year passed adjustment to record accumulated depreciation for WF1369909F0 0 0 0 0 (246,064) 0 246,064 0 0 Beginning Net Position246,064Depreciation expense(246,064)Total passed adjustments0 0 0 0 0 (246,064) 0 246,064 0 0Impact on Change in Net Position (246,064)Impact on Net Position 0Client: CITY OF COLLEGE STATION TEXASPeriod Ending: September 30, 2018Assets & Deferred OutflowsLiabilities & Deferred InflowsNet Effect on Following YearFactual (F), Judgmental (J), Projected (P) City of College Station, Texas Single Audit Reports September 30, 2018 DRAFT City of College Station, Texas September 30, 2018 Contents Schedule of Expenditures of Federal Awards ..................................................................... 1 Notes to the Schedule of Expenditures of Federal Awards ............................................... 2 Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards – Independent Auditor’s Report ........................................................................................... 3 Report on Compliance for the Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance – Independent Auditor’s Report .............. 5 Schedule of Findings and Questioned Costs ...................................................................... 8 Summary Schedule of Prior Audit Findings ...................................................................... 11 DRAFT City of College Station, Texas Schedule of Expenditures of Federal Awards Year Ended September 30, 2018 The accompanying notes are an integral part of this Schedule. 1 Federal CFDA Pass-Through Entity Passed Through Total Federal Number Identifying Number to Subrecipients Expenditures U.S. Department of Homeland Security: Direct Programs State Homeland Security Program - Swat Night Vision Phase II 97.067 -$ 15,140$ State Homeland Security Program - Rapid Response Packs 97.067 - 14,109 - 29,249 Assistance to FireFighters Grant Program 2014 97.044 - 163,160 Total U.S. Department of Homeland Security - 192,409 U.S. Department of Justice: Passed through from City of Bryan, Texas Edward Byrne Memorial Justice Assistance Grant Program 201 16.738 2016-DJ-BX-0271 - 2,491 Total U.S. Department of Justice - 2,491 U.S. Department of Housing and Urban Development: Direct Programs CDBG - Entitlement Grants Cluster: Community Development Block Grant 2014 14.218 - 6,296 Community Development Block Grant 2015 14.218 24,959 113,035 Community Development Block Grant 2016 14.218 - 148,474 Community Development Block Grant 2017 14.218 123,777 454,051 Total CDBG - Entitlement Grants Cluster 148,736 721,856 HOME Investment Partnerships 2013 14.239 - 5,536 HOME Investment Partnerships 2014 14.239 - 52,984 HOME Investment Partnerships 2015 14.239 - 170,881 HOME Investment Partnerships 2016 14.239 - 269,680 HOME Investment Partnerships 2017 14.239 - 80,279 HOME Investment Partnerships 2018 14.239 - 309 - 579,669 Total U.S. Department of Housing & Urban Development 148,736 1,301,525 Total Expenditures of Federal Awards 148,736$ 1,496,425$ Federal Grantor/Pass-Through Grantor/Program or Cluster Title DRAFT City of College Station, Texas Notes to the Schedule of Expenditures of Federal Awards Year Ended September 30, 2018 2 Notes to Schedule 1. The accompanying schedule of expenditures of federal awards (Schedule) includes the federal award activity of the City of College Station, Texas (City) under programs of the federal government for the year ended September 30, 2018. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position or cash flows of the City. 2. Expenditures reported on the Schedule are reported on the cash basis which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States. Expenditures of federal awards are reported in the City’s basic financial statements on the accrual basis. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. The City has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. 3. The federal loan programs listed subsequently are administered directly by the City and balances and transactions relating to these programs are included in the City’s basic financial statements. Loans outstanding at the beginning of the year are not included in the federal expenditures presented in the schedule, since there are not continuing compliance requirements other than required loan payments. New loans made during the year are included in the federal expenditures presented in the Schedule. The balance of the loans outstanding at September 30, 2018, consists of: CFDA Number Program Name Outstanding Balance at September 30, 2018 14.239 HOME Investment Partnerships Program 1,960,079$ DRAFT Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditor’s Report The Mayor and City Council City of College Station, Texas We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of College Station, Texas (City), as of and for the year ended September 30, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated March __, 2019, which contained a reference to other auditors and emphasis of matter paragraphs regarding a change in accounting principle and a prior period restatement. The financial statements of Brazos Valley Solid Waste Management Agency (BVSWMA), a joint venture between the City of College Station and City of Bryan and the financial statements of Experience BCS, the discretely presented component unit, were not audited in accordance with Government Auditing Standards, and accordingly, this report does not include reporting on internal control over financial reporting or instances of reportable noncompliance associated with BVSWMA or Experience BCS. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.DRAFT The Mayor and City Council City of College Station, Texas Page 4 Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies, and therefore, material weaknesses or significant deficiencies may exist that have not been identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify a certain deficiency in internal control, described in the accompanying schedule of findings and questioned costs as item 2018-0001, that we consider to be a significant deficiency. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. City's Response to the Finding The City's response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. The City’s response was not subjected to the auditing procedures applied in the audit of the financial statements, and accordingly, we express no opinion on it. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. March __, 2019 DRAFT Report on Compliance for the Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance Independent Auditor’s Report The Mayor and City Council City of College Station, Texas Report on Compliance for the Major Federal Program We have audited the City of College Station, Texas’ (City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on the City’s major federal program for the year ended September 30, 2018. The City’s major federal program is identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with federal statutes, regulations and the terms and conditions of its federal awards applicable to its federal program. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for the City’s major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. DRAFT The Honorable Mayor and Members of the City Council City of College Station, Texas Page 6 We believe that our audit provides a reasonable basis for our opinion on compliance for the major federal program. However, our audit does not provide a legal determination of the City’s compliance. Opinion on the Major Federal Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on the major federal program for the year ended September 30, 2018. Report on Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on the major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for the major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. DRAFT The Honorable Mayor and Members of the City Council City of College Station, Texas Page 7 Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of College Station, Texas, as of and for the year ended September 30, 2018, and the related notes to the financial statements, which collectively comprise City's basic financial statements. We issued our report thereon dated March __, 2019, which contained an unmodified opinion on those financial statements and a reference to other auditors and “Emphasis of Matter” paragraphs regarding a change in accounting principle and a prior period restatement. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedules of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. March __, 2019 DRAFT City of College Station, Texas Schedule of Findings and Questioned Costs Year Ended September 30, 2018 8 Summary of Auditor’s Results Financial Statements 1. The type of report the auditor issued on whether the financial statements audited were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) was: Unmodified Qualified Adverse Disclaimer 2. The independent auditor’s report on internal control over financial reporting disclosed: Significant deficiency(ies)? Yes None reported Material weakness(es)? Yes No 3. Noncompliance considered material to the financial statements was disclosed by the audit? Yes No Federal Awards 4. The independent auditor’s report on internal control over compliance for the major federal awards program disclosed: Significant deficiency(ies)? Yes None reported Material weakness(es)? Yes No 5. The opinion expressed in the independent auditor’s report on compliance for the major federal awards program was: Unmodified Qualified Adverse Disclaimer 6. The audit disclosed finding required to be reported by 2 CFR 200.516(a)? Yes No DRAFT City of College Station, Texas Schedule of Findings and Questioned Costs (Continued) Year Ended September 30, 2018 9 7. The City’s major federal program was: Cluster/Program CFDA Number CDBG - Entitlement Grants Cluster 14.218 8. The threshold used to distinguish between Type A and Type B programs was $750,000. 9. The City qualified as a low-risk auditee? Yes No DRAFT City of College Station, Texas Summary Schedule of Prior Audit Findings Year Ended September 30, 2018 10 Findings Required to be Reported by Government Auditing Standards Reference Number Finding 2018-0001 Restatement of Prior Year Financial Statements Criteria or specific requirement: The City's internal controls should be designed to prevent, or detect and correct, misstatements within the financial statements in a timely basis. Condition: The City's 2017 financial statements understated sales tax receivable and incorrectly included fiduciary fund activity. Effect: The City’s 2018 beginning net position and/or fund balance were restated to conform to accounting principles generally accepted in the United States (GAAP). Cause: The City’s year end reconciliation and financial statement review processes were not sufficient to identify errors in the financial statements. Recommendation: We recommend that management strengthen its internal controls over year end reconciliations and financial statement reviews to ensure balances are reported in accordance with GAAP. Views of responsible officials and planned corrective actions: We agree that management strengthen its internal controls over year end reconciliations and financial statement reviews to ensure balances are reported in accordance with GAAP. Significant personnel changes in the Finance Department have led to multiple changes in the reconciliation and review processes. The City is focused on hiring and retaining well qualified personnel. As new personnel are hired and trained, the processes should stabilize and improve in the reconciliation and review area. Findings Required to be Reported by the Uniform Guidance Reference Number Finding No matters are reportable. DRAFT City of College Station, Texas Summary Schedule of Prior Audit Findings (Continued) Year Ended September 30, 2018 11 Reference Number Summary of Finding Status 2017-01 Community Development Block Grant (CDBG) CFDA 14.218 U.S. Department of Housing and Urban Development Award No. B-16-MC-48-0007; B07-MC-48-0007 (local account) Grant Period – 10/01/16 – 09/30/17, 10/01/07 – 09/30/08 (local account) Resolved Criteria or specific requirement – When CDBG funds are used for construction contracts in excess of $2,000, the contract becomes subject to the Wage Rate Requirements. This includes a requirement for the contractor or subcontractor to submit to the non-Federal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). This must be completed within seven days after the regular pay date for the pay period. Condition – During review of this compliance requirement, it was noted that the City did not obtain certified payrolls for all weeks in which construction occurred on the 2016 CDBG Sidewalk project. Certified payrolls were obtained through April 26, 2017; however, additional work was completed after this date and certified payrolls were not obtained by the City. Questioned costs – This finding did not result in any questioned costs. Context – We tested three projects which were subject to the Wage Rate Requirements under the Special Tests and Provisions. Two of the projects appear to be in compliance with requirements noted above. The 2016 CDBG Sidewalk Project was not in compliance. Effect – Failure to comply with the applicable grant requirements could result in termination of the grant and repayment of grant funds. Cause – The City’s Public Works department was managing the 2016 CDBG Sidewalk Project and did not inform the Community Development department that additional work had been performed after April 26, 2017. DRAFT FRAUD RESPONSE PLAN: General Policy 1. INTRODUCTION 1.1. The City of College Station, henceforth “the City”, is committed to high legal, ethical and moral standards. The City Council promotes a risk aware culture and expects all staff to share in this responsibility. Fraud is an ever-present threat and hence must be a concern to all members of staff. The City of College Station views fraud as an extremely serious matter and is committed to the promotion of an anti-fraud culture throughout the organization. 1.2. This document is intended to provide: direction and advice to those who find themselves dealing with suspected cases of theft, fraud or corruption; a framework for fraud response; and information on various aspects and implications of an investigation. It is not intended to offer direction on the prevention of fraud. 1.3. This document applies to any irregularity, or suspected irregularity, involving employees, consultants, vendors, contractors, or any other parties having a business relationship with the City. Any investigative activity will be conducted without regard to any person’s relationship to the City, position, or length of service. All managers and supervisors have a duty to be familiar with and alert for the types of improprieties that might be expected to occur within their areas of responsibility. 2. DEFINITIONS 2.1. Fraud is defined as dishonestly obtaining an advantage, avoiding an obligation or causing a loss to another party. The criminal act of fraud is the intent to deceive; therefore, attempted fraud is treated as seriously as accomplished fraud. The term “fraud” commonly includes activities such as theft, corruption, conspiracy, embezzlement, deception, bribery and extortion. Some illustrations of incidents which would be classified as fraud are contained in Appendix A. Fraud may involve: (i) manipulation, falsification or alteration of records or documents; (ii) suppression or omission of the effects of transactions from records or documents; (iii) recording of transactions without substance; (iv) misappropriation (theft) or willful destruction or loss of assets; and (v) deliberate misapplication of accounting policies or other regulations. 2.2. Computer fraud is defined as the material misuse of information technology equipment in the perpetration of fraud, including but not limited to: (i) manipulating programs or data dishonestly; (ii) altering, substituting, or destroying records; (iii) creating spurious records; or (iv) misusing computer time and resources. 2.3. An irregularity may be defined as any incident or action which is not part of the normal operation of the system or the expected course of events. 2.4. An initial inquiry into a suspected fraud is defined as an examination of the available facts of the incident to ascertain the likelihood that the criminal act of fraud may have taken place. Internal auditors will use Generally Accepting Government Auditing standards when conducted these inquiries. 2.5. A fraud investigation is defined as the collection of evidence admissible in a court of law to determine whether the criminal act of fraud has taken place. 3. PURPOSE OF THE FRAUD RESPONSE PLAN 3.1. The purpose of the Fraud Response Plan, henceforth “the Plan,” is to ensure that effective and timely action is taken in the event of a fraud. The Plan aims to minimize losses and increase the chances of a successful investigation. 3.2. The Plan defines authority levels, responsibilities for action, and reporting lines in the event of a suspected fraud or irregularity. It acts as a checklist of actions and a guide to follow if fraud is suspected. The Plan is designed to: (i) prevent further loss; (ii) establish and secure evidence necessary for criminal, civil and disciplinary action; (iii) determine when to contact the Police Department and establish lines of communication; (iv) assign responsibility for investigating the incident; (v) minimize and recover losses; (vi) review the reasons for the incident, the measures taken to prevent a recurrence, and determine any action needed to strengthen future responses to fraud. 4. RESPONSIBILITIES 4.1. The City must undertake fraud investigations when there is suspected fraud and take the appropriate legal and disciplinary action. Whether there is suspected or proven fraud, the City should make any necessary changes to systems and procedures to prevent similar frauds from occurring in the future. The City should establish systems for recording and subsequently monitoring all discovered cases of proven or suspected fraud. 4.2. Overall, managing the risk of fraud is the responsibility of the Audit Committee, Management Team, and the City Internal Auditor. The City Management Team, comprised of the City Manager and Department Directors, is responsible for establishing and maintaining a sound system of internal controls that supports the achievement of City policies, aims and objectives. This system of internal controls should be designed to respond to and manage the whole range of risks that the City faces, including fraud risk. The City Attorney is responsible for ensuring appropriate action has been made to recover assets. 4.3. Responsibility for exercising disciplinary actions rests with the Director of Human Resources, although this should be done in consultation with the City Manager’s Office and other Department Directors where appropriate. 4.4. The City’s governance body (City Council and the Audit Committee) is responsible for promoting an anti-fraud culture by:  promoting an anti-fraud culture recognized by all City staff;  ensuring that vigorous and prompt investigations are carried out if fraud occurs or is suspected;  establishing appropriate mechanisms for reporting fraud risk issues;  confirming that appropriate action is taken to minimize the risk of similar frauds occurring in the future. 4.5. Department Directors are responsible for:  making sure that all staff are aware of their responsibilities in relation to combating fraud through anti-fraud training and development opportunities;  assessing the types of risk involved in the operations for which they are responsible;  designing an effective system of controls to prevent fraud within their areas of responsibility;  implementing new controls to reduce the risk of similar fraud occurring where frauds have taken place;  taking appropriate disciplinary action against supervisors where supervisory failures have contributed to the commission of fraud. 4.6. The City Internal Auditor is responsible for:  delivering an opinion to the Audit Committee on the adequacy of the control system managing fraud risk;  assisting in the prevention of fraud by evaluating the effectiveness of controls commensurate with the potential risk in City’s operations;  examining fraud indicators and allegations, and conducting preliminary internal inquiries to confirm or negate, as far as possible, the suspicions that have arisen;  maintaining documentation of all reported suspicions, including those dismissed as minor or otherwise not investigated;  identifying any system weakness and prescribing internal control improvements to prevent a recurrence;  reporting to the Audit Committee the results of all fraud related inquiries. 4.7. Every member of staff is responsible for:  acting responsibly when using City resources and funds whether they are involved with cash, payment systems, receipts, suppliers, or customers.  being aware that unusual events or transactions could be indicators of fraud;  reporting details immediately through the appropriate channel if a fraud or any suspicious acts are recognized;  cooperating fully with whoever is conducting internal assessments or fraud investigations. 5. FRAUD DETECTION 5.1. Fraud may be highlighted as a result of specific management assessments or be brought to management's attention by a third party; Department Directors should be alert to the possibility that unusual events or transactions could be symptoms of fraud or attempted fraud. 5.2. The City has established an Ethics Hotline and a strict non‐retaliation policy to encourage and protect employees who report ethics violations and to promote a culture of legal and regulatory compliance. The Ethics Hotline is monitored by the City Internal Audit Office and provides a process for reporting potential violations of laws, regulations, policies or procedures in a manner that protects the reporter’s identity to the extent allowed by law. Additionally, irregularities may come to light over the course of audit reviews. 5.3. When any member of staff suspects that a fraud has occurred, the City Internal Auditor or appropriate Department Director should be notified immediately. If verbally notified of a possible fraud, a Department Director must immediately contact the City Internal Auditor. The City Internal Auditor will inform the City Manager of allegations where the loss is potentially significant or where the incident may lead to adverse publicity. 6. INITIAL INQUIRY 6.1. Within 24 hours of becoming aware of suspected fraud, a preliminary internal inquiry will be undertaken by the City Internal Audit Office in conjunction with the City Attorney’s Office to determine the facts and ascertain the likelihood of a criminal act. The purpose of the initial inquiry is to confirm or negate, as far as possible, the suspicions that have arisen so that, if necessary, an investigation may be initiated. 6.2. Potential fraud will be examined by Internal Auditors to determine whether a genuine mistake has been made or an irregularity has occurred. Preliminary examination may involve discreet inquiries with staff or the review of documents. It is important for staff to be clear that any irregularity of this type, however apparently innocent, will be analyzed. 6.3. Internal auditors must be conscious that internal disciplinary action and criminal prosecution may result from the initial inquiry. To prevent the loss of evidence, the City Internal Audit Office will conduct the initial internal inquiry under the assumption that it will lead to a fraud investigation. Therefore, the utmost care is required from the outset—specifically when conducting interviews. Internal auditors should be aware of concerned staff members’ legal rights in certain situations such as the right to representation or the right to remain silent. 6.4. Where a member of staff is to be interviewed, the individual heading the inquiry or investigation will consult with, and take advice from, the Director of Human Resources. The Department Director will also be notified when doing so will not impede an ongoing inquiry or investigation. The Human Resources Director will advise those involved in matters of employment law, City policy and other procedural matters (such as disciplinary or complaints procedures) as necessary. 6.5. Auditors should avoid steps in the examination that could hamper a future fraud investigation. There may, however, be instances where auditors collect potential evidence. When evidence is obtained during the preliminary inquiry, auditors should:  take steps to ensure that all original evidence is secured as soon as possible;  be able to account for the security of the evidence at all times, including keeping a record of its movement and signatures of all persons to whom the evidence has been transferred. For this purpose all items of evidence should be individually numbered and descriptively labeled;  not alter or amend the evidence in any way;  ensure evidence obtained from electronic devices is only handled by certified specialists;  document when auditors came into possession of the evidence. 6.6. In order to protect the City from further loss and destruction of evidence, it may be necessary to suspend the concerned staff member immediately following the preliminary inquiry conducted by the City Internal Audit Office. Specific advice should be sought from Human Resources before proceeding. 7. INVESTIGATION 7.1. Where the preliminary inquiry points to the likelihood of a criminal act having taken place, the City Attorney’s Office and the Police Department will be contacted at once. The advice of the City Attorney’s Office and the Police Department will be followed in taking forward the investigation. With the recommendation from the City Attorney, Chief of Police, City Manager, and City Internal Auditor an outside investigator with specific expertise may be hired to assist in the fraud investigation. 7.2. When an outside investigator is hired, they will be employed through the City Internal Audit Office. The Police Department will handle fraud investigations that are not led by an outside investigator. 7.3. The recovery of losses should be a major objective of any fraud investigation. To this end the quantification of losses is important. Repayment of losses should be sought in all cases. Where necessary, external advisors can be involved or legal advice should be sought on the most effective method to secure recovery of losses. 8. REPORTING 8.1. The City Manager, City Attorney, Police Chief, and City Internal Auditor will be kept informed throughout an inquiry and proceeding investigation, unless they have been implicated. Significant matters will be reported to the City Council as soon as practical. 8.2. At the completion of the examination, the City Internal Audit Office will prepare a summary report on the outcome and lessons learned from the results of any potential fraud inquiry or investigation using Generally Accepted Government Auditing Standards. This report will be circulated when appropriate to all other interested parties. Where a fraud has occurred, management must make any necessary changes to systems and procedures to ensure that similar frauds will not recur. 8.3. The City Internal Audit Office will maintain documentation of all reported suspicions, including those dismissed as minor or otherwise not investigated. This documentation will contain details of actions taken and conclusions reached and will be presented to the Audit Committee for inspection annually. 9. FURTHER ACTION 9.1. After proper investigation, the City will take legal and disciplinary action in all cases where it is considered appropriate. There will be consistent handling of cases without regard to the perpetrator’s position or length of service. 9.2. Where an inquiry involves a member of staff and it is determined that no criminal act has taken place, the City Internal Auditor will coordinate with the Director of Human Resources and the appropriate Department Director to determine which of the following has occurred and therefore whether disciplinary action is appropriate:  gross misconduct or acting dishonestly (but not criminally);  intent to commit a criminal act (without the act being executed);  negligence or error of judgment was seen to be exercised; or  nothing occurred and therefore no action is needed. 9.3. The investigation or initial inquiry will also consider whether there has been any failure of supervision. Where this has occurred, appropriate disciplinary action will be taken against those responsible for this failure. 9.4. Where, after having sought the advice of the City Attorney’s Office, the City Manager judges it cost effective to do so, the City will pursue civil action in order to recover any losses. The case will be referred to the City Attorney’s Office for action. APPENDIX A: Where Fraud Can Occur 1.1. Fraud can happen wherever staff, partnering organizations or independent contractors complete official documentation and can take financial advantage of the City. The risk of fraud is enhanced where staff or contractors are in positions of trust or responsibility and are not checked or subjected to effective monitoring. Consequently, the following areas are particularly susceptible to fraud:  claims from partnering organization or independent contractors for payment;  contracts;  travel and expense claims;  cash receipts or petty cash;  payroll;  ordering (for example, unauthorized order or falsification of order);  assets (especially, portable/attractive/valuable items). 1.2. Examples of Fraud 1.2.1. Claims for items or service payments:  claims for services not performed;  claims for a higher level of service than that performed;  duplicate claim for service previously paid for. 1.2.2. Contracts:  falsified contractual claims for delays in contract work;  irregularities in tendering;  claims for work not performed;  bogus invoices submitted. 1.2.3. Travel claims:  false travel claims;  mileages inflated;  unnecessary travel taken;  2 employees claim for a journey taken together;  rental of car not used for official purposes. 1.2.4. Expense claims:  false or inflated claims made;  excessive or inappropriate expense claims. 1.2.5. Cash receipts:  accepting cash without receipting or declaring it;  altering documentation to disguise the theft of cash. 1.2.6. Petty cash:  reimbursement sought for receipted but inappropriate expenditure;  vouchers or receipts submitted with no expenditure made;  borrowing from fund. 1.2.7. Payroll:  erroneous or “ghost” employees introduced onto the payroll  a terminated employee not being taken off the payroll, and the salary payment being diverted to the perpetrator;  hours worked over-stated to take advantage of flex-time or over-time arrangements;  claims for work not performed;  receiving payment from another organization during normal working hours, when paid by the City. 1.2.8. Ordering:  goods or services ordered for personal use or from a specific supplier in return for some form of benefit;  goods or services ordered from a relative’s or friend’s business avoiding proper bidding;  accepting a lower number of items than ordered, but certifying an invoice for the accurate number;  creating or certifying false invoices, for which no order has been raised. 1.2.9. Assets:  misuse, theft and fraud of assets not controlled properly;  the use of City assets for an individual’s personal reasons, e.g. personal computer, mobile phone, vehicle, or equipment. These examples do not represent a comprehensive list of potential frauds but can be used as an illustration. APPENDIX B: Fraud Response Process Narrative Fraud Response Process 1. A potentially fraudulent act is reported to the City Internal Audit Office. 2. Does the allegation implicate the City Manager? Yes: Proceed to step 4. 3. No: The City Internal Auditor notifies the City Manager of the allegation and discusses the action plan. 4. The City Internal Auditor initiates a preliminary internal inquiry to determine the facts. 5. The City Internal Auditor consults with the City Attorney’s Office throughout the investigation about the likelihood of a criminal act. 6. Is it likely that a criminal act has taken place? No: Proceed to step 16. 7. Yes: The City Internal Auditor and City Attorney’s Office immediately contact the Police Chief. The City Attorney, Police Chief, City Manager, and City Auditor meet to discuss the next steps in the process. 8. Is an Outside Investigator with specific expertise hired? 9. No: The Police Chief oversees the investigation to its completion. Proceed to step 11. 10. Yes: An Outside Investigator is hired by the City Internal Audit Office. 11. Once the investigation is complete the results are reported to the City Internal Audit Office. 12. Results of the investigation are reported to the City Manager’s Office, the Audit Committee, and other concerned parties. 13. The City Manager’s Office, with input from the City Attorney’s Office, reviews the results of the investigation and considers the effects of pursuing civil action. 14. Is civil action against the perpetrator pursued? No: Proceed to step 16. 15. Yes: The City Attorney’s Office pursues legal action against the perpetrator(s). Proceed to step 16. 16. The City Auditor consults with the Human Resources Director and the appropriate Department Director to determine whether disciplinary action is appropriate. 17. Should disciplinary action be taken against any involved staff? No: Proceed to step 19. 18. Yes: Department Director and Human Resources implement disciplinary action. 19. The City Internal Audit Office maintains documentation of all reported suspicions. 20. Annually, the City Internal Auditor’s Office reports all incidents of potential fraud, including those dismissed or otherwise not investigated, to the City Audit Committee. This documentation includes actions taken and conclusions reached and complies with Government Auditing Standards. City Attorney pursues legal action CAE, PD, CAO, & CMO assess next steps of fraud investigation CAE discusses action plan with CMO CMO implicated? CAE conducts initial inquiry CAO and CAE assess likelihood of criminal act No Yes Crime Occurred? Hire outside investigator? Outside investigator completes fraud investigation Police Department completes fraud investigation CAE and CMO reviews the results of the fraud investigation Audit Committee reviews the results of the fraud investigation Pursue civil action? Yes No Yes HR, Dept. Dir., & CMO consider disciplinary action No HR implements disciplinary action Disciplinary action taken? CAE maintains documentation of all incidents Yes No Audit Committee reviews all incidents of potential fraud No Yes Potential fraud identified 5 4 3 2 1 6 7 9 10 8 11 12 13 15 14 16 17 18 19 Fraud Response Flow Chart a Key a Chief Audit Executive (CAE) City Manager s Office (CMO) City Attorney s Office (CAO) Police Department (PD) Human Resources (HR) TY ELLIOTT CITY INTERNAL AUDITOR’S OFFICE AUDIT COMMITTEE City Internal Auditor 1101 Texas Ave. Mayor Karl Mooney telliott@cstx.gov College Station, TX 77840 Councilmember James Benham TEL: (979) 764-6269 Councilmember Linda Harvell Mike Ashfield (Advisory) Nathan Sharp (Advisory) TO: Honorable Mayor and City Council FROM: Ty Elliott, City Internal Auditor DATE: September 25, 2018 SUBJECT: Fiscal Year 2019 Potential Audit Plan During fiscal year 2018, our Office received permission from the Audit Committee to design and implement a continuous auditing program and to develop and finalize a Fraud Response Plan. In addition, towards the end of fiscal year 2019, we will need to update the COSO Matrix and process documentation. Despite these prior commitments, we believe we have enough resources to conduct one small scope audit during FY19 – most likely during October. A description of each potential audit topic follows: Performance Evaluations: Over the course of the FY17 Risk Assessment and the COSO Assessment, we found that Employee Performance Evaluations differ greatly across City departments and divisions. An audit of this topic would focus on identifying where employees are treated differently across the City and evaluating if this is reasonable. City-wide User Access: Based on the COSO Assessment, an analysis of City-wide user access of key systems may be warranted. An audit of this topic will involve reviewing user access policies and procedures, and identifying and analyzing user access to key systems. Software Acquisition and Use: An audit of software acquisition and use would investigate software used throughout the City and the associated licenses, as well as, software acquisition policies and procedures. Parkland Dedication: Since our Office was formed in 2007, we have conducted two audits of the Parks and Recreation Department, however, both were focused on the recreation side. An audit of the Parkland Dedication program would focus on compliance with City ordinances as well as efficient and effective achievement of the program’s mission, goals, and objectives. Financial Indicators: This would entail examining the Comprehensive Annual Financial Report and other financial documents and is intended to: 1) identify significant existing or emerging financial problems, 2) put the City’s finances in context, and 3) encourage discussion of City finances. Commodity Purchases: A previous audit of purchasing processes was conducted in 2008 with a follow- up in 2010; however, these audits did not specifically address purchasing processes involving commodities – or raw materials that the City buys and stores in bulk. An audit of commodity purchases would include a review of policies, procedures, processes and practices. City of College Station City Internal Auditor’s Office 2 | P a g e Vendor Database: Based on the COSO Assessment, an in-depth analysis of the City’s Vendor Database may be needed. This includes areas such as vendor performance, inappropriate vendor-employee relationships, and database controls and access. Payroll Aspect Audit: An audit of a specific payroll aspect would involve review and testing over internal controls as well as analysis. Specific payroll aspects that could be covered include: Fire and Police Move- Up Pays, Short-Term Disability Payments, a specific Fringe Benefit (i.e. cell phone allowance, car allowance, etc.), or a specific department’s overtime usage (i.e. Fire, Police, Public Works overtime, etc.). The aspects of payroll identified as risks during the COSO Assessment include Move-Up Pays and Short-Term Disability Payments. Police Evidence Disposal: An audit of Police Evidence was begun during fiscal year 2016, but was never completed. Based on this previously completed work, an audit of Police Evidence disposal would evaluate the City’s current evidence disposal policies and procedures and their effectiveness. Based on this, a potential audit schedule would be as follows: Figure 1: Potential FY19 Schedule Sincerely, Ty L Elliott CIA, CFE, CGAP, COSO City Internal Auditor 10/1/2018 12/31/2018 4/1/2019 7/1/2019 9/30/2019 Potential Audit Fraud Response Plan Continuous Auditing Implementation COSO Update Parkland Dedication Audit March 2019 City Internal Auditor’s Office City of College Station File#: 19-02 Audit Executive Summary: Parkland Dedication Why We Did This Audit This audit was conducted per direction of the Audit Committee. The City acquires significant land dedications and collects substantial parkland dedication fees on an annual basis due to its parkland dedication ordinance. What We Recommended Modify the parkland dedication ordinance so that dedication requirements for multifamily developments are proportional to the fee-in-lieu of dedication. Reduce the number of park zones to the fewest number of zones feasible according to legal requirements. Modify or eliminate the discounts built into the park development fee. Develop a more elegant parkland dedication methodology. Any changes made to the ordinance should seek to simplify it instead of adding any additional layers of complexity. Require Parks and Recreation staff to verify parkland dedication acres and fees that have been collected by Planning and Development staff. Consider engaging the Texas Municipal League or other contract partners to advocate on the City’s behalf to modify Texas Local Government Code 245. What We Found The City’s current parkland dedication requirements and fee structure is complex. While some of this complexity is the result of federal and state law, much of it is due to competing political interests that have led to several changes in the parkland dedication ordinance over the past 10 years. The most significant change occurred in 2008, which resulted in an ordinance that imposed some of the highest parkland dedication fees and land dedication requirements in Texas. Subsequent City Councils have modified the ordinance to shift or lesson the burden of fees and land requirements. Although some City Councils desired to increase parkland dedication requirements and fees while others sought to reduce them, most changes made since 2008 have resulted in added layers of complexity. As the parkland dedication ordinance has become more complex, accurately and fairly accounting for the land dedication, monies collected, and the funds expended have become increasingly challenging for City staff. To mitigate these risks, the City has implemented several internal controls. Overall, these controls have been effective, but they have come at the cost of increased administrative burden to City staff, developers, and appointed and elected governance bodies. Perhaps the greatest consequence of the ordinance’s complexity is the timely expenditure of parkland dedication funds. As a result, the City’s population has grown at a significantly higher rate than the rate parkland has been added to the City. In addition, the City risks being required to refund monies collected, but how and to whom to refund may be problematic. Parkland Dedication 1 Parkland Dedication Audit Table of Contents Introduction ................................................................................................................. 2 Audit Objectives ........................................................................................................ 2 Scope and Methodology ............................................................................................. 2 Parkland Dedication Background ................................................................................. 3 Findings and Analysis .................................................................................................... 6 The Parkland Dedication Ordinance is Complex ............................................................ 6 The City’s Requirements are More Complex than other Texas Cities ............................ 6 Multifamily Dedication Requirements Are Not Proportional to Fees-in-lieu .................... 8 Ordinance Changes Have Increased Parkland Dedication Complexity .......................... 9 Some Parkland Dedication Requirements May Merit Periodic Consideration ................ 10 Ordinance Complexity Has Impacted Internal Controls Costs .................................... 11 Timely Expenditure of Parkland Funds Has Been Challenging ....................................... 12 The City Has More Park Zones than Other Texas Cities ............................................ 12 New Parks Should Be Built Within a Reasonable Time Frame .................................... 13 Parkland Dedication Ordinance Complexity Hinders Spending ................................... 13 Recent Changes Have Aimed to Address Spending Difficulties .................................. 14 Parkland Dedication Fee Collection Is Challenging ....................................................... 16 Fee Assessment Systems Adequately Account for Collections ................................... 16 The Inaccuracies Identified are Not Material ........................................................... 17 Fee Assessment Is Complicated By Outside Factors ................................................. 18 Recommendations ................................................................................................... 20 Appendix A: Management’s Response .......................................................................... 22 Appendix B: Internal Control and Process Summary ...................................................... 24 2 Parkland Dedication Introduction The Office of the City Internal Auditor conducted this performance audit of the parkland dedication program pursuant to Article II Section 30 of the College Station City Charter, which outlines the City Internal Auditor’s primary duties. A performance audit is an objective, systematic examination of evidence to assess independently the performance of an organization, program, activity, or function. The purpose of a performance audit is to provide information to improve public accountability and facilitate decision-making. Performance audits encompass a wide variety of objectives, including those related to assessing program effectiveness and results; economy and efficiency; internal control; compliance with legal or other requirements; and objectives related to providing prospective analyses, guidance, or summary information. A performance audit of the Parkland Dedication program was included in the fiscal year 2019 audit plan based on direction given by the Audit Committee. Audit Objectives This audit addresses the effectiveness of the City’s parkland dedication program and answers the following questions:  How does the City of College Station’s parkland dedication program compare to best practices and benchmark cities?  Do adequate controls exist to ensure parkland dedication fees are being collected according to the ordinance?  Are parkland dedication contributions being spent effectively? Scope and Methodology We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Audit fieldwork was conducted from October 2018 through January 2019. The scope of review varied depending on the analysis being performed. The methodology used to complete the audit objectives included:  Reviewing the work of auditors in other jurisdictions and researching professional literature to identify: 1) parkland dedication best practices, and 2) general challenges facing parkland dedication programs. Parkland Dedication 3  Comparing applicable policies and procedures and relevant state and federal laws or regulations to the current parkland dedication ordinance and parkland dedication program practices.  Interviewing pertinent staff in the Parks and Recreation Department, Planning and Development Services Department, and Fiscal Services Department.  Obtaining legal opinions on various parkland dedication related issues from the City Attorney’s Office.  Examining historical parkland dedication ordinances and relevant City Council, Planning and Zoning, and Parks and Recreation Advisory Board meetings and minutes.  Verifying the accuracy and completeness of parkland dedication payments and fees.  Examining the parkland dedication ordinances of similar jurisdictions and benchmarking these jurisdictions’ parkland dedication programs to the City of College Station’s program. Parkland Dedication Background The City of College Station’s parkland dedication program originated in 1970 and was intended to provide for the creation and development of recreational areas in the City in conjunction with population growth. In 2008, this ordinance received an extensive update spearheaded by the City Council. At the time of this ordinance change, the City had a population of approximately 91,000 with 587 acres of community and neighborhood parkland and 666 acres of regional parkland.1 From 2008 to 2018, the City has added 107 acres of parkland, an increase of 8 percent—while the City’s population has grown to approximately 120,000, an increase of 32 percent. Figure 1 below compares increases in park acreage to population growth over time. Figure 1: Park Acreage and Population Growth (percent increase) 1 Parkland acreage amounts exclude cemeteries, conference centers, and Texas A&M University parks. 0% 1% 2% 3% 4% 5% 6% 7% 8% 2009-10 2010-11 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 Park Acre % Inc.Park Acre % Inc. (excluding regional parks)Population % Inc. 4 Parkland Dedication In 2018, the City had 11 acres of parkland per thousand people. When the parkland dedication program originated in 1970, the National Recreation and Park Association (NRPA) reported that the average park and recreation agency offered 7 acres of parkland per 1,000 residents. Based on a 2018 report published by the NRPA, the typical park and recreation agency offers one park for every 2,114 residents served, with 10 acres of parkland per 1,000 residents. Although the City had 11 acres of parkland per thousand people in 2018, it sets parkland dedication requirements based on a goal of 7 parkland acres per thousand people – 3.5 acres of community and neighborhood parkland each.2 This discrepancy is largely due to regional parkland acreage not being considered when setting this standard. As can be seen in Figure 2 below, nearly half of the City’s park acreage is composed of regional parkland within Lick Creek and Veterans parks. Figure 2: 2018 Park Inventory Table 1: Park Inventory Park Type 2008 Acres 2018 Acres Community 287 334 Neighborhood 300 353 587 687 Veterans (regional) 150 149 Lick Creek (regional) 516 523 666 672 Total Acres 1,252 1,359 Park service level is a function of population, and park acreage. The land dedication requirement is then proportional to this service level, determined by the estimated number of people the development can house:  If population increases and parkland remains the same, the service level decreases;  If parkland increases and population remains the same, the service level increases. Decreasing the expected park service level would mean that past residents were subsidizing park funding for future residents, while increasing the expected park service level would mean that future residents will subsidize park funding for past residents. 2 At the time the 2008 ordinance was being developed, a population of approximately 88,000 and park acreage of 616 was assumed. The park acreage included 29 acres of TAMU parkland, but excluded 666 acres of regional parkland. These assumptions resulted in 7 acres of parkland per 1,000 population. Community 25% Neighborhood 26% Veterans 11% Lick Creek 38% Parkland Dedication 5 The City’s parkland dedication ordinance requires a developer to either dedicate a certain amount of land or pay a fee-in-lieu of dedication. The formula for this is shown below: Parkland Acres X 2.38 3 X Number of Housing X Fair Market Population Units Proposed Value of an Acre Service Level Land Dedication Requirement Fee-in-Lieu of Land Requirement The City also requires developers to pay a park development fee or construct park developments in lieu of the fee. Most Texas cities that have parkland dedication ordinances only require that land be dedicated and do not impose park development fees. Ordinances that contain only the land and the fee-in-lieu elements without containing a park development fee require existing taxpayers to pay the costs of improvements to transform the bare land into a park. As can be seen in Figure 3 below, parkland acres per 1,000 population has steadily been decreasing in College Station since 2010. Community and neighborhood park acres per thousand population fell below 6 acres in 2017 and remained below that mark in 2018. Some of the causes of this trend will be discussed in the Findings and Analysis section of this report. Figure 3: Community and Neighborhood Park Acres per Thousand People4 3 Based on average household size of owner-occupied units according to 2010 census data. 4 Official population estimates obtained from the City’s Planning and Development Services Department were used. 0 1 2 3 4 5 6 7 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Community Park Acres/1,000 Neighborhood Park Acres/1,000 6 Parkland Dedication Findings and Analysis The City’s current parkland dedication requirements and fee structure is complex. While much of this complexity is the result of federal and state law, some of it is due to competing political interests that have led to several changes in the parkland dedication ordinance over the past 10 years. As the parkland dedication ordinance has become more complex, accurately and fairly accounting for the land dedication, monies collected, and the funds expended have become increasingly challenging for City staff. To mitigate these risks, the City has implemented several internal controls (see Appendix B). Overall, these controls have been effective, but they have come at the cost of increased administrative burden to City staff, developers, and appointed and elected governance bodies. The Parkland Dedication Ordinance is Complex The City’s parkland dedication requirements are more complex and the associated fees are higher than most other Texas cities. Transaction complexity often leads to fraud risks resulting from reduced transparency. In addition, the more complex the transaction the greater the risk of transactional errors or inaccuracies. The City’s Requirements are More Complex than other Texas Cities In 2008, the Texas A&M AgriLife Extension performed a comprehensive study that analyzed the parkland dedication ordinances of 42 Texas cities and reported the acres of parkland per 1,000 population in 83 Texas cities. At this time, College Station ranked 29 out of 83 in park acres per 1,000 residents. Three of the 42 cities in the study did not have a fee-in-lieu of option and 10 cities calculated fees based solely on market value. Of the remaining 29, College Station had the highest total parkland dedication fees. In determining parkland dedication fees, the 2008 study found that 8 cities fee calculations’ differentiated single-family developments from multi-family developments. Ten cities had park development fees, but only 3 of those 10 differentiated between single-family and multifamily. In addition, many ordinances were restricted to only a subset of parks—typically neighborhood, or neighborhood and community parks—instead of all parks, and they did not extend into the extraterritorial jurisdiction (ETJ) areas. The City of College Station’s 2008 ordinance contained all these elements, which added to its complexity; and only the City of Bryan rivaled College Station in its ordinance’s complexity. Since a comprehensive study of parkland dedication ordinances in Texas has not been conducted in approximately 10 years, our office examined the parkland dedication ordinances of other cities. Because population and growth are key factors in determining parkland dedication, Parkland Dedication 7 cities within ±35,000 of College Station’s population with 10 to 30 percent growth rates were determined to be benchmark cities. These cities can be seen in Figure 4 below. Cities without ordinances include Midland, Carrollton, Richardson, Conroe, Odessa, and Killeen (colored in gray in Figure 4). Figure 4: Parkland Acres per Thousand People5 College Station’s parkland dedication requirements are some of the highest among comparable cities. A breakdown of parkland dedication fees in benchmark cities can be seen in Table 2 on the next page. Unlike other municipalities, the City of College Station charges multifamily developments by the bedroom and not by the dwelling unit, which makes comparison difficult. This being said, we estimated College Station to have the third highest total fees of comparable cities. In terms of actual land required per dwelling unit, the City appears to be about in the middle for single-family developments; however, College Station currently has the highest multifamily parkland dedication requirement. College Station’s dedication requirement for multifamily developments is one acre per 49 bedrooms for neighborhood parks and 53 bedrooms for community parks. When these values are converted to dwelling units for comparison purposes the result is one acre per 21 dwelling units for neighborhood parks and 22 units for community parks. To put this into perspective, Bryan has the next highest multifamily dedication requirement amongst the cities examined, with a land dedication of 1 acre per 90 dwelling units. In other words, developers of multifamily properties are required to dedicate approximately 4 5 Census population estimates and developed parkland acres were used for comparison purposes. - 2 4 6 8 10 12 14 Pharr Edinburg Pearland Killeen Odessa League City Denton Allen Conroe Bryan Richardson Carrollton Lewisville Sugar Land Midland College Station Flower Mound Round Rock 8 Parkland Dedication times the amount of land for parks in College Station than they are required to dedicate in the City of Bryan. Table 2: Parkland Dedication Requirements City DU/Acre Fee-in-Lieu Dev. Fee Est. Fee- in-Lieu Total Fees Lewisville 33 Market Value $1,000/DU $1,758 $2,758/DU Flower Mound 30 Market Value $278/DU $1,933 $2,211/DU College Station SF: NGBH: 117 COMM: 128 MF: NGBH: 21 COMM: 22 SF: $524/DU MF: $220/BR SF: $737/DU MF: $467/BR N/A SF: $1,261/DU MF: $687/BR6 Pearland 50 Market Value None $1,300 $1,300/DU League City 90 None $1,000/DU7 N/A $1,000/DU Denton SF: 143 MF: 222 Market Value SF: $291/DU MF: $187/DU SF: $336 MF: $216 SF: $627/DU MF: $403/DU Edinburg 50 $600/DU None N/A $600/DU Allen 100 FMV None $590 $590/DU Bryan SF: 74 MF: 90 SF: $162/DU MF: $133/DU $358/DU N/A SF: $520/DU MF: $491/DU Sugar Land SF: 100 MF: 146 SF: $350/DU MF: $240/DU None N/A SF: $350/DU MF: $240/DU Round Rock SF: 1-8% of total acres of subdivision MF: 10-20% of total acres of subdivision Market Value None N/A N/A Phar 1 acre/15 acres of development $1,250/acre $250/DU N/A N/A Multifamily Dedication Requirements Are Not Proportional to Fees-in-lieu Although the City modified the parkland dedication ordinance in 2015 and 2017, many of the assumptions that form the basis of the parkland dedication requirement have remained constant since the 2012 update to the ordinance. For example, the assumptions for multifamily developments are as follows:  96,603 population (according to 2012 population estimate)  346 acres of neighborhood parks (according to 2012 estimates)  316 acres of community parks (according to 2012 estimates)  2.38 average persons per household (according to 2010 census data) Given the before mentioned assumptions have not changed since 2012, service level for multifamily developments is calculated as follows:  96,603/346 = 1 acre of neighborhood park per 279 people  96,603/316 = 1 acre of community park per 305 people 6 Converted to Dwelling Units, this amount would total $1,636/DU. 7 If a developer pays parkland dedication fees at the time of approval for the master plan, the fee is reduced to $800/DU. Parkland Dedication 9 This service level results in the following land dedication for multifamily developments:  Neighborhood parks: 279 people/2.38 PPH = 117 Dwelling Units per acre  Community parks: 305 people/2.38 PPH = 128 Dwelling Units per acre The ordinance’s fee schedule was changed in 2015 to list the amounts for multifamily properties by bedrooms instead of dwelling units, while single-family properties continued to be listed by dwelling unit. Prior to this change, with a “by-the-dwelling-unit” assessment, all multifamily units paid the same amount for parkland dedication regardless of the number of bedrooms. As a result, multifamily developers constructing units with 1 to 2 bedrooms per unit were typically paying more per bedroom than the multifamily developers that constructed units with more than three bedrooms per unit. The documentation regarding the 2015 ordinance presented to City Council states “since the current fees were established assuming an average of 2.38 persons per household, the amendment assumes that the previous “per dwelling unit” requirement can be divided by 2.38 resulting in a “per person” or “per bedroom fee for multi-family projects.” Although this statement is a fair assumption when converting dwelling units to bedrooms for the fee-in-lieu of land dedication. This is not the case when converting the dwelling units per acre of dedicated land to bedrooms per acre. Consequently, the 2015 ordinance’s methodology resulted in the following land dedication requirement:  Neighborhood parks: 117/2.38 = 49 bedrooms per acre of dedicated land  Community parks: 128/2.38 = 53 bedrooms per acre of dedicated land As a result of this change, it could be as much as 6 times more costly for multifamily developments to dedicate parkland than to pay the fee-in-lieu of land. Therefore, the City should change these requirements so that they are proportional to the fee-in-lieu dedication. A cost neutral conversion that results in a land dedication requirement proportional to the fee-in- lieu of dedication could have been achieved by the following calculation:  Neighborhood parks: 117 x 2.38 = 278 bedrooms per acre of dedicated land  Community parks: 128 x 2.38 = 305 bedrooms per acre of dedicated land Ordinance Changes Have Increased Parkland Dedication Complexity Over the past ten years there have been four changes to the parkland dedication ordinance that impacted the dedication requirements and the fees collected, as well as significantly adding to the ordinance’s complexity. Although the ordinance was modified most recently in 2015 and 2017, the two most significant changes occurred in 2008 and 2012. The change that occurred in 2008 was the most extensive and resulted in an ordinance that imposed some of the highest parkland dedication fees and land dedication requirements in Texas. Subsequent City Councils have modified the ordinance to shift or lesson the burden of 10 Parkland Dedication fees and land requirements. Although some City Councils desired to increase parkland dedication requirements and fees while others sought to reduce them, most changes made since 2008 have resulted in added layers of complexity. The 2012 changes made to the parkland dedication ordinance resulted in an overall reduction of parkland dedication and fees. In addition, changes made to the variables that form the basis of the parkland dedication calculations shifted the burden of costs from single-family developments to multifamily developments. For example, the 2012 ordinance gave a 75 percent discount on single-family community park development fees and a 50 percent discount on multifamily community park development fees. Table 3 compares the assumptions from the 2008 parkland dedication ordinance to those in the 2012 ordinance. The table below also describes the effect of a variable on parkland dedication fees (assuming all other variables are held constant). Table 3: Parkland Calculation Dedication Variables Variable 2008 2012 Impact on Fee Neighborhood parks acres 308 346 Increase Community parks acres 299 316 Increase Population 87,758 96,603 Decrease Owner-occupied Persons Per Household 2.80 2.38 Decrease Renter-occupied Persons Per Household 2.28 2.38 Increase Land value (cost per acre) $32,000 $32,000 None Neighborhood park cost $630,520 $350,000 Decrease Community park cost $2,500,000 $7,600,000 Increase Number of neighborhood parks 38 42 Increase Number of community parks 8 8 None Single fam. development discount 0% 75% Decrease Multi fam. development discount 0% 50% Decrease Some Parkland Dedication Requirements May Merit Periodic Consideration The fee-in-lieu of a land dedication should be a reasonable amount based on the land that should have been dedicated. Six of 11 benchmark municipalities (55%) use the fair market value (FMV) of the land that would be dedicated to calculate their fee. The other 5 benchmarks periodically estimate the FMV of land in their jurisdiction and use this amount to assess all developers’ requirements. The City of College Station uses the latter methodology and has assumed since 2008 that a reasonable price per acre of land is $32,000. If a new development could house about 1,000 people (420 single-family homes), but chose to pay the fee-in-lieu, they would be charged $224,000 (i.e. 7 acres x $32,000). Using multiple listing service (MLS) data provided by City staff, we found that the median price of undeveloped land8 in College Station for the past five years was $22,094 and in the past year 8 Included properties over 10 acres not zoned commercial to best represent land to be developed to residential properties. Parkland Dedication 11 was $29,293. While this calculation indicates that parkland dedication acquisition fees may have been high in the past, they have generally been decreasing over time. In addition, it appears reasonable to use this land value assumption for the next few years, but it should be re- evaluated periodically. In addition to a land dedication requirement, the City requires the payment of a park development fee, which is based on the estimated cost per person the City would incur by developing a neighborhood park ($350,000; about 2,300 people) and community park ($7,600,000; about 12,060 people) respectively. The City’s current park development fee gives a 75 percent discount on the community park cost to single-family developments and a 50 percent discount to multifamily developments due to changes made to community park development standards in 2012. These discounts were enacted to keep these fees from substantially increasing due to park construction cost increases and a change in neighborhood and community park standard that occurred between 2008 and 2012. However, we found that there does not appear to be a cogent basis for which these discounts percentages were determined. In lieu of paying a park development fee, a developer may construct park developments according to the City’s standards. Six of 11 benchmark cities (55%) charge a park development fee, while 5 separate benchmark cities (45%) allow the developer to construct park developments. In addition, we found that some cities either require or offer discounts for developer constructed parks that are turned over to home owner associations to manage and maintain. Ordinance Complexity Has Impacted Internal Controls Costs Internal controls helps to achieve policy goals, protects assets from misuse and theft, and increases the accuracy and reliability of financial records. Overall, we found that the City’s internal controls over the assessment, collection, and expenditure of parkland dedication funds to be well designed. However, the City’s system of internal controls over the parkland dedication process, documented in Appendix B, has come at significant costs. Due to the complexities of the ordinance previously described in this report, designing a process that mitigates all significant risks has been challenging for City staff. Consequently, if future changes are made to the parkland dedication ordinance, they should be made in consideration of the administrative burden placed on staff. It is important to keep in mind that the more complex the transaction, the greater the risk of transactional errors or malfeasance—and thus a more costly system of internal controls is needed to prevent such occurrences. 12 Parkland Dedication Timely Expenditure of Parkland Funds Has Been Challenging Having separate community and neighborhood fees and funds compounds collection issues and hinders effective spending. Meanwhile, not expending collected parkland dedication funds in a timely fashion exposes the City to several risks. For example, the City risks being required to refund monies, but how and to whom the refund is issued may be problematic. In addition, both developers from whom the monies were collected and the citizens that live in the corresponding development are likely to grow frustrated if park amenities are not delivered in a reasonable time frame. The City Has More Park Zones than Other Texas Cities Like College Station, most Texas cities with parkland dedication programs create park zones to ensure that the money generated from developments in a zone is expended in that zone. A likely reason this methodology is so widely employed is due to legal precedent that appears to suggest that the enacting jurisdiction should provide a connection between the demand generated by the development and the park being developed with those resources. To this effect, the City’s system of internal controls is designed to ensure that money collected in a certain park zone is used to develop a park within that specific zone. The City currently collects fees in 2 community park zones and 16 neighborhood park zones. These zones can be seen on the maps in Figure 5 below. Unlike College Station, the comparable cities examined typically have far fewer zones, and do not separate the zones into community and neighborhood zones. Figure 5: Park Zone Maps Community Park Zones Neighborhood Park Zones Parkland dedication fees sometimes apply in the extra-territorial jurisdiction (ETJ). In addition, we can see from Figure 5 that the City currently charges community park fees in the ETJ, but does not charge neighborhood fees. This reflects a 2017 policy change that amended the City’s Parkland Dedication 13 Parks and Recreation Master Plan to discontinue building neighborhood parks in the ETJ, however, community parks would still be built. Four of 11 benchmark cities (36%) require parkland dedication in the ETJ. New Parks Should Be Built Within a Reasonable Time Frame When fees-in-lieu are paid, the homes generating the fees should expect to benefit from new park amenities within a reasonable time frame. Nevertheless, many cities fail to specify a time frame of any kind, which could be considered a limitation of their parkland dedication ordinances. When they do, a reasonable time frame is most commonly determined to be either 10 or 5 years. Similar to the City of College Station, 67 percent of benchmark cities’ ordinances define a reasonable time frame as 10 years. If the reasonable time frame criterion is not met, many cities provide for the landowners who have paid parkland dedication fees to receive a refund. The City’s current ordinance requires parkland dedication fees to be encumbered or expended by the City within 10 years of the date received. The City is then required to refund the property landowner on the expiration of the received date. Parkland Dedication Ordinance Complexity Hinders Spending Collected parkland dedication fees are accounted in the City’s Tyler MUINIS system in separate funds based on the development’s neighborhood and community park zone. Each month, Fiscal Services staff reconciles the payments recorded in TRAKiT and in Tyler MUNIS. During fiscal year 2018, there were 26 active park funds: 6 community funds and 20 neighborhood funds.9 Funds are then spent out of these accounts either through the purchase order process or the capital projects process to ensure monies are spent in the appropriate areas. Figure 6 below shows how the park zone funds have changed between fiscal years 2013 and 2017. Figure 6: Park Zone Funds (FY13-FY17) 9 Active park fund means that the fund was growing either due to interest or developer contributions. $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 FY13 FY14 FY15 FY16 FY17 Contributions Expenditures Ending Balance 14 Parkland Dedication In other words, numerous park zones hinder effective parks spending. For instance, only three of the twenty active neighborhood park zones have more than $350,000, which is the amount the City estimates it takes to construct a neighborhood park. Indeed, each neighborhood park fund has about $118,000 on average, but actually over half of the accounts have less than $50,000. On the other hand, these funds total about $2.4 million dollars – enough money to build almost seven neighborhood parks. Table 4 shows the summary statistics of each park zone fund type. Table 4: Park Zone Funds Balance (12/17/18) Count Average Min Max Total Neighborhood Park 20 $ 118,045 $ 00,108 $ 0,546,964 $ 2,360,899 Community Park 6 $ 780,544 $ 40,634 $ 3,026,718 $ 4,683,263 Total: 26 $ 270,929 $ 00,108 $ 3,026,718 $ 7,044,162 Recent Changes Have Aimed to Address Spending Difficulties Not only do these spending difficulties hinder the City’s goal of providing recreational areas, but also leave the owners of the property without the use of a park. A 2017 change to the City’s parkland dedication ordinance attempted to correct some of these issues by implementing the following changes:  Allowed collection of parkland dedication funds to be used for improvements as well as acquisition and development;  Combined community park zones A&B and C&D and dissolved neighborhood park zones in the ETJ;  Prohibited parkland dedication funds that are encumbered as well as expended from being refunded; and  Extended the right to refund term to 10 years from 5 years, but compelled the City to automatically refund landowners instead of requiring a written request. Allowing funds to be used for improvements as well as acquisition and development of park land adequately expands the City’s ability to spend park zone funds. In addition, as the funds must be spent in the zone they are collected, the City can demonstrate a reasonable connection between the need created and the benefit being received. Similarly, combining community park zones allows for monies being collected to be spent more effectively. For instance, land where there is little development can be purchased to construct new community parks. This would previously have been more difficult because funds could only be spent where development was taking place. Thus, unless large swaths of land were dedicated, it was difficult to acquire enough land to warrant a community park. Parkland Dedication 15 Likewise, specifying that encumbered funds cannot be refunded protects the City from having a park acquisition or development planned or under contract and suddenly losing its funding. Finally, changing the refund limit to 10 years gives the City more time to spend contributed funds and decreases the risk that a needed park will not be developed. However, requiring the City to automatically refund landowners could create a large administrative burden on City staff if the money is not expended or encumbered prior to the 10- year time frame.10 As of the end of fiscal year 2018, approximately $867,000 has been collected with this refund expectation – presenting a potentially onerous burden if not spent within the 10-year time frame. All this being said, there is some issue of expectation. The City’s parkland dedication ordinance asserts that parks and recreational areas are required for the health, safety, and general welfare of the population. If the City fails to provide the benefit associated with the perceived need of its citizens it risks a loss of reputation. 10 This change was based on a recommendation from the Planning and Zoning Commission to automatically issue a refund to the developer for whom the fee was collected. Prior to this change being considered, the City’s Legal staff advised the City Council that refunds should legally be issued to landowners, which will in many cases not be the developers. 16 Parkland Dedication Parkland Dedication Fee Collection Is Challenging Parkland dedication fees are assessed and collected by Planning and Development Services staff through the City’s TRAKiT system. Normally, this system automatically assesses parkland dedication fees to all multifamily building permits and residential final plats based on the number of bedrooms or dwelling units entered by the developer. A plans examiner or planner verifies these numbers before the fees are collected by Planning and Development Services cashiers as part of their normal duties. Developers are required to pay the assessed fees before the permit is issued or the plat is filed. Due to the complexities of the ordinance described previously, many parkland dedication applicable projects do not go through the normal process. Instead they must receive additional approvals by the Parks and Recreation Department, the Parks and Recreation Advisory Board, and the Planning and Zoning Commission depending on why they are exceptions (see Appendix B). This could be because land is being dedicated, park developments are being constructed, or the project is vested to a previous fee schedule. These complications are discussed further in following sections. In order to assess the effectiveness of the systems involved, we collected data for two different scopes: calendar years 2015 through 2017 and fiscal years 2016 through 2018. Table 5 presents a summary of the development records reviewed over the course of the audit in conjunction with our scopes: Table 5: Reviewed Development Records CY15-CY17 FY16-FY18 Total Reviewed Count Amount Count Amount Count Amount Multi-Family Permits 155 $ 3,302,642 128 $ 2,774,920 166 $ 3,658,508 Residential Permits 361 $ 0,730,548 348 $ 0,728,026 370 $ 0,748,202 New Construction Permits 4 $ 0,812,536 3 $ 0,812,536 4 $ 0,812,536 Tenant Finish-Out 1 $ 0,002,000 1 $ 0,002,000 1 $ 0,002,000 Final Plat 135 $ 1,626,613 46 $ 1,306,387 167 $ 1,945,981 Development Plat 1 $ 0,001,261 1 $ 0,001,261 1 $ 0,001,261 Mixed-Use Plat 6 $ 0,016,250 1 $ 0,016,250 7 $ 0,016,250 Total: 663 $ 6,491,850 528 $ 5,641,390 716 $ 7,184,738 Fee Assessment Systems Adequately Account for Collections The City’s TRAKiT system automatically assigns the correct fund account number to each record based on the address or parcel number. We evaluated the accuracy of this system by comparing each parkland dedication transaction’s address on Google Maps to the Parks and Recreation Master Plan, and were able to verify that all 528 records paid between October 1, 2015 and September 30, 2018 (fiscal years 2016 to 2018) were categorized in TRAKiT correctly. Parkland Dedication 17 Parkland dedication fees are paid either during the final plat for single-family residences or at the building permit level for multifamily residences. In order to verify that fees were assessed to all appropriate records in TRAKiT, we sequentially reviewed all multi-family permit, final plat, and mixed-use final plat records between January 1, 2015 and December 31, 2017 (calendar years 2015 to 2017). Of the 663 records in this scope, 121 were not assessed a fee. These are broken down in Table 6 into “No Risk,” “Low Risk,” “Medium Risk,” and “High Risk” categories based on the likelihood that they were incorrectly not assessed a fee. Table 6: No Fee Charged Risk (CY15-CY17) Risk Level No. of Records Potential Dollar Value11 High 5 $ 016,036 Medium 1 $ 189,150 Low 29 $ 626,324 None 86 N/A Total: 121 $ 848,974 We verified that 5 records were incorrectly not charged a fee, resulting in an actual loss for the City of $16,036. The records in question were typically redevelopment of a property that previously had a single-family dwelling. When the property was redeveloped as a duplex, the parkland dedication fee created by the additional dwelling unit was not charged. The amount of loss is less than 1 percent of the actual amount collected during this period and is thus immaterial, however, these errors exemplify the effects of ordinance complexity. The Inaccuracies Identified are Not Material The City of College Station’s current fee schedule requires each residential development to dedicate an amount of land and pay a park development fee based on the number of dwelling units (for single-family developments) or bedrooms (for multifamily developments) being built. The City’s ordinance allows for a fee to be paid in lieu of donating land and also allows for the developer to construct park developments instead of paying the park development fee. We reviewed the submitted plans and additional documentation of each record with parkland dedication fees paid between October 1, 2015 and September 30, 2018 in order to verify that they had been assessed accurately. We found 161 records that are incorrect, but 159 of them are related to one specific development. This development was charged an additional fee because they proposed building dwelling units with 5 bedrooms. The City determined that the developer should pay an additional $91 for each dwelling unit – $35 for neighborhood parks and $56 for community parks. For these 159 records (211 dwelling units), however, the total additional fee of $91 per 11 This amount reflects the amount that would have been charged if the fees were collected based on the current fee schedule at the date of application. 18 Parkland Dedication unit was assessed entirely as a community park fee. This resulted in a total of $7,486 being incorrectly accounted in Community Park Zone B, which should instead be moved into Neighborhood Park Zone 15. Another record is for one specific apartment development, which should have been charged the current multifamily fee. Instead, single-family fees were charged for all except the neighborhood park development fee. This resulted in an over-charge of $3,075 for Community Park Zone B and $2,386 for Neighborhood Park Zone 1. Finally, one single-family house was rebuilt as a duplex, which would warrant a total fee of $1,261, however, they were actually charged $2,533. Resulting in an over-charge of $1,272. Although there are errors, the actual amounts in question are immaterial (i.e. less than 1% was incorrectly accounted and less than 1% was overcharged). This being said, it was extremely difficult to reconcile the remaining records in our scope with a high degree of certainty. Therefore, we categorized these records into “No Risk,” “Low Risk,” “Medium Risk,” “High Risk,” and “Incorrect” transactions based on the documentation available. As can be seen in Table 7 below, it is telling that only 51% of the amount collected during our scope is at low or no risk level. This is mostly not due to the fault of the departments involved, but is instead due to outside factors that are further explored below. Table 7: Remittance Risk – FY16-18 Scope Risk Level No. of Records Total Dollar Value Potential Dollar Value12 At-Risk Amount Under Over Incorrect 161 $ 0,382,502 $ 0,516,624 $ 0,161,485 ($ 27,363) High 96 $ 0,318,546 $ 0,352,048 $ 0,046,684 ($ 13,182) Medium 164 $ 2,054,998 $ 3,712,130 $ 1,690,871 ($ 33,740) Low 45 $ 0,070,616 $ 0,245,358 $ 0,174,742 ($ 000.00) No 61 $ 2,814,718 $ 2,814,718 $ 0,0000.00 ($ 000.00) Total: 528 $ 5,641,380 $ 7,640,878 $ 2,073,782 ($ 74,284) Fee Assessment Is Complicated By Outside Factors Parkland dedication requirement options make verifying payment amounts onerous. Dedication exceptions affected 31 records within our scope, accounting for $755,915 or about 13 percent of the money collected. These exceptions involve a proposal from a developer to dedicate land, develop a park, or both. Proposals are discussed with Parks and Recreation staff and reviewed by the Parks and Recreation Advisory Board, but are ultimately approved or refused by the Planning and Zoning Commission. 12 This amount reflects amount that would have been charged if fees were collected on this record based on the current fee schedule at the date of application. Parkland Dedication 19 These exceptions are at a higher risk because documentation for the dedication is often hard to associate with the records in question. For instance, large residential development final plat records typically have a parkland administrative approval form attached that is signed by the Director of Planning and Development Services, however, these are often not present for multi- family permit records. In addition, these forms may reference that parkland was dedicated, but may not reference how much or where to locate the final plat which has the dedicated land. This makes verifying land dedication and thus the fees that must still be paid difficult – not just for our staff, but also for Planning and Development Services. State law requirements further muddle parkland dedication fee assessment. Vesting exceptions affected 299 records within the scope, accounting for $1,724,334 or about 31 percent of the money collected. Texas Local Government Code 245 allows development projects to be vested to a certain date for specific types of licenses and fees, including parkland dedication fees. This means that if a developer began a project previous to the City’s update to parkland dedication fees, the developer has the right to choose which fee schedule they wish to fall under. If we imagine parkland dedication fees did not vest, the City would have instead collected $2,728,304 – a little over a $1 million difference.13 While vesting parkland dedication fees is not an issue caused by the City, it does still impact the complexity – and thus administrative burden – of the City’s parkland dedication fee structure. 13 This calculation accounts for developments that dedicated land or constructed park developments. 20 Parkland Dedication Recommendations Based on our review, it appears that the primary cause of many of the audit findings detailed in this report are related to the complexity of the City’s parkland dedication ordinance. As a result, we recommend the City consider several potential modifications to the ordinance. This being said, we hold the position that it is Council’s responsibility to set policy, while management’s duty is to carry out this policy direction effectively and efficiently. Therefore, policy decisions, such as determining the appropriate parks service level, are not addressed in the following recommendations. The Director of Parks and Recreation should work with the Legal and Planning and Development Services Departments in considering the following modifications to the parkland dedication ordinance. 1. Modify the parkland dedication ordinance so that dedication requirements for multifamily developments are proportional to the fee-in-lieu of dedication. If this modification is not made, it could be as much as 6 times more costly for multifamily developments to dedicate parkland than to pay the fee-in-lieu of land. 2. Reduce the number of parkland zones to the fewest number of zones that is legally permissible. Eliminating the distinction between neighborhood and community parks zones should also be considered. But only if the total number of zones can be reasonably reduced to a number that will not adversely impact the timely construction of community parks. Ideally, the size of the zones should be based on information from empirical studies measuring how far people in the community travel to parks. 3. Modify or eliminate the discounts built into the park development fee. It is important to note that this will result in higher fees if all other variables remain constant. Therefore, the City Council’s input should be sought as to the appropriate park service level and fees to be charged if this modification to the ordinance is to be considered. 4. Eliminate parkland dedication in the extra territorial jurisdiction (ETJ). Building and maintaining parks outside of city limits presents several challenges to a municipality. For this reason, very few cities require parkland dedication for developments in their ETJ. 5. Develop a more elegant parkland dedication methodology. The City’s current parkland dedication ordinance is one of the most complex ordinances in the State. Multiple solutions should be considered in modifying the ordinance’s methodology. The Director of Parks and Recreation should not only work with Legal and Planning and Development staff, but also consult with colleagues at other cities and experts within the field when considering modifications to the ordinance’s methodology. Any changes made to the Parkland Dedication 21 ordinance should seek to simplify it instead of adding any additional layers of complexity. In addition to the recommendations related to modifying the parkland dedication ordinance, the Director of Parks and Recreation should work with the City Manager’s Office and the Planning and Development Services Department in considering the following: 6. Require Parks and Recreation staff to verify parkland dedication acres and parkland dedication fees that have been collected by Planning and Development staff. Although we found internal controls to be generally well designed, this segregation of duty will help ensure accurate land dedications and cash collections with minimal added cost. 7. Consider engaging the Texas Municipal League or other contract partners to advocate on the City’s behalf to modify Texas Local Government Code 245. This state code allows development projects to be vested to a certain date for specific types of licenses and fees, including parkland dedication fees. The City should weigh the costs and the likelihood of success in eliminating or modifying this code against the costs and risks imposed on the City as a result of this legislation. 22 Parkland Dedication Appendix A: Management’s Response CITY OF COLLEGE STATION PARKS AND RECREATION DEPARTMENT PARKLAND DEDICATION AUDIT RECOMMENDATION RESPONSE FEBRUARY 15, 2019 Following is the response from the Parks and Recreation Department Director for each of the recommendations from the January 2019 Parkland Dedication Audit. The Director of Parks and Recreation should work with the Legal and Planning and Development Services Departments in considering the following modifications to the parkland dedication ordinance. 1. Modify the parkland dedication ordinance so that dedication requirements for multifamily developments are proportional to the fee-in-lieu of dedication. If this modification is not made, it could be as much as 6 times more costly for multifamily developments to dedicate parkland than to pay the fee-in-lieu of land. Answer: Agree. This item can be accomplished with the expected update of the ordinance in response to this audit. 2. Reduce the number of parkland zones to the fewest number of zones that is legally permissible. Eliminating the distinction between neighborhood and community park zones should also be considered. But only if the total number of zones can be reasonably reduced to a number that will not adversely impact the timely construction of community parks. Ideally, the size of the zones should be based on information from empirical studies measuring how far people in the community travel to parks. Answer: Agree. While the number of Neighborhood Park Zones was recently reduced from 29 to 16, it was accomplished by removing the Neighborhood Zones located within the ETJ. I agree that we may be able to reduce the number of Neighborhood Park Zones within the City Limits even further by combining adjacent zones, while staying within close proximity and taking into account access barriers (natural and man-made). I agree with combining the Neighborhood and Community Park distinctions into a single category of Parks. This will enable the City to include all park properties in the methodology calculations as well as be a major step in simplifying the Parkland Dedication Ordinance. I would like to keep the 2 Community Park Zones, however, to enable the City to spend collected funds from all of the Neighborhood Park Zones located within their respective Community Park Zones in order to not adversely impact timely construction/development of community parks. 3. Modify or eliminate the discounts built into the park development fee. It is important to note that this will result in higher fees if all other variables remain constant. Therefore, the City Council’s input should be sought as to the appropriate park service level and fees to be charges if this modification to the ordinance is to be considered. Parkland Dedication 23 Answer: Agree. The discounts can be removed with the inclusion of all parks into a single category, as they were applied only with the Community Park development calculations. Options, such as remaining at the current target service level of 7 acres per 1,000 population, adjusting the target to the current actual service level of 11 acres per 1,000 population, or even targeting the national average service level of 10 acres per 1,000 population, can be considered. 4. Eliminate parkland dedication in the extra territorial jurisdiction (ETJ). Building and maintaining parks outside of city limits presents several challenges to a municipality. For this reason, very few cities require parkland dedication for developments in their ETJ. Answer: Agree. This will greatly simplify the Parkland Dedication Ordinance with both collections and expenses. Issues with Parkland Dedication requirements have, at times, become issues when working with developments located within the ETJ. 5. Develop a more elegant parkland dedication methodology. The City’s current parkland dedication ordinance is one of the most complex ordinances in the State. Multiple solutions should be considered in modifying the ordinance’s methodology. The Director of Parks and Recreation should not only work with Legal and Planning and Development staff, but also consult with colleagues at other cities and experts within the field when considering modifications to the ordinance’s methodology. Any changes made to the ordinance should seek to simplify it instead of adding any additional layers of complexity. Answer: Agree. The audit recommendations will go a long ways towards simplifying the ordinance. As these recommendations are applied to the ordinance’s methodology, the resulting fees will be easier to understand, calculate, collect, and spend, while at the same time staying within the bounds of the ordinance guidelines, rules and purpose. In addition to the recommendations related to modifying the parkland dedication ordinance, the Director of Parks and Recreation should work with the City Manager’s Office and the Planning and Development Services Department in considering the following: 6. Require Parks and Recreation staff to verify parkland dedication acres and parkland dedication fees that have been collected by Planning and Development staff. Although we found internal controls to be generally well designed, this segregation of duty will help ensure accurate land dedications and cash collections with minimal added cost. Answer: Agree. The Parks and Recreation Project and Asset Manager will be assigned this task, in conjunction with the Parks and Recreation Business Services Manager. 7. Consider engaging the Texas Municipal League or other contract partners to advocate on the City’s behalf to modify Texas Local Government Code 245. This state code allows development projects to be vested to a certain date for specific types of licenses and fees, including parkland dedication fees. The City should weigh the costs of the likelihood of success in eliminating or modifying this code against the costs and risks imposed on the City as a result of this legislation. Answer: Agree. 24 Parkland Dedication Appendix B: Internal Control and Process Summary Parkland Dedication Ordinance Update Process Parks & Recreation Planning & Development City Attorney s Office Parks & Recreation Board Planning & Zoning Commission City Council About every three years Approved? Discuss & decide on ordinance changes Proposed Ordinance Review and make a recommendation Fee change? Review and make a recommendation Review proposed ordinance and recommendations Ordinance update complete Set up new fee schedule Yes Yes No No 2 3 4 5 6 9 7 8 10 1 Parkland Dedication Remittances Applicant Plans Examiner Development Coordinator Planner Parks & Recreations Parks & Recreation Board Planning & Zoning No Fee assessed by TRAKiT Construct park improvements? Project type? Submit application No Vested? Pay Parkland dedication fees Verify vested date Permit No Verify parkland dedication fields Pay parkland dedication fees Modify fee accordingly Yes Planning & Dev Cash Handling Process Review park site plan Approved? Yes Review park site planYes Discuss parkland dedication options Approved? Plat No Dedicate land?Approved? No Verify parkland dedication fields Dedication submitted on final plat No Yes Review and make recomendation Review recommendation & plat Land is platted Yes 1 2 7 8 11 13 19 20 9 1012 3 4 5 6 14 23 2215 17 16 18 21 Parkland Dedication and Maintenance Process Planning & Zoning Commission Planning & Development Brazos County Applicant Parks & Recreation Update City systems with new parkland Land dedication approved Receive Mylar of dedicated land Notify Parks & Recreation of new park acreage Review site plan Approved? Update park inventory spreadsheets Submits park site plan Development in-lieu of fee approved? Yes Verify inventory items in park land No No Construct park developmentsYes 10 2 Transfer dedicated land to the City Purchases new parkland 3 5 6 4 1 7 89 11 12 14 Accounts Payable Process Maintain and develop park land 13 15