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Res 16-05 Approving the Comprehensive Annual Financial Report Year Ending September 30, 2015TOWN OF WESTLAKE RESOLUTION NO. 16-05 A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, ACCEPTING THE COMPREHENSIVE ANNUAL FINANCIAL REPORT PRESENTED BY WEAVER AND TIDWELL, L.L.P., FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015. WHEREAS, Section 103.001 of the Local Government Code requires that a municipality shall have its records and accounts audited annually and shall have an annual financial statement prepared based on the audit; and WHEREAS, Section 103.002 of the Local Government Code requires that a municipality shall employ at its own expense a certified public accountant who is licensed in this state or a public accountant who holds a permit to practice from the Texas State Board of Public Accountancy to conduct the audit and to prepare the annual financial statements; and NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE: SECTION 1: That, all matters stated in the Recitals hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety. SECTION 2: That the Town Council does hereby accept the Comprehensive Annual Financial Report from Weaver and Tidwell, L.L.P., for the fiscal year ended September 30, 2015, attached as Exhibit "A". SECTION 3: If any portion of this Resolution shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Resolution without the invalid provision. Resolution 16-05 Page 1 of 2 SECTION 4: That this resolution shall become effective from and after its date of passage. PASSED AND APPROVED ON THIS 22" DAY OF FEBRUARY, 2016. ATTEST: on Lo. Attorney Resolution 16-05 Page 2 of 2 TOWN OF WESTLAKE TOWN OF WESTLAKE, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2015 Prepared by: Town of Westlake Finance Department 3 Village Circle, Suite 202 Westlake, Texas 76262 TOWN OF WESTLAKE Exhibit Page I.INTRODUCTORY SECTION Letter of Transmittal i GFOA Certificate of Achievement viii Organization Chart ix Town Officials x II.FINANCIAL SECTION Independent Auditor’s Report 1 A.MANAGEMENT'S DISCUSSION AND ANALYSIS 4 B.BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position A-1 16 Statement of Activities A-2 17 Fund Financial Statements Governmental Funds Financial Statements Balance Sheet A-3 19 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position A-4 21 Statement of Revenues, Expenditures, and Changes in Fund Balance A-5 22 Reconciliation of the Statement of Revenues, Expendituresand Changes in Fund Balances of Governmental Funds to the Statement of Activities A-6 24 Proprietary Funds Financial Statements Statement of Net Position A-7 25 Statement of Revenues, Expenses, and Changes in Net Position A-8 26 Statement of Cash Flows A-9 27 Fiduciary Funds Financial Statements Statement of Fiduciary Net Position A-10 28 Discretely Presented Component Units Financial Statements Combining Statement of Net Position A-11 29 Combining Statement of Activities A-12 31 Notes to the Basic Financial Statements 33 C.REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures, and Changes in Fund Balance- Budget and Actual- General Fund B-1 77 Schedule of Revenues, Expentitures and Changes in Fund Balance - Budget and Actual - Westlake Academy B-2 78 Notes to Budgetary Comparison Schedules 79 Schedule of Net Pension Liability and Related Ratios - TMRS B-3 80 Schedule of Contributions - TMRS B-4 81 Notes to TMRS Required Supplementary Information 82 Schedule of Academy's Proportionate Share of Net Pension Liability - TRS B-5 83 Schedule of Contributions - TRS B-6 84 TOWN OF WESTLAKE, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 TABLE OF CONTENTS Table of Contents - Continued Exhibit Page D.COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Major Governmental Funds Schedule of Revenues, Expenditures and Changes in Fund Balances C-1 85 Budget and Actual - Debt Service Fund Nonmajor Governmental Funds Combining Balance Sheet C-2 87 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance C-3 88 Nonmajor Special Revenue Funds Budgetary Comparison Schedules: Visitors Association Fund C-4 89 Lone Star Public Facilities Corporation Fund C-5 90 Economic Development Fund C-6 91 4B Economic Development Corporation Fund C-7 92 III.STATISTICAL SECTION Exhibit Net Position By Component S-1 94 Changes in Net Position S-2 95 Fund Balances, Governmental Funds S-3 97 Changes in Fund Balances, Governmental Funds S-4 98 Assessed Value and Estimated Actual Value of Taxable Property S-5 100 Principal Property Tax Payers S-6 101 Property Tax Levies and Collections S-7 102 Direct and Overlapping Property Tax Rates S-8 103 Taxable Sales by Industry Type S-9 104 Ratios of General Bonded Debt Outstanding S-10 105 Ratios of Outstanding Debt by Type S-11 106 Direct and Overlapping Governmental Activities Debt S-12 107 Demographic and Economic Statistics S-13 108 Principal Employers S-14 109 Full-Time Equivalent City Government Employees by Function/Program S-15 110 Operating Indicators by Function/Program S-16 111 Capital Asset Statistics by Function/Program S-17 112 3 Village Circle #202  Westlake, Texas 76262 Metro: 817-430-0941  Fax: 817-430-1812  www.westlake-tx.org i Town of Westlake February 22, 2016 Honorable Mayor, Council Members and the Citizens of the Town of Westlake, The Town of Westlake (the "Town") Fiscal and Budgetary Policies require that the Town's Finance Department prepare a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Accordingly, the Comprehensive Annual Financial Report (CAFR) for the Town of Westlake, Texas for the fiscal year ended September 30, 2015, is hereby issued. This report consists of management's representations concerning the finances of the Town. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making representations, the Town established a comprehensive internal control framework that was designed both to protect the Town's assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the Town’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the Town's comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatements. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The Town's financial statements have been audited by Weaver and Tidwell, L.L.P. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Town for the fiscal year ended September 30, 2015, were free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the Town's financial statements for the fiscal year ended September 30, 2015, were fairly presented in conformity with GAAP. The independent auditors' report is presented as the first component of the financial section of this report. This report is presented in three sections: Introductory, Financial and Statistical. The Introductory Section includes this transmittal letter, a listing of Town Officials, and an organizational chart of the Town. The Financial Section includes the independent auditor’s report on the basic financial statements, Management’s Discussion and Analysis (MD&A), basic financial statements, the notes to ii the basic financial statements, and combining and individual fund statements and schedules. The MD&A is a narrative introduction, containing overview and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement, and should be read in conjunction with the MD&A. The Town of Westlake’s MD&A can be found immediately following the independent auditor’s report. The Statistical Section includes financial and demographic information relevant to readers of the Town’s financial statements. The statistical data is generally presented on a multi-year basis. Profile of the Town Minutes from downtown Fort Worth, Texas and DFW International Airport, the Town of Westlake is home to several upscale residential communities and Fortune 500 companies, all of which share a unique character and charm, along with a commitment to excellence. The Town is located in northeast Tarrant County and may be conveniently accessed by several major thoroughfares, including SH 114 and US 377. The Town occupies approximately 7 square miles and serves a population of approximately 1,184. In 2015, the average size of new home construction was 9,693 square feet with an average estimated construction cost of $1.68 million. The Town, incorporated in 1956, is considered a Type A general-law municipality. The Town operates under the Council-Manager form of government. The Council is comprised of a mayor and five (5) council members and is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring the Town Manager. The Town Manager is responsible for carrying out the policies and ordinances of the Council, for overseeing the day-to-day operations of the Town and appointing and supervising heads of various departments. The Mayor and Town Council members serve two (2) year terms. All elected officials are elected at-large. The financial reporting entity (the government) includes all funds of the primary government (i.e. the Town of Westlake), as well as all of its component units. Component units are legally separate entities for which the primary government is financially accountable. The following entities are considered blended component units: Lone Star Public Facilities Corporation is a Texas nonprofit corporation that acts on behalf of the Town to further the public purposes under the Public Facilities Corporation Act, as it’s duly constituted authority and instrumentality. The board of directors, appointed by the Town’s governing body, is comprised of seven members, of whom five must be members of the Town’s governing body. 4B Economic Development Corporation is a Texas nonprofit industrial corporation under the Development Corporation Act of 1979 formed to promote economic development within the Town and the State of Texas in order to eliminate unemployment and underemployment, and to promote and encourage employment and the public welfare of, for, and on behalf of the Town by developing, implementing, financing, and providing one or more projects defined and permitted under Section 4B of the Act. The board of directors is composed of seven persons appointed by the members of the Town’s governing board. Four of the members of the board of directors are members of the Town’s governing board. iii Westlake Academy (Academy) is an open-enrollment charter school, as provided by Subchapter D, Chapter 12, of the Texas Education Code. The Town of Westlake (“Charter Holder”) applied for and became the first municipality in Texas to ever receive this special charter designation. The Academy had 658 students in FY 12-13 and serves Kindergarten thru 12th grade. The Academy graduated their first class in FY 09-10. The Board consists of six (6) trustees and is appointed by the Town’s governing body. Currently, all members of the board of trustees are members of the Town’s governing body. The Academy’s year-end is August 31. Discretely presented component units are legally separate entities and not part of the primary government’s operations. These component units are as follows: Texas Student Housing Corporation-Denton Project, Texas Student Housing Authority-Jefferson Commons at Town Lake Austin Project, Texas Student Housing Corporation-College Station Project, and Texas Student Housing Authority. Services Provided The Town provides to its citizens those services that have proven to be necessary and meaningful and which the Town can provide for the least amount of cost. Major services provided under the general government and enterprise functions are: Fire and emergency medical services, police, water and sewer utility services, park and recreational facilities, street improvements, education and administrative services. The Town utilizes a combination of direct service delivery along with out- sourced services in its service delivery mix. The decision as to which service to deliver directly versus out-sourcing is based on analysis of cost-effectiveness, citizen responsiveness, and customer service quality. Economic Conditions and Outlook The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the environment within which the Town operates. Local Economy The Town staff is aware that the Town of Westlake does not create wealth, but instead, is entrusted with public dollars collected on behalf of our citizens. We are stewards who are fully vested in the success of the Town of Westlake and Westlake Academy. We exist as a municipal corporation for one reason and one reason only: to prioritize and deliver the best services possible with the resources provided to achieve an exceptional quality of life. This is a challenge the Staff takes very seriously, one that we pursue with vigor every day. Over the previous fiscal year, the Town has achieved and/or is continuing to work toward important initiatives and projects that will allow us to balance our “distinctive development, trails, and quality of life amenities amidst an ever expanding urban landscape.” These include: Achievement and recognition for our transparency efforts and our fiscal stewardship through receipt of the following:  Distinguished Budget Presentation Award from the Governmental Finance Officers Association (GFOA) marking the 8th year in a row that we have received this honor for our municipal budget and the 6th year for our educational services budget (Westlake Academy). iv  International Award for Budget Excellence from the Association of School Business Officials International for the past six years.  Certificate of Achievement for Excellence in Financial Reporting for our Comprehensive Annual Financial Report (CAFR), also known as the annual audit which has also been recognized through GFOA for the last six years.  Award for Outstanding Achievement in Popular Annual Financial Reporting (PAFR), by converting much of the CAFR document into an easy-to-read format for our residents. This was the Town’s second year to achieve this award. Invested in an update of our existing Comprehensive Planning document as we worked with the Town Council, residents, and the appointed steering committee members to memorialize our community vision in the new document. Our current version was compiled in 1992 and many changes have occurred since that time. Progress continues through the facilitation efforts of an outside consultant as we move into the final phases with the updating of the associated ordinances that support the Plan. Invested in the third iteration of our strategic plan through the use of the Balanced Scorecard system. Council members worked with an outside consultant to create strategic themes and updated our vision, mission, and values statements for Westlake. Staff then identified outcome objectives, created a Tier One Strategy Map, and developed performance measures for Council adoption. We also began reporting the approved performance measures to the governing board this fiscal year. Invested in the Town’s open enrollment charter school as Westlake Academy, completed its 12th year of operation and graduated our 6th class of seniors with 54 students.  Westlake Academy continues to have excellent academic and extra-curricular results and is ranked among the best high schools in America: Washington Post ranked us as 42nd out of 2,300 schools across the nation. Invested in the Town’s CIP ($1.7M) mainly through the continued progress of Phase 3 of the FM 1938/Davis Blvd. Streetscaping improvements.  Invested approximately $100K in trail and park improvements; $100K in an outdoor warning siren for emergency weather related events  Invested a total of $316K in the Town’s infrastructure through reconstruction and drainage improvements on Sam School Rd. and Dove Rd. Short Term Trends, Challenges and Planning Over the history of our Town, municipal budgets have been prepared with an eye toward being fiscally conservative, while providing the high quality customer service that our residents have come to expect in Westlake. As a component of our budgets, we also identify current trends to be stewards of our community. Some of these factors can be found below: Westlake’s Permanent Population Growth: This is the portion of our population considered to be our permanent residents. An increase in population of 185 in 1990 to the present 1,150 represents a 522% increase for a net gain of 965 residents. We will need to monitor and plan for the continued increase in these numbers in light of Forging Westlake’s forecast of 7.12% population growth between now and 2040. v Traffic Demands Due to Growth in Westlake and Surrounding Cities’: The 4 cities that surround Westlake are also projected to have a combined population of 215,000 people by 2040. As stated earlier, Westlake is estimated to grow to 7,000 by that same time. Internally current zoning entitlements, if executed, would create an estimated 300,000 vehicle trips per day. Local impacts associated with this level of growth affects the Town’s street infrastructure, water and sewer system capital investment requirements, as well as demand for daily municipal services Balanced Growth to Impact Cost of Municipal Services: Likewise, the ability to pay for municipal services utilizing a cost effective revenue format requires balanced growth that provides for commercial development and a diversified tax base, while maintaining the community’s bucolic atmosphere. At the same time, we must continue to ensure the policy direction of the Town is focused on growth paying for the infrastructure for which it creates the demand. Housing Start Increases: This past year, we continued to see single family residential construction as a result of Granada Phase 1 receiving a final plat. Existing subdivisions such as Vaquero and Terra Bella also had strong home construction activity. This is depicted in the side-chart – prerecession starts were at 38 per year and we are estimating 50 for the coming fiscal year. Housing starts in Westlake, due to the high value, adds taxable value, but impacts the demand for our municipal services, especially the Town’s charter school. Management of Development: As the economy and the surrounding cities in the Metroplex experience commercial development and individuals continue to make the North Texas Region their home, we will need to manage our distinctive housing developments to ensure we maintain our community as an ‘oasis of natural beauty’ as outlined in our Vision statement. Daytime Population: Because Westlake is the home of many major corporate office campuses, its Monday-Friday daytime population swells to approximately 10,000 - 12,000 individuals. These office complexes are comprised of notable corporate clients that include Deloitte LLP, Core Logic and Fidelity Investments. Staff will continue to monitor our corporate stakeholders and attempt to identify avenues to strengthen these relationships and assist in drawing new corporations to Westlake. Continued Impact of Westlake Academy on Residential Growth: The number of Westlake residents who are selecting Westlake Academy as the educational choice for their students has doubled in the past five years. Resident surveys continually indicate that the Academy is one of the main reasons they moved to Westlake, and why they plan to remain in our community. For example, the 2015 survey results indicate that 96% of the parents say that enrollment at Westlake Academy was very/somewhat important to their decision to live in the community. vi Increase in Westlake Academy Overall Enrollment and Opening of New School Buildings: The Academy has experienced steady enrollment growth from 491 in SY 2009-10 to a projected 832 in SY 2015-16. The current increase of student population is a result of the Phase I expansion efforts on the Academy campus and our community growth. It will require that we carefully manage our student enrollment processes to provide adequate space for children of Westlake residents. Approximately 39,000 sq. ft. of new facilities spaces was opened in SY 14/15, which was comprised of a secondary classroom building, field house, and a primary years’ multi-use building. All of these buildings increased our capacity and allowed for decompression of our current facilities. The lottery waiting list for admissions continues to grow from 705 in 2011 to 2,400 students for this coming school year. Public Education Funding Shortfall: State funding of public education was decreased by the State Legislature in 2011. While it has increased somewhat since then, the allocation has not kept pace with basic cost increases. This negatively impacts Westlake since it owns and operates a public charter school, Westlake Academy, which receives 79% of its operational funding from the State. Implementation of the Comprehensive Plan: With adoption of the Town’s new Comp Plan, Forging Westlake, a number of our ordinances need to be rewritten and new ones drafted so that the Plan’s recommendations can be implemented. The task of implementing the changes to the ordinances will require additional staff time and oversight to ensure we reflect the direction of the Council and the Comp Plan. Pursuit of Infrastructure and Services Reinvestment While Combating Certain Cost Increases: With growth comes the need for reinvestment through capital spending for infrastructure, equipment, as well as work force attraction/retention. This must be facilitated in concert with the consideration of additional staffing needs to maintain our service levels. We have balanced all these components in light of maximizing staff efficiencies and processes to help contain large expenditure drivers such as employee health insurance. Continued emphasis on long-range financial planning: The FY15-16 budget contains an updated Long-Range Financial Forecast which identifies key revenue and expenditure drivers while assessing historical financial trends and their potential impact upon the town’s financial stability. The forecast must be monitored and updated during the budget formulation process as well as reviewed with the Town Council as the budget is being prepared. Staff will also continue to produce a quarterly financial report for the Council that monitors and analyzes trends in the General Fund, Utility Fund, and Visitor Association Fund. The report serves as a valuable tool to assist in developing a proactive, rather than reactive, approach to our changing financial trends. Users of this document, as well as others interested in the programs and services offered by the Town of Westlake, are encouraged to read the Town's Fiscal Year 2015-16 Budget. The budget details the Town's long-term goals and financial policies, and describes program accomplishments and initiatives. vii Other Information The Government Finance Officers Association of the United States of America and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Westlake for its comprehensive annual financial report (CAFR) for the fiscal year ended September 30, 2014. This was the eighth year the Town has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report (CAFR) continues to meet the Certificate of Achievement Program's requirements and we are submitting it to GFOA to determine its eligibility for another certificate. In addition, we also received our eighth GFOA Distinguished Budget Presentation Award for the fiscal year beginning October 1, 2014 for our municipal budget and the 6th year for our educational services budget for Westlake Academy, a component unit of the Town. In order to qualify for the Distinguished Budget Presentation Award, the Town and Academy budget documents had to be judged proficient as a policy document, a financial plan, an operations guide, and a communications device. Westlake Academy has also received recognition from the Association of School Business Officials International as a recipient of the International Award for Budget Excellence for the past six years. The Finance Department received its third Popular Annual Financial Report (PAFR) converting much of the FY 2013-2014 audit document into an easy-to-read format for our residents. The goal is to encourage resident awareness as it relates to Town finances through the condensed version of the budget. The report provides an “overview of our financial position and policies, and conveys our commitment to delivering responsive services and programs in a fiscally responsible manner.” Acknowledgements The preparation of this report could not be accomplished without the efficient and dedicated services of the entire staff of the Finance Department. Appreciation is expressed to Town employees throughout the organization, especially those employees who were instrumental in the successful completion of this report. The staff would also like to thank the Mayor and Town Council for their conservative leadership and their support in planning and conducting the financial operations of the Town in a responsible and progressive manner. Respectfully Submitted, Tom Brymer Debbie Piper, CPA Town Manager Finance Director viii ix x TOWN OF WESTLAKE ELECTED AND APPOINTED OFFICIALS September 30, 2015 Laura Wheat Alesa Belvedere Michael Barrett Rick Rennhack Carol Langdon Wayne Stoltenberg ELECTED OFFICIALS Mayor Laura Wheat Mayor Pro-Tem Carol Langdon Council Member Ales Belvedere Council Member Michael Barrett Council Member Rich Renhack Council Member Wayne Stoltenberg APPOINTED OFFICIALS TOM BRYMER Town Manager AMANDA DEGAN GINGER AWTRY Assistant Town Manager Director of Communications and Community Affairs DEBBIE PIPER KELLY EDWARDS Director of Finance Town Secretary EDDIE EDWARDS TODD WOOD Director of Planning and Development Director of Human Resources and Administrative Services JARROD GREENWOOD RICHARD WHITTEN Director of Public Works Fire Chief TROY MEYER JASON POWER Director of Facilities Maintenance and Parks and Recreation Director of Information Technology FINANCIAL SECTION TOWN OF WESTLAKE AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS 12221 MERIT DRIVE, SUITE 1400, DALLAS, TX 75251 P: 972.490.1970 F: 972.702.8321 1 INDEPENDENT AUDITOR’S REPORT To the Honorable Mayor and Members of Town Council Town of Westlake, Texas Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Town of Westlake (the Town) as of and for the year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise the Town’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 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 of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Town of Westlake, Texas Page 2 2 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the Town, as of September 30, 2015, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Emphasis of Matter Regarding Going Concern The accompanying financial statements have been prepared assuming the discretely presented component units will continue as going concerns. As discussed in Note 17 to the financial statements, the discretely presented component units are in default on their bonds due to failure to meet certain bond covenants. This gives bond holders the right to accelerate and demand payment on the bonds in full. This condition raises substantial doubt about the discretely presented component units’ ability to continue as going concerns. Management’s plans regarding these matters are also described in Note 17. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter. Change in Accounting Principle As discussed in Note 16 to the financial statements, in 2015 the Town adopted new accounting guidance, GASB Statement No. 68, “Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27” and GASB Statement No. 71, “Pension Transition for Contributions Made Subsequent to the Measurement Date”. Our opinion is 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 on pages 4 through 15 and budgetary comparison information and pension schedules on pages 77 through 84 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 Town of Westlake, Texas Page 3 3 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town’s basic financial statements. The introductory section, combining and individual fund financial statements and schedules, and statistical section, are presented for purposes of additional analysis and are not a required part of the 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 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 have also issued our report dated February 15, 2016 on our consideration of the Town’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 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 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 Town’s internal control over financial reporting and compliance. WEAVER AND TIDWELL, L.L.P. Dallas, Texas February 15, 2016 TOWN OF WESTLAKE MANAGEMENT’S DISCUSSION AND ANALYSIS TOWN OF WESTLAKE MANAGEMENT’S DISCUSSION AND ANALYSIS 4 Management of the Town of Westlake offers the readers of the Town’s financial statements this narrative overview and analysis of the financial activities and financial position of the Town for the fiscal year ended September 30, 2015. Financial reporting is limited in its ability to provide the “big picture” but rather focuses on financial position and changes in financial position. In other words; are revenues and/or expenditures higher or lower than the previous year? Has the net position (containing both short- term and long-term assets and liabilities) or fund balances (the current “spendable” assets less current liabilities) of the government been maintained? Readers are encouraged to consider the information presented here in conjunction with the additional information furnished in the letter of transmittal (pages i-vii of this report) and the statistical section (pages 94- 112 of this report) as well as information in the annual operating budget, along with other community information found on the town’s website at www.westlake-tx.org. It should be noted that the Independent Auditor’s Report describes the auditors’ association with the various sections of this report and that all of the additional information from the website and other Town sources are unaudited. FINANCIAL HIGHLIGHTS • The assets and deferred outflows of resources of the Town exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $58,370,808 (Net position). This number must be viewed within the context that the vast majority of the Town's net position of $36,043,845 (61.7%) are capital assets and that most capital assets in a government entity do not directly generate revenue nor can they be sold to generate liquid capital. The net position restricted for specific purposes totaled $17,827,177 (30.5%). The remaining amount, $4,499,786 (7.8%), represents unrestricted net position. • As of the close of the current fiscal year, the Town of Westlake's governmental funds reported combined ending fund balances of $28,185,481, which is a increase of $16,297,841 in comparison with the prior year. Within this total, $20,801,880 is non-spendable, restricted, committed or assigned by management or council. • At the end of the current fiscal year, fund balance for the general fund was $7,680,550, a decrease of $272,968 in comparison with the prior year. Of this total fund balance, $7,383,601 is unassigned. This represents 109% of the total general fund expenditures and is equivalent to 283 operating days. • The Town's capital assets (net of accumulated depreciation) increased by $3,824,916. This is primarily attributed to the completion of the Westlake Academy Expansion project which includes a multi-purpose building, three story secondary school building and a field house. • The Town's long-term debt decreased by $1,331,958 in total, due to the scheduled repayment of principal on outstanding bonded debt. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the Town's basic financial statements. The Town's basic financial statements are comprised of the following three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains supplementary information in addition to the basic financial statements themselves. 5 Government-wide financial statements The government-wide financial statements are designed to provide readers with a broad overview of the Town's finances, in a manner similar to a private-sector business. The government-wide financial statements are prepared utilizing the economic resources measurement focus and the accrual basis of accounting. The statement of net position presents information on all of the Town's assets and liabilities with the difference between the two reported as net position. Over time, increases or decreases in the Town's net position serves as a useful indicator of whether the financial position of the Town is improving or weakening. The statement of activities presents information showing how the government's net position changed during the most recent fiscal year. All of the revenues and expenses 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. Both of the government-wide financial statements distinguish functions of the Town that are principally supported by sales taxes, property 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 Town include general government, public safety, culture and recreation, economic development, public works, visitor services and education. The business-type activities of the Town include water/sewer and cemetery. The government-wide financial statements include not only the Town (known as the primary government), but also discretely presented component units including all of the Texas Student Housing entities. Financial information for these component units is reported separately from the financial information presented for the primary government itself. See pages 33- 34 of the "Financial Section" for detail on these entities. In addition, the Town has the following blended component units: Lone Star Public Facilities Corporation, 4B Economic Development Corporation, and Westlake Academy, an open enrollment charter school owned and operated by the Town of Westlake. Fund Financial Statements A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The Town, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Below are the three types of funds. Governmental funds - Governmental funds are used to account for essentially the same functions reported as government activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financial requirements. 6 Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, the reader 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 Town maintains ten individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General, Westlake Academy, Debt Service, Capital Projects, Solana PID Capital Projects, and Westlake Academy Expansion funds, all of which are presented as major funds. Data from the other funds (Visitors Association, Economic Development, Lone Star Public Facilities Corporation and Westlake 4B Economic Development Corporation) are combined into a single, aggregate presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The Town adopts an annual appropriated budget for all funds, except the Capital Projects, Solana PID Capital Projects, and Westlake Academy Expansion funds which are project-length based budgets. A budgetary comparison statement has been provided for all appropriate funds to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages 19 -24 of this report. Proprietary funds - There are two types of proprietary funds, Enterprise Funds and Internal Service Funds. An Enterprise Fund is the only proprietary fund currently maintained by the Town. Enterprise funds are used to report the same functions presented as business-type activities in the government- wide financial statements. The Town uses enterprise funds to account for its water and sewer activities and its cemetery activities. All activities associated with providing such services are accounted for in this fund, including administration, operation, maintenance, debt service, capital improvements, billing and collection. The Town's intent is that costs of providing the services to the general public on a continuing basis is financed through user based charges in a manner similar to a private enterprise. The Town has no Internal Service Funds (fund to report activities that provide supplies and services for the Town's other programs and activities, i.e. self-insurance and fleet management). The basic proprietary fund financial statements can be found on pages 25 -27 on this report. Fiduciary funds - Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the Town's own programs. The accounting used for fiduciary funds is similar to the accounting used for proprietary funds. The Town of Westlake maintains one fiduciary fund, the PID Agency (debt service) Fund. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 33 – 76 of this report. 7 Other information. In addition to the basic financial statements and accompanying notes, this report also presents schedules that further support the information in the financial statements. The schedules are presented immediately following the notes to the financial statements and can be found on pages 77-92. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of the government’s financial position. In the case of the Town, assets exceeded liabilities by $58,370,808 at the close of the most recent fiscal year. The Town’s combined net position changed from a year ago, increasing $19,485,447 from $38,885,361 to $58,370,808. Our analysis below focuses on the net position (Table 1) and changes in net position (Table 2) of the Town’s governmental and business-type activities. The largest portion of the Town’s net position, $36,043,845 (61.7%), reflects its investment in capital assets (e.g. land, buildings, equipment, improvements, construction in progress, and infrastructure), less any debt used to acquire capital assets still outstanding. The Town uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Town’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the Town’s net position, $17,827,177 (30.5%), represents resources that are subject to external or internal restrictions on how they may be used. The remaining balance of $4,499,786 (7.8%) represents unrestricted net position which is available for the town’s ongoing expenses. Table 1 Condensed Statement of Net Position At September 30, 2015 and 2014 2015 2014 2015 2014 2015 2014 Current and other assets 29,451,181$ 14,197,535$ 4,879,191$ 5,210,808$ 34,330,372$ 19,408,343$ Capital assets 54,470,449 50,205,686 12,662,988 13,102,835 67,133,437 63,308,521 Total Assets 83,921,630$ 64,403,221$ 17,542,179$ 18,313,643$ 101,463,809$ 82,716,864$ Deferred outflows of resources 1,549,467 1,194,749 42,985 - 1,592,452 1,194,749 Noncurrent liabilities 29,466,305 29,866,622 6,357,349 6,389,337 35,823,654$ 36,255,959$ Other liabilities 1,377,466 2,308,387 7,425,583 6,461,906 8,803,049 8,770,293 Total Liabilities 30,843,771 32,175,009 13,782,932 12,851,243 44,626,703$ 45,026,252$ Deferred inflows of resources 58,750 - - - 58,750 - Net investments in capital assets 29,633,298 32,048,991 6,410,547 6,734,414 36,043,845$ 38,783,405$ Restricted 17,827,177 2,284,947 - - 17,827,177 2,284,947 Unrestricted 7,108,101 (910,977)(2,608,315)(1,272,014)4,499,786 (2,182,991) Total Net Position 54,568,576$ 33,422,961$ 3,802,232$ 5,462,400$ 58,370,808$ 38,885,361$ Governmental Activities Business-type Activities Total Assets Liabilities Net Position 8 Table 2 Changes in Net Position For the years ended September 30, 2015 and 2014 2015 2014 2015 2014 2015 2014 Program revenues Fees, fines and charges for services 2,466,032$ 2,127,786$ 3,563,395$ 3,436,451$ 6,029,427$ 5,564,237$ Operating grant and contributions 7,615,653 6,592,642 - - 7,615,653 6,592,642 Capital grants and contributions 19,983,078 80,472 - - 19,983,078 80,472 General revenues Taxes Sales taxes 4,925,428 4,725,845 - - 4,925,428 4,725,845 Property taxes 1,438,969 1,367,069 - - 1,438,969 1,367,069 Hotel occupancy taxes 872,179 796,481 - - 872,179 796,481 Mixed beverage taxes 59,184 51,602 - - 59,184 51,602 Franchise taxes 963,040 795,322 - - 963,040 795,322 Interest on investments 28,904 26,713 7,083 7,114 35,987 33,827 Miscellaneous 198,199 246,633 - - 198,199 246,633 Total revenues 38,550,666 16,810,565 3,570,478 3,443,565 42,121,144$ 20,254,130$ General governmental 3,145,716 2,784,587 - - 3,145,716 2,784,587 Public saftey 2,381,437 2,190,050 - - 2,381,437 2,190,050 Culture and recreation 129,970 123,541 - - 129,970 123,541 Economic development 171,757 147,680 - - 171,757 147,680 Public works 1,081,996 955,794 - - 1,081,996 955,794 Visitor services 665,936 493,087 - - 665,936 493,087 Education 8,598,261 7,147,411 - - 8,598,261 7,147,411 Interest on long-term debt 1,022,201 998,951 - - 1,022,201 998,951 Water and sewer - - 4,861,529 3,690,137 4,861,529 3,690,137 Cemetery - - 7,297 7,121 7,297 7,121 Total expenses 17,197,274 14,841,101 4,868,826 3,697,258 22,066,100 18,538,359 Increase (decrease) in net position before transfers 21,353,392 1,969,464 (1,298,348) (253,693) 20,055,044 1,715,771 Transfers 323,100 43,399 (323,100)(43,399)- - Change in net position 21,676,492 2,012,863 (1,621,448) (297,092) 20,055,044 1,715,771 Net position, beginning as previously stated 33,422,961 32,057,541 5,462,400 5,759,492 38,885,361 37,817,033 Cumulative effect of a change in accounting principle (530,877) (647,443) (38,720) - (569,597) (647,443) Net position, ending 54,568,576$ 33,422,961$ 3,802,232$ 5,462,400$ 58,370,808$ 38,885,361$ Governmental Activities Business-type Activities Total Revenues: Expenses: 9 Governmental activities: Governmental activities increased the Town's net position by $21,145,615 (63.3%), increasing net position from $33,422,961 to $54,568,576. Unrestricted net position, the part of net position that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation, other legal requirements, and/or Council or management's decision, increased by $8,019,078. Total revenues for governmental activities increased by $21,740,121 when compared to the prior year. General revenue had an increase of $476,238, while program revenues had an increase of $21,263,863. Program revenues • Fees, fines and charges for services increased by $338,246 which was primarily due to an increase of building permits/fees related to Granada and Entrada as well as Terra Bella. • Operating Grants and Contributions increased by $1,323,011 primarily due to the increase of state funding as a result of increased enrollment at Westlake Academy due to the campus expansion as well as increased grant revenues from Westlake Academy Foundation and Hudson Foundation. • Capital Grants and Contributions increased by $19,902,606 with the major portion ($18M) associated with the contribution of funds related to the Public Improvement District (PID). General revenues • Sales tax increased by $199,583 which can be attributed to the continued improvement in the local economy as well as several new technology and professional related companies and several one-time payments related to purchases and/or construction. • Hotel occupancy taxes increased by $75,698 which now includes receipts from Deloitte University as well as Solana Marriott. • Increase in property tax receipts of $71,900 and franchise fees by $167,718. • Increase in Miscellaneous of $361,566 is due to contributions by TxDot and Fidelity related to FM 1938. Expenses • Total expenses for governmental activities increased by $2,356,173 or approximately 18%. The increase is made up of several components. The major portion of the total increase was due to capital outlay associated with the Solana PID and $1,450,850 was related to the education expenditures because of staffing and supplies needed for the extra students and classroom supplies caused by the three additional buildings/classrooms. Additionally, the Executive Principal completed her first full year of employment and salary adjustments to other leadership positions during the fiscal year. 10 Business-type Activities: The net position of our business-type activities ended fiscal year 2015 at $3,802,232 compared with $5,462,400 in 2014. This represents a decrease in net position of $1,660,168, or 30% less than the prior fiscal year. Revenues of the Town's business-type activities were $3,570,478 for the fiscal year ending September 30, 2015. Revenues (Charges for Services) increased by $126,913 or 4% over the prior year. Operating expenses for the business-type activities were $4,868,826 for the year, an increase of $1,171,568 or 32%. This increase was primarily attributed to a payment to the City of Fort Worth for the Town’s proportionate share of water system upgrades to provide Westlake with future capacity needs. Additional payments of approximately $2M will be made in subsequent years until the completion of the project. The business-type activities also had net transfers out of $323,100 in 2015 compared to net transfers out of $43,399 in the prior year which represented an interfund repayment. FINANCIAL ANALYSIS OF THE TOWN'S FUNDS As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the Town's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a town's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the Town's governmental funds reported combined ending fund balances of $28,185,481; an increase of $16,297,841 in comparison with the prior year. Approximately 26.2% of this total ($7,383,601) constitutes unassigned fund balance, which is available for spending at the government's discretion. The remainder of fund balance is nonspendable, restricted, committed or assigned to indicate that it is not available for new spending because it has already been committed. The following tables present a summary of general, special revenue, capital project, and debt service fund revenues and expenditures for the fiscal year ended September 30, 2015, and the amount and percentage of increases and decreases in relation to the prior year. 11 Table 3 Summary of Governmental Funds Revenues Increase Percent 2014-5 Percent (Decrease)Increase Amount Of Total From 2013-14 (Decrease) Taxes Sales taxes 4,925,428$ 13.1%199,583$ 4.2% Property taxes 1,432,917 3.8%79,561 5.9% Hotel occupancy taxes 59,184 0.2%7,582 14.7% Mixed beverage taxes 872,179 2.3%75,698 9.5% Franchise taxes 963,040 2.6%167,718 21.1% Subtotal - Taxes 8,252,748 21.9%530,142 6.9% State program 6,173,418 16.4%903,777 17.2% Federal program 87,797 0.2%7,694 9.6% Interest income 28,904 0.1%2,191 8.2% Building permits and fees 1,200,790 3.2%25,715 2.2% Fines and penalties 734,152 1.9%3,711 0.5% Intergovernmental 3,810 0.0%270 7.6% Contributions 18,785,953 49.8%18,703,507 22685.8% Miscellaneous 2,467,381 6.5%805,918 48.5% Total Revenues 37,734,953$ 100.0%20,982,925$ 125.3% Revenues Table 4 Summary of Governmental Funds Expenditures Increase Percent 2014-15 Percent (Decrease)Increase Amount Of Total From 2013-14 (Decrease) General government 2,411,239$ 11.0%174,879$ 7.8% Public safety 2,490,551 11.4%343,964 16.0% Culture and recreation 130,322 0.6%6,781 5.5% Economic development 171,757 0.8%24,072 16.3% Public works 744,028 3.4%128,247 20.8% Visitor services 670,157 3.1%177,075 35.9% Education 7,938,501 36.2%794,823 11.1% Capital outlay 5,274,282 24.0%(4,689,765) -47.1% Debt services 2,108,174 9.6%(82,275) -3.8% Total Expenditures 21,939,011$ 100.0%(3,122,199)$ -12.5% Expenditures 12 Below are summaries and explanations of the changes in fund balances from fiscal year 2014 to fiscal year 2015 of the Governmental Funds that are contained in the above totals. General Fund - Fund balance decreased $272,968 (3%). Most General Fund revenue categories realized increases over the prior year and many surpassed budget estimates as well. Sales tax receipts, franchise and fines and penalties exceeded both budget and prior year. Sales taxes grew as a result of continued improvement in the local economy with several new technology and professional related companies and one-time payments related to purchases and/or construction. An additional $485K was transferred from the General Fund with a large portion being contributed to building permits and fees related to Entrada and Granada which have been designated to be moved to the Capital Project Fund for future projects. Visitors Association Fund- Fund balance decreased by $27,455 (2%) primarily due to the additional funds paid to the Marriott based on an economic development agreement to bring more groups to Westlake. Capital Projects Fund - Fund balance increased by $831,893 (63%) largely due to the transfer in from the General Fund of Entrada and Granada fees which were designated for future projects and additional transfers for various capital projects. Westlake Academy Expansion Fund- Fund balance decreased by $28,941 (7%) with the final expenditures of the Phase I construction being offset by the transfer in of lot fees based on an economic development agreement related to Granada lot sales. Solana Public Improvement District (PID) Capital Project Fund – This is a new fund created to detail the funds contributed based on bond proceeds for the construction of infrastructure for the Entrada development. All infrastructure will be conveyed to the Town upon completion. Fund balance increased by $15,173,051 based on the contribution of $18M offset by construction draws for the project and bond issuance costs. Proprietary Funds. The Town's proprietary fund statements provide the same type of information found in the government-wide financial statements with greater detail. Total net position of the Proprietary Funds amounted to $3,802,232, a decrease of $1,660,168 which was primarily due to the payment to the City of Fort Worth for the Town’s proportionate share of water system upgrades to provide Westlake with future capacity needs. Additional payments will be made in subsequent years. General Fund Budgetary Highlights The General Fund budget for fiscal year 2015 was amended in total to increase the net change in fund balance from $(1,655,765) to $(674,171), a total increase of $981,594. The amended budget for net revenues was increased by $591,736 (8%) based on anticipated increases in several categories and the amended budget for expenditures was increased by $380,683 while other financing sources (uses) increased by $976,540. This was primarily due to unanticipated insurance proceeds offset by a reduction of transfers out to Debt Service. Sales tax receipts in 4B Economic Development Fund are used for debt service and the General Fund transfers out the shortfall. More than anticipated sales tax revenues were received; therefore, a smaller amount of funds had to be transferred to the Debt Service Fund. The General Fund actual revenue collections were less than the amended budget by $187,265 which can be attributed to the additional receipt of taxes offset by the anticipated addition of building permits and fees which weren’t received due to timing. The final expenditures were $971,368 (12%) less than budgeted. Several of the larger expenditures under budget were due to timing. We had anticipated the implementation of permitting software and the amendment to the Code or Ordinances 13 to support the newly approved Comprehensive Plan. These large items were not able to be completed by year-end but will be expensed in the current fiscal year 2015-2016. There was also a savings on the budgeted attorney and consultant fees as a result of reimbursements regarding the Entrada/Granada developments. The remaining larger savings were due to savings in contracted services and training. Capital Assets and Debt Administration Capital Assets. The Town's investment in capital assets for its governmental and business-type activities as of September 30, 2015, totaled $67,133,437 (net of accumulated depreciation). The investment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructure, and construction in progress. The net increase in the Town's investment in capital assets for the current fiscal year was $3,824,916 or 6%. Increase for governmental activities was 8.5% ($4,264,763) and 3.3% ($439,847) decrease in business-type activities. Major capital asset events during the current fiscal year included the following: o $2.8M – Construction in Progress (Primarily PID) o $842K – FM 1938 Town Improvements o $723K – Fire Truck o $489K – WA expansion o $207K – Fire Station Complex o $131K – WA Playground equipment o $106K – Outdoor warning System o $ 92K – Technology o $ 56K - Open Space and Cemetery improvements o $ 26K – Glenwyck Farms Park Improvements o $ 11K – Facilities/Maintenance lawnmower Table 5 Town’s Capital Assets (Net of Accumulated Depreciation) 2015 2014 2015 2014 2015 2014 Land 11,896,664$ 11,896,663$ -$ -$ 11,896,664$ 11,896,663$ Capital improvements 10,539,908 7,814,722 10,461,290 10,809,857 21,001,198 18,624,579 Building 27,011,626 27,009,853 27,011,626 27,009,853 Machinery and equipment 1,914,727 1,016,010 1,802,085 1,861,591 3,716,812 2,877,601 W/W treatments rights 153,492 185,266 153,492 185,266 Construction in progress 3,107,524 2,468,438 246,121 246,121 3,353,645 2,714,559 Total capital assets 54,470,449$ 50,205,686$ 12,662,988$ 13,102,835$ 67,133,437$ 63,308,521$ Governmental Activities Business-type Activities Total Additional information on the Town's capital assets can be found in Note 4 on pages 48- 51 of this report. 14 Long-term debt- At the end of the current fiscal year, the Town had total long-term debt outstanding of $34,924,001. Of this amount, $28,232,000 represents bonded indebtedness, $33,814 economic development reimbursement, $174,373 capital leases, $323,227 in loans and $5,226,294 contractual obligations. During the fiscal year 2014-2015, the Town's total debt payable decreased by $1,331,958. This decrease was due to the scheduled repayment of principal and interest on outstanding bonded debt. Standard & Poor's Ratings Services, a division of McGraw-Hill, Inc. has recently increased the Town's rate from AA to AA+/stable. Additional information about the rating agency or the significance of the rating provided may be obtained from Standard & Poor's web site. Additional information on the Town's long-term debt can be found in Note 5 on pages 51- 60. Table 6 Outstanding Debt at Year-End 2015 2014 2015 2014 2015 2014 General obligation bonds 17,480,000$ 18,260,000$ -$ -$ 17,480,000$ 18,260,000$ Certificates of obligation 9,759,250 10,029,800 992,750 1,014,200 10,752,000 11,044,000 Contractual obligations 33,814 65,789 5,226,294 5,320,824 5,260,108 5,386,613 Capital leases 174,373 237,378 - - 174,373 237,378 Premium on bonds 701,120 744,328 33,397 33,397 734,517 777,725 Notes payable 323,227 371,464 323,227 371,464 Compensated absences 172,704 157,863 27,072 20,916 199,776 178,779 Total long-term debt 28,644,488$ 29,866,622$ 6,279,513$ 6,389,337$ 34,924,001$ 36,255,959$ Governmental Activities Business-type Activities Total ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS In the FY 2015-16 adopted budget, the General Fund balance is anticipated to increase by $398,987. General Fund revenues are budgeted to increase by 4% with sales tax making up 45% of the budgeted revenue. Ad valorem taxes are anticipated to increase by approximately 3% based on the certified roll of $940,684,347 representing 15% of the budgeted revenues. Expenditures are budgeted to increase $455,731 a 6% increase. This includes an 11% increase in payroll which includes a full year of the increased payroll based on the survey performed in FY 14-15 to bring all personnel to market. In this coming year, the Town’s budget continues to be impacted by encouraging economic signs. Growth in Westlake, along the SH 114 corridor and with the progress of our new mixed-use development, Entrada, should continue to increase the commercial revenue sources. Additionally, increases are expected in residential-related revenues due to new housing developments on the horizon. The Utility Fund FY 2015-16 adopted budget is estimated to decrease by $1,658,588 primarily due to the payment to the City of Fort Worth for the Town’s proportionate share of water system upgrades to provide Westlake with future capacity needs. 15 CONTACTING THE TOWN'S FINANCE DEPARTMENT This financial report is designed to provide our citizens, customers, and investors and creditors with a general overview of the Town's finances and to demonstrate the Town's accountability for the money it receives. If you have questions about this report or need additional financial information, contact Debbie Piper, Town of Westlake Finance Director, at 817-490-5712 or email at dpiper@westlake-tx.org. BASIC FINANCIAL STATEMENTS TOWN OF WESTLAKE EXHIBIT A-1 TOWN OF WESTLAKE STATEMENT OF NET POSITION SEPTEMBER 30, 2015 The accompanying notes are an integral part of this statement. 16 Primary Government Discretely Governmental Business-type Presented Activities Activities Total Component Units Cash and cash equivalents 12,120,035$ 3,538,226$ 15,658,261$ 6,478,370$ Receivables (net of allowance)1,488,435 1,025,216 2,513,651 238,775 Inventories - 96,589 96,589 - Other assets 96,693 - 96,693 80,961 Restricted cash and cash equivalents 15,746,018 219,160 15,965,178 4,188,806 Capital assets: Land and construction in progress 15,004,188 246,121 15,250,309 7,282,413 Buildings and improvements 46,780,027 14,899,416 61,679,443 69,554,153 Wastewater treatment rights - 635,199 635,199 - Machinery and equipment 4,516,302 3,566,595 8,082,897 5,902,065 Less accumulated depreciation (11,830,068) (6,684,343) (18,514,411) (34,184,668) Total capital assets 54,470,449 12,662,988 67,133,437 48,553,963 Total Assets 83,921,630 17,542,179 101,463,809 59,540,875 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources - TRS pension 107,779 - 107,779 - Deferred outflows of resources - TMRS pension 347,792 42,985 390,777 - Deferred loss on refunding 1,093,896 - 1,093,896 - Total Deferred Outflows of Resources 1,549,467 42,985 1,592,452 - Accounts payable 1,258,548 550,548 1,809,096 844,344 Customer deposit payable - 219,160 219,160 - Unearned revenue 1,100 284,535 285,635 2,137,931 Accrued interest payable 117,818 6,371,340 6,489,158 25,264,298 Noncurrent liabilities: Due within one year 1,252,914 123,493 1,376,407 74,661,851 Due in more than one year 28,213,391 6,233,856 34,447,247 - Total Liabilities 30,843,771 13,782,932 44,626,703 102,908,424 DEFERRED INFLOWS OF RESOURCES Unavailable resources - TRS pension 58,750 - 58,750 - Total Deferred Inflows of Resources 58,750 - 58,750 - Net investment in capital assets 29,633,298 6,410,547 36,043,845 (26,107,888) Restricted for: Tourism 1,081,009 - 1,081,009 - Construction 15,173,051 - 15,173,051 - Court security and technology 203,173 - 203,173 - Future projects 13,632 - 13,632 - Education 1,356,312 - 1,356,312 - Unrestricted 7,108,101 (2,608,315)4,499,786 (17,259,661) Total net position 54,568,576$ 3,802,232$ 58,370,808$ (43,367,549)$ NET POSITION ASSETS LIABILITIES TOWN OF WESTLAKE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2015 The accompanying notes are an integral part of this statement. 17 Program Revenues Charges for Operating Grants Capital Grants Expenses Services and Contributions and Contributions Primary government: Governmental activities: General government 3,145,716$ 110,778$ -$ 18,119,637$ Public safety 2,381,437 887,919 13,810 - Cultural and recreation 129,970 - 6,750 - Public works 1,081,996 936,245 - 649,566 Economic development 171,757 - - 410,000 Visitor services 665,936 - - - Education 8,598,261 531,090 7,595,093 803,875 Interest on long-term debt 1,022,201 - - - Total governmental activities 17,197,274 2,466,032 7,615,653 19,983,078 Business-type activities: Water and sewer 4,861,529 3,549,775 - - Cemetery 7,297 13,620 - - Total business-type activities 4,868,826 3,563,395 - - Total primary government 22,066,100$ 6,029,427$ 7,615,653$ 19,983,078$ Reported Discretely Presented Component Units 17,995,200$ 14,488,825$ -$ -$ GENERAL REVENUES AND TRANSFERS: Taxes: Sales taxes Property taxes Hotel occupancy taxes Mixed beverage taxes Franchise taxes Interest Income Miscellaneous Transfers Total general revenues and transfers Change in net position NET POSITION, beginning of year as previously stated Cumulative effect of change in accounting principle NET POSITION, end of year Functions/Programs EXHIBIT A-2 18 Primary Government Discretely Governmental Business - Type Presented Activities Activities Total Component Units 15,084,699$ -$ 15,084,699$ -$ (1,479,708) - (1,479,708) - (123,220) - (123,220) - 503,815 - 503,815 - 238,243 - 238,243 - (665,936) - (665,936) - 331,797 - 331,797 - (1,022,201) - (1,022,201) - 12,867,489 - 12,867,489 - - (1,311,754) (1,311,754) - - 6,323 6,323 - (1,305,431) (1,305,431) - 12,867,489 (1,305,431) 11,562,058 - -$ -$ -$ (3,506,375)$ 4,925,428 - 4,925,428 - 1,438,969 - 1,438,969 - 872,179 - 872,179 - 59,184 - 59,184 - 963,040 - 963,040 - 28,904 7,083 35,987 3,211 198,199 - 198,199 - 323,100 (323,100) - - 8,809,003 (316,017) 8,492,986 3,211 21,676,492 (1,621,448) 20,055,044 (3,503,164) 33,422,961 5,462,400 38,885,361 (39,864,385) (530,877) (38,720) (569,597) - 54,568,576$ 3,802,232$ 58,370,808$ (43,367,549)$ Net (Expense) Revenue and Changes in Net Position TOWN OF WESTLAKE BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2015 The accompanying notes are are an integral part of this statement. 19 Debt Westlake Service General Academy Fund ASSETS: Cash and cash equivalents 7,106,297$ 1,317,864$ 20,915$ Receivables : Property taxes 5,379 - 674 Accounts receivable 824,725 366,320 - Other - - - Due from other funds 164,147 - - Other assets 13,334 81,485 - Restricted cash and cash equivalents - - - TOTAL ASSETS 8,113,882$ 1,765,669$ 21,589$ LIABILITIES, DEFFERED INFLOWS OF RESOURCES AND FUND BALANCE: Liabilities: Accounts payable 427,953$ 91,957$ -$ Unearned revenue - - - Due to other funds - - - Total liabilities 427,953 91,957 - DEFERRED INFLOWS OF RESOURCES: Unavailable resources - property taxes 5,379 - 673 Total deferred inflows of resources 5,379 - 673 Fund Balances: Nonspendable: Prepaid items 13,334 81,485 - Restricted for: Tourism - - - Capital items - - - Court security and technology 203,173 Debt service - - 20,916 Education - 1,592,227 - Committed for: Street and tree improvements 80,442 - - Unassigned 7,383,601 - - Total fund balances 7,680,550 1,673,712 20,916 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES 8,113,882$ 1,765,669$ 21,589$ EXHIBIT A-3 20 Westlake Solana PID Nonmajor Total Capital Academy Capital Governmental Governmental Projects Expansion Projects Funds Funds 2,208,871$ 395,932$ -$ 1,070,156$ 12,120,035$ - - - - 6,053 - - - 264,948 1,455,993 26,389 - - - 26,389 - - - - 164,147 - - - 1,874 96,693 - - 15,746,018 - 15,746,018 2,235,260$ 395,932$ 15,746,018$ 1,336,978$ 29,615,328$ 90,276$ 179$ 572,967$ 75,216$ 1,258,548$ - - - 1,100 1,100 - - - 164,147 164,147 90,276 179 572,967 240,463 1,423,795 - - - - 6,052 - - - - 6,052 - - - 1,874 96,693 - - - 1,081,009 1,081,009 2,144,984 395,753 15,173,051 13,632 17,727,420 203,173 - - - - 20,916 - - - - 1,592,227 - - - - 80,442 - - - - 7,383,601 2,144,984 395,753 15,173,051 1,096,515 28,185,481 2,235,260$ 395,932$ 15,746,018$ 1,336,978$ 29,615,328$ EXHIBIT A-4 TOWN OF WESTLAKE RECONCILIATION OF THE GOVERMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2015 21 Total fund balance-governmental funds balance sheet 28,185,481$ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not current financial resources and therefore are not reported in the governmental funds balance sheet.54,470,449 Deferred losses on refunding are reported as deferred outlfows of resources in the government-wide statement of net position.1,093,896 Revenues earned but not available within sixty days of the fiscal year-end are not recognized as revenue in the fund financial statements.6,052 Deferred outflows of resources related to the Town's and Academy's net pension liability increase net position by $107,779 and $347,792, respectively; while the Academy's deferred resource outflows related to the net pension liability decreases net position by $58,750. This amount is the net effect.396,821 Interest payable on long-term debt does not require current financial resources, therefore interest payable is not reported as a liability in the governmental funds balance sheet.(117,818) Long-term liabilities, including bonds payable, are not due and payable in the current period, and therefore are not reported in the fund financial statements.(29,466,305) NET POSITION OF GOVERNMENTAL ACTIVITIES - statement of net position 54,568,576$ TOWN OF WESTLAKE TOWN OF WESTLAKE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015 The accompanying notes are are an integral part of this statement. 22 Westlake Debt General Academy Service Fund REVENUES: Taxes Sales 3,587,323$ -$ -$ Property 1,256,796 - 176,121 Mixed beverage 59,184 - - Hotel occupancy - - - Franchise 963,040 - - State program revenues - 6,173,418 - Federal program revenues - 87,797 - Interest income 10,078 2,067 - Building permits and fees 1,200,790 - - Fines and penalties 734,152 - - Intergovernmental 3,810 - - Contributions 10,000 - - Miscellaneous 81,539 1,971,097 - Total revenues 7,906,712 8,234,379 176,121 EXPENDITURES: Current General government 2,411,239 - - Public safety 2,490,551 - - Cultural and recreation 130,322 - - Public works 744,028 - - Economic development - - - Visitor services - - - Education - 7,938,501 - Capital outlay 748,297 - - Debt service Principal retirement 48,237 - 1,050,550 Interest and other fiscal charges - 10,204 963,425 Total expenditures 6,572,674 7,948,705 2,013,975 Excess (deficiency) of revenues Over (Under) Expenditures 1,334,038 285,674 (1,837,854) OTHER FINANCING SOURCES (USES) Transfers in 521,320 300,000 1,857,689 Transfers out (2,290,385) - - Capital lease proceeds - 16,740 - Insurance proceeds 162,059 - - Net other financing sources (uses)(1,607,006) 316,740 1,857,689 NET CHANGE IN FUND BALANCES (272,968) 602,414 19,835 FUND BALANCES, AT BEGINNING OF YEAR 7,953,518 1,071,298 1,081 FUND BALANCES AT END OF YEAR 7,680,550$ 1,673,712$ 20,916$ EXHIBIT A-5 23 Westlake Solana PID Nonmajor Total Capital Academy Capital Governmental Governmental Projects Expansion Projects Funds Funds -$ -$ -$ 1,338,105$ 4,925,428$ - - - - 1,432,917 - - - - 59,184 - - - 872,179 872,179 - - - - 963,040 - - - - 6,173,418 - - - - 87,797 3,544 1,401 9,711 2,103 28,904 - - - - 1,200,790 - - - - 734,152 - - - - 3,810 649,566 - 18,119,637 6,750 18,785,953 - - - 414,745 2,467,381 653,110 1,401 18,129,348 2,633,882 37,734,953 - - - - 2,411,239 - - - - 2,490,551 - - - - 130,322 - - - - 744,028 - - - 171,757 171,757 - - - 670,157 670,157 - - - - 7,938,501 1,260,018 494,670 2,771,297 - 5,274,282 - - - 31,975 1,130,762 - - - 3,783 977,412 1,260,018 494,670 2,771,297 877,672 21,939,011 (606,908) (493,269) 15,358,051 1,756,210 15,795,942 1,438,801 464,328 - 35,758 4,617,896 - - (185,000) (1,819,411) (4,294,796) - - - 16,740 - - - 162,059 1,438,801 464,328 (185,000) (1,783,653) 501,899 831,893 (28,941) 15,173,051 (27,443) 16,297,841 1,313,091 424,694 - 1,123,958 11,887,640 2,144,984$ 395,753$ 15,173,051$ 1,096,515$ 28,185,481$ EXHIBIT A-6 TOWN OF WESTLAKE RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2015 The accompanying notes are are an integral part of this statement. 24 Net change in fund balances- total governmental funds.16,297,841$ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.5,431,666 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.(1,246,759) Governmental funds do not recognize assets contributed by developers. However, in the statement of activities, the fair market value of those assets is recognized as revenue, then allocated over the useful life of the assets and reported as depreciation expense.130,000 The repayment of the principal of long term debt consumes the current financial resources of governmental funds, but has no effect on net position. The amortization of bond premiums and deferred gain/loss on refunding of long term debt is reported in the statement of activities but does not require the use of current financial resources. Therefore, the effect of the amortization of these various items are not reported in the statement of revenues, expenditures, and changes in fund balance. This amount represents the net effect of the following items: Repayments 1,130,762 Amortization of premium on bonds 43,208 Amortization of deferred loss on refunding (100,852) 1,073,118 Governmental funds reflect the proceeds of capital leases as other financing sources and payments as expenditures. However, in the government-wide statements, the proceeds and payments are reflected as changes in liabilities. This amount represents the net effect of proceeds ($16,740) and payments, $79,745.63,005 Current year changes in accrued interest payable does not require the use of current financial resources; and therefore, are not reported as expenditures in governmental funds.2,642 Implementation of GASB 68 requires certain expenditures to be de-expended and recorded as deferred outflows of resources. The following is the net effect of current year TMRS pension expense, ($196,848), and contributions made after the measurement date, $228,154.31,306 Implementation of GASB 68 also affected the Academy. Contributions made to TRS after the measurement date caused the change in net position to increase by $92,325. Contributions made before the measurement period also caused an increase in the change in net position of $12,082. The net share of the Academy's amount of deferred inflows and outflows of resources decreased 74,574 the change in net position by $29,833. This amount is the net effect. Insurance recoveries are recorded as other financing source in the governmental funds financial statements, while in the governmentwide statement of activities, the gain on (50,144) disposal increases net position. The difference is the carrying amount of the assets disposed of. Current year changes in the long-term liability for compensated absences do not require the use of current financial resources; and therefore, are not reported as expenditures in governmental funds.(14,841) Certain revenues in the government-wide statement of activities that do not provide current financial resources are not reported as revenue in the governmental funds.(115,916) CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES - statement of activities 21,676,492$ EXHIBIT A-7 TOWN OF WESTLAKE STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2015 The accompanying notes are are an integral part of this statement. 25 Utility Cemetery Fund Fund Total ASSETS: Current Assets Cash and cash equivalents 3,478,452$ 59,774$ 3,538,226$ Accounts receivable 1,025,216 - 1,025,216 Inventories - 96,589 96,589 Restricted cash and investments 219,160 - 219,160 Total current assets 4,722,828 156,363 4,879,191 Noncurrent assets Capital assets: Construction in progress 246,121 - 246,121 Buildings and improvements 14,899,416 - 14,899,416 Wastewwater treatment rights 635,199 - 635,199 Machinery and equipment 3,566,595 - 3,566,595 Less: accumulated depreciation (6,684,343) - (6,684,343) Total capital assets 12,662,988 - 12,662,988 Total noncurrent assets 12,662,988 - 12,662,988 TOTAL ASSETS 17,385,816 156,363 17,542,179 DEFERRED OUTFLOWS OF RESOURCES: Unavailable resources - TMRS pension 42,985 - 42,985 TOTAL DEFERRED OUTFLOWS OF RESOURCES 42,985 - 42,985 LIABILITIES Current liabilities: Accounts payable 548,923 1,625 550,548 Customer deposits payable 219,160 - 219,160 Accrued interest payable 6,371,340 - 6,371,340 Unearned revenue 284,535 - 284,535 Compensated absences - current portion 2,707 2,707 Current portion of bonds payable 21,450 - 21,450 Contractual obligations 99,336 - 99,336 Total current liabilities 7,547,451 1,625 7,549,076 Long-term liabilities: Bonds payable 971,300 - 971,300 Compensated absences 24,365 - 24,365 Contractual obligations 5,160,355 - 5,160,355 Net pension liability 77,836 - 77,836 Total long-term liabilities 6,233,856 - 6,233,856 TOTAL LIABILITIES 13,781,307 1,625 13,782,932 NET POSITION Net investment in capital assets 6,410,547 - 6,410,547 Unrestricted (2,763,053) 154,738 (2,608,315) TOTAL NET POSITION 3,647,494$ 154,738$ 3,802,232$ EXHIBIT A-8 TOWN OF WESTLAKE STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015 The accompanying notes are are an integral part of this statement. 26 Utility Cemetery Fund Fund Total OPERATING REVENUES: Charges for services $3,352,471 13,620$ 3,366,091$ Miscellaneous revenue 197,304 - 197,304 Total operating revenues 3,549,775 13,620 3,563,395 OPERATING EXPENSES: Payroll costs 358,353 - 358,353 Professional and contract services 1,129,962 6,443 1,136,405 Depreciation 493,101 - 493,101 Amortization of wastewater treatment rights 31,774 - 31,774 Water purchases 1,223,393 - 1,223,393 Cost of cemetary lots sold - 397 397 Other operating costs 829,343 457 829,800 Total operating expenses 4,065,926 7,297 4,073,223 Net operating income (516,151) 6,323 (509,828) NON-OPERATING REVENUES(EXPENSES): Interest income 6,996 87 7,083 Interest expense (795,603) - (795,603) Total non-operating revenues (expenses)(788,607) 87 (788,520) INCOME (LOSS) BEFORE TRANSFERS AND CAPITAL CONTRIBUTIONS (1,304,758) 6,410 (1,298,348) Transfer out (323,100) - (323,100) Total transfers and capital contributions (323,100) - (323,100) Change in net position (1,627,858) 6,410 (1,621,448) Total net position, beginning of year 5,314,072 148,328 5,462,400 Cumulative effect of change in accounting principle (38,720) - (38,720) Total net position, end of year $3,647,494 154,738$ 3,802,232$ EXHIBIT A-9 TOWN OF WESTLAKE STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015 The accompanying notes are are an integral part of this statement. 27 Utility Cemetery CASH FLOWS FROM OPERATING ACTIVITIES:Fund Fund Total Receipts from customers 3,350,495$ 13,678$ 3,364,173$ Payments to employees (372,908) - (372,908) Payments to suppliers (2,851,473) (5,630) (2,857,103) Net cash provided by operating activities 126,114 8,048 134,162 CASH FLOW FROM NONCAPITAL FINANCING ACTIVITIES: Transfer to other funds (323,100) - (323,100) Net cash used in noncapital financing activities (323,100) - (323,100) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Principal paid on debt (114,808) - (114,808) Interest paid on debt (139,384) - (139,384) Investment earnings 6,996 87 7,083 Purchase of property and equipment (85,028) - (85,028) Net cash provided by (used in) capital and related financing activities (332,224) 87 (332,137) Net increase (decrease) in cash (529,210) 8,135 (521,075) Cash and cash equivalents at the beginning of the year 4,226,822 51,639 4,278,461 Cash and cash equivalents at the end of the year 3,697,612$ 59,774$ 3,757,386$ RECONCILIATION OF TOTAL CASH AND CASH EQUIVALENTS: Cash and cash equivalents 3,478,452$ 59,774$ 3,538,226$ Restricted cash and cash equivalents 219,160 - 219,160 Total cash and cash equivalents 3,697,612 59,774 3,757,386 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income (loss)(516,151) 6,323 (509,828) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 524,875 - 524,875 Pension expense 24,329 - 24,329 Changes in operating assets and liabilities: Receivables (189,913) 58 (189,855) Prepaid Items Inventory - 397 397 Compensated absences 6,156 - 6,156 Deferred outflows of resource (28,198) - (28,198) Accounts payable 314,383 1,270 315,653 Customer deposits payable 24,450 - 24,450 Deferred revenue (33,817) - (33,817) Net cash provided by operating activities 126,114$ 8,048$ 134,162$ TOWN OF WESTLAKE EXHIBIT A-10 TOWN OF WESTLAKE STATEMENT OF FIDUCIARY NET POSITION AGENCY FUND SEPTEMBER 30, 2015 The accompanying notes are are an integral part of this statement. 28 PID Agency Fund ASSETS Restricted cash and cash equivalents 4,372,587$ Total Assets 4,372,587$ LIABILITIES Liability to bond holders 4,372,587$ Total Liabilities 4,372,587$ TOWN OF WESTLAKE DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF NET POSITION SEPTEMBER 30, 2015 The accompanying notes are are an integral part of this statement. 29 Texas Student Texas Student Housing Authority Housing Jefferson Commons Corporation at Town Lake Denton Project Project ASSETS Cash and cash equivalents 367,085$ 256,209$ Accounts receivable (net of allowance)21,644 17,694 Prepaid rent 27,965 - Restricted assets: Cash and cash equivalents 1,933,280 232,333 Capital assets: Land 2,200,000 2,182,816 Buildings and improvements 25,705,000 16,963,841 Machinery and equipment 1,253,841 1,211,085 Less: accumulated depreciation (13,542,440) (7,948,001) Total assets 17,966,375 12,915,977 LIABILITIES AND NET POSITION LIABILITIES: Accounts payable and accrued expenses 287,802 340,452 Unearned revenue 187,524 145,275 Accrued interest payable 7,289,475 4,182,603 Bonds payable 25,605,131 19,627,520 Total liabilities 33,369,932 24,295,850 NET POSITION:Net investment in capital assets (9,988,730) (7,217,779) Unrestricted (5,414,827) (4,162,094) Total net position (15,403,557)$ (11,379,873)$ EXHIBIT A-11 30 Texas Student Housing Corporation Texas Student College Station Housing Project Authority Total 5,174,458$ 680,618$ 6,478,370$ 198,464 973 238,775 52,996 - 80,961 2,023,193 - 4,188,806 2,899,597 - 7,282,413 26,885,312 - 69,554,153 3,437,139 - 5,902,065 (12,694,227) - (34,184,668) 27,976,932 681,591 59,540,875 215,235 855 844,344 1,770,049 35,083 2,137,931 13,792,220 - 25,264,298 29,429,200 - 74,661,851 45,206,704 35,938 102,908,424 (8,901,379) - (26,107,888) (8,328,393) 645,653 (17,259,661) (17,229,772)$ 645,653$ (43,367,549)$ TOWN OF WESTLAKE DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015 The accompanying notes are an integral part of this statement. 31 Program Revenues Charges for Operating Grants Capital Grants Functions/Programs Expenses Services and Contributions and Contributions Business-type activities: Texas Student Housing Authority 248,967$ 359,193$ -$ -$ Texas Student Housing Authority: College Station Project 8,054,674 6,006,756 - - Jefferson Commons at Town Lake 4,138,075 3,208,107 - - Denton Project 5,553,484 4,914,769 - - Total business-type activities 17,995,200 14,488,825 - - Total primary government 17,995,200$ 14,488,825$ -$ -$ GENERAL REVENUES: Interest Income Total general revenues Change in Net Postion NET POSITION, beginning of year NET POSITION, end of year EXHIBIT A-12 32 Texas Student Texas Student Texas Student Housing Authority Housing Housing Jefferson Commons Corporation Texas Student Corporation at Town Lake College Station Housing Denton Project Project Project Authority Total -$ -$ -$ 110,226$ 110,226$ - - (2,047,918) - (2,047,918) - (929,968) - - (929,968) (638,715) - - - (638,715) (638,715) (929,968) (2,047,918) 110,226 (3,506,375) (638,715)$ (929,968)$ (2,047,918)$ 110,226$ (3,506,375)$ 1,895 100 818 398 3,211 1,895 100 818 398 3,211 (636,820) (929,868) (2,047,100) 110,624 (3,503,164) (14,766,737) (10,450,005) (15,182,672) 535,029 (39,864,385) (15,403,557)$ (11,379,873)$ (17,229,772)$ 645,653$ (43,367,549)$ TOWN OF WESTLAKE TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 33 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Town of Westlake, Texas (the Town) was incorporated under the provisions of the laws of the State of Texas on December 26, 1956. The Town operates under a Council- Manager form of government and provides the following services as authorized by the laws of the State of Texas: public safety; cultural and recreation; and economic development. The accounting and reporting policies of the Town conform to accounting principles generally accepted in the United States of America for local governments. Generally accepted accounting principles (GAAP) for local governments include those principles prescribed by the Governmental Accounting Standards Board (GASB). The following is a summary of the more significant accounting and reporting policies: Financial Reporting Entity The accompanying financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the Town'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 it is legally separate from the Town. Based on these criteria, the financial information of the following entities have been blended or discretely presented within the financial statements: Lone Star Public Facilities Corporation, 4B Economic Development Corporation, Westlake Academy, Texas Student Housing Authority, Texas Student Housing Authority – Jefferson Commons at Town Lake Project, Texas Student Housing Corporation – College Station Project and Texas Student Housing Corporation – Denton Project. The Texas Student Housing Authority, Texas Student Housing Authority – Jefferson Commons at Town Lake Project, Texas Student Housing Corporation – College Station Project, and Texas Student Housing Corporation – Denton Project (collectively, Texas Student Housing Entities) are Texas nonprofit organizations as a duly constituted authority of the Town pursuant to Section 53.35(b) of the Texas Education Code, as amended (Act). Texas Student Housing Entities' primary purpose is to construct, own, and operate student housing facilities on college campuses in Texas. The board consists of seven directors which are appointed by the Town's governing body and has the ability to remove at will the appointed members; thus, the governing body can impose its will on the organizations. However, the board is not substantively the same as the Town’s governing body; therefore, the Texas Student Housing Entities are reported as discretely presented component units (enterprise funds). The Town is not responsible for the long-term debt of the Texas Student Housing Entities. The Texas Student Housing Entities’ year-end is August 31. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 34 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Component Units – Continued Discretely Presented – Continued Separately issued financial reports are available for the all the Texas Student Housing Entities. These reports may be obtained by contacting the following office. Texas Student Housing Authority 99 Trophy Club Drive Trophy Club, Texas 76262 Blended Lone Star Public Facilities Corporation is a Texas nonprofit corporation that acts on behalf of the Town to further the public purposes under the Public Facilities Corporation Act, as it’s duly constituted authority and instrumentality. The board of directors, appointed by the Town's governing body, is comprised of seven members, of whom five must be members of the Town's governing body. Since the board of directors is substantively the same as the Town's governing body, and a financial benefit relationship exists, the entity has been reported as a blended component unit of the Town. 4B Economic Development Corporation is a Texas nonprofit industrial corporation under the Development Corporation Act of 1979 formed to promote economic development within the Town and the State of Texas in order to eliminate unemployment and underemployment, and to promote and encourage employment and the public welfare of, for, and on behalf of the Town by developing, implementing, financing, and providing one or more projects defined and permitted under Section 4B of the Act. The board of directors is composed of seven persons appointed by the members of the Town's governing board. Four of the members of the board of directors are members of the Town's governing board. Since the board of directors is substantively the same as the Town's governing body, and a financial benefit relationship exists, the entity has been reported as a blended component unit of the Town. Westlake Academy (Academy) is an open-enrollment charter school, as provided by Subchapter D, Chapter 12, of the Texas Education Code. The Town of Westlake (Charter Holder) applied for and became the first municipality in Texas to ever receive this special charter designation. The board consists of six trustees and is appointed by the Town's governing body. Currently, all the members of the board of trustees are members of the Town's governing body. Since the board of directors is substantively the same as the Town's governing body, and a financial benefit relationship exists, the entity has been reported as a blended component unit of the Town. The Academy's year-end is August 31. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 35 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the non-fiduciary activities of the Town. 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. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual Governmental Funds and major individual Enterprise Funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 36 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Measurement Focus, Basis of Accounting, and Financial Statement Presentation – Continued Sales taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the Town. The Town uses funds to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Governmental Funds are those through which most governmental functions of the Town are financed. The acquisition, use, and balances of the Town's expendable financial resources and the related liabilities (except those accounted for in the proprietary fund type) are accounted for through governmental funds. The measurement focus is upon determination of changes in financial position, rather than upon income determination. The Town reports the following major governmental funds: General Fund - to account for all financial resources except those required to be accounted for in another fund. The General Fund balance is available for any purpose, provided it is expended or transferred in accordance with the legally adopted budget of the Town. Westlake Academy Fund - to account for all local, state and federal revenue and related educational expenditures of the Academy. Debt Service Fund - to account for resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds. Capital Projects Fund - to account for proceeds from long-term financing and revenue and expenditures related to authorized construction and other capital asset acquisitions other than those related to the expansion of Westlake Academy facilities. Westlake Academy Expansion Fund – to account for proceeds from long-term financing and revenue and expenditures related to authorized construction related to the expansion of Westlake Academy facilities. Solana Public Improvement District (PID) Capital Projects Fund – to account for the acquisition or construction of capital facilities and improvements relating to the Solana public improvement district. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 37 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Measurement Focus, Basis of Accounting, and Financial Statement Presentation – Continued In addition, the Town reports the following nonmajor governmental funds: Visitors Association Fund - to account for municipal hotel occupancy taxes collected and expenditures to promote tourism and the convention and hotel industry. Lone Star Public Facilities Corporation - to account for investment activity relating to the Lone Star Public Facilities Corporation. 4B Economic Development Corporation - to account for sales tax collected to fund the activities of the 4B Economic Development Corporation. Economic Development Fund - to account for sales tax and hotel occupancy tax collected to fund activity relating to Economic Development agreements. The Town adopts an annual appropriated budget for all governmental funds except capital projects, Solana PID capital projects, and Westlake Academy Expansion funds, which are project-length based budgets. A budgetary comparison schedule has been provided for all appropriate funds to demonstrate compliance with the budget. Proprietary Funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Town's Enterprise Fund are charges to customers for sales and services. Operating expenses for the Enterprise Fund include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenue and expenses. The Town reports the following major proprietary funds: Utility Fund - to account for revenues and expenses related to providing water and sewer services to the general public on a continuing basis. Cemetery Fund- to account for the operations of the Town's cemetery. The Town reports the following fiduciary fund: Solana PID Agency Fund – to account for bond proceeds, assessments, and related debt associated with bonds issued by the Town as an agent for the Solana public improvement district. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the Town's water and wastewater function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenue reported for the various functions concerned. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 38 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Measurement Focus, Basis of Accounting, and Financial Statement Presentation – Continued Amounts reported as program revenues include: 1) charges to customer or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenue. Likewise, general revenue includes all taxes. Assets, Liabilities, and Net Position or Equity Cash and Cash Equivalents Cash and investments of all funds, including restricted cash, are available upon demand and are considered to be "cash equivalents." For purposes of the statement of cash flows, the Town considers highly-liquid investments (including restricted assets) with an original maturity of three months or less when purchased to be cash equivalents. State statutes authorize the Town to invest in (1) obligations of the United States or its agencies and instrumentalities; (2) direct obligations of the State of Texas or its agencies; (3) other obligations, the principal of, and interest on, which are unconditionally guaranteed or insured by the State of Texas or the United States; (4) obligations of states, agencies, counties, cities, and other political subdivisions of any state having been rated as to investment quality by a nationally recognized investment rating firm and having received a rating of not less than "A" or its equivalent; (5) certificates of deposit by state or national banks domiciled in this state that are (a) guaranteed or insured by the Federal Deposit Insurance Corporation, or its successor; or, (b) secured by obligations that are described by (1) - (4); or (6) fully collateralized direct repurchase agreements having a defined termination date, secured by obligations described by (1) pledged with third-party selected or (2) approved by the Town, and placed through a primary government securities dealer. All investments are recorded at fair value based on quoted market prices. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties. Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 39 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Assets, Liabilities, and Net Position or Equity – Continued Receivables and Payables – Continued Advances between funds, as reported in the fund financial statements, are offset by nonspendable fund balance in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. The Town's property taxes are levied on October 1 on the assessed value listed as of the prior January 1 for all real and business personal property located in the Town. Assessed values are established at 100% of estimated market value. Property taxes attach as an enforceable lien on property as of January 1. Taxes are due by January 31 following the October 1 levy date and are considered delinquent after January 31 of each year. All property tax receivables are shown net of an allowance for uncollectibles. The net property tax receivable allowance is equal to management’s estimate of uncollectible outstanding property taxes at September 30, 2015. Restricted Assets Certain bond proceeds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. Inventories and prepaid items Inventories, which are expended as they are consumed, are stated at the lower of cost or market on a first-in, first-out basis. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. Fund Changes and Transactions Between Funds Legally authorized transfers are treated as transfers in and out and are included as other financing sources (uses) of both governmental and proprietary funds. The Town allocates an indirect cost percentage of the salaries, wages and related costs of personnel who perform administrative services as well as other indirect costs necessary for the operation of various funds. Expenses are budgeted and paid from the appropriate fund. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 40 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Assets, Liabilities, and Net Position or Equity – Continued Capital Assets All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. The cost of nominal maintenance and repairs that do not add value to the asset or materially extend assets' lives are not capitalized. Donated assets are valued at their fair market value on the date donated. Assets capitalized have an original cost of $5,000 or more and three years or more of life. All infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), regardless of the acquisition date or amount, have been included. Estimated historical cost for initial reporting of infrastructure assets (those reported by governmental activities) was valued by estimating the current replacement cost of the infrastructure and using an index to deflate the cost to the estimated acquisition/construction year. As the Town constructs or acquires additional capital assets, including infrastructure assets, they are capitalized and reported at historical cost. Depreciation has been calculated on each class of depreciable property using the straight-line method. Estimated useful lives are as follows: Years Water and sewer system 10-50 Buildings 20-50 Machinery and equipment 3-30 Improvements 5-30 Information systems and software 3 Assets Compensated Absences The Town's policy allows employees to earn 5 days of vacation and 5 days of sick leave between six months and one year of service, and 10 days of vacation and 10 days of sick leave between one year and two years of service and each successive year through five years of service. After completion of 5 years of service, 15 days of vacation and 15 days of sick leave per year are earned. After completion of 10 years of service, 20 days of vacation and 20 days of sick leave per year are earned. The Town makes sick and vacation time available in full at the beginning of each year, and hours are actually earned throughout the year. Unused, earned vacation hours are paid upon termination or retirement at the employee's normal hourly rate; accumulated, unused sick time is only payable upon retirement, death of the employee, or other circumstances when authorized by the Town Manager. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 41 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Assets, Liabilities, and Net Position or Equity – Continued Long-term Obligations In the government-wide financial statements and proprietary fund types in the fund 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 type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as issuance costs during the current period. The face amount of the debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts are reported as other financing uses. Issuance costs, even if withheld from the actual proceeds, are reported as expenditures. Fund Equity and Net Position The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the Town is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows: • Nonspendable: This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact. Nonspendable items are not expected to be converted to cash or are not expected to be converted to cash within the next year. • Restricted: This classification includes amounts for which constraints have been placed on the use of the resources 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: This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by board resolution of the Town council, the Town's highest level of decision making authority. These amounts cannot be used for any other purpose unless the Town council removes or changes the specified use by taking the same type of action that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 42 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Assets, Liabilities, and Net Position or Equity – Continued Fund Equity and Net Position – Continued • Assigned: This classification includes amounts that are constrained by the Town's intent to be used for a specific purpose but are neither restricted nor committed. In the General Fund, assigned amounts represent intended uses established by the Town Council or a Town official delegated that authority by Town Charter or ordinance. • Unassigned: This classification includes the residual fund balance for the General Fund. The unassigned classification also includes negative residual fund balance of any other governmental fund that cannot be eliminated by offsetting of assigned fund balance amounts. In the government-wide financial statements, net position represents the difference between assets and liabilities. 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, and adding back unspent proceeds. Net position is reported as restricted when there are limitations imposed on its use either though the enabling legislations adopted by the Town or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. The government-wide and fund level financial statements report restricted fund balances for amounts not available for appropriation or legally restricted for specific uses. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, it is the Town's policy to use restricted resources first, then unrestricted resources as needed. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the Town considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds. Summary of Significant Accounting Policies 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 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. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 43 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED Estimates The preparation of financial statements, in conformity with U.S. generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates. Subsequent Events The Town has evaluated all events or transactions that occurred after September 30, 2015 up through February 15, 2016, the date the financial statements were issued. NOTE 2. CASH AND INVESTMENTS Legal provisions generally permit the Town to invest in certificates of deposit, repurchase agreements, public funds investment pools, direct obligations of the United States of America or its subdivisions and state and local government securities. The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in the areas of investment practices, management reports and establishment of appropriate policies. Among other things, it requires the Town to adopt, implement, and publicize its investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar - weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for certificates of deposit. Statutes and the Town's investment policy authorized the Town to invest in the following investments as summarized in the table below: Maximum Maximum Maximum Percentage Investment Maturity of Portfolio In One Issuer Obligations of the U.S. Government, its agencies and instrumentalities 2 years None None Certificates of deposit 1 year None None Mutual funds 2 years 80%None Investment pools -None None Authorized Investment Type TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 44 NOTE 2. CASH AND INVESTMENTS – CONTINUED The Town did not engage in repurchase or reverse repurchase agreement transactions during the current year. At year end, the carrying amount of the Town’s deposits was $16,077,071 and the bank balance was $17,597,039. The bank balance was completely covered by federal deposit insurance and collateral held by the pledging financial institution in the Town’s name. At year end, the carrying amount of the component units’ deposits was $10,667,176 and the bank balance was $10,742,156. The bank balance was completely covered by federal deposit insurance and collateral held by the pledging financial institution in the component units’ names. The carrying amount consists of $6,478,370 in cash and cash equivalents and $4,188,806 in restricted cash and cash equivalents. At September 30, 2015, the Town's cash and cash equivalents consist of and are classified in the accompanying financial statements are follows: Primary government: Cash and cash equivalents 15,658,261$ Restricted cash and investments 15,965,178 Total primary government 31,623,439 Fiduciary funds: Restricted cash and cash equivalents 4,372,587 Total cash and investments 35,996,026$ Deposits with financial institutions 16,077,071$ Investments 19,918,955 Total cash and investments 35,996,026$ Disclosures Relating to Interest Rate Risk This is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in market interest rates. In order to limit interest and market rate risk from changes in interest rates, the Town's investment policy sets a maximum stated maturity limit of two years for obligations of the United States Government, its agencies and instrumentalities (excluding mortgage backed securities) and one year for fully insured or collateralized certificates of deposit. No more than 80% of the Town's monthly average balance may be invested in money market funds. Additionally, the Town invests in an investment pool that purchases a combination of shorter term investments with an average maturity of 48 days thus reducing the interest rate risk. Information about the sensitivity of the fair values of the Town's investments to market interest rate fluctuations is provided by the following table that shows the distribution of the Town's Investments. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 45 NOTE 2. DEPOSITS AND INVESTMENTS – CONTINUED Disclosures Relating to Interest Rate Risk – Continued As of September 30, 2015, the Town's investments were as follows: Weighted Carrying Average Amount Fair Value Maturity (days) TexPool 350$ 350$ 48 days Commerical Paper 19,918,605 19,918,605 1 day Total 19,918,955$ 19,918,955$ Investment Type Disclosures Relating to Credit Risk This is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the Public Funds Investment Act, the Town's investment policy, or debt agreements, and the actual rating as of year-end for each investment type. Minimum Rating Carrying Fair Legal as of Amount Value Rating Year-end Investments: TexPool 350$ 350$ N/A AAA-m Commercial Paper 19,918,605 19,918,605 N/A A-1 Total 19,918,955$ 19,918,955$ Primary government Disclosures Relating to Concentration of Credit Risk The Town’s investment policy is to avoid a concentration of assets in a specific maturity, a specific issue, or a specific class of investments. Disclosures Relating to Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The Public Funds Investment Act does not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The Public Funds Investment Act requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least the bank balance less the FDIC insurance at all times. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 46 NOTE 2. DEPOSITS AND INVESTMENTS – CONTINUED Disclosures Relating to Custodial Credit Risk – Continued The Town requires all deposits to be covered by Federal Depository Insurance Corporation (FDIC) insurance and/or collateralized by qualified securities pledged by the Town’s depository in the Town’s name and held by the depository’s agent. As of September 30, 2015, the Town's entire cash deposits with financial institutions in excess of federal depository insurance were fully collateralized. Investment in State Investment Pools On September 1, 1989, local government investment pools became authorized investments for the majority of public entities in Texas. The Interlocal Cooperation Act was amended by the 71st Texas Legislature to facilitate the creation of local government investment pools in Texas. This act permits the creation of investment pools to which a majority of political subdivisions (local governments) may delegate, by contract, the authority to make investments purchased with local investment funds and to hold legal title as custodian of the investments. TexPool was organized to conform with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, Chapter 2256 of the Texas Government Code. During the year ended September 30, 2015, the Town had investments with TexPool. TexPool, a public funds investment pool created by the Treasurer of the State of Texas acting by and through the Texas Treasury Safekeeping Trust Company, which is empowered to invest funds and acts as custodian of investments purchased with local investment funds. These investments are not required to be categorized because the investor is not issued securities, but rather it owns an undivided beneficial interest in the assets of the respective funds. The fair value of the position in TexPool is the same as the value of the pool shares. Restricted Cash Proprietary Fund Within the proprietary funds, the $219,160 of restricted cash represents customer deposits received for water and sewer usage that are refundable upon termination of service. Discretely Presented Component Units Within the discretely presented component units, the $4,188,806 in restricted cash and cash equivalents represents funds held for debt service. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 47 NOTE 3. RECEIVABLES Governmental activities receivable balance consists of the following as of September 30, 2015: Debt Total Westlake Service Capital Nonmajor Governmental General Academy Fund Projects Fund Funds Receivables: Sales tax 464,485$ -$ -$ -$ 192,103$ 656,588$ Property tax 7,172 - 898 - 8,070 Other taxes 15,875 - - - 72,845 88,720 Franchise tax 228,280 - - - - 228,280 Accounts 46,115 - - - - 46,115 Other 94,244 366,320 - 26,389 - 486,953 Gross receivables 856,171 366,320 898 26,389 264,948 1,514,726 Less: allowance for uncollectibles (26,067) - (224) - - (26,291) Net total receivables 830,104$ 366,320$ 674$ 26,389$ 264,948$ 1,488,435$ Governmental Funds Business-type receivables balance consists of the following as of September 30, 2015: Receivables: Sales tax Property tax Other taxes Franchise tax Accounts Other Gross receivables Less: allowance for uncollectibles Net total receivables Utility Cemetery Fund Fund Total -$ -$ -$ - - - - - - - - - 1,025,216 - 1,025,216 - - - 1,025,216 - 1,025,216 - - - 1,025,216$ -$ 1,025,216$ Business-Type Activities TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 48 NOTE 4. CAPITAL ASSETS Capital asset activity for the year ended September 30, 2015, was as follows: Primary Government Beginning Ending Balance Increases Decreases Transfers Balance Governmental activities: Capital assets, not being depreciated: Land 11,896,663$ 1$ -$ -$ 11,896,664$ Construction in progress 2,468,438 2,877,036 - (2,237,950) 3,107,524 Total assets not being depreciated 14,365,101 2,877,037 - (2,237,950) 15,004,188 Capital assets, being depreciated: Capital improvements 11,374,376 905,115 - 2,237,950 14,517,441 Buildings 31,625,654 696,832 (59,900) - 32,262,586 Machinery and equipment 3,336,556 990,758 (8,500) - 4,318,814 Information systems and software 105,564 91,924 - - 197,488 Total capital assets being depreciated 46,442,150 2,684,629 (68,400) 2,237,950 51,296,329 Less accumulated depreciation: Capital improvements (3,559,654) (417,879) - - (3,977,533) Buildings (4,615,801) (644,915) 9,756 - (5,250,960) Machinery and equipments (2,367,539) (165,555) 8,500 - (2,524,594) Information systems and software (58,571) (18,410) - - (76,981) Total accumulated depreciation (10,601,565) (1,246,759) 18,256 - (11,830,068) Total capital assets being depreciated 35,840,585 1,437,870 (50,144) 2,237,950 39,466,261 Governmental activities capital assets, net 50,205,686$ 4,314,907$ (50,144)$ -$ 54,470,449$ Beginning Ending Balance Increases Decreases Transfers Balance Business-type activities: Capital assets, not being depreciated: Construction in progress 246,121$ -$ -$ -$ 246,121$ Total assets not being depreciated 246,121 - - - 246,121 Capital assets, being depreciated: Capital improvements 14,882,835 16,581 - - 14,899,416 Wastewater treatment rights 635,199 - - - 635,199 Machinery and equipment 3,498,148 68,447 - - 3,566,595 Total capital assets being depreciated 19,016,182 85,028 - - 19,101,210 Less accumulated depreciation: Capital improvements (4,072,978) (365,149) - - (4,438,127) Wastewater treatment rights (449,933) (31,774) - - (481,707) Machinery and equipment (1,636,557) (127,952) - - (1,764,509) Total accumulated depreciation (6,159,468) (524,875) - - (6,684,343) Total capital assets being depreciated 12,856,714 (439,847) - - 12,416,867 Business-type activities capital assets, net 13,102,835$ (439,847)$ -$ -$ 12,662,988$ TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 49 NOTE 4. CAPITAL ASSETS – CONTINUED Depreciation was charged to departments of the primary government as follows: Governmental activities: General government 827,326$ Public safety 79,419 Public works 340,014 Total depreciation expense - governmental activities 1,246,759$ Business-type activities: Water and sewer 524,875$ A summary of discretely presented component units' capital assets at September 30, 2015 follows: Texas Student Housing Corporation – Denton Project Beginning Ending Balance Increases Decreases Balance Capital assets, not being depreciated: Land 2,200,000$ -$ -$ 2,200,000$ Total assets not being depreciated 2,200,000 - - 2,200,000 Capital assets, being depreciated: Buildings 25,705,000 - - 25,705,000 Furniture and fixtures 1,253,841 - - 1,253,841 Total capital assets being depreciated 26,958,841 - - 26,958,841 Less accumulated depreciation: Buildings (11,495,847) (856,833) - (12,352,680) Furniture and fixtures (1,181,310) (8,450) - (1,189,760) Total accumulated depreciation (12,677,157) (865,283) - (13,542,440) Total capital assets being depreciated 14,281,684 (865,283) - 13,416,401 Capital assets, net 16,481,684$ (865,283)$ -$ 15,616,401$ TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 50 NOTE 4. CAPITAL ASSETS – CONTINUED Texas Student Housing Authority – Jefferson Commons at Town Lake Project Beginning Ending Balance Increases Decreases Balance Capital assets, not being depreciated: Land 2,182,816$ -$ -$ 2,182,816$ Total assets not being depreciated 2,182,816 - - 2,182,816 Capital assets, being depreciated: Building and improvements 13,270,150 - - 13,270,150 Capitalized purchase price 887,095 - - 887,095 Land improvements 2,806,596 - - 2,806,596 Unit appliances 295,134 - - 295,134 Furniture and fixtures 915,951 - - 915,951 Total capital assets being depreciated 18,174,926 - - 18,174,926 Less accumulated depreciation: Building and improvements (4,976,306) (442,338) - (5,418,644) Capitalized purchase price (313,325) (28,485) - (341,810) Land improvements (882,909) (93,553) - (976,462) Unit appliances (295,134) - - (295,134) Furniture and fixtures (915,951) - - (915,951) Total accumulated depreciation (7,383,625) (564,376) - (7,948,001) Total capital assets being depreciated 10,791,301 (564,376) - 10,226,925 Capital assets, net 12,974,117$ (564,376)$ -$ 12,409,741$ TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 51 NOTE 4. CAPITAL ASSETS – CONTINUED Texas Student Housing Corporation –College Station Project Beginning Ending Balance Increases Decreases Balance Capital assets, not being depreciated: Land 2,899,597$ -$ -$ 2,899,597$ Total assets not being depreciated 2,899,597 - - 2,899,597 Capital assets, being depreciated: Buildings 26,885,312 - - 26,885,312 Furniture and fixtures 3,437,138 - - 3,437,138 Total capital assets being depreciated 30,322,450 - - 30,322,450 Less accumulated depreciation: Buildings (8,853,174) (896,177) - (9,749,351) Furniture and fixtures (2,859,802) (85,073) - (2,944,875) Total accumulated depreciation (11,712,976) (981,250) - (12,694,226) Total capital assets being depreciated 18,609,474 (981,250) - 17,628,224 Capital assets, net 21,509,071$ (981,250)$ -$ 20,527,821$ NOTE 5. LONG-TERM DEBT A summary of long-term debt transactions for the year ended September 30, 2015, was as follows: Amount Beginning Ending Due within Balance Additions Reductions Balance One year Governmental activities: General obligation bonds and certificates of obligation 28,289,800$ -$ (1,050,550)$ 27,239,250$ 1,068,550$ Unamortized bond premium 744,328 - (43,208) 701,120 - Notes payable 371,464 - (48,237) 323,227 48,126 Capital leases 237,378 16,740 (79,745) 174,373 85,154 Fidelity tax reimbursement 65,789 - (31,975) 33,814 33,814 Compensated absences 157,863 145,940 (131,099) 172,704 17,270 Net pension liability- TMRS 428,290 201,471 - 629,761 - Net pension liability - TRS 235,829 45,287 (89,060) 192,056 - Total governmental activities 30,530,741$ 409,438$ (1,473,874)$ 29,466,305$ 1,252,914$ Amount Beginning Ending Due within Balance Additions Reductions Balance One year Business-type activities: Certificates of obligation 1,014,200$ -$ (21,450)$ 992,750$ 21,450$ Contractual obligations 5,320,824 - (94,530) 5,226,294 99,336 Unamortized bond premium 33,397 - - 33,397 - Compensated absences 20,916 19,497 (13,341) 27,072 2,707 Net pension liability - TMRS 52,935 24,901 - 77,836 - Total business-type activities 6,442,272$ 44,398$ (129,321)$ 6,357,349$ 123,493$ TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 52 NOTE 5. LONG-TERM DEBT – CONTINUED General Obligation Bonds and Certificates of Obligation General obligation bonds and certificates of obligation are as follows as of September 30, 2015: General Obligations Bonds and Final Business- Certificates of Obligation Maturity Interest Rates Governmental Type $7,465,000 General Obligation Refunding Bonds, Series 2007 2032 3.75-4.20%7,165,000$ -$ $2,095,000 Combination Tax and Revenue Certificates of Obligation, Series 2011 2031 3.25%1,727,000 - $7,375,000 General Obligation Refunding Bonds, Series 2011 2028 2.0-4.0%6,735,000 - $9,320,000 Certificates of Obligation, Series 2013 2043 2.0-4.0%8,032,250 992,750 $2,200,000 General Obligation Refunding Bonds, Series 2013 2028 2.0-2.5%1,855,000 - $1,910,000 General Obligation Refunding Bonds, Series 2014 2032 2.0-5.0%1,725,000 - 27,239,250$ 992,750$ Debt service requirements of certificates of obligation and general obligations to be retired from governmental funds are as follows: Total Principal Interest Requirements 1,068,550$ 942,543$ 2,011,093$ 1,088,000 939,260 2,027,260 1,127,000 897,495 2,024,495 1,160,450 863,898 2,024,348 1,198,350 829,017 2,027,367 6,558,500 3,566,912 10,125,412 7,739,200 2,338,317 10,077,517 4,380,000 874,569 5,254,569 1,717,700 407,317 2,125,017 1,201,500 73,514 1,275,014 27,239,250$ 11,732,842$ 38,972,092$ 2020 2031-2035 2036-2040 2041-2043 2019 2021-2025 2026-2030 Year Ending September 30, 2016 2017 2018 TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 53 NOTE 5. LONG-TERM DEBT – CONTINUED General Obligation Bonds and Certificates of Obligation – Continued Debt service requirements of certificates of obligation to be retired from proprietary funds are as follows: Total Principal Interest Requirements 21,450$ 33,896$ 55,346$ 22,000 33,461 55,461 22,000 33,021 55,021 22,550 32,576 55,126 23,650 32,114 55,764 126,500 151,079 277,579 173,800 129,137 302,937 220,000 89,882 309,882 212,300 50,343 262,643 148,500 9,086 157,586 992,750$ 594,595$ 1,587,345$ 2021-2025 2026-2030 2017 2020 2019 Total 2031-2035 2036-2040 2041-2044 2018 September 30, 2016 Year Ending Notes Payable In March 2014, the Town received a $366,774 loan from Bennett Benner Pettit, the proceeds of which were used to fund a portion of the Westlake Academy expansion project. The terms of the note call for ten annual payments at 0% interest. In August 2014, the Town entered into a purchase agreement to acquire technology equipment secured by a 3-year interest-free note in the amount of $34,710. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 54 NOTE 5. LONG-TERM DEBT – CONTINUED Notes Payable – Continued Debt service requirements for the notes payable to be retired from governmental funds are as follows: 48,126$ 36,677 36,677 36,677 36,677 128,393 323,227$ 2016 2019 2020 Year Ending September 30, 2021-2024 Total 2017 2018 Capital Leases The Westlake Academy has entered into lease agreements as lessee for financing the acquisition of computer equipment and software. The lease agreements qualify capital leases for accounting purposes, and therefore, have been recorded at the present value of its future minimum lease payments as of the inception date. Equipment and software with a historical cost of $255,749 was under capital lease at September 30, 2015. Because the cost of the individual items was below the Town’s capitalization threshold, the entire cost was recorded as expense during the year ended September 30, 2015. The following schedule shows the future minimum lease payments under the capitalized lease together with the present value of the net minimum lease payments as of September 30, 2015: Annual Lease Payments 90,561$ 90,550 648 Total minimum lease payments 181,759 Less: Amounts representing interest (7,386) Present value of net minimum lease payments 174,373$ Year Ending August 31, 2016 2018 2017 TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 55 NOTE 5. LONG-TERM DEBT – CONTINUED Fidelity Tax Reimbursement On August 10, 1998, the Town entered into an economic development agreement with Fidelity Texas Limited Partnership (Fidelity) which provided that Fidelity will receive a rebate of one percent of local sales taxes collected by the Town and paid by Fidelity. The agreement provided that the rebate will be paid to Fidelity within 30 days of each calendar quarter from the sales taxes received by the Town. On November 13, 2000, the agreement was amended to allow for a payment schedule of fifteen annual equal installments for sales tax rebate due and payable to Fidelity. The amount due will not bear interest. The loan is discounted to present value and amortized over the life of the loan using the effective interest method. Debt service requirements for deferred rebates to be retired from governmental funds are as follows: Total Principal Interest Requirements 33,814$ 1,944$ 35,758$ 33,814$ 1,944$ 35,758$ 2016 Total Year Ending September 30, Contractual Obligations Proprietary funds contractual obligations as of September 30, 2015 are as follows: Business- Maturity Interest Rate Type Elevated Water Storage Facility 2020 5.0-5.65%546,350$ Limited pledge contractual obligation: Dove Road Water Line and West Pump Station 2028 6.75%4,679,944 5,226,294$ Contractual Obligations Elevated Water Storage Facility - On October 9, 2000, the Town approved an interlocal agreement with the City of Keller, which provided for the joint construction, operation, maintenance and use of an elevated water storage facility and appurtenances. The Town recorded a contractual obligation of $1,466,000 based on the terms of the interlocal agreement, which requires 20 annual principal and interest payments to the City of Keller, with payments due each September 30 at interest rates ranging from 5.0% to 5.65%. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 56 NOTE 5. LONG-TERM DEBT – CONTINUED Contractual Obligations – Continued Dove Road Water Line and West Pump Station - In April 2000, the Town approved an agreement with the Hillwood Development Corporation (Hillwood). In the agreement, Hillwood agreed to bear all initial costs for the design, engineering and constructions of the Dove Road Water Line and the West Pump Station that will service the residents of the Town. The Town agreed to reimburse Hillwood for the cost of the project upon completion and the Town's acceptance of the project, which occurred in June 2001, solely from a $.25 charge per 1,000 gallons of usage. The Town further agreed to deposit debt service revenue of $.25 per 1,000 gallons of usage collected from Town residents to fund its repayment to Hillwood. Debt service revenue will be allocated between Hillwood service area and Town service area by 52% and 48%, respectively and deposited into two separate debt service funds that will result in debt service revenue to pay the respective share of the construction cost. The Town recorded a limited pledge contractual obligation of $4,679,944 for the project cost based upon the terms of the agreement, which requires 239 monthly principal and interest payments to Hillwood, at an interest rate of 6.75%. If the Town collects insufficient funds to pay current interest on the debt, the interest payment may be deferred. No portion of debt payments will be applied to the principal component, until all current and deferred interest is fully paid. The obligation of the Town to pay the purchase price and interest thereon is not a general obligation of the Town but is a limited recourse obligation payable solely from debt service revenue. The schedule of future payments by the Town under these agreements is as follows: Total Principal Interest Requirements -$ 6,362,260$ 6,362,260$ 99,336 985,500 1,084,836 104,143 849,799 953,942 108,950 904,224 1,013,174 113,756 962,616 1,076,372 120,165 1,028,071 1,148,236 4,679,944 724,066 5,404,010 5,226,294$ 11,816,536$ 17,042,830$ Year Ending Past Due 2018 2019 2020 September 30, 2016 2017 2021-2025 Total Prior Year Defeasance of Debt In prior years, the government defeased general obligations bonds by placing proceeds of the new bonds in an irrevocable trust account to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the government's financial statements. At September 30, 2015, there were no prior year defeased bonds outstanding. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 57 NOTE 5. LONG-TERM DEBT – CONTINUED Compensated Absences Although compensated absences are liquidated by the fund to which they relate, the significant portion of the governmental activities compensated absences has typically been liquidated by the general fund. Discretely Presented Component Units – Long-term Debt Texas Student Housing Corporation –Denton Project The long-term debt activity of the Denton Project is as follows: Amounts Beginning Ending Due Within Balance Increases Decreases Balance One Year Revenue Bonds: 2001 A Bonds 23,710,000$ -$ (785,000)$ 22,925,000$ 2,075,000$ 2001 B Bonds 3,240,000 - - 3,240,000 - Less discount on bonds (597,354) - 37,485 (559,869) - Total 26,352,646$ -$ (747,515)$ 25,605,131$ 2,075,000$ The Bonds are payable solely from the revenues generated by the Denton Property and are secured by the revenues pledged and assigned under the terms of the Trust Indenture. The Town of Westlake does not have any liability for the payment of the bonds as the bonds are non-recourse to both the Town of Westlake and Texas Student Housing Authority. Interest rates on the bonds range from 5.00% to 11.00% and are payable semi-annually on July 1 and January 1 of each year thereafter. At September 30, 2015, the Project was not in compliance with certain covenants of the Indenture including insufficient funds in some of the required funds discussed in Note 2 and a fixed charges ratio less than 1.0. In addition, all required principal payments on the Series B bonds had not been made as of September 30, 2015. Upon certain events of default either the trustee, or owners of not less than 25% in aggregate principal of the bonds then outstanding, may declare the principal and all interest then due to be immediately due and payable. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 58 NOTE 5. LONG-TERM DEBT – CONTINUED Discretely Presented Component Units – Long-term Debt – Continued Texas Student Housing Corporation – Denton Project – Continued The debt service requirements of the bonds are as follows: Total Principal Interest Requirements 1,240,000$ 6,992,072$ 8,232,072$ 835,000 1,784,418 2,619,418 950,000 1,728,055 2,678,055 1,020,000 1,661,593 2,681,593 1,085,000 1,589,980 2,674,980 1,165,000 1,513,768 2,678,768 7,190,000 6,205,540 13,395,540 10,185,000 3,220,028 13,405,028 2,495,000 181,283 2,676,283 26,165,000$ 24,876,737$ 51,041,737$ 2021-2025 2026-2030 2031-2035 2017 Year Ending 2020 September 30, Past Due 2019 2018 2016 Texas Student Housing Authority – Jefferson Commons at Town Lake Project Amounts Beginning Ending Due Within Balance Increases Decreases Balance One Year Revenue Bonds: 2002 A-1 Bonds 14,890,492$ -$ (352,213)$ 14,538,279$ 382,998$ 2002 A-2 Bonds 5,089,241 - - 5,089,241 - Total 19,979,733$ -$ (352,213)$ 19,627,520$ 382,998$ The bonds are payable solely from the revenues generated by the Project and are secured by the revenues pledged and assigned under the terms of the Trust Indenture. Interest rates on the bonds range from 7.76% to 8.69% at present and principal and interest payments are made monthly. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 59 NOTE 5. LONG-TERM DEBT – CONTINUED Discretely Presented Component Units – Long-term Debt – Continued Texas Student Housing Authority – Jefferson Commons at Town Lake Project – Continued The future debt service requirements of the bonds are as follows: Total Principal Interest Requirements -$ 3,931,163$ 3,931,163$ 382,998 1,508,639 1,891,637 413,797 1,477,840 1,891,637 447,074 1,444,563 1,891,637 483,026 1,408,611 1,891,637 521,870 1,369,767 1,891,637 3,310,558 6,147,627 9,458,185 4,873,699 4,584,486 9,458,185 6,737,498 1,707,029 8,444,527 2,457,000 - 2,457,000 19,627,520$ 23,579,725$ 43,207,245$ 2016 2017 2018 Year Ending 2031-2035 2019 September 30, Past Due 2026-2030 Total 2021-2025 2020 2036-2038 Texas Student Housing Corporation – College Station Project The Project's installment note payable is summarized as follows: Rate Balance Cambridge Student Housing Financing Company, L.P.; substantially all assets and assignment of rents: due November 1, 2039 8.00%29,429,200$ Lender/Security/Due/Date The following is a summary of long-term debt transactions of the Project for the year ended August 31, 2015: Amounts Beginning Ending Due Within Balance Increases Decreases Balance One Year Revenue Certificates 29,885,000$ -$ (455,800)$ 29,429,200$ 870,000$ TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 60 NOTE 5. LONG-TERM DEBT – CONTINUED Discretely Presented Component Units – Long-term Debt – Continued Texas Student Housing Corporation – College Station Project – Continued The debt is to be amortized through 2040 with varying payments. The annual requirements to amortize the Project’s outstanding installment notes payable as of September 30, 2015 are as follows: Principal Interest Total Past Due 315,000$ 13,101,973$ 13,416,973$ 555,000 1,795,820 2,350,820 600,000 1,751,328 2,351,328 645,000 1,703,325 2,348,325 720,000 1,650,637 2,370,637 775,000 1,592,890 2,367,890 3,320,000 7,109,570 10,429,570 3,575,000 5,912,733 9,487,733 5,155,000 4,275,367 9,430,367 13,769,200 1,854,218 15,623,418 29,429,200$ 40,747,861$ 70,177,061$ 2036-2040 Total Governmental Activities 2031-2035 2016 2017 September 30, 2020 2021-2025 2026-2030 Year Ending 2018 2019 Class C and D bonds are in default and the property does not generate enough revenue to pay the debt obligations. All of the Class C and D bonds issued remain outstanding as of September 30, 2015. Each class has certain rights and privileges, as contained in the private placement memorandum. As a part of the offering, the Project entered into a trust agreement with J. P. Morgan Trust Company, N.A. (the Trustee) for the purpose of determining that each class is paid in accordance with the private placement memorandum. At September 30, 2015, the Project was not in compliance with the fixed charge coverage ratio. As a result, the lender may accelerate the maturity of the unpaid portion of the principal payable under the installment sale agreement. However, the Authority does not anticipate this event will occur, since foreclosure by private interests would result in the loss of tax-exempt status for the Project. The Town of Westlake does not have any liability for the payment of debt of the discretely presented component units as the bonds are non-recourse to both the Town and Texas Student Housing Authority. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 61 NOTE 6. UNEARNED REVENUE / DEFERRED INFLOWS OF RESOURCES Unearned revenue in the proprietary fund of $284,535 relates to the collection of the entire amount due on eight Ductbank leases as follows: one 25-year lease with AT&T local network services; five leases with Verizon Southwest ranging from 20 to 30 years; one 5- year lease with MCI Metro; and one 5-year lease with L3 Communications for use of the Town's Ductbank. Unearned revenue of $1,100 in the non-major governmental funds represents sponsorship and registration fees received in advance of an event held in October 2015. Governmental funds report deferred inflows of resources in connection with receivables for revenue that is not considered to be available to liquidate liabilities of the current period. At the end of the current fiscal year, deferred inflows of resources reported in the governmental funds consist of $5,379 and $673 of unavailable property taxes in the general fund and debt service fund, respectively. NOTE 7. INTERLOCAL AGREEMENT WITH THE CITY OF SOUTHLAKE In August 1995, the Town entered into an agreement with the City of Southlake to allow the Town to utilize capacity in a sewer line and to set forth their respective rights and obligations with respect to the sewer line owned by the City of Southlake. The Town is obligated to share in the cost of construction, operation and maintenance of the water sewer line. The sewer line was constructed in 2000. Additionally, the Town must pay the City of Southlake all transportation, treatment and related costs allocable to the metered flow of sewage from the Town into the sewer line. NOTE 8. FEDERAL AND STATE PROGRAM REVENUES The Town received financial assistance from various federal and state governmental agencies in the form of grants for Westlake Academy. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and are subject to audit by the grantor agencies. Any unallowed disbursement resulting from such audits becomes a liability of the Town. In the opinion of the Town management, no material refunds will be required as a result of unallowed disbursements (if any) by the grantor agencies. Sources of federal and state program revenues for the year ended September 30, 2015, were as follows: Westlake Academy Federal program revenues: U.S. Department of Eduation - Passed through State Department of Education Total federal program revenues:87,797$ State program revenues: State Department of Education 6,173,418$ Source TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 62 NOTE 9. INTERFUND BALANCES AND TRANSACTIONS Interfund receivables and payables at September 30, 2015, were as follows: Due from Due to Other Funds Other Funds General fund 164,147$ -$ Nonmajor governmental funds: 4B Economic Development Fund - 164,147 164,147$ 164,147$ The 4B Economic Development Corporation Fund amount of $164,147 payable to the General Fund is related to debt service payment reimbursement. Inter-fund transfers are reported in the governmental funds and proprietary fund financial statements. In the government-wide statements, inter-fund transfers are eliminated within the governmental activities column and business-type column, as appropriate. Transfers are used to (1) move revenues collected in the special revenue funds to finance various programs in accordance with budgetary authorizations, (2) move receipts restricted for debt service from the funds collecting the receipts to the Debt Service fund as debt service payments become due, (3) reimburse one fund for services provided to another fund, (4) move unrestricted General fund revenues to Capital Project fund as determined by the Council for capital projects, and (5) transfer payment for economic development agreements to the Economic Development fund. Individual fund transfers for fiscal year 2015 were as follows: Transfer out Transfer in Amount Purpose General Fund Nonmajor Governmental 35,758$ Payment to Fidelity (Phase I) General Fund Debt Service Fund 461,498 Debt service payments General Fund Westlake Academy Expansion 54,328 Payment for the expansion project General Fund Capital Projects 1,438,801 Payment for the capital project Utility Fund General Fund 323,100 Collection of Ft. Worth Impact Fees and interfund payment Nonmajor Governmental General Fund 13,220 Operating expenditures for Communications & Community Affairs Department. Nonmajor Governmental Debt Service 164,450 Debt service payments Nonmajor Governmental Debt Service 1,231,741 Debt service payments Nonmajor Governmental Westlake Academy Expansion 410,000 Lot payment per economic development agreement General Fund Westlake Academy 300,000 Student reserve funds PID Capital Projects General Fund 185,000 Payment to General Fund for PID creation expenses 4,617,896$ TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 63 NOTE 10. WATER PURCHASE AND WASTEWATER TREATMENT CONTRACTS The Town has a contract with the City of Fort Worth, Texas, to purchase water. Under the contract, the Town may obtain from the City of Fort Worth, a supply of potable water at a reasonable rate based on water usage. The rate charges are subject to minimum annual contract payments. Water expense for the year ended September 30, 2015 was $1,223,393. NOTE 11. DEFINED BENEFIT PENSION PLAN - TMRS Plan Description The Town participates as one of 860 plans in the 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. Benefits Provided 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 payments 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. Employees Covered By Benefit Terms At the December 31, 2014 valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees of beneficiaries currently receiving benefits 8 Inactive employees entitled to but not yet receiving benefits 17 Active employees 30 55 TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 64 NOTE 11. DEFINED BENEFIT PENSION PLAN – TMRS - CONTINUED 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 Town were required to contribute 7% of their annual gross earnings during the fiscal year. The contribution rates for the Town were 8.05% and 10.92% in calendar years 2014 and 2015, respectively. The Town’s contributions to TMRS for the year ended September 30, 2015, were $277,651, and were equal to the required contributions. Net Pension Liability The Town’s Net Pension Liability (NPL) was measured as of December 31, 2014, 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, 2014 actuarial valuation was determined using the following actuarial assumptions: • Inflation 3.0% per year • Overall payroll growth 3.0% per year • Investment Rate of Return 7.0%, net of pension plan investment expense, including inflation Salary increases were based on a service-related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality Table, 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. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 65 NOTE 11. DEFINED BENEFIT PENSION PLAN - TMRS – CONTINUED Actuarial Assumptions – Continued Actuarial assumptions used in the December 31, 2014, valuation were based on the results of actuarial experience studies. The experience study in TMRS was for the period January 1, 2006 through December 31, 2009, first used in the December 31, 2010 valuation. Healthy post-retirement mortality rates and annuity purchase rates were updated based on a Mortality Experience Investigation Study covering 2009 through 2011, and dated December 31, 2013. These assumptions were first used in the December 31, 2013 valuation, along with a change to the Entry Age Normal (EAN) actuarial cost method. Assumptions are reviewed annually. No additional changes were made for the 2014 valuation. The long-term expected rate of return on pension plan investments is 7.0%. The pension plan’s policy in 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. This rate 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: Long-Term Expected Real Asset Class Target Allocation Rate of Return (Arithmetic) Domestic Equity 17.5%4.80% International Equity 17.5%6.05% Core Fixed Income 30.0%1.50% Non-Core Fixed Income 10.0%3.50% Real Return 5.0%1.75% Real Estate 10.0%5.25% Absolute Return 5.0%4.25% Private Equity 5.0%8.50% Total 100.0% TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 66 NOTE 11. DEFINED BENEFIT PENSION PLAN – TMRS – CONTINUED Discount Rate The discount rate used to measure the Total Pension Liability was 7.0%. The projection of cash flows used to determine the discount rate assumed that employee 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 active and inactive employees. 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. Allocations The Town’s net pension liability, pension expense, and deferred outflows of resources related to TMRS have been allocated between governmental activities and business- type activities using a contribution-based method. Changes in the Net Pension Liability Total Plan Net Pension Fiduciary Pension Liability Net Position Liability (a)(b)(a) - (b) Balance at 12/31/2013 3,669,053$ 3,187,798$ 481,255$ Changes for the year: Service Cost 288,923 - 288,923 Interest 264,994 - 264,994 Change of benefit terms - - - Difference between expected and actual experience 176,965 - 176,965 Changes of assumptions - - - Contributions - employer - 172,064 (172,064) Contributions - employee - 152,077 (152,077) Net investment income - 182,430 (182,430) Benefit payments, including refunds of employee contributions (55,762) (55,762) - Administrative expense (1,904) 1,904 Other changes - (127) 127 Net Changes 675,120 448,778 226,342 Balance at 12/31/14 4,344,173$ 3,636,576$ 707,597$ Increase (Decrease) TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 67 NOTE 11. DEFINED BENEFIT PENSION PLAN – TMRS – CONTINUED Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the Town, calculated using the discount rate of 7.0%, as well as what the Town’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.0%) or 1-percentage- point higher (8.0%) than the current rate: 1% Decrease 1% Decrease in 1% Increase in Discount Rate (6.0%)Discount Rate (7.0%)Discount Rate (8.0%) Net pension liability 1,420,650$ 707,597$ 123,093$ 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 and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended September 30, 2015, the Town recognized pension expense of $221,177. At September 30, 2015, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Resources Inflows of Resources Difference between expected and actual economic experience 144,686$ -$ Changes in actuarial assumptions - - Difference between projected and actual investment earnings 32,573 - Contributions subsequent to the measurement date 213,518 Total 390,777$ -$ TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 68 NOTE 11. DEFINED BENEFIT PENSION PLAN – TMRS – CONTINUED Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions – Continued $213,518 reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability for the year ending September 30, 2015. Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year ended Sept. 30, 2016 253,940$ 2017 40,422 2018 40,422 2019 40,422 2020 15,571 Total 390,777$ NOTE 12. DEFINED BENEFIT PENSION PLAN – TRS Plan Description The Academy participates in a cost-sharing multiple-employer defined benefit pension that has a special funding situation. The plan is administered by the Teacher Retirement System of Texas (TRS). TRS’s defined benefit pension plan is established and administered in accordance with the Texas Constitution, Article XVI, Section 67 and Texas Government Code, Title 8, Subtitle C. The pension trust fund is a qualified pension trust under Section 401(a) of the Internal Revenue Code. The Texas Legislature establishes benefits and contribution rates within the guidelines of the Texas Constitution. The pension’s Board of Trustees does not have the authority to establish or amend benefit terms. All employees of public, state-supported educational institutions in Texas who are employed for one-half or more of the standard work load and who are not exempted from membership under Texas Government Code, Title 8, Section 822.002 are covered by the system. Pension Plan Fiduciary Net Position Detailed information about the Teacher Retirement System’s fiduciary net position is available in a separately-issued Comprehensive Annual Financial Report that includes financial statements and required supplementary information. That report may be obtained on the Internet at http://www.trs.state.tx.us/about/documents/cafr.pdf#CAFR; by writing to TRS at 1000 Red River Street, Austin, TX, 78701-2698; or by calling (512) 542-6592. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 69 NOTE 12. DEFINED BENEFIT PENSION PLAN – TRS – CONTINUED Benefits Provided TRS provides service and disability retirement, as well as death and survivor benefits, to eligible employees (and their beneficiaries) of public and higher education in Texas. The pension formula is calculated using 2.3 percent (multiplier) times the average of the five highest annual creditable salaries times years of credited service to arrive at the annual standard annuity except for members who are grandfathered, the three highest annual salaries are used. The normal service retirement is at age 65 with 5 years of credited service or when the sum of the member’s age and years of credited service equals 80 or more years. Early retirement is at age 55 with 5 years of service credit or earlier than 55 with 30 years of service credit. There are additional provisions for early retirement if the sum of the member’s age and years of service credit total at least 80, but the member is less than age 60 or 62 depending on date of employment, or if the member was grandfathered in under a previous rule. There are no automatic post-employment benefit changes; including automatic COLAs. Ad hoc post-employment benefit changes, including ad hoc COLAs can be granted by the Texas Legislature as noted in the Plan description in (A) above. Contributions Contribution requirements are established or amended pursuant to Article 16, section 67 of the Texas Constitution which requires the Texas legislature to establish a member contribution rate of not less than 6% of the member’s annual compensation and a state contribution rate of not less than 6% and not more than 10% of the aggregate annual compensation paid to members of the system during the fiscal year. Texas Government Code section 821.006 prohibits benefit improvements, if as a result of the particular action, the time required to amortize TRS’ unfunded actuarial liabilities would be increased to a period that exceeds 31 years, or, if the amortization period already exceeds 31 years, the period would be increased by such action. Employee contribution rates are set in state statute, Texas Government Code 825.402. Senate Bill 1458 of the 83rd Texas Legislature amended Texas Government Code 825.402 for member contributions and established employee contribution rates for fiscal years 2014 thru 2017. It also added a 1.5% contribution for employers not paying Old Age Survivor and Disability Insurance (OASDI) on certain employees effective for fiscal year 2015 as discussed in Note 1 of the TRS 2014 CAFR. The 83rd Texas Leg islature, General Appropriations Act (GAA) established the employer contribution rates for fiscal years 2014 and 2015. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 70 NOTE 12. DEFINED BENEFIT PENSION PLAN – TRS – CONTINUED Contributions – Continued Contribution Rates 2014 2015 Member 6.4% 6.7% Non-Employer Contributing Entity (State) 6.8% 6.8% Employers 6.8% 6.8% 2014 Employer Contributions $ 18,228 2014 Member Contributions $ 320,575 2014 NECE On-behalf Contributions $ 280,876 Contributors to the plan include members, employers and the State of Texas as the only non-employer contributing entity. The State is the employer for senior colleges, medical schools and state agencies including TRS. In each respective role, the State contributes to the plan in accordance with state statutes and the General Appropriations Act (GAA). As the non-employer contributing entity for public education and junior colleges, the State of Texas contributes to the retirement system an amount equal to the current employer contribution rate times the aggregate annual compensation of all participating members of the pension trust fund during that fiscal year reduced by the amounts described below which are paid by the employers. Employers (public school, junior college, other entities or the State of Texas as the employer for senior universities and medical schools) are required to pay the employer contribution rate in the following instances: • On the portion of the member's salary that exceeds the statutory minimum for members entitled to the statutory minimum under Section 21.402 of the Texas Education Code. • During a new member’s first 90 days of employment. • When any part or all of an employee’s salary is paid by federal funding sources, a privately sponsored source, from non-educational and general, or local funds. • When the employing district is a public junior college or junior college district, the employer shall contribute to the retirement system an amount equal to 50% of the state contribution rate for certain instructional or administrative employees; and 100% of the state contribution rate for all other employees. In addition to the employer contributions listed above, when employing a retiree of the Teacher Retirement System the employer shall pay both the member contribution and the state contribution as an employment after retirement surcharge. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 71 NOTE 12. DEFINED BENEFIT PENSION PLAN – TRS – CONTINUED Actuarial Assumptions The total pension liability in the August 31, 2014 actuarial valuation was determined using the following actuarial assumptions: Valuation Date August 31, 2014 Actuarial Cost Method Individual Entry Age Normal Amortization Method Level Percentage of Payroll, Open Remaining Amortization Period 30 years Asset Valuation Method 5 year Market Value Discount Rate 8.00% Long-term expected Investment Rate of Return* 8.00% Salary Increases* 4.25% to 7.25% Weighted-Average at Valuation Date 5.55% Payroll Growth Rate 3.50% *Includes Inflation of 3% The actuarial methods and assumptions are primarily based on a study of actual experience for the four year period ending August 31, 2010 and adopted on April 8, 2011. With the exception of the post-retirement mortality rates for healthy lives and a minor change to the expected retirement age for inactive vested members stemming from the actuarial audit performed in the summer of 2014, the assumptions and methods are the same as used in the prior valuation. When the mortality assumptions were adopted in 2011 they contained a significant margin for possible future mortality improvement. As of the date of the valuation there has been a significant erosion of this margin to the point that the margin has been eliminated. Therefore, the post-retirement mortality rates for current and future retirees was decreased to add additional margin for future improvement in mortality in accordance with the Actuarial Standards of Practice No. 35. Discount Rate The discount rate used to measure the total pension liability was 8.0%. There was no change in the discount rate since the previous year. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and those of the contributing employers and the non-employer contributing entity are made at the statutorily required rates. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all 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. The long-term rate of return on pension plan investments is 8%. The long-term expected rate of return on pension plan investments was determined using a building- block method in which best-estimates 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. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 72 NOTE 12. DEFINED BENEFIT PENSION PLAN – TRS – CONTINUED Discount Rate – Continued 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 geometric real rates of return for each major asset class included in the Systems target asset allocation as of August 31, 2014 are summarized below: Long-term Expected Portfolio Target Real Return Real Rate of Asset Class Allocation Geometric Basis Return* Global Equity U.S.18%7.0%1.4% Non-U.S. Developed 13%7.3%1.1% Emerging Markets 9%8.1%0.9% Directional Hedge Funds 4%5.4%0.2% Private Equity 13%9.2%1.4% Stable Value U.S. Treasuries 11%2.9%0.3% Absolute Return 0%4.0%0.0% Stable Value Hedge Funds 4%5.2%0.2% Cash 1%2.0%0.0% Real Return Global Inflation Linked Bonds 3%3.1%0.0% Real Assets 16%7.3%1.5% Energy and Natural Resources 3%8.8%0.3% Commodities 0%3.4%0.0% Risk Parity Risk Parity 5%8.9%0.4% Alpha 1.0% Total 100.0%8.7% * The Expected Contribution to Returns incorporates the volatility drag resulting from the conversion between Arithmetic and Geometric mean returns. Discount Rate Sensitivity Analysis The following schedule shows the impact of the Net Pension Liability if the discount rate used was 1% less than and 1% greater than the discount rate that was used (8%) in measuring the 2014 Net Pension Liability. 1% Decrease in Discount 1% Increase in Discount Rate (7.0%)Rate (8.0%)Discount Rate (9.0%) Academy's proportionate share of the TRS net pension liability 343,191$ 192,056$ 79,034$ TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 73 NOTE 12. DEFINED BENEFIT PENSION PLAN – TRS – CONTINUED Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At August 31, 2014, the Academy reported a liability of $192,056 for its proportionate share of the TRS’s net pension liability. This liability reflects a reduction for State pension support provided to the Academy. The amount recognized by the Academy as its proportionate share of the net pension liability, the related State support, and the total portion of the net pension liability that was associated with the Academy were as follows: Academy’s Proportionate share of the collective net pension liability $ 192,056 State’s proportionate share that is associated with Academy 2,965,583 Total $ 3,157,639 The net pension liability was measured as of August 31, 2014 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The employer’s proportion of the net pension liability was based on the employer’s contributions to the pension plan relative to the contributions of all employers to the plan for the period September 1, 2013 thru August 31, 2014. At August 31, 2014 the employer’s proportion of the collective net pension liability was 0.0007190%. Since this is the first year of implementation, the Academy does not have the proportion measured as of August 31, 2013. The Notes to the Financial Statements for August 31, 2014 for TRS stated that the change in proportion was immaterial and, therefore, disregarded this year. There were no changes of assumptions or other inputs that affected measurement of the total pension liability during the measurement period. There were no changes of benefit terms that affected measurement of the total pension liability during the measurement period. There was a change in employer contribution requirements that occurred after the measurement date of the net pension liability and the employer’s reporting date. A 1.5% contribution for employers not paying Old Age Survivor and Disability Insurance (OASDI) on certain employees went into law effective 09/01/2013. The amount of the expected resultant change in the employer’s proportion cannot be determined at this time. For the year ended August 31, 2014, the Academy recognized pension expense of $274,163 and revenue of $274,163 for support provided by the State. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 74 NOTE 12. DEFINED BENEFIT PENSION PLAN – TRS – CONTINUED Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions – Continued At August 31, 2014, the Academy reported its proportionate share of the TRS’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Difference between expected and actual economic experience 2,970$ -$ Changes in actuarial assumptions 12,484 - Changes in proportionate share (50) Difference between projected and actual investment earnings - (58,700) Contributions paid to TRS subsequent to the measurement date 92,325 Total 107,779$ (58,750)$ The net amounts of the employer’s balances of deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year ended Aug. 31, 2016 80,249$ 2017 (12,076) 2018 (12,076) 2019 (12,076) 2020 2,599 Thereafter 2,409 Total 49,029$ TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 75 NOTE 13. RISK MANAGEMENT The Town is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; errors and omissions; injuries to employees, and natural disasters. The Town's general liability, workers' compensation liability, law enforcement liability, errors and omissions liability, and automobile liability coverage is insured by the Texas Municipal League, a public entity risk pool. The Town's only responsibility to the Texas Municipal League is to pay premiums for insurance and related deductible amounts of these policies. Other risk of loss is covered by commercial insurance. Settlements of claims have not exceeded coverage in the past three years. NOTE 14. CONTINGENT LIABILITIES Litigation Various claims and lawsuits are pending against the Town. In the opinion of Town management, after consultation with legal counsel, the potential loss on these claims and lawsuits will not materially affect the Town's financial position. Circle T Municipal Utility Districts The Town and Hillwood are currently in discussions regarding the debt for Municipal Utility District's (MUDs) #1 and #3 on the Circle T property in Westlake which is controlled by AIL Investments, L.P. As this property develops, Hillwood agreed to de- annex developed property from the MUDs in exchange for pro-rata payments on water and sewer infrastructure installed by the MUDs at their inception. To date, two projects, Chrysler Financial and Deloitte University, have been or are being developed within these MUDs. Discussions regarding the Town's payment to AIL Investments, L.P. in exchange for de-annexation of these two tracks from the Circle T MUDs have taken place but have not come to a conclusion as to the settlement amounts. These discussions are ongoing until the Town receives full documentation that it determines is adequate to support the requested payments. The Town of Westlake holds full rights and privileges under the State granted Certificate of Convenience and Necessity (CCN) and can serve all water and sewer customers within these MUD boundaries regardless of the status of these negotiations. NOTE 15. SOLANA PUBLIC IMPROVEMENT DISTRICT On February 24, 2014, the Town Council granted a petition by Maguire Partners-Solana Land, LP in resolution 14-07 to authorize and provide for the creation of a public improvement district, The Solana Public Improvement District (“the District”). The District encompasses approximately 85 acres currently being developed as a master-planned mixed-use development known as “Westlake Entrada” that is expected to include, among other things, condominiums, residential villas, hotels, office, retail, commercial, institutional and hospitality uses, and a wedding event center. The District was created in accordance with Chapter 372 of the Texas Local Government Code. TOWN OF WESTLAKE NOTES TO THE FINANCI AL STATEMENTS 76 NOTE 15. SOLANA PUBLIC IMPROVEMENT DISTRICT – CONTINUED On February 5, 2015, the Town Council approved issuance of $26,175,000 of Special Assessment Revenue Bonds, Series 2015 related to the District. The Public Improvement District Bonds (“The Bonds”) are special and limited obligations of the Town payable solely from the pledged revenues and other funds comprising the Trust Estate, as and to the extent provided in the indenture. The bonds do not give rise to a charge against the general credit or taxing power of the Town and are payable solely from the sources identified in the indenture. The owners of the bonds shall never have the right to demand payment thereof out of money raised or to be raised by taxation, or out of any funds of the Town other than the Trust Estate, as and to the extent provided in the indenture; and, no owner of the bonds shall have the right to demand any exercise of the Town’s taxing power to pay the principal of the bonds or the interest or redemption premium, if any, thereon. The Town shall have no legal or moral obligation to pay the bonds out of any funds of the Town other than the Trust Estate in accordance with the Texas Local Government Code. The proceeds from the bond issue are to be used as follows: payment of a portion of the costs of construction, acquisition, or purchase of certain water, wastewater and roadway public improvements for the special benefit of the District; funding a reserve fund; funding capitalized interest; payment of a portion of the costs incidental to the organization of the District; and payment of the cost of issuance of the bonds. The Town is not, and will not be obligated to provide any funds to finance construction of authorized improvements. All design and construction costs of the District’s authorized public improvements will be paid from the District assessments and from other sources of funds, if any, to the extent provided in the Trust Indenture. NOTE 16. CUMULATIVE EFFECT OF ADOPTION OF GASB STATEMENTS As a result of implementation of GASB Statement No. 68, “Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27”, and GASB Statement No. 71, “Pension Transition for Contributions Made Subsequent to the Measurement Date”, an adjustment has been made to record the Town’s net pension liability associated with TRS as of August 31, 2014 and the Academy’s net pension liability associated with TMRS as of December 31, 2014. As a result, beginning net position of the governmental activities has been decreased by $530,877, the net effect of the beginning net pension liability and deferred outflows of resources of TMRS ($313,276) and TRS ($217,601); and the beginning net position of the utility fund has been decreased by $38,720. NOTE 17. GOING CONCERN The 2015 financial statements were prepared assuming the Texas Student Housing entities will continue as going concerns. The Texas Student Housing entities’ bonds payable are considered to be in default due to not making full principal and interest payments and, therefore, are reported as current liabilities. This is considered an event of default by the Trustees, which gives the bondholders the right to accelerate and demand payment of the bonds in full. Management and the property managers are in the process of developing and implementing plans to increase occupancy and rental rates at the properties to improve their financial performance. REQUIRED SUPPLEMENTARY INFORMATION EXHIBIT B-1 TOWN OF WESTLAKE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL – GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2015 77 Variance Favorable Orginal Amended Actual (Unfavorable) REVENUES: Taxes Sales 3,376,250$ 3,575,000$ 3,587,323$ 12,323$ Property 1,209,094 1,248,094 1,256,796 8,702 Mixed beverages 50,500 50,500 59,184 8,684 Franchise 795,383 809,270 963,040 153,770 Interest income 10,420 10,420 10,078 (342) Building permits and fees 1,460,500 1,561,350 1,200,790 (360,560) Fines and penalties 670,000 690,000 734,152 44,152 Intergovernmental - - 3,810 3,810 Contributions - 167,541 10,000 (157,541) Miscellaneous 60,094 73,344 81,539 8,195 Total revenues 7,632,241 8,185,519 7,906,712 (278,807) EXPENDITURES: Current General government 3,054,661 3,147,116 2,411,239 735,877 Public safety 2,456,719 2,648,274 2,490,551 157,723 Cultural and recreation 224,602 213,415 130,322 83,093 Public works 794,038 751,018 744,028 6,990 Capital outlay 745,000 877,541 748,297 129,244 Debt service Principal retirement 18,339 36,678 48,237 (11,559) Total expenditures 7,293,359 7,674,042 6,572,674 1,101,368 Excess of revenues over expenditures 338,882 511,477 1,334,038 822,561 OTHER FINANCING SOURCES (USES) Transfers in 306,965 700,298 521,320 (178,978) Transfers out (2,301,612) (2,009,410) (2,290,385) (280,975) Insurance proceeds - 291,005 162,059 (128,946) Net other financing sources (uses)(1,994,647) (1,018,107) (1,607,006) (588,899) NET CHANGE IN FUND BALANCE (1,655,765) (506,629) (272,968) 233,661 FUND BALANCE AT BEGINNING OF YEAR 7,953,518 7,953,518 7,953,518 - FUND BALANCE AT END OF YEAR 6,297,753$ 7,446,889$ 7,680,550$ 233,661$ General Fund Budgeted Amounts EXHIBIT B-2 TOWN OF WESTLAKE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL – WESTLAKE ACADEMY FOR THE YEAR ENDED SEPTEMBER 30, 2015 78 Variance Favorable Orginal Final Actual (Unfavorable) REVENUES: State program revenues 5,782,092$ 6,070,659$ 6,173,418$ 102,759$ Federal program revenues 73,896 162,270 87,797 (74,473) Interest income 1,515 1,575 2,067 492 Miscellaneous 1,409,790 1,536,215 1,971,097 434,882 Total revenues 7,267,293 7,770,719 8,234,379 463,660 EXPENDITURES: Education 7,756,046 7,948,314 7,938,501 9,813 Interest and other fiscal charges 90,565 90,565 10,204 80,361 Total expenditures 7,846,611 8,038,879 7,948,705 90,174 Excess (deficiency) of revenues over expenditures (579,318) (268,160) 285,674 553,834 OTHER FINANCING SOURCES Transfers in 300,000 300,000 300,000 - Capital lease proceeds - - 16,740 16,740 Total other financing sources 300,000 300,000 316,740 16,740 NET CHANGE IN FUND BALANCE (279,318) 31,840 602,414 570,574 FUND BALANCE AT BEGINNING OF YEAR 1,071,298 1,071,298 1,071,298 - FUND BALANCE AT END OF YEAR 791,980$ 1,103,138$ 1,673,712$ 570,574$ Westlake Academy Budgeted Amounts TOWN OF WESTLAKE NOTES TO BUDGETARY COMPARISON SCHEDULES 79 Budgetary Information -The Town follows these procedures annually in establishing the budgetary data reflected in the budgetary comparison schedules: 1. The Town Manager submits to the Town Council a proposed budget for the fiscal year commencing the following October 1. The budget includes proposed expenditures and the means of financing them. 2. Prior to October 1, the budget is legally adopted through passage of an ordinance. This budget is reported as the Original Budget in the budgetary comparison schedules. 3. During the fiscal year, changes to the adopted budget may be authorized, as follows: a. Items requiring Town Council action - appropriation of fund balance reserves; transfers of appropriations between funds; new inter-fund loans or advances; and creation of new capital projects or increases to existing capital projects. b. Items delegated to the Town Manager - appropriation balances from an expenditure account to another within a single fund. 4. Annual budgets are legally adopted and amended as required for the general, special revenue and debt service funds. Project length budgets are adopted for the capital projects funds. All budgets are adopted on a basis consistent with generally accepting accounting principles. Budgets are adopted for the proprietary funds annually only as a management tool. There are no legally mandated budgetary constraints for the proprietary funds. 5. Budget amounts are reflected after all authorized amendments and revisions. This budget is reported as the Final Budget in the budgetary comparison schedules. 6. The appropriated budget is prepared by fund, function and department. The Town's management may make transfers of appropriations within a fund. Transfers of appropriations between funds require the approval of the Town Council. The legal level of budgetary control is the fund level. The Town Council made several supplementary budget appropriations during the year. 7. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting under which purchase orders, contracts and other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriation is utilized in the governmental funds. Encumbrances lapse at year-end and do not constitute expenditures or liabilities because the commitments must be re-appropriated and honored during the subsequent year. 8. Expenditures exceeded appropriations in debt service of the General Fund. EXHIBIT B-3 TOWN OF WESTLAKE SCHEDULE OF NET PENSION LIABILITY AND RELATED RATIOS TEXAS MUNICIPAL RETIREMENT SYSTEM FOR THE YEAR ENDED SEPTEMBER 30, 2015 80 2015 Total Pension Liability: Service cost 288,923$ Interest 264,994 Change in benefit terms - Difference between expected and actual experience 176,965 Change in assumptions - Benefit payments (55,762) Net change in total pension liability 675,120 Total Pension Liability-beginning 3,669,053 Total Pension Liability-ending 4,344,173 Plan Fiduciary Net Position Contributions - employer 172,064 Contributions - nonemployer 152,077 Net investment income 182,430 Benefit payments (55,762) Administrative income (1,904) Other (127) Net change in plan fiduciary net position 448,778 Plan fiduciary net position -beginning 3,187,798 Plan fiduciary net position - ending 3,636,576 Town's net pension liability -ending 707,597$ Plan fiduciary net position as a % of total pension liability 83.71% Covered payroll 2,172,525$ Town's net pension liability as a % of employee payroll 32.57% EXHIBIT B-4 TOWN OF WESTLAKE SCHEDULE OF CONTRIBUTIONS TEXAS MUNICIPAL RETIREMENT SYSTEM FOR THE YEAR ENDED SEPTEMBER 30, 2014 81 2015 Actuarially Determined Contributions 277,651$ Contributions in relation to the actuarially determined contributions (277,651) Contribution deficiency (excess)-$ Covered employee payroll 2,778,776 Contributions as a percentage of covered employee payroll 9.99% TOWN OF WESTLAKE NOTES TO TEXAS MUNICIPAL RETIREMENT SYSTEM REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 2015 82 VALUATION DATE: Actuarial determined contribution rates are calculated as of December 31 each year and become effective in January, 12 months and one day later. METHODS AND ASSUMPTIONS USED TO DETERMINE CONTRIBUTION RATES: Actuarial Cost Method Entry Age Normal Amortization Method Level Percentage of Payroll, Closed Remaining Amortization Period 30 years Asset Valuation Method 10 Year smoothed market; 15% soft corridor Inflation 3.00% Salary Increases 3.50% to 12.00% including inflation Investment Rate of Return 7.00% Retirement Age Experience-based table of rates that are specific to the City's plan of benefits. Last updated for the 2010 valuation pursuant to an experience study of the period 2005 - 2009 Mortality RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 103% and projected on a fully generational basis with scale BB TOWN OF WESTLAKE EXHIBIT B-5 SCHEDULE OF ACADEMY’S PROPORTIONATE SHARE OF NET PENSION LIABILITY – TEACHER RETIREMENT SYSTEM FOR THE YEAR ENDED AUGUST 31, 2015 83 2015 Academy's proportion of the net pension liability 0.0007190% Academy's proportionate share of net pension liability 192,056$ State's proportionate share of net pension liability associated with the Westlake Academy 2,965,583 Total 3,157,639$ Academy's covered payroll 4,300,931$ Academy's proportionate share of net pension liability as a percentage of its covered payroll 4.47% Plan fiduciary net position as a percentage of total pension liability 83.25% EXHIBIT B-6 TOWN OF WESTLAKE SCHEDULE OF CONTRIBUTIONS TEACHER RETIREMENT SYSTEM FOR THE YEAR ENDED AUGUST 31, 2015 (UNAUDITED) 84 2015 Statutorially required contributions 92,325$ Actual contributions in relation to statutorially required contributions 92,325 Contribution deficiency (excess)-$ Academy's covered payroll 4,784,694$ Contributions as a percentage of Academy's covered payroll 1.93% TOWN OF WESTLAKE COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES TOWN OF WESTLAKE EXHIBIT C-1 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL – DEBT SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2015 85 Variance Favorable Original Amended Actual (Unfavorable) REVENUES: Taxes Property 166,969$ 176,500$ 176,121$ (379)$ Total revenues 166,969 176,500 176,121 (379) EXPENDITURES: Debt service Principal retirement 1,245,550 1,050,550 1,050,550 - Interest and other fiscal charges 1,049,108 963,828 963,425 403 Total expenditures 2,294,658 2,014,378 2,013,975 403 Deficiency of revenues under expenditures (2,127,689) (1,837,878) (1,837,854) 24 OTHER FINANCING SOURCES (USES) Transfers in 2,139,554 1,859,274 1,857,689 (1,585) Net other financing sources (uses)2,139,554 1,859,274 1,857,689 (1,585) NET CHANGE IN FUND BALANCE 11,865 21,396 19,835 (1,561) FUND BALANCE AT BEGINNING OF YEAR 1,081 1,081 1,081 - FUND BALANCE AT END OF YEAR 12,946$ 22,477$ 20,916$ (1,561)$ Debt Service Fund Budgeted Amounts TOWN OF WESTLAKE NONMAJOR GOVERNMENTAL FUNDS 86 Visitors Association Fund To account for municipal hotel occupancy taxes collected and expenditures to promote tourism and the convention and hotel industry. Lone Star Public Facilities Corporation To account for investment activity relating to the Lone Star Public Facilities Corporation. Economic Development Fund To account for sales tax and hotel occupancy tax collected to fund activity relating to Economic Development agreements. 4B Economic Development Corporation To account for sales tax collected to fund the activities of the 4B Economic Development Corporation. EXHIBIT C-2 TOWN OF WESTLAKE COMBINING BALANCE SHEET NON MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015 87 Visitors Association Lone Star Public Facilities Corporation Fund Economic Development Fund 4B Economic Development Corporation Fund Total Nonmajor Governmental Funds ASSETS Cash and cash equivalents 1,050,718$ 13,632$ 5,806$ -$ 1,070,156$ Receivables: (net of allowances for uncollectibles) Accounts receivable 68,127 - 32,674 164,147 264,948 Other assets 1,874 - - - 1,874 Total assets 1,120,719$ 13,632$ 38,480$ 164,147$ 1,336,978$ LIABILITIES AND FUND BALANCES Accounts payable 36,736$ -$ 38,480$ -$ 75,216$ Unearned revenue 1,100 - - - 1,100 Due to other funds - - - 164,147 164,147 Total liabilities 37,836 - 38,480 164,147 240,463 FUND BALANCES Nonspendable: Prepaid items 1,874 - - - 1,874 Restricted for: Tourism 1,081,009 - - - 1,081,009 Future projects - 13,632 - - 13,632 Total fund balances 1,082,883 13,632 - - 1,096,515 Total liabilities and fund balances 1,120,719$ 13,632$ 38,480$ 164,147$ 1,336,978$ EXHIBIT C-3 TOWN OF WESTLAKE COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015 88 Visitors Association Lone Star Public Facilities Corporation Fund Economic Development Fund 4B Economic Development Corporation Fund Total Nonmajor Governmental Funds REVENUES Sales -$ -$ 106,748$ 1,231,357$ 1,338,105$ Hotel occupancy 807,179 - 65,000 - 872,179 Interest income 1,698 21 - 384 2,103 Contributions 6,750 - - - 6,750 Miscellaneous 4,745 - 410,000 - 414,745 Total revenues 820,372 21 581,748 1,231,741 2,633,882 EXPENDITURES Current: Economic development - 9 171,748 - 171,757 Visitor services 670,157 - - - 670,157 Debt service Principal retirement - - 31,975 - 31,975 Interest and other fiscal charges - - 3,783 - 3,783 Total expenditures 670,157 9 207,506 - 877,672 Excess of revenues over expenditures 150,215 12 374,242 1,231,741 1,756,210 OTHER FINANCING SOURCES (USES) Transfers in - - 35,758 - 35,758 Transfers out (177,670) - (410,000) (1,231,741) (1,819,411) Total other financing sources (uses)(177,670) - (374,242) (1,231,741) (1,783,653) Net change in fund balances (27,455) 12 - - (27,443) Fund balances, October 1 1,110,338 13,620 - - 1,123,958 Fund balances, September 30 1,082,883$ 13,632$ -$ -$ 1,096,515$ EXHIBIT C-4 TOWN OF WESTLAKE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL – VISITORS ASSOCIATION FUND FOR THE YEAR ENDED SEPTEMBER 30, 2015 89 Variance Favorable Orginal Amended Actual (Unfavorable) REVENUES: Taxes Hotel occupancy 707,000$ 805,000$ 807,179$ 2,179$ Interest income 2,900 2,900 1,698 (1,202) Contributions 6,810 8,110 6,750 (1,360) Miscellaneous 11,840 12,490 4,745 (7,745) Total revenues 728,550 828,500 820,372 (8,128) EXPENDITURES: Visitor services 706,924 666,804 670,157 (3,353) Total expenditures 706,924 666,804 670,157 (3,353) Excess of revenues over expenditures 21,626 161,696 150,215 (11,481) OTHER FINANCING USES Transfers out (177,670) (177,670) (177,670) - Total other financing uses (177,670) (177,670) (177,670) - NET CHANGE IN FUND BALANCE (156,044) (15,974) (27,455) (11,481) FUND BALANCE AT BEGINNING OF YEAR 1,110,338 1,110,338 1,110,338 - FUND BALANCE AT END OF YEAR $954,294 $1,094,364 $1,082,883 $(11,481) Visitors Association Fund Budgeted Amounts EXHIBIT C-5 TOWN OF WESTLAKE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL – LONE STAR PUBLIC FACILITIES CORPORATION FUND FOR THE YEAR ENDED SEPTEMBER 30, 2015 90 Variance Favorable Orginal Amended Actual (Unfavorable) REVENUES: Interest income 45$ 45$ 21$ (24)$ Total revenues 45 45 21 (24) EXPENDITURES: Economic development - - 9 9 Total expenditures - - 9 9 NET CHANGE IN FUND BALANCE 45 45 12 (33) FUND BALANCE AT BEGINNING OF YEAR 13,620 13,620 13,620 - FUND BALANCE AT END OF YEAR $13,665 $13,665 $13,632 $(33) Lone Star Public Facilities Corporation Budgeted Amounts EXHIBIT C-6 TOWN OF WESTLAKE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL – ECONOMIC DEVELOPMENT FUND FOR THE YEAR ENDED SEPTEMBER 30, 2015 91 Variance Favorable Orginal Amended Actual (Unfavorable) REVENUES: Taxes Sales 100,000$ 100,000$ 106,748$ 6,748$ Hotel occupancy 70,000 85,000 65,000 (20,000) Miscellaneous 440,000 410,000 410,000 - Total revenues 610,000 595,000 581,748 (13,252) EXPENDITURES: Economic development 170,000 185,000 171,748 13,252 Debt service Principal retirement 5,521 5,521 31,975 (26,454) Interest and other fiscal charges 30,237 30,237 3,783 26,454 Total expenditures 205,758 220,758 207,506 13,252 Excess of revenues over expenditures 404,242 374,242 374,242 - OTHER FINANCING SOURCES (USES) Transfers in 35,758 35,758 35,758 - Transfers out (440,000) (410,000) (410,000) - Total other financing sources (uses)(404,242) (374,242) (374,242) - NET CHANGE IN FUND BALANCE - - - - FUND BALANCE AT BEGINNING OF YEAR - - - - FUND BALANCE AT END OF YEAR -$ -$ -$ -$ Economic Development Fund Budgeted Amounts EXHIBIT C-7 TOWN OF WESTLAKE SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL – 4B ECONOMIC DEVELOPMENT CORPORATION FUND FOR THE YEAR ENDED SEPTEMBER 30, 2015 92 Variance Favorable Orginal Amended Actual (Unfavorable) REVENUES: Taxes Sales 1,158,750$ 1,225,000$ 1,231,357$ 6,357$ Interest income 500 500 384 (116) Total revenues 1,159,250 1,225,500 1,231,741 6,241 EXPENDITURES: Economic development - - - - Total expenditures - - - - Excess of revenues over expenditures 1,159,250 1,225,500 1,231,741 6,241 OTHER FINANCING USES Transfers out (1,159,250) (1,225,500) (1,231,741) (6,241) Total other financing uses (1,159,250) (1,225,500) (1,231,741) (6,241) NET CHANGE IN FUND BALANCE - - - - FUND BALANCE AT BEGINNING OF YEAR - - - - FUND BALANCE AT END OF YEAR -$ -$ -$ -$ 4B Economic Development Corporation Budgeted Amounts TOWN OF WESTLAKE STATISTICAL SECTION STATISTICAL SECTION (UNAUDITED) 93 This part of the Town of Westlake, T exas' 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 Town's overall financial health. Contents Page Financial Trends 94-99 Revenue Capacity 100-104 Debt Capacity 105-107 Demographic and Economic Information 108-109 Operating Information 110-112 Sources:Unless otherwise noted, the information in these schedules is derived from annual financial reports for the relevant year. These schedules offer demographic and economic indicators to help the reader understand the environment within which the Town's financial activities take place. These schedules contain service and infrastructure data to help the reader understand how the information in the Town's financial report relates to the services the Town provides and the activities it performs. These schedules contain trend information to help the reader understand how the Town's financial performance and well- being have changed over time. These schedules contain information to help the reader assess the Town's most significant local revenue sources. Although sales taxes are the Town's most significant local revenue source,information about principal revenue payers is confidential under Texas statutes,and;therefore,not disclosed.Trend information about sales tax revenue is provided in Exhibit S-9. These schedules present information to help the reader assess the affordability of the Town's current levels of outstanding debt and the Town's ability to issue additional debt in the future. EXHIBIT S-1 TOWN OF WESTLAKE NET POSITION BY COMPONENT LAST TEN YEARS (ACCRUAL BASIS OF ACCOUNTING – UNAUDITED) 94 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Governmental activities: Invested in capital assets, net of related debt 9,171,657$ 9,646,644$ 10,313,743$ 13,244,690$ 13,633,485$ 12,658,921$ 14,866,299$ 21,177,426$ 32,048,991$ 29,633,298$ Restricted 1,406,756 1,719,771 2,004,763 1,761,067 1,564,868 7,137,362 4,726,376 4,243,239 2,284,947 17,827,177 Unrestricted 3,023,875 3,305,542 3,835,751 4,122,185 5,866,046 3,448,100 5,023,731 6,636,876 910,977)( 7,108,101 Total governmental activities net position 13,602,288$ 14,671,957$ 16,154,257$ 19,127,942$ 21,064,399$ 23,244,383$ 24,616,406$ 32,057,541$ 33,422,961$ 54,568,576$ Business-type activities: Invested in capital assets, net of related debt 8,436,729$ 8,097,807$ 7,726,576$ 7,349,032$ 7,033,831$ 6,875,031$ 6,877,555$ 6,601,949$ 6,734,414$ 6,410,547$ Unrestricted 1,846,851)( 2,008,243)( 1,997,281)( 1,945,578)( 2,003,600)( 1,542,092)( 1,636,249)( 842,457)( 1,272,014)( 2,608,315)( Total business-type activities net position 6,589,878$ 6,089,564$ 5,729,295$ 5,403,454$ 5,030,231$ 5,332,939$ 5,241,306$ 5,759,492$ 5,462,400$ 3,802,232$ Primary government: Invested in capital assets, net of related debt 17,608,386$ 17,744,451$ 18,040,319$ 20,593,722$ 20,667,316$ 19,533,952$ 21,743,854$ 27,779,375$ 38,783,405$ 36,043,845$ Restricted 1,406,756 1,719,771 2,004,763 1,761,067 1,564,868 7,137,362 4,726,376 4,243,239 2,284,947 17,827,177 Unrestricted 1,177,024 1,297,299 1,838,470 2,176,607 3,862,446 1,906,008 3,387,482 5,794,419 (2,182,991) 4,499,786 Total primary government net position 20,192,166$ 20,761,521$ 21,883,552$ 24,531,396$ 26,094,630$ 28,577,322$ 29,857,712$ 37,817,033$ 38,885,361$ 58,370,808$ Source:Annual financial reports Fiscal Year EXHIBIT S-2 (CONTINUED) TOWN OF WESTLAKE CHANGES IN NET POSITION LAST TEN YEARS (ACCRUAL BASIS OF ACCOUNTING – UNAUDITED) 95 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 EXPENSES Governmental activities: General government 1,811,281$ 1,941,289$ 2,031,460$ 2,203,882$ 2,272,127$ 2,478,826$ 2,518,490$ 2,606,785$ 2,784,587$ 3,145,716$ Public Safety 1,705,528 1,738,080 1,795,782 1,939,441 1,698,164 1,801,585 1,883,424 1,978,803 2,190,050 2,381,437 Cultural and Recreation 91,444 86,560 129,641 115,770 105,997 122,400 111,765 113,924 123,541 129,970 Public Works 613,956 455,481 1,013,804 1,028,934 594,705 470,054 216,901 267,973 955,794 1,081,996 Economic Development 35,759 120,753 473,451 207,044 309,653 680,823 546,039 626,423 147,680 171,757 Visitor Services 393,115 217,992 312,777 341,270 420,270 356,365 475,719 521,521 493,087 665,936 Education 2,249,998 2,672,698 3,305,220 3,722,705 4,138,875 4,884,985 6,193,560 5,803,611 7,147,411 8,598,261 Interest on long-term debt 1,021,779 869,327 991,184 1,068,935 1,026,026 1,127,913 897,573 1,031,328 998,951 1,022,201 Total governmental activities expenses 7,922,860 8,102,180 10,053,319 10,627,981 10,565,817 11,922,951 12,843,471 12,950,368 14,841,101 17,197,274 Business-type activities: Water and Sewer 2,137,831 2,206,618 2,410,765 2,694,407 2,567,675 2,794,235 3,098,466 3,356,466 3,690,137 4,861,529 Cemetery - - 13,299 473 27,822 5,604 6,282 5,328 7,121 7,297 Total business-type activities expenses 2,137,831 2,206,618 2,424,064 2,694,880 2,595,497 2,799,839 3,104,748 3,361,794 3,697,258 4,868,826 Total primary government program expense 10,060,691$ 10,308,798$ 12,477,383$ 13,322,861$ 13,161,314$ 14,722,790$ 15,948,219$ 16,312,162$ 18,538,359$ 22,066,100$ PROGRAM REVENUES Governmental activities: Fees, fines, and charges for services: General Government 742,176$ 785,771$ 522,215$ 677,948$ 716,624$ 721,157$ 673,090$ 774,909$ 33,975$ 110,778$ Public Safety 136,870 165,255 113,755 107,634 80,665 140,600 142,402 182,154 848,772 887,919 Public Works 699,753 625,340 902,875 594,338 1,597,655 292,572 407,328 659,246 1,022,769 936,245 Education 98,357 85,925 42,839 98,314 102,406 99,638 195,059 182,220 222,270 531,090 Operating grants and contributions 3,686,964 1,257,058 1,296,378 1,522,935 853,151 728,242 5,269,841 4,907,472 6,592,642 7,615,653 Capital grants and contributions 1,455,626 - - 2,059,624 83,250 425,900 - 5,897,456 80,472 19,983,078 Total governmental activities program reven 6,819,746 2,919,349 2,878,062 5,060,793 3,433,751 2,408,109 6,687,720 12,603,457 8,800,900 30,064,763 Business-type activities: Charges for services: Water and Sewer 1,842,238 1,657,186 2,037,306 2,345,236 2,101,510 3,078,868 2,934,842 3,157,332 3,428,702 3,549,775 Cemetery 2,100 - 5,550 13,300 4,500 5,510 7,749 13,620 Operating grants and contributions 19,653 - - - 46,810 - 24,423 - - - Capital grants and contributions - - 169,034 - - - - - - - Total business-type activities program reven 1,861,891 1,657,186 2,208,440 2,345,236 2,153,870 3,092,168 2,963,765 3,162,842 3,436,451 3,563,395 Total primary government program revenue 8,681,637$ 4,576,535$ 5,086,502$ 7,406,029$ 5,587,621$ 5,500,277$ 9,651,485$ 15,766,299$ 12,237,351$ 33,628,158$ Fiscal Year EXHIBIT S-2 (CONCLUDED) TOWN OF WESTLAKE CHANGES IN NET POSITION LAST TEN YEARS (ACCRUAL BASIS OF ACCOUNTING – UNAUDITED) 96 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 NET (EXPENSE) REVENUES Governmental activities 1,103,114)$( 5,182,831)$( 7,175,257)$( 5,567,188)$( 7,132,066)$( 9,514,842)$( 6,155,751)$( 346,911)$( 6,040,201)$( 12,867,489$ Business-type activities 275,940)( 549,432)( 215,624)( 349,644)( 441,627)( 292,329 140,983)( 198,952)( 260,807)( 1,305,431)( Total primary government net expense 1,379,054)( 5,732,263)( 7,390,881)( 5,916,832)( 7,573,693)( 9,222,513)( 6,296,734)( 545,863)( 6,301,008)( 11,562,058 GENERAL REVENUES AND OTHER CHANGES IN NET POSITION Governmental activities: Taxes Sales 1,810,706$ 2,197,756$ 3,590,575$ 3,664,409$ 3,790,533$ 4,609,626$ 3,657,274$ 4,375,397$ 4,725,845$ 4,925,428$ Property 1,260,112 1,441,238 1,366,633 1,367,069 1,438,969 Hotel Occupancy 415,544 458,471 527,662 497,769 457,693 527,261 590,853 709,578 796,481 872,179 Mixed Beverage 13,674 14,066 16,177 17,869 17,902 19,721 38,286 39,727 51,602 59,184 Franchise 457,004 560,312 649,108 624,401 603,233 586,836 664,991 734,935 795,322 963,040 Unrestricted grants and contributions 1,822,200 2,259,643 2,500,817 2,960,590 3,484,141 3,744,757 - - - - Investment earnings 98,824 261,622 188,459 61,224 38,383 46,248 33,353 24,218 26,713 28,904 Miscellaneous 448,827 466,654 564,973 568,782 676,638 691,345 1,112,858 1,023,149 246,633 198,199 Transfers 45,319 33,976 220,819 61,321 - 145,216 45,507 485,591)( 43,399 323,100 Extraordinary item 56,704 124,346)( - - - Special item - 67,760 - - - Gain on sale of capital assets - - - - - 7,000 - - - - Total governmental activities 5,112,098 6,252,500 8,258,590 8,456,365 9,068,523 11,694,826 7,527,774 7,788,046 8,053,064 8,809,003 Business-type activities: Investment earnings 25,604 46,158 32,103 7,858 8,334 9,929 10,077 6,552 7,114 7,083 Miscellaneous 56,025 36,936 44,071 77,266 60,070 145,666 84,780 224,995 - - Transfers 45,319)( 33,976)( 220,819)( 61,321)( - 145,216)( 45,507)( 485,591 43,399)( 323,100)( Total business-type activities 36,310 49,118 144,645)( 23,803 68,404 10,379 49,350 717,138 36,285)( 316,017)( Total primary government 5,148,408 6,301,618 8,113,945 8,480,168 9,136,927 11,705,205 7,577,124 8,505,184 8,016,779 8,492,986 CHANGE IN NET POSITION Governmental activities 4,008,984 1,069,669 1,083,333 2,889,177 1,936,457 2,179,984 1,372,023 7,441,135 2,012,863 21,676,492 Business-type activities 239,630)( 500,314)( 360,269)( 325,841)( 373,223)( 302,708 91,633)( 518,186 297,092)( 1,621,448)( Total primary government 3,769,354$ 569,355$ 723,064$ 2,563,336$ 1,563,234$ 2,482,692$ 1,280,390$ 7,959,321$ 1,715,771$ 20,055,044$ Source: Annual financial reports Fiscal Year EXHIBIT S-3 TOWN OF WESTLAKE FUND BALANCES GOVERNMENTAL FUNDS LAST TEN YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING – UNAUDITED) 97 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General fund Reserved 434,375$ 563,176$ 303,639$ 193,105$ 214,750$ -$ -$ -$ -$ -$ Unreserved 2,850,789 2,533,123 2,503,099 2,532,207 3,578,235 - - - - - Nonspendable: Prepaid items 62,020 6,856 6,906 8,821 13,334 Restricted for: Court security and technology 186,776 192,768 194,422 193,082 203,173 Committed for: Future projects 219,687 49,941 74,941 80,442 80,442 Assigned for: Future equipment 22,000 22,000 24,000 - - Unassigned - - - - - 3,524,911 4,992,240 6,751,362 7,671,173 7,383,601 Total general fund 3,285,164$ 3,096,299$ 2,806,738$ 2,725,312$ 3,792,985$ 4,015,394$ 5,263,805$ 7,051,631$ 7,953,518$ 7,680,550$ All other governmental funds Reserved Special revenue funds 869,694$ 1,183,020$ 1,527,724$ 1,256,954$ 1,112,941$ -$ -$ -$ -$ -$ Unreserved, reported in: Special revenue funds 427,720 846,214 1,666,371 1,933,564 2,693,846 - - - - - Nonspendable: Prepaid items 33,511 60,963 62,635 80,118 83,359 Restricted for: Tourism 1,109,365 1,052,546 1,025,891 1,107,520 1,081,009 Future projects 4,647,863 3,594,379 10,370,914 1,751,405 13,632 Debt service 7,505 22,657 1,482 1,081 20,916 Education 885,365 758,127 931,094 993,998 1,592,227 Economic development 267,577 178,384 - - - Capital projects funds 102,687 102,376 3,233,471 323,009 237,177 - - - - 17,713,788 Unassigned - - - - - - - - - - Total all other governmental funds 1,400,101$ 2,131,610$ 6,427,566$ 3,513,527$ 4,043,964$ 6,951,186$ 5,667,056$ 12,392,016$ 3,934,122$ 20,504,931$ Note: further consideration, the 4B Economic Development Corporation and Lone Star Public Facility Corporation funds are now classified as blended component units. The Town implemented GASB Statement No. 54 in fiscal year 2011. Source: Annual financial reports Economic Development Funds were classified as special revenue funds through FY 2002 and considered discretely presented component units through FY 2007. Upon EXHIBIT S-4 (CONTINUED) TOWN OF WESTLAKE CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS LAST TEN YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING – UNAUDITED) 98 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 REVENUES Taxes 2,696,928$ 3,230,605$ 4,783,522$ 4,804,448$ 4,869,361$ 7,000,690$ 6,393,472$ 7,226,180$ 7,722,606 8,252,748 Licenses, fees and permits 748,016 900,121 1,108,083 860,697 1,746,954 530,646 598,394 944,735 1,175,075 1,200,790 Fines and penalties 751,036 651,090 554,376 523,515 647,170 605,705 622,338 695,167 730,441 734,152 State program revenues 1,925,043 2,387,733 2,673,680 3,163,129 3,687,706 3,945,658 4,369,635 4,696,540 5,269,641 6,173,418 Federal program revenues 75,662 49,200 75,207 56,134 199,436 337,508 152,351 81,958 80,103 87,797 Investment earnings 98,824 261,622 188,459 61,224 38,383 46,248 33,353 24,218 26,713 28,904 Contributions 4,964,085 1,079,768 1,048,308 1,264,262 533,400 - 732,535 5,916,014 82,446 18,785,953 Other revenues 547,184 552,579 607,812 673,400 779,044 980,816 1,323,237 1,274,826 1,665,003 2,471,191 Total revenues 11,806,778 9,112,718 11,039,447 11,406,809 12,501,454 13,447,271 14,225,315 20,859,638 16,752,028 37,734,953 EXPENDITURES General government 2,542,295 1,385,492 1,516,346 1,519,600 1,644,587 1,733,324 1,878,885 1,910,545 2,236,360 2,411,239 Public safety 1,627,641 1,665,879 1,731,317 1,890,469 1,634,936 1,842,751 2,224,469 1,967,584 2,146,587 2,490,551 Cultural and recreation 91,444 86,560 129,641 115,770 105,997 122,400 111,765 113,924 123,541 130,322 Public works 434,716 276,789 846,604 841,822 333,831 326,749 391,115 532,675 615,781 744,028 Economic development 35,759 141,197 495,071 229,907 401,879 706,391 243,939 296,565 147,685 171,757 Visitor services 393,115 226,992 312,777 341,270 420,270 356,365 475,719 521,521 493,082 670,157 Education 2,249,998 2,672,698 3,305,220 3,722,705 4,138,875 4,884,985 6,193,560 5,762,652 7,143,678 7,938,501 Capital Outlay 371,860 836,787 463,918 4,335,114 682,103 1,023,772 1,110,476 7,601,631 9,964,047 5,274,282 Capital Project Debt service Principal 350,000 470,000 395,000 593,937 563,703 555,000 668,000 2,955,000 1,004,677 1,130,762 Interest and other fiscal charges 1,028,634 1,240,950 923,944 990,641 977,163 1,083,377 952,027 830,425 1,116,489 977,412 Bond issuance cost - - 33,000 - - 36,446 148,891 185,699 69,283 - Total expenditures 9,125,462 9,003,344 10,152,838 14,581,235 10,903,344 12,671,560 14,398,846 22,678,221 25,061,210 21,939,011 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 2,681,316$ 109,374$ 886,609$ 3,174,426)$( 1,598,110$ 775,711$ 173,531)$( 1,818,583)$( 8,309,182)$( 15,795,942$ EXHIBIT S-4 (CONCLUDED) TOWN OF WESTLAKE CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS LAST TEN YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING – UNAUDITED) 99 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 OTHER FINANCING SOURCES (USES): Proceeds from sale of land -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Sale of assets 7,000 - - - - Issuance of debt - - 2,500,000 117,640 - 2,095,000 - 8,294,800 - - Premium on CO issued 284,437 - - Refunding bonds issued 7,465,000 - - - - 7,799,196 2,200,000 1,910,000.00 - Premium on refunding bonds issued 37,723 84,598.00 - Payments to bond escrow agent 7,088,706)( - - - - 7,650,305)( - (1,925,315) - Proceeds from capital lease 23,000 - - - - - - 239,009 16,740 Notes payable issued 50,000 - - 401,484 162,059 Special item - 67,760 40,959 - - Extraordinary item 56,704 124,346)( 40,959)( - - Transfers in 704,577 1,212,558 2,160,174 2,435,486 1,804,577 7,082,163 2,121,099 2,104,929 3,094,211 4,617,896 Transfers out 659,258)( 1,178,582)( 1,939,355)( 2,374,165)( 1,804,577)( 6,936,947)( 2,075,592)( 2,590,520)( (3,050,812)(4,294,796) Total other financing sources (uses)45,319 433,270 2,720,819 178,961 - 2,353,920 137,812 10,331,369 753,175 501,899 Prior period adjustment 60,000 - - - - - - - - - NET CHANGES IN FUND BALANCES 2,786,635$ 542,644$ 3,607,428$ 2,995,465)$( 1,598,110$ 3,129,631$ 35,719)$( 8,512,786$ 7,556,007)$( 16,297,841$ DEBT SERVICE AS A PERCENTAGE OF NONCAPITAL EXPENDITURES 15.7% 20.9% 13.6% 15.4% 15.0% 14.1% 12.5% 25.3% 14.4% 12.9% Note: Economic Development Funds were classified as special revenue funds through FY 2002 and considered discretely presented component units through FY 2007. Upon further consideration, the 4B Economic Development Corporation and Lone Star Public Facility Corporation funds are now classified as blended component units. Source:Annual Financial Reports EXHIBIT S-5 TOWN OF WESTLAKE ASSESED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST FIVE FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING – UNAUDITED) 100 Less:Total Taxable Total Fiscal Real Personal Tax-Exempt Assessed Direct Year Property Property Property Value Tax Rate 2011 951,070,355$ 70,569,170$ 143,856,142$ 877,783,383$ 0.1601 2012 1,016,474,604 85,329,823 156,315,552 945,488,875 0.15684 2013 1,099,249,031 122,792,343 335,814,215 886,227,159 0.15684 2014 1,091,142,760 151,927,427 346,730,543 896,339,644 0.15634 2015 1,123,354,430 139,936,507 342,248,275 921,042,662 0.15634 Note:Prior to fiscal year ended September 30, 2011, the Town of Westlake did not assess an ad valorem tax. Source:Tarrant County Appraisal District Denton Central Appraisal District Appraised Value EXHIBIT S-6 TOWN OF WESTLAKE PRINCIPAL PROPERTY TAX PAYERS CURRENT AND FOUR YEARS AGO (UNAUDITED) 101 Percentage Percentage Taxable of Total Town Taxable of Total Town Assessed Taxable Assessed Taxable Taxpayer Value Rank Assessed Value Taxpayer Value Rank Assessed Value 5 Village Circle Holdings LP 140,613,560$ 1 15.27% Maguire Thomas Partners, etal 116,839,380$ 1 13.31% FMR Texas, LLC/LTD Partnership 71,938,529 2 7.81% FMR Texas, LLC/LTD Partnership 148,569,643 2 16.93% DCLI, LLC 52,633,131 3 5.71% Maguire Partners 39,117,985 3 4.46% Fidelity Investments Inc.26,383,422 4 2.86% Lexington TNI Westlake LP 18,249,200 4 2.08% Marsh USA Inc 21,098,171 5 2.29% First American Leasing/Real Estate 17,636,457 5 2.01% Lexington TNI Westlake LP 14,700,000 6 1.60% DCLI, LLC 13,234,691 6 1.51% Corelogic Solutions LLC 14,473,635 7 1.57% Fidelity Investments 12,277,810 7 1.40% Prince Whipple Trust 6,850,000 8 0.74% Levi Strauss & Co.8,215,271 8 0.94% Levi Strauss & CO 5,903,735 9 0.64% Westlake Terra, LLC 7,400,002 9 0.84% Vaquero Club, Inc.5,383,416 10 0.58% EMC Corp 6,418,484 10 0.73% Total 359,977,599$ 39.08% Total 387,958,923$ 44.20% CY Taxable Value 921,042,662 877,783,383 Source: Tarrant County Appraisal District Note: (1) Prior to fiscal year ended September 30, 2011, the Town of Westlake did not assess an ad valorem tax. (2) Total Taxable Assessed Value including real and personal property for tax year 2010 (fiscal year 2011) is $877,783,383. (3) Total Taxable Assessed Value including real and personal property for tax year 2014 (fiscal year 2015) is $921,042,662. 20112015 EXHIBIT S-7 TOWN OF WESTLAKE PROPERTY TAX LEVIES AND COLLECTIONS LAST FIVE FISCAL YEARS (UNAUDITED) 102 Taxes Levied Adjusted Collections Fiscal for the Adjustments Taxes Levied Percent in Subsequent Percentage Year Fiscal Year to Levy for Fiscal Year Amount of Levy Years Amount of Levy 2011 1,409,956$ 47,560$ 1,362,396$ 1,356,050$ 99.53%5,556 1,361,606$ 99.94% 2012 1,486,968 47,220 1,439,748 1,437,908 99.87%1,437,908 99.87% 2013 1,398,777 45,297 1,353,480 1,352,097 99.90%1,352,097 99.90% 2014 1,405,819 44,761 1,361,058 1,350,639 99.23%(451) 1,350,188 99.20% 2015 1,450,674 43,948 1,406,726 1,405,148 99.89%- 1,405,148 99.89% Note: Prior to fiscal year ended September 30, 2011, the Town of Westlake did not assess an ad valorem tax. Source: Tarrant County Appraisal District Denton Central Appraisal District of the Levy to Date Collected within the Fiscal Year Total Collections EXHIBIT S-8 TOWN OF WESTLAKE DIRECT AND OVERLAPPING PROPERTY TAX RATES (PER $100 OF ASSESSED VALUE) LAST FIVE FISCAL YEARS (UNAUDITED) 103 Operating/ Tarrant Tarrant Trophy Total Fiscal General Debt Service Total (A)Carroll Northwest Keller Denton Tarrant County County Club Direct and Year Fund Fund Direct ISD ISD ISD County County College Dist Hospital Dist.MUD #1 Overlapping 2011 0.15620 0.00390 0.16010 1.41500 1.37500 1.53060 0.27736 0.26400 0.13764 0.22790 0.19500 5.58259 2012 0.13835 0.01849 0.15684 1.41500 1.37500 1.54000 0.28287 0.26400 0.14897 0.22790 0.17500 5.58557 2013 0.14197 0.01487 0.15684 1.40000 1.37500 1.54000 0.28287 0.26400 0.14897 0.22790 0.13339 5.52896 2014 0.13710 0.01924 0.15634 1.40000 1.45250 1.54000 0.27220 0.26400 0.14950 0.22790 0.13339 5.59583 2015 0.13710 0.01924 0.15634 1.40000 1.45250 1.54000 0.27220 0.26400 0.14950 0.22790 0.13339 5.59583 Notes:Prior to fiscal year ended September 30, 2011, the Town of Westlake did not assess an advalorem tax. Overlapping rates are those of local and county governments that apply to property owners within the Town of Westlake. Not all overlapping rates apply to all Town's property owners (e.g., the rates for the counties and school districts apply only to the proportion of the Town's property owners whose property is located within the geographic boundaries of the county and school district) Source:Tarrant County Appraisal District Denton Central Appraisal District School Districts Counties City Direct Rates Overlapping Rates EXHIBIT S-9 TOWN OF WESTLAKE TAXABLE SALES BY INDUSTRY TYPE LAST TEN FISCAL YEARS (UNAUDITED) 104 NAICS Industry Type 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 11 Agriculture, Forestry, Fishing and Hunting 31$ 67$ 182$ 210$ $ - 60$ 38$ 163$ 731$ 775$ 21 Mining 2,321 - 2,109 20 400 4,260 3,050 335 15 714 22 Utilities 463,222 212,336 230,072 186,773 178,693 180,032 171,131 176,622 204,280 191,031 23 Construction 81,542 200,791 998,867 1,043,752 68,306 132,780 139,000 365,049 239,888 216,546 31-33 Manufacturing 1,120,328 360,010 371,193 430,515 386,492 402,062 526,755 295,660 375,905 234,651 42 Wholesale Trade 248,702 284,082 142,999 138,456 105,557 145,631 134,466 59,571 421,371 515,602 44-45 Retail 408,556 253,293 610,119 648,597 1,097,007 707,553 1,106,427 1,132,811 962,244 1,332,659 48-49 Transportation and Warehousing 63 491 791 556 316 1,156 3,662 1,962 3,550 51 Information 538,210 223,672 320,848 377,828 423,834 508,609 367,298 378,221 623,828 567,685 52 Financial and Insurance 10,162 343,446 107,319 68,936 87,188 73,455 27,857 75,529 505,585 295,622 53 Real Estate and Rental and Leasing 178,047 204,398 138,879 154,315 327,207 210,158 215,754 457,693 493,570 708,747 54 Professional, Scientific, and Technical Services 111,746 452,018 199,700 192,008 202,263 231,526 221,331 536,971 242,069 193,145 56 Admin and Support and Waste Mgmt & Rem Srv 245,562 45,809 127,779 22,319 39,539 65,045 39,027 110,686 103,340 50,264 61 Education Services 895 317 282 2,980 619,228 1,675,351 356,689 373,117 153,279 201,761 62 Health Care and Social Assistance 10 - 238 - 170 106 251 11,018 2,887 71 Arts, Entertainment and Recreation 49,474 224,101 199,876 174,485 158,996 206,050 204,456 184,687 191,343 189,027 72 Accommodation and Food Services 34,021 57,084 130,923 140,344 140,996 175,938 93,123 204,044 221,061 246,755 81 Other Services (except Public Administration)130,476 130,392 18,576 1,756 4,462 4,632 9,805 13,156 17,412 8,965 92 Public Administration 170 - - - 11 1 135 295 27,243 - 3,623,538$ 2,992,307$ 3,599,960$ 3,584,084$ 3,840,735$ 4,723,628$ 3,617,604$ 4,368,521$ 4,796,144$ 4,960,386$ Town direct sales tax rate 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Note:Information on sales tax by NAICS was not available prior to 2006. Comparison will be made to the prior year until ten-year prior comparison can be made. Source:Texas State Comptroller reports 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 Town's sales tax revenue Fiscal Year EXHIBIT S-10 TOWN OF WESTLAKE RATIOS OF GENERAL BONDED DEBT OUSTANDING LAST TEN FISCAL YEARS 105 Percentage General Certificates of Actual Fiscal Obligation of Taxable Per Year Bonds Obligation Total Sales Capita 2006 - 18,460,000 18,460,000 10.19% 26,447 2007 7,365,000 11,755,000 19,120,000 13.05% 27,198 2008 9,850,000 11,375,000 21,225,000 11.82% 27,038 2009 9,735,000 10,975,000 20,710,000 11.30% 25,791 2010 9,630,000 10,555,000 20,185,000 10.65% 23,831 2011 8,962,656 12,210,000 21,172,656 9.19% 21,343 2012 16,770,000 4,877,000 21,647,000 11.84% 20,369 2013 16,590,000 13,622,000 30,212,000 13.81% 27,251 2014 18,260,000 11,044,000 29,304,000 12.40% 24,748 2015 17,480,000 10,752,000 28,232,000 11.46% 23,527 Notes:Details regarding the Town's outstanding debt can be found in the notes to the financial statements. There was no debt issued until fiscal year 2002. See Table 13 for personal income and population data. General Bonded Debt Outstanding 0 5 10 15 20 25 30 35 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ai l l i o n s Deneral hbligation .onds Certificates of hbligation EXHIBIT S-11 TOWN OF WESTLAKE RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (UNAUDITED) 106 General Certificates Other Certificates Total Percentage Fiscal Obligation of Capital Contractual of Primary of Personal Per Year Bonds Obligation Leases Loans Obligations Obligation Government Income Capita 2004 -$ 12,400,000$ -$ -$ 6,027,387$ 18,427,387$ 45%56,181$ 2005 - 18,810,000 - - 5,980,921 24,790,921 55%69,834 2006 - 18,460,000 - - 5,878,381 24,338,381 27%34,869 2007 7,365,000 11,755,000 23,000 - 5,822,299 24,965,299 27%35,513 2008 9,850,000 11,375,000 15,264 - 5,763,022 27,003,286 23%34,399 2009 9,735,000 10,975,000 46,559 - 5,734,191 26,490,750 22%32,990 2010 9,630,000 10,555,000 - - 5,658,888 25,843,888 25%30,512 2011 8,962,656 12,210,000 - 50,000 5,580,380 26,803,036 21%27,019 2012 16,770,000 4,877,000 - 34,075 5,498,668 27,179,743 20%25,576 2013 16,590,000 13,622,000 - 18,150 5,412,149 35,642,299 24%32,150 2014 18,260,000 10,029,800 237,378 437,253 5,320,824 1,014,200 35,299,455 22%29,812 2015 17,480,000 9,759,250 154,347 357,041 5,226,294 992,750 33,969,682 20%28,308 Note: See Table 13 for personal income and population data. Details regarding the Town's outstanding debt can be found in the notes to the financial statements. No debt was issued until fiscal year 2000. Governmental Activities Business-Type Activities EXHIBIT S-12 TOWN OF WESTLAKE DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF SEPTEMBER 30, 2015 (UNAUDITED) 107 Amount of Debt Outstanding As of Percent (1)Amount Carroll ISD 216,607,746$ 9/30/2015 5.67%12,281,659$ Denton County 634,275,000 9/30/2015 0.02%126,855 Keller ISD 771,227,959 9/30/2015 4.56%35,167,995 Northwest ISD 765,546,815 9/30/2015 1.37%10,487,991 Tarrant County 333,795,000 9/30/2015 0.78%2,603,601 Tarrant County College District - 9/30/2015 0.78%- Tarrant County Hospital District 23,440,000 9/30/2015 0.78%182,832 Trophy Club MUD#1 10,845,000 9/30/2015 18.76%2,034,522 Total Overlapping Debt 62,885,455 Town of Westlake Outstanding Debt 35,299,475 Total Direct & Overlapping Debt 98,184,930$ Source: Texas Municipal Report prepared by employees of the Municipal Advisory Council of Texas ("MAC") Note: (1)The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of the entity's taxable assessed value that is within the Town's boundaries and dividing it by the entities' total taxable assessed value. Overlapping Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Town. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the Town of Westlake. This process recognized that, when considering the Town's ability to issue and repay long-term debt, the entire debt burden borne by the resident 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. Taxing Body EXHIBIT S-13 TOWN OF WESTLAKE DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (UNAUDITED) 108 Per Capita Tarrant County Calendar Estimated Personal Personal Unemployment Year Population Income Income Rate 2005 355 45,292,916 127,586 5.1% 2006 698 90,835,901 130,137 4.6% 2007 703 93,316,319 132,740 4.3% 2008 785 115,891,905 147,633 5.1% 2009 803 120,920,285 150,586 8.1% 2010 847 102,852,057 121,431 8.1% 2011 992 126,678,400 127,700 7.9% 2012 1,063 138,423,531 130,254 6.2% 2013 1,109 147,292,890 132,859 6.0% 2014 1,184 160,462,095 135,516 5.0% 2015 1,200 165,871,904 138,227 4.0% Sources: American Community Survey (ACS) USA.com - Per Capita Income source North Central Texas Council of Governments/US Census 2010 Tarrant County Unemployment Rate information taken from Texas Workforce Commission. Population for 2000 is from the 2000 census. Fiscal Years 2001 through 2003 are estimated. The Town took over the utility billing in 2004 and estimated the population by using number of residential water accounts and assuming a 2.5 average household size. 2010 Census shows median household income at $250,000. Due to the influx of residents coming to Westlake Academy, surveys have shown that there are approximately 1.28 school-age children in each household; therefore, we will use a 3.23 average household size to calculate population. 303 328 355 698 703 785 803 847 992 1062.72 1108.64 1184.08 0 200 400 600 800 1000 1200 1400 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 9stimated topulation EXHIBIT S-14 TOWN OF WESTLAKE PRINCIPAL EMPLOYERS CURRENT AND EIGHT YEARS AGO (UNAUDITED) 109 2007 Percentage Percentage of Estimated of Estimated Total Town Total Town Employer Employees Employment Employer Employees Employment Fidelity Investments 5,843 51.51% Fidelity Investments 3,100 37.15% Core Logic 1,790 15.78% First American/Core Logic 3,000 35.95% Wells Fargo 617 5.44% Chrysler Financial/TD Auto Finance 325 3.89% Deloitte 460 4.06% Wells Fargo 790 9.47% TD Auto Finance 390 3.44% McKesson Corporation 215 2.58% Sabre JLL Facilities 317 2.79% Sonitrol/World Factory 165 1.98% First American Title 262 2.31% Walco 150 1.80% Verizon Wireless 412 3.63% Vaquero Club 140 1.68% Travelocity 200 1.76% Marriott Solana Hotel 120 1.44% Sount Physicians 170 1.50% Pfizer, Inc.115 1.38% Vaquero Country Club 123 1.08% Town of Westlake/Westlake Academy 73 0.87% Marriott Solana Hotel 108 0.95% Premier Academy 34 0.41% Westlake Academy 94 0.83% Solara Healthcare 28 0.34% Total 10,786 95% Total 8,255 99% Note: Information on the Principal Employers from 1999 is not available. Information will be accumulated over the next ten years. Comparisons will be made to the first available data until ten years can be comp Source: Cushman &Wakefield tenant records and contact with employers of the Town 2015 EXHIBIT S-15 TOWN OF WESTLAKE FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) 110 Function/Program 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General government Town manager 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Assistant Town Manager 0.75 0.90 1.00 Assistant to Town Manager 1.00 1.00 1.00 1.00 1.00 1.00 0.75 0.00 0.00 0.00 Administrative 0.50 0.00 0.00 0.75 0.50 0.75 0.75 1.00 0.50 0.50 Building official 1.00 1.00 1.00 1.33 1.33 1.33 1.33 1.50 1.66 1.66 Town secretary 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.25 Facilities/Grounds maintenance 0.50 0.50 0.75 1.08 1.08 1.08 0.83 1.00 1.09 1.34 Municipal 3.75 4.00 4.00 4.25 4.50 4.50 3.75 4.75 5.10 5.00 Finance 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 4.00 4.00 Payroll/Human Resources 0.00 0.00 1.00 1.33 1.33 1.33 1.33 2.00 2.00 2.00 Information Technology 1.00 1.00 Public safety (EMS)11.00 11.00 11.00 9.00 9.00 9.00 9.00 10.00 13.25 14.25 Culture and recreation 0.50 0.50 0.75 0.75 0.75 0.75 0.50 0.75 0.84 0.84 Public works 1.00 1.00 1.50 1.50 1.50 1.50 2.00 3.00 2.66 2.66 Marketing and public affairs 1.00 0.00 0.00 0.00 0.00 0.00 1.00 1.00 2.00 2.00 Education 32.40 36.40 43.00 48.10 55.62 59.44 67.48 76.18 91.18 93.65 Total 57.65 60.40 69.00 74.09 81.61 85.68 93.72 106.93 128.18 132.15 Source: Prior Town budgets and Academy personnel records Note: A full time municipal employee is scheduled to work 2,080 hours per year (including vacation and sick leave). Fulltime equivalent employment is calculated by dividing total labor hours by 2,080. A full time education employee is scheduled to work 1,122 hours per year. EXHIBIT S-16 TOWN OF WESTLAKE OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) 111 Function/Program 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General government Permits issued 194 162 93 61 44 70 85 132 144 159 Permit values 47,464,851$ 67,101,543$ 188,578,581$ 21,051,297$ 190,388,737$ 21,173,592$ 29,481,047$ 50,544,048$ 59,358,904$ 80,011,354$ Police (Contract with Keller PD) Motor vehicle stops 8,992 10,045 10,357 9,247 9,763 9,829 12,221 9,993 9,579 10,432 Traffic accident investigations 164 225 208 266 273 348 343 322 341 398 Part I crimes 30 25 26 23 19 30 39 9 15 20 DWI arrests 56 53 45 24 32 80 50 69 55 62 Fire/EMS Fire runs 136 153 169 118 172 191 181 238 211 211 Ambulance runs 207 251 159 184 187 264 266 286 240 253 Inspections 161 96 132 15 71 71 54 96 286 261 Public Works - General Street resurfacing (LF)7,128 5,333 - - - 3,800 30,000 - - - Potholes repaired 20.00 0.00 20.00 10.00 5.00 36.00 6.00 2.00 6.00 20.00 Public Works - Utility Number of water accounts 338 386 419 437 478 500 568 614 651 713 Water main breaks 3 2 4 5 6 4 4 3 1 1 Avg daily consumption MG (water)1.031 0.729 0.999 1.020 0.889 1.200 1.100 1.090 1.045 1.021 Peak daily consumption MG (water)2.677 1.978 2.060 2.740 2.460 2.540 2.600 2.480 2.690 2.770 System capacity - MG (water)1.685 1.685 1.685 1.685 1.685 1.685 1.685 1.685 2.685 2.685 Water purchased (in gallons x 000)376,264 266,158 364,764 372,933 324,843 443,222 407,305 401,457 381,482 372,838 Water sold (in gallons x 1000)338,085 246,280 340,743 313,495 290,000 385,320 376,496 357,297 347,148 360,000 Wastewater Number of new sewer connections 211 235 240 251 254 245 292 325 350 384 Avg daily sewage treatment 0.1320 0.1370 0.124 0.101 0.063 0.163 0.136 0.151 0.208 0.166 (thousands of gallons) Source: Various Town departments Notes: N/A represents information that is unavailable. EXHIBIT S-17 TOWN OF WESTLAKE CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) 112 Function/Program 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Fire Stations 1 1 1 1 1 1 1 1 1 1 Public Works - Utility Pump station 1 1 1 1 1 1 1 1 1 1 Lift station 2 2 2 2 3 3 3 3 3 3 Telecommunications Duct Bank (LF)38,303 38,303 43,703 49,103 51,803 57,783 57,783 57,783 59,936 66,084 Telecommunications Duct Bank Manholes 95 95 104 113 122 122 122 122 122 140 Water Water mains (LF)58,300 59,200 64,600 70,000 79,000 130,000 137,891 137,891 142,694 148,117 Fire hydrants 119 119 130 130 154 188 191 191 201 214 Storage capacity MG 1,685 1,685 1,685 1,685 1,685 1,685 1,685 1,685 2,685 2,685 Wastewater Sanitary sewers (LF)35,000 35,000 39,300 39,300 49,900 94,000 94,000 94,000 98,964 104,373 Manholes 250 250 267 284 304 304 304 304 326 355 Public Works - Utility Streets (miles)10.80 10.80 10.80 10.80 10.80 10.80 10.25 10.25 10.25 10.50 Highways (miles)- - - - - - - - - - Streetlights - - - - - - - - - - Traffic signals (school zone flashers)2 2 2 2 2 2 2 2 2 2.0 Parks and recreation Acreage 19 19 25 25 25 25 25 25 27 27.0 Playgrounds 2 2 2 2 2 2 2 2 2 2.0 Softball/soccer field 1 1 1 1 1 1 1 1 1 1.0 Football field - - 1 1 1 1 1 1 1 1.0 Public trails (miles)2.5 3.5 3.5 3.5 3.5 5.0 5.0 5.0 7.0 8.5 Source: Various Town departments Note: No capital asset indicators are available for the general government. The amount of roads decreased in FY 2011-2012 due to a portion of road being dedicated to TxDot