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03-05-2013 Agenda with BackupSCHERTZ CITY COUNCIL REGULAR SESSION HAL BALDWIN MUNICIPAL COMPLEX COUNCIL CHAMBERS 1400 SCHERTZ PARKWAY BUILDING #4 SCHERTZ, TEXAS 78154 03-05-2013 Council Agenda AMENDED AGENDA TUESDAY MARCH 5, 2013 AT 6:00 P.M. The City Council may, for its convenience or for the convenience of City Staff or persons in attendance, modify the order in which items on the agenda are considered by the City Council. Call to Order – Regular Session Invocation and Pledges of Allegiance to the Flags of the United States and State of Texas. (Pastor Stephen Prescod, Church of the First Born) City Events and Announcements • Announcements of upcoming City Events (D. Harris/J. Bierschwale/B. James) • Announcements and recognitions by City Manager (J. Kessel) Proclamation • Proclamation recognizing the “Train a Dog/Save A Warrior Program” (Mayor Carpenter) Workshop Item • Discussion and direction regarding the final design of the Animal Adoption Center. (B. James/P. Gaudreau) Presentations • FY 2011-12 Comprehensive Annual Financial Report (CAFR) (J. Kessel/J. Santoya & D. Fraser) Hearing of Residents This time is set aside for any person who wishes to address the City Council. Each person should fill out the speaker’s register prior to the meeting. Presentations should be limited to no more than 3 minutes. 03-05-2013 City Council Agenda Page - 2 - All remarks shall be addressed to the Council as a body, and not to any individual member thereof. Any person making personal, impertinent, or slanderous remarks while addressing the Council may be requested to leave the meeting. Discussion by the Council of any item not on the agenda shall be limited to statements of specific factual information given in response to any inquiry, a recitation of existing policy in response to an inquiry, and/or a proposal to place the item on a future agenda. The presiding officer, during the Hearing of Residents portion of the agenda, will call on those persons who have signed up to speak in the order they have registered. Consent Agenda Items The Consent Agenda is considered to be self-explanatory and will be enacted by the Council with one motion. There will be no separate discussion of these items unless they are removed from the Consent Agenda upon the request by the Mayor or a Councilmember. 1. Minutes - Consideration and/or action regarding the approval of the minutes of the Special Pre-Budget Workshop meeting of February 22, 2013, and the Regular Meeting of February 26, 2013. (J. Kessel/B. Dennis) 2. CAFR FY 2011-12 – Consideration and/or action regarding the FY 2011-12 Comprehensive Annual Financial Report (CAFR). (J. Kessel/J. Santoya & D. Fraser) 3. Resolution No. 13-R-14 – Consideration and/or action approving a Resolution authorizing an Interlocal Agreement with Guadalupe Regional Medical Center, and other matters in connection therewith. (J. Bierschwale/S. Dyal) 4. Resolution No. 13-R-15 – Consideration and/or action approving a Resolution authorizing an Interlocal Agreement with Comal County District Attorney, and other matters in connection therewith. (J. Bierschwale/M. Harris) 5. Resolution No. 13-R-13 – Consideration and/or action approving a Resolution authorizing forms of a Community Facilities Agreement, Construction Performance Bond, and Performance Escrow Agreement and other matters in connection therewith. (B. James/M. Spain) 6. Ordinance No. 13-F-03 - Consideration and/or action approving Ordinance No. 13- F-03 Granting Cibolo Waste Incorporated, DBA Bexar Waste Inc., a Franchise for Municipal Solid Waste Collection, Recycling, and Household Hazardous Waste Collection and Disposal Program; imposing provisions and conditions relating to the exercise of same; and providing for penalties not to exceed $200 for violation thereof; repealing all Ordinances or parts of Ordinances in conflict with this Ordinance. Final Reading (J. Bierschwale/S. Willoughby) Roll Call Vote Confirmation Executive Session 03-05-2013 City Council Agenda Page - 3 - Called under: Section 551.071 Texas Government Code Deliberation regarding litigation, pending or contemplated litigation; Section 551.072 Texas Government Code - Deliberation regarding the purchase, exchange, sale, lease, or value of real property, or real estate; Section 551.074 Texas Government Code - Deliberation regarding personnel matters, policies, duties, employment, and evaluation of certain public officials and employees; Section 551.074 Texas Government Code – Deliberation regarding personnel matters and the appointment, employment, evaluation, reassignment, duties, discipline, or dismissal of the City Manager and City Secretary. Section 551.087 Texas Government Code – Deliberation regarding Economic Development Negotiations. Reconvene into Regular Session 7. Take any action deemed necessary as a result of the Executive Session. Requests and Announcements 8. Announcements by City Manager • Citizen Kudos • Recognition of City employee actions • New Departmental initiatives 9. Requests by Mayor and Councilmembers that items be placed on a future City Council agenda. 10. Requests by Mayor and Councilmembers to City Manager and Staff for information. 11. Announcements by Mayor and Councilmembers • City and community events attended and to be attended • City Council Committee and Liaison Assignments (see assignments below) • Continuing education events attended and to be attended • Recognition of actions by City employees • Recognition of actions by community volunteers • Upcoming City Council agenda items Adjournment CERTIFICATION 03-05-2013 City Council Agenda Page - 4 - I, BRENDA DENNIS, CITY SECRETARY OF THE CITY OF SCHERTZ, TEXAS, DO HEREBY CERTIFY THAT THE ABOVE AGENDA WAS PREPARED AND POSTED ON THE OFFICIAL BULLETIN BOARDS ON THIS THE 1st DAY OF MARCH 2013 AT 2:30 P.M., WHICH IS A PLACE READILY ACCESSIBLE TO THE PUBLIC AT ALL TIMES AND THAT SAID NOTICE WAS POSTED IN ACCORDANCE WITH CHAPTER 551, TEXAS GOVERNMENT CODE. Brenda Dennis Brenda Dennis CPM, TRMC, MMC, City Secretary I CERTIFY THAT THE ATTACHED NOTICE AND AGENDA OF ITEMS TO BE CONSIDERED BY THE CITY COUNCIL WAS REMOVED BY ME FROM THE OFFICIAL BULLETIN BOARD ON _____DAY OF _______________, 2013. ____________________________Title:__________________________ This facility is accessible in accordance with the Americans with Disabilities Act. Handicapped parking spaces are available. If you require special assistance or have a request for sign interpretative services or other services please call 210 619-1030 at least 24 hours in advance of meeting. COUNCIL COMMITTEE AND LIAISON ASSIGNMENTS Mayor Carpenter TIRZ II Board Hal Baldwin Scholarship Committee Audit Committee Investment Advisory Committee Mayor Pro-Tem Edwards – Place 4 Investment Advisory Committee Audit Committee Hal Baldwin Scholarship Committee Councilmember Fowler – Place 1 Interview Board for Boards and Commissions Schertz Housing Board Liaison Councilmember Scagliola – Place 2 Animal Control Advisory Committee Interview Board for Boards and Commissions Sweetheart Advisory Committee Cibolo Valley Local Government Corporation Councilmember Antuna - Place 3 Audit Committee ASA Commuter Rail District Board – Lone Star Schertz Seguin Local Government Corporation Randolph Joint Land Use Study (JLUS) Executive Committee Councilmember Verinder – Place 5 Agenda No. 1 CITY COUNCIL MEMORANDUM City Council Meeting: March 5, 2013 Department: City Secretary Subject: Minutes BACKGROUND The City Council held a workshop on February 22, 2013, and a regular meeting on February 26th, 2013. FISCAL IMPACT None RECOMMENDATION Staff recommends Council approve the minutes of the workshop of February 22, 2013, and the minutes of the regular meeting on February 26, 2013. ATTACHMENT Minutes –Workshop meeting February 22, 2013, Regular meeting February 26, 2013 02-22-2013 Minutes MINUTES BUDGET WORKSHOP RETREAT MEETING February 22, 2013 A Special Pre-Budget Workshop meeting was held by the Schertz City Council of the City of Schertz, Texas, on February 22, 2013, at 12:00 p.m., at the Schertz Civic Center. The following members present to-wit: Mayor Michael Carpenter Mayor Pro-Tem Cedric Edwards Councilmember Jim Fowler Councilmember David Scagliola Councilmember George Antuna Staff Present: City Manager John Kessel Executive Director David Harris Executive Director John Bierschwale Executive Director Brian James Chief of Staff Bob Cantu Executive Assistant Sarah Gonzalez Members of the public present: Mr. Sydney Verinder, Councilmember Elect Call to Order (General Comments Mayor Carpenter called the pre-budget workshop to order at 12:35 p.m. with Mayor Carpenter, Councilmembers David Scagliola, Jim Fowler were present. Also present was Mr. Sydney Verinder, and was welcomed to participate by Mayor Carpenter. Welcome/Overview • Presentation and discussion regarding the FY 2013-14 pre-budget strategic planning (J. Kessel/Management Staff) City Manager John Kessel led the pre-budget discussion. At 12:40 p.m., Councilmember Antuna arrived and a quorum was present. At 1:10 p.m., Mayor Pro-Tem Edwards arrived. At 2:20 p.m., Councilmember George Antuna had to leave the workshop. At 3:30 p.m., City Department heads arrived and participated in the pre-budget workshop discussions. ADJOURNMENT After discussion was concluded, the pre-budget workshop was adjourned the 5:30 p.m. 02-22-2013 Minutes Page - 2 - ___________________________________ Mayor, Michael R. Carpenter ATTEST: ___________________________ City Secretary, Brenda Dennis 2-26-2013 Minutes MINUTES REGULAR MEETING February 26, 2013 A Regular Meeting was held by the Schertz City Council of the City of Schertz, Texas, on February 26, 2013, at 6:00 p.m., in the Hal Baldwin Municipal Complex Council Chambers, 1400 Schertz Parkway, Building #4, Schertz, Texas. The following members present to-wit: Mayor Michael R. Carpenter Mayor Pro-Tem Cedric Edwards, Sr. Councilmember Jim Fowler Councilmember David Scagliola Councilmember George Antuna, Jr. Councilmember Sydney H. Verinder Staff Present: City Manager John C. Kessel Executive Director John Bierschwale Executive Director David Harris Executive Director Brian James Chief of Staff Bob Cantu City Attorney Michael Spain City Secretary Brenda Dennis CALL TO ORDER: Mayor Carpenter called the Regular Meeting to order at 6:00 p.m. INVOCATION AND PLEDGES OF ALLEGIANCE TO THE FLAGS OF THE UNITED STATES AND THE STATE OF TEXAS. Reverend Gerry Goodridge, with the Bracken United Methodist Church gave the invocation followed by the Pledges of Allegiance to the Flags of the United States and the State of Texas. A. Oath of Office – Oath of office administered to newly appointed Councilmember Sydney H. Verinder, City Council Place 5. (City Secretary, Brenda Dennis to administer Oath) City Secretary Brenda Dennis administered the Oath of Office to Councilmember Select Sydney H. Verinder. Mayor Carpenter, Council and Staff congratulated Mr. Verinder and welcomed him. Mayor Carpenter recognized Councilmember Verinder who introduced his wife Laura, his daughter Kathleen and her husband Kevin who were in the audience this evening. Mayor Carpenter recognized Commissioner Jim Wolverton who was in the audience this evening. City Events and Announcements • Announcements of upcoming City Events (D. Harris/J. Bierschwale/B. James) Mayor Carpenter recognized Executive Director David Harris who announced the following upcoming events: o Saturday, March 2, 2013, 5th Annual Wilenchik Walk of Life Mr. Harris recognized Events Coordinator Mayor Spence who came forward briefing the Council and audience on the event. o March 2 through March 17, 2013, Schertz Annual Spring Clean Up 2-26-2013 Minutes o Saturday, March 23, 2013, Plant and Play Day, Schertz Playscape • Announcements and recognitions by City Manager (J. Kessel) Mayor Carpenter recognized City Manager John Kessel who thanked the Events Coordinator Mary Spence, Municipal Court Director Patti Veliz, members of Facilities Maintenance, Facilities Maintenance Supervisor Joe Villarreal, Administrative Assistant Judy Vela, Facilities Techs Esther Botello, Albert Orosco, and Serge Valbrun for their assistance with the reception for the Baldwin Family. Mr. Kessel also publically thanked HEB and Grumpy Azzoz for donating the food. Hearing of Residents This time is set aside for any person who wishes to address the City Council. Each person should fill out the speaker’s register prior to the meeting. Presentations should be limited to no more than 3 minutes. All remarks shall be addressed to the Council as a body, and not to any individual member thereof. Any person making personal, impertinent, or slanderous remarks while addressing the Council may be requested to leave the meeting. Discussion by the Council of any item not on the agenda shall be limited to statements of specific factual information given in response to any inquiry, a recitation of existing policy in response to an inquiry, and/or a proposal to place the item on a future agenda. The presiding officer, during the Hearing of Residents portion of the agenda, will call on those persons who have signed up to speak in the order they have registered. Mayor Carpenter recognized the following who spoke: • Mrs. Clare Layton, 12231 Lost Meadows Drive, who provided the Council with an update regarding her request regarding the recent call to 911 mix up, and the answers she received from City Staff and the County. Mrs. Layton provided comments regarding the City Secretary’s performance. • Mr. Ed “Grumpy” Azzoz, 528 Wayward Pass, who spoke regarding the recent Council Candidate interviews. Mr. Azzoz also provided comments regarding the City Secretary’s performance. Mr. Azzoz also spoke on the recent Amazon project, requesting information on what tax revenue this project would bring the City. He requested that this information be placed on the City website. • Mr. Steve White, 805 Main Street, who spoke regarding concern for our City as he believes a storm is coming and does not know where it is coming from, where it will be coming from or what is going to cause it. He stated he is concerned about brain drain at the City. He stated he has been in the City 40 years, we are losing our key people, and he does not know why. He needs an answer and he needs to know why. He stated individuals that got our City where it is today are leaving, and we have to stop this. We need to do something to change direction, and do something about the storm brewing. He is talking about people, they are our key assets. Consent Agenda Items 2-26-2013 Minutes The Consent Agenda is considered to be self-explanatory and will be enacted by the Council with one motion. There will be no separate discussion of these items unless they are removed from the Consent Agenda upon the request by the Mayor or a Councilmember. Mayor Carpenter requested that agenda item 5 be removed from the consent agenda for separate consideration. Council concurred. Mayor Carpenter also stated that at the request of City Staff, agenda item 6 has been removed for consideration. 1. Minutes - Consideration and/or action regarding the approval of the minutes of the Special Pre-Budget Workshop meeting of February 15, 2013, and the Regular Meeting of February 19, 2013. (J. Kessel/B. Dennis) 2. Resolution No. 13-R-08 – Consideration and/or action approving a Resolution authorizing an advertising and graphic design services agreement with Souzamaphone Marketing, LLC, and other matters in connection therewith. (D. Harris/L. Erwin) The following was read into record: RESOLUTION NO. 13-R-08 A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS AUTHORIZING AN ADVERTISING AND GRAPHIC DESIGN SERVICES AGREEMENT WITH SOUZAMAPHONE MARKETING, LLC, AND OTHER MATTERS IN CONNECTION THEREWITH 3. Ordinance No. 13-T-05 – Consideration and/or action approving an Ordinance authorizing a Budget Adjustment to fund Playscape Electrical and Security Improvements; repealing all Ordinances or parts of Ordinances in conflict with the Ordinance; and providing an effective date. Final Reading (B. James/G. Logan) The following was read into record: ORDINANCE NO. 13-T-05 AN ORDINANCE BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS AUTHORIZING A BUDGET ADJUSTMENT TO FUND PLAYSCAPE ELECTRICAL AND SECURITY IMPROMEMENTS; REPEALING ALL ORDINANCES OR PARTS OF ORDINANCES IN CONFLICT WITH THIS ORDINANCE; AND PROVIDING AN EFFECTIVE DATE 4. Ordinance No. 13-T-06 – Consideration and/or action approving an Ordinance authorizing a budget adjustment to provide matching funds for a CDBG Grant to achieve ADA barrier removal at Crescent Bend Nature Park, Pickrell Park, Ashley Park, Woodland Oaks Park, and Lone Oak Park; repealing all Ordinances or parts of Ordinances in conflict with the Ordinance; and providing an effective date. Final Reading (D. Harris/G. Logan) The following was read into record: 2-26-2013 Minutes ORDINANCE NO. 13-T-06 AN ORDINANCE BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS AUTHORIZING A BUDGET ADJUSTMENT TO PROVIDE MATCHING FUNDS FOR A CDBG GRANT TO ACHIEVE ADA BARRIER REMOVAL AT CRESCENT BEND NATURE PARK, PICKRELL PARK, ASHLEY PARK, WOODLAND OAKS PARK, AND LONE OAK PARK; REPEALING ALL ORDINANCES OR PARTS OF ORDINANCES IN CONFLICT WITH THIS ORDINANCE; AND PROVIDING AN EFFECTIVE DATE Mayor Carpenter recognized Mayor Pro-Tem Edwards who moved, seconded by Councilmember Scagliola to approve the consent agenda items 1 through 5. The vote for item 1 was, Mayor Pro-Tem Edwards, Councilmembers Fowler and Scagliola voting yes, Councilmembers Antuna and Verinder abstaining, and no one voting no. Motion Carried The vote for items 2, 3, and 4 was unanimous with Mayor Pro-Tem Edwards, Councilmembers Fowler, Scagliola, Antuna, and Verinder voting yes and no one voting no. Motion carried. Discussion and/or Action Items 5. Appointment to the Randolph Joint Land Use Study (JLUS) Executive and Advisory Committees - Consideration and/or action approving a Resolution appointing members of the City Council to serve on the Randolph Joint Land Use Study (JLUS) Committees. (B. James/B. James) Mayor Carpenter recognized Executive Director Brian James who stated that Former Mayor Baldwin was the appointee to the Executive Committee, and Councilmember George Antuna Jr., was the appointee to the Advisory Committee. The City of Schertz needs to appoint a member to serve both on the Executive Committee and the Advisory Committee. The intent of the Randolph Joint Land Use Study (JLUS) is to provide a detailed land use assessment for the areas around Randolph. The Randolph JLUS will focus on mission/airfield encroachment, airspace competition, traffic management, noise, dust, frequency management, and storm-water drainage for three separate study areas: • Randolph • Seguin Auxiliary Field • Stinson Airfield The study will also provide a current baseline of existing incompatible land uses surrounding the installation, an assessment of regional growth trends, and surrounding communities with a plan to use in local land use planning and infrastructure decisions in the vicinity of RAFB, Seguin Auxiliary Field, and Stinson Airfield. The study will develop recommendations based on best practices and experience in effort to identify strategies to promote compatible land use planning around RAFB, Seguin Auxiliary Field, and Stinson Airfield by its surrounding communities in the future. 2-26-2013 Minutes Mayor Carpenter recognized Mayor Pro-Tem Edwards who moved, seconded by Councilmember Verinder to approve the appointment of Councilmember George Antuna, Jr., to serve as the Executive Committee Member and Chief of Staff Bob Cantu to serve as the Advisory Member to the Randolph Joint Land Use Study Committee. The vote was unanimous with Mayor Pro-Tem Edwards, Councilmembers Fowler, Scagliola, Antuna, and Verinder voting yes and no one voting no. Motion carried Roll Call Vote Confirmation Mayor Carpenter recognized City Secretary Brenda Dennis who recapped the votes for agenda items 1, 2, 3, 4, and 5. Executive Session Mayor Carpenter recessed the regular meeting into executive session at 6:33 p.m. Called under: Section 551.071 Texas Government Code Deliberation regarding litigation, pending or contemplated litigation; Section 551.072 Texas Government Code - Deliberation regarding the purchase, exchange, sale, lease, or value of real property, or real estate; Section 551.074 Texas Government Code - Deliberation regarding personnel matters, policies, duties, employment, and evaluation of certain public officials and employees; Section 551.074 Texas Government Code – Deliberation regarding personnel matters and the appointment, employment, evaluation, reassignment, duties, discipline, or dismissal of the City Manager and City Secretary. Section 551.087 Texas Government Code – Deliberation regarding Economic Development Negotiations. Reconvene into Regular Session Mayor Carpenter reconvened into regular session at 12:52 a.m. on February 28, 2013. 7. Take any action deemed necessary as a result of the Executive Session. Mayor Carpenter stated there is no action this evening, but requested that the Executive Session items be placed back on the March 5, 2013 agenda. Requests and Announcements 8. Announcements by City Manager • Citizen Kudos • Recognition of City employee actions 2-26-2013 Minutes • New Departmental initiatives No further announcements provided. 9. Requests by Mayor and Councilmembers that items be placed on a future City Council agenda. No items requested. 10. Requests by Mayor and Councilmembers to City Manager and Staff for information. No information requested. 11. Announcements by Mayor and Councilmembers • City and community events attended and to be attended • City Council Committee and Liaison Assignments • Continuing education events attended and to be attended • Recognition of actions by City employees • Recognition of actions by community volunteers • Upcoming City Council agenda items No announcements provided. Adjournment As there was no further business, the meeting was adjourned at 12:52 a.m., February 28, 2013. __________________________________ Mayor, Michael R. Carpenter ATTEST: ___________________________________________ City Secretary, Brenda Dennis Agenda No. 2 CITY COUNCIL MEMORANDUM City Council Meeting: March 5, 2013 Department: Finance Department Subject: Comprehensive Annual Financial Report - CAFR FY 2011-12 BACKGROUND Presentation and consideration and/or action regarding the FY 2011-12 Comprehensive Annual Financial Report (CAFR) by Debbie Fraser, CPA of Armstrong, Vaughan & Associates FISCAL IMPACT None RECOMMENDATION Staff recommends approval of the 2011-12 Comprehensive Annual Financial Report ATTACHMENTS Comprehensive Annual Financial Report CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2012 OFFICIALS ISSUING REPORT John C. Kessel City Manager Juan F. Santoya, Jr. Director of Finance i CITY OF SCHERTZ, TEXAS TABLE OF CONTENTS SEPTEMBER 30, 2012 PAGE INTRODUCTORY SECTION .........................................................................................................iii LETTER OF TRANSMITTAL ........................................................................................................................iv CITY OFFICIALS ............................................................................................................................................ix ORGANIZATIONAL CHART .........................................................................................................................x CERTIFICATE OF ACHIEVEMENT .............................................................................................................xi FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT .........................................................................................................2 MANAGEMENTS DISCUSSION AND ANALYSIS .....................................................................................4 BASIC FINANCIAL STATEMENTS ............................................................................................................13 STATEMENT OF NET ASSETS ...............................................................................................................14 STATEMENT OF ACTIVITIES.................................................................................................................16 BALANCE SHEET –GOVERNMENTAL FUNDS ..................................................................................18 RECONCILIATION OF BALANCE SHEET TO STATEMENT OF NET ASSETS ...............................20 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS ..................................................................................................................21 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVIT IES .23 STATEMENT OF NET ASSETS -PROPRIETARY FUNDS ...................................................................24 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS ........................................................................................................................26 STATEMENT OF CASH FLOWS -PROPRIETARY FUNDS .................................................................27 NOTES TO BASIC FINANCIAL STATEMENTS ........................................................................................29 REQUIRED SUPPLEMENTARY INFORMATION .....................................................................................51 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL -GENERAL FUND ....................................................................................52 NOTES TO SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE –BUDGET AND ACTUAL -GENERAL FUND..............................................................54 TEXAS MUNICIPAL RETIREMENT SYSTEM -ANALYSIS OF FUNDING PROGRESS .................55 SUPPLEMENTARY INFORMATION ..........................................................................................................56 COMPARATIVE BALANCE SHEETS -GENERAL FUND ...................................................................57 COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -GENERAL FUND.............................................................................................................58 COMPARATIVE BALANCE SHEETS -DEBT SERVICE FUND ..........................................................59 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL -DEBT SERVICE FUND ..............................................................................60 COMBINING BALANCE SHEET -NONMAJOR GOVERNMENTAL FUNDS ...................................61 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES –NONMAJOR GOVERNMENTAL FUNDS ..................................................................63 ii SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL -HOTEL OCCUPANCY FUND ....................................................................65 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE- BUDGET TO ACTUAL -PARK FUND ................................................................................................66 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL -POLICE FORFEITURES FUND .................................................................67 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL -LIBRARY GRANT FUND ..........................................................................68 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL -HISTORICAL COMMITTEE FUND ..........................................................69 COMBINING STATEMENT OF NET ASSETS - DISCRETELY PRESENTED COMPONENT UNITS ...........................................................................70 COMBINING STATEMENT OF ACTIVITIES - DISCRETELY PRESENTED COMPONENT UNITS ...........................................................................71 COMBINING BALANCE SHEET -DISCRETELY PRESENTED COMPONENT UNITS ...................72 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -DISCRETELY PRESENTED COMPONENT UNITS.....................................................73 STATISTICAL SECTION NET ASSETS, BY COMPONENT .................................................................................................................75 CHANGE IN NET ASSETS ...........................................................................................................................77 FUND BALANCES -GOVERNMENTAL FUNDS ..............................................................................................81 CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS ..............................................................83 TAX REVENUE BY SOURCE –GOVERNMENTAL FUNDS ...................................................................85 TOTAL WATER AND SEWER CONSUMPTION AND RATES..........................................................86 PRINCIPAL WATER AND SEWER CONSUMERS ...............................................................................87 ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY .......................88 DIRECT AND OVERLAPPING PROPERTY TAX RATES ........................................................................89 PRINCIPAL PROPERTY TAX PAYERS ......................................................................................................90 PROPERTY TAX LEVIES AND COLLECTIONS .......................................................................................91 TAXABLE ASSESSED VALUE....................................................................................................................92 RATIOS OF OUTSTANDING DEBT BY TYPE ..........................................................................................93 RATIOS OF GENERAL BONDED DEBT OUTSTANDING.................................................................95 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT.........................................96 DEBT MARGIN INFORMATION .................................................................................................................97 PLEDGED REVENUE COVERAGE .............................................................................................................98 DEMOGRAPHIC AND ECONOMIC STATISTICS .....................................................................................99 TOP TEN PRINCIPAL EMPLOYERS.........................................................................................................100 FULL-TIME EQUIVALENT CITY GOVERNMENTAL EMPLOYEES BY FUNCTION .......................101 OPERATING INDICATORS BY FUNCTION/PROGRAM .......................................................................102 CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM..................................................................104 COMPLIANCE SECTION REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS ........................107 iii INTRODUCTORY SECTION iv February 11, 2013 To the Honorable Mayor, City Council, and the Citizens of City of Schertz: State law requires that local governments publish a complete set of financial statements presented in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP) and audited in accordance with generally accepted auditing standards in the United States of America by a firm licensed certified public accountants.Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the City of Schertz for the fiscal year ended September 30, 2012. This report consists of management’s representations concerning the finances of the City of Schertz. 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 these representations, management of the City of Schertz has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Schertz’s financial statements in conformity with U.S. GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Schertz comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City of Schertz’s financial statements have been audited by Armstrong, Vaughan & Associates P.C. a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Schertz for the fiscal year ended September 30, 2012, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Schertz’s financial statements for the fiscal year ended September 30, 2012, are fairly presented in conformity with U.S. GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Schertz’s MD&A can be found immediately following the report of the independent auditor. v Profile of the Government The City of Schertz, incorporated in 1958, is located in the central part of Texas, which is considered to be a top growth area in the state, and one of the top growth areas in the country. The City of Schertz currently occupies a land area of 32.1 square miles and serves a population of 33,382. The City of Schertz is empowered to levy a property tax on both real and personal properties located within its boundaries. It also is empowered by state statue to extend its corporate limits by annexation, which occurs periodically when deemed appropriate by the governing body. The City of Schertz has operated under the council-manager form of government since 30 November 1972. Policymaking and legislative authority are vested in a City Council consisting of the mayor and 5 other members. The City Council is responsible for establishing public policy on City matters by the passage of appropriate ordinances and resolutions. The City Manager is responsible for overseeing the day-to-day operations of the government, implementing policy established by City Council, and for appointing the heads of the various departments. The council is elected on a non-partisan basis. Council members serve two-year staggered terms, with two council members elected every two years. The mayor is elected to serve a two-year term. The mayor and all five council members are elected at large. The City of Schertz provides a full range of services,including police and fire protection, the construction and maintenance of streets, recreational facilities, cultural events, water and sewer services and EMS services. The annual budget serves as the foundation for the City of Schertz’s financial planning and control. All departments of the City of Schertz are required to submit requests for appropriation to the City Manager by June of each year. The City Manager uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the council for review prior to 1 August. The council then holds public hearings on the proposed budget and to adopt a final budget by no later than September 30th, the close of the City of Schertz’s fiscal year. The appropriated budget is prepared by each department (e.g. police). Department heads may make transfers of appropriations within a department. The City Manager may make transfers between departments and funds with City Council approval. Budget to actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented on pages 52-53 as part of the required supplementary information. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Schertz operates. vi Local economy. The City of Schertz enjoys a favorable economic environment and indicators point to favorable growth. In November 2012, Amazon announced it would build a $166 million fulfillment center on 96 acres in Schertz. The fulfillment center will have 1.26 million square feet and be the largest facility in Schertz. The new fulfillment center is expected to create 350 new jobs with an annual payroll of $11 million. SYSCO completed their 630,000 square foot distribution facility in January 2012 and employs 575 full time staff. Salof Companies moved into a 390,935 square foot facility. Salof employs 110 people and is expected to employ a total of 225 positions within 2 years. Caterpillar completed a second phase to their operations and is expected to add two more phases with a total of 330 jobs. Baptist Emerus Emergency Hospital began construction on its new $11 million facility and is expected to be in operation by spring of 2013. Businesses with headquarters or divisions located within the city or in close proximity include Eye Care Centers of America, Brandt Engineering, Cal-Tex Protective Coatings, Inc., Valero, FedEx Freight, Marshall Shredding Company, Kraft Nabisco and Republic National Distributing Company. The region has a manufacturing and industrial base that adds to the relative stability of the unemployment rate, which currently stands at 5.5%. The region has a labor force of approximately 990,000, and this number is expected to increase in the next several years as the region continues to experience population and business growth. Local indicators point to a strong and growing housing market. The City planned well and has an abundant water supply for meeting its future growth. Long-term financial planning. The community approved bond propositions in November 2010 for quality of life projects which included a swimming pool, improvements to athletic and soccer fields, building an animal services facility, and improvements to Main Street. Bonds have been sold for these projects. Design work was in progress for the athletic and soccer fields, animal shelter and swimming pool. In 2006, the citizens approved bond propositions for $38.5 million in streets and drainage improvements, a new library and additional recreational facilities. The library, recreation center were completed. Most of the streets and drainage projects have been completed. Financial Information Internal Control. Management is responsible for establishing and maintaining internal controls designed to ensure that assets of the City are protected from loss, theft or misuse and to provide adequate accounting information compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles for local governments as prescribed by the Governmental Accounting Standards Board (GASB), the Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants (AICPA). The internal control system is designed to provide reasonable, but not absolute assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of an internal control should not exceed the benefits derived from the internal control. The City utilizes financial accounting software which is designed with a system of internal controls. These controls are continually being reevaluated to provide reasonable, but not absolute, assurances. Budget Controls. The City also utilizes budgetary controls. Legally expenditures cannot exceed the appropriated amount. The objective of these budgetary controls is to ensure compliance with the adopted budget approved by the City Council as mandated by the city charter and state law. The levels of budgetary control are established at the line-item basis and at the fund level vii Cash management policies and practices. During the year, temporarily idle cash was invested through State local investment pools. Cash available for longer term investments was invested in agency bonds and certificates of deposit. Cash in the State local investment pools are essentially liquid. Longer term investments had an average maturity of 2 years. The average yield on investments was .50 percent. Active involvement in investment instruments was limited due to the continuation of extremely low interest rates and market uncertainty. The rate of return was simply not sufficient to justify the management expense. Risk Management. During 2012, the City continued a risk management program for worker’s compensation. Various control techniques, including employee accident prevention training, have been implemented during the year to minimize accident-related losses. Third-party coverage is currently maintained for individual worker’s compensation claims and all other potential losses. Additional information on the City of Schertz’s risk management activity can be found in the notes to the financial statements. Pension benefits. The City of Schertz sponsors an agent multiple-employer defined benefit pension plan for its employees. Each year, an independent actuary engaged by the pension plan calculates the amount of the annual contribution the City of Schertz must make to the pension plan to ensure the plan will be able to fully meet its obligations to retired employees on a timely basis. As a matter of policy, the City of Schertz fully funds each year’s annual required contribution to the pension plan as determined by the actuary. The remaining unfunded amount is being systematically funded as part of the annual required contribution calculated by the actuary Other Financial Information: Independent Audit. An independent audit is required every year of the general ledger, accounts, financial records, and transactions of all city departments. The audit is completed by an independent certified public accounting firm selected by the City Council. The City is in compliance with this requirement and the independent auditor’s report by Armstrong, Vaughan, P.C. Certified Public Accountants, has been included in this report. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Schertz for its comprehensive annual financial report for the fiscal year ended September 30, 2011. This was the 27th consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City 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 our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the finance department. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. viii In addition, without the assistance of each and every department head on staff, we would have none of the successes we’ve enjoyed. Credit also must be given to the Mayor and the City Council for their unfailing support for the City Manager and staff. Respectfully submitted, John C. Kessel Juan F. Santoya City Manager Finance Director ix CITY OF SCHERTZ, TEXAS CITY OFFICIALS MAYOR VACANT MAYOR PRO-TEM GEORGE ANTUNA, JR. CITY COUNCIL DAVID SCAGLIOLA CEDRIC EDWARDS, SR. MICHAEL CARPENTER JIM FOWLER CITY MANAGER JOHN C. KESSEL DIRECTOR OF FINANCE JUAN F. SANTOYA, JR. CITY ATTORNEY MICHAEL SPAIN, FULBRIGHT & JAWORSKI, L.L.P CITY AUDITOR ARMSTRONG, VAUGHAN & ASSOCIATES, P.C. x CITY OF SCHERTZ ORGANIZAT IONAL CHAR T *Appointed by City Council Citizens Mayor & City Council Prosecuting Attorney* City Secretary*City Manager*Municipal Court Judge* City Attorney* Records Management Operations Development Support Economic Development Chief of Staff Police Fire Rescue EMS Public Works Municipal Court Marshal Services Development Services Engineering Geographic Information Systems Parks, Recreation, and Community Service Animal Services Finance Purchasing & Asset Management Public Affairs Customer Relations Facilities Maintenance Schertz Magazine Library Information Technology Human Resources xi 1 FINANCIAL SECTION 2 INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the City Council City of Schertz, Texas We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Schertz, Texas, as of and for the year ended September 30, 2012, which collectively comprise the City's basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the City of Schertz, Texas’management. 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Schertz, Texas, as of September 30, 2012, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 11, 2013 on our consideration of City of Schertz, Texas' internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 3 Accounting principles generally accepted in the United States of America require that management’s discussion and analysis,budgetary comparison information, and analysis of defined benefit pension plan funding progress on pages 4 through 12 and 51 through 55 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 regarding the methods of preparing the information and comparing the information for consistency with management’s response to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Schertz, Texas, financial statements taken as a whole. The combining and individual fund financial statements are presented for purposes of additional analysis and are not a required part of the financial statements. These statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements taken as a whole. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Schertz, Texas, financial statements taken as a whole. The introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the financial statements. These 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. Armstrong, Vaughan & Associates, P.C. February 11, 2013 4 MANAGEMENTS DISCUSSION AND ANALYSIS As management of the City of Schertz, we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City of Schertz for the fiscal year ended September 30, 2012. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report. Financial Highlights The assets of the City of Schertz exceeded its liabilities at the close of the most recent fiscal year by $126,043,088 (net assets).Of this amount, $17,230,534 (unrestricted net assets) may be used to meet the City's ongoing obligations to citizens and creditors. The City's total net assets increased by $3,586,578. A majority of this increase, 54%, is attributable to capital contributions from developers. As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $22,659,404, an increase of $7,857,247 in comparison with the prior year. The majority of this increase is from the new bonds issued in the Capital Projects fund. At the end of the fiscal year, the combined total of the General Fund assigned and unassigned fund balances was $2,975,878 which is 15% of the general fund expenditures not including capital outlay. The fund balance policy is to have a 25% balance. During the fiscal year, the City issued $7.625 million in general obligation debt for voter approved community projects. The related principal and interest payments for the debt are from an annual ad valorem tax levied against all taxable property within the City. In addition, the City had one debt refunding due to the favorable rate environment. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of Schertz is improving or deteriorating. The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). 5 Both of the government-wide financial statements distinguish functions of the City of Schertz that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Schertz include general government, public safety, streets and parks, health, and culture and recreation. The business-type activities of the City of Schertz include a water and sewer department and an emergency medical services department. The government-wide financial statements include not only the City of Schertz itself (known as the primary government) but also legally separate component units for which the City is financially accountable. Financial information for these component units is reported separately from the primary government. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Schertz, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. The funds of the City of Schertz can be divided into two categories: governmental and proprietary. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government- wide financial statements, governmental fund financial statements focus on near 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 is useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Schertz maintains eleven individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, the debt service fund, and the capital projects fund, all of which are considered to be major funds. Data from the other eight governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. Proprietary funds. The City of Schertz maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of Schertz uses enterprise funds to account for its water and sewer department and for its emergency medical services department. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water and sewer department and for the emergency medical services department, both of which are considered to be major funds of the City of Schertz. 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. 6 Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's general fund budgetary schedule. The City of Schertz adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. The combining statements referred to earlier in connection with non-major governmental funds are presented immediately following the required supplementary information. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City of Schertz, assets exceeded liabilities by $126 million at the close of the most recent fiscal year. The largest portion of the City's total net assets (85%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding, plus bond proceeds that have not yet been signed. The City of Schertz uses these capital assets to provide services to citizens; consequently, these assets are not available for operational type of future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's total net assets (2%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets, $17.2 million may be used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Schertz is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. TABLE A-1 NET ASSETS 2012 2011 2012 2011 2012 2011 Current and Other Assets 27,501,728$ 19,189,682$ 14,882,981$ 12,904,183$ 42,384,709$ 32,093,865$ Capital Assets 101,396,956 102,897,959 59,257,605 60,061,493 160,654,561 162,959,452 Total Assets 128,898,684 122,087,641 74,140,586 72,965,676 203,039,270 195,053,317 Current Liabilities 5,334,964 4,614,315 2,829,343 3,348,941 8,164,307 7,963,256 Long-Term Liabilities 59,259,434 54,297,127 9,572,441 10,336,424 68,831,875 64,633,551 Total Liabilities 64,594,398 58,911,442 12,401,784 13,685,365 76,996,182 72,596,807 Net Assets: Invested in Capital Assets, Net of Related Debt 56,616,809 55,415,699 50,161,157 51,838,589 106,777,966 107,254,288 Restricted 2,034,588 2,279,621 - - 2,034,588 2,279,621 Unrestricted 5,652,889 5,480,879 11,577,645 7,441,722 17,230,534 12,922,601 Total Net Assets 64,304,286$ 63,176,199$ 61,738,802$ 59,280,311$ 126,043,088$122,456,510$ Governmental Activities Business-Type Activities Total 7 The government's net assets increased by $3.6 million during the current fiscal year. Fifty-four percent of this increase represents capital contributions from developers. The following table indicates changes in net assets for governmental and business-type activities followed by graphs displaying total revenues and expenses by type: TABLE A-2 CHANGES IN NET ASSETS FOR GOVERNMENTAL AND BUSINESS-TYPE ACTIVITIES Revenues:2012 2011 2012 2011 2012 2011 Program Revenues: Charges for Services 6,512,839$ 5,967,735$ 20,972,682$ 20,637,927$ 27,485,521$ 26,605,662$ Operating Contributions 715,517 549,851 - - 715,517 549,851 Capital Contributions 1,106,413 2,998,115 828,853 2,175,889 1,935,266 5,174,004 General Revenues Property Taxes 11,298,204 10,280,768 - - 11,298,204 10,280,768 Other Taxes 7,455,606 6,671,247 - - 7,455,606 6,671,247 Investment Earnings 50,947 35,008 36,409 37,950 87,356 72,958 Miscellaneous 604,277 303,444 666,645 457,094 1,270,922 760,538 Total Revenues 27,743,803 26,806,168 22,504,589 23,308,860 50,248,392 50,115,028 Expenses: General Government 6,514,329 5,878,984 - - 6,514,329 5,878,984 Public Safety 9,103,676 8,390,740 - - 9,103,676 8,390,740 Public Environment 3,586,087 3,152,119 - - 3,586,087 3,152,119 Parks and Recreation 1,425,517 1,436,436 - - 1,425,517 1,436,436 Cultural 899,487 858,336 - - 899,487 858,336 Health 357,658 374,516 - - 357,658 374,516 Administration 2,415,696 2,387,518 - - 2,415,696 2,387,518 Interest and Other Fees 2,250,972 2,189,935 - - 2,250,972 2,189,935 Water and Sewer - - 16,349,967 15,280,871 16,349,967 15,280,871 EMS - - 3,758,425 3,659,031 3,758,425 3,659,031 Total Expenses 26,553,422 24,668,584 20,108,392 18,939,902 46,661,814 43,608,486 INCREASE IN NET ASSETS BEFORE TRANSFERS 1,190,381 2,137,584 2,396,197 4,368,958 3,586,578 6,506,542 Transfers (62,294) 84,235 62,294 (84,235) - - CHANGE IN NET ASSETS 1,128,087$ 2,221,819$ 2,458,491$ 4,284,723$ 3,586,578$ 6,506,542$ Governmental Activities Business-Type Activities Total TOTAL REVENUES-GOVERNMENT-WIDE $- $2,000,0 00 $4,000,0 00 $6,000,0 00 $8,000,0 00 $10,000,000 $12,000,000 Charges for Se rvices Op erat ing Grants and Co ntributio ns Cap it al Gr ants an d Co nt ribut ions Property T axes Other Taxes Unrestricted I nvestmen t Earnings Miscellaneous 2012 2011 8 TOTAL EXPENSES-GOVERNMENT-WIDE - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 1 0,000,000 General Governme nt Public Safety Pu blic Envi ronmen t Parks and Recreation Cu ltural Health Admi nistration Interest and Other Fees 2012 2011 Revenues-Governmental Activities (Continued) Propert y Tax, 5 9% Sa les a nd Use Tax, 27% Franchise Tax, 9 % Occupa ncy Tax, 2 % Misc el laneous, 3% Investment Ea rnings, 0% Ge neral Re ve nue by Source -Go ve rnme nt al Activities 9 Business-Type Activities Business-Type activities accounted for 69% of the growth in the net assets of the City of Schertz. Of this increase, 34%is the result of capital contributions from developers. For the most part, increases in expenses closely paralleled inflation and the change in revenues was primarily related to fluctuations in capital contributions from developers. - 5,0 00,000 1 0,000,000 1 5,000,000 2 0,000,000 2 5,000,000 2012 2011 Revenues Ex pens es $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 Wate r and Sewer Utilities EM S Program Revenue Program Expense Nonopera tin g Revenu es Capital Contributions and Transf ers 10 Financial Analysis of the Government's Funds As noted earlier, the City of Schertz uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $22.7 million. Of this total amount, $2.56 million constitutes unassigned fund balance, which is available for spending at the government's discretion. The remainder of fund balance is non-spendable, restricted, or assigned to indicate that it is not available for new spending because it has already been committed to pay debt service, for capital improvement projects, and other assigned purposes. The general fund is the chief operating fund of the City of Schertz. At the end of the current fiscal year, unassigned fund balance of the general fund was $2.56 million, while total fund balance was $4.0 million, an increase of $773,617 from the prior year. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 13% of total general fund expenditures,not including capital. The debt service fund has a total fund balance of $227,674 all of which is reserved for the payment of debt service. The net increase in fund balance during the current year in the debt service fund was $110,424. The capital projects fund has a total fund balance of $17.3 million,an increase of $7.0 million. This increase was from the proceeds of a voter approved bond issue for various community projects. Proprietary funds. The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net assets of the water and sewer fund at the end of the year amounted to $11,540,031 and those for the Schertz EMS fund amounted to $37,614. General Fund Budgetary Highlights The General Fund expenditures were $886,822 less than budgeted amounts and the fund balance was $651,916 higher than anticipated. This is the result of cost savings across most of the General Fund. The only department significantly over budget Legal, which is attributed to increased planning for future growth. The original budget was amended during the year to increase total expenditures by less than 1%. 11 CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets.The City's investment in capital assets for its governmental and business-type activities as of September 30, 2012, amounts to $160,654,561 (net of accumulated depreciation). The City did not add significant capital assets this year aside from developer contributions of infrastructure. Additional information on the City's capital assets can be found in the notes to the basic financial statements. TABLE A-3 CAPITAL ASSETS (Net of Depreciation) 2012 2011 2012 2011 2012 2011 Land 7,442,117$ 7,442,117$ 910,413$ 910,413$ 8,352,530$ 8,352,530$ Buildings and Improvements 35,037,432 35,037,432 76,417,848 71,829,995 111,455,280 106,867,427 Machinery, Equipment, and Vehicles 6,121,702 5,717,322 2,787,698 2,667,463 8,909,400 8,384,785 Infrastructure 80,129,133 77,314,528 - - 80,129,133 77,314,528 Construction in Progress 751,277 1,552,178 84,996 3,697,506 836,273 5,249,684 Accumulated Depreciation (28,084,705) (24,165,618) (20,943,350) (19,043,884) (49,028,055) (43,209,502) TOTALS 101,396,956$102,897,959$59,257,605$ 60,061,493$ 160,654,561$162,959,452$ Activities Activities Total Governmental Business-Type Long-Term Debt. At the end of the current fiscal year, the City of Schertz had total bonded debt outstanding of $71,595,189. Of this amount, $68,990,000 comprises debt backed by the full faith and credit of the government. The remainder of the City's debt represents bonds secured solely by specified revenue sources, i.e., revenue bonds. During the fiscal year, the City issued $7,625,000 in general obligation debt for community projects approved by the voters in November 2010. The related principal and interest payment for the bonds are from an annual ad valorem tax levied against all taxable property within the City. In addition, the City also issued one debt refunding to take advantage of favorable interest rates. The City of Schertz's general fund maintains a "AA" rating from Standard and Poors and Fitch Ratings while its water and sewer fund maintains an "A" rating from Standard and Poor's. Additional information on the City's long-term debt can be found in notes to the basic financial statements. TABLE A-4 2012 2011 2012 2011 2012 2011 General Obligation Bonds 51,050,000$44,715,000$-$ -$ 51,050,000$44,715,000$ Certificates of Obligation 996,300 7,910,800 5,383,700 5,704,200 6,380,000 13,615,000 Revenue Bonds - - 2,355,000 2,490,000 2,355,000 2,490,000 Gen. Obl. Refunding Bonds 9,155,000 2,790,000 2,405,000 2,675,000 11,560,000 5,465,000 Other Debt 60,189 97,188 190,000 250,000 250,189 347,188 TOTALS 61,261,489$55,512,988$10,333,700$11,119,200$71,595,189$66,632,188$ Activities Activities Total Governmental Business-Type 12 Economic Factors and Next Year's Budgets and Rates During the current fiscal year, unassigned fund balance in the general fund increased to $2,560,667. The City of Schertz has not appropriated any portion of this amount for spending in the 2013 fiscal year budget. The intention is to build up the unassigned fund balance to 3 to 6 months of operating expenses. Water and sewer rates are expected to remain stable. Requests for Information This financial report is designed to provide a general overview of the City's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Finance Director, City of Schertz, 1400 Schertz Parkway, Schertz, Texas 78154. 13 BASIC FINANCIAL STATEMENTS See Accompanying notes to basic financial statements. 14 CITY OF SCHERTZ, TEXAS STATEMENT OF NET ASSETS SEPTEMBER 30, 2012 Governmental Business-Type Component ASSETS Activities Activities Total Units Current Assets: Cash and Cash Equivalents 1,213,977$ 1,012,440$ 2,226,417$ 336,212$ Investments 3,551,309 3,283,359 6,834,668 3,758,864 Receivables (net of allowances) Delinquent Taxes 1,665,877 - 1,665,877 507,237 Accounts and Other 2,109,629 3,608,800 5,718,429 20,345 Accrued Interest Income - 3,090 3,090 852 Prepaid Expenses - 11,078 11,078 2,367 Inventories 63,556 162,119 225,675 - Internal Balances (439,011) 439,011 - - Total Current Assets 8,165,337 8,519,897 16,685,234 4,625,877 Noncurrent Assets: Restricted Assets: Cash and Cash Equivalents 410,305 500,939 911,244 - Investments 18,023,461 5,695,909 23,719,370 - Note Receivable - - - 120,080 Deferred Charges 902,625 166,236 1,068,861 15,424 Capital Assets: Land 7,442,117 910,413 8,352,530 - Buildings and Improvements 35,037,432 76,417,848 111,455,280 - Machinery, Equipment, and Vehicles 6,121,702 2,787,698 8,909,400 - Infrastructure 80,129,133 - 80,129,133 - Construction in Progress 751,277 84,996 836,273 - Accumulated Depreciation (28,084,705) (20,943,350) (49,028,055) - Total Noncurrent Assets 120,733,347 65,620,689 186,354,036 135,504 TOTAL ASSETS 128,898,684$ 74,140,586$ 203,039,270$ 4,761,381$ Primary Government See Accompanying notes to basic financial statements. 15 CITY OF SCHERTZ, TEXAS STATEMENT OF NET ASSETS (CONTINUED) SEPTEMBER 30, 2012 Governmental Business-Type Component Activities Activities Total Units LIABILITIES AND NET ASSETS Current Liabilities Payable from Unrestricted Assets: Accounts Payable 964,558$ 1,341,093$ 2,305,651$ 55,065$ Accrued Liabilities 645,523 93,112 738,635 6,066 Due to Other Governments 256,769 - 256,769 - Unearned Revenue 52,507 29,278 81,785 - Accrued Interest Payable 407,486 57,504 464,990 6,842 Compensated Absences 153,893 43,800 197,693 6,811 Current Portion of Long-Term Debt 2,825,878 805,993 3,631,871 390,000 Total Current Liabilities Payable From Unrestricted Assets 5,306,614 2,370,780 7,677,394 464,784 Current Liabilities Payable from Restricted Assets: Customer Deposits 28,350 458,563 486,913 - Total Current Liabilities Payable From Restricted Assets 28,350 458,563 486,913 - Total Current Liabilities 5,334,964 2,829,343 8,164,307 464,784 Noncurrent Liabilities: Compensated Absences 615,572 175,201 790,773 - Long-Term Debt 58,643,862 9,397,240 68,041,102 970,000 Total Noncurrent Liabilities 59,259,434 9,572,441 68,831,875 970,000 TOTAL LIABILITIES 64,594,398 12,401,784 76,996,182 1,434,784 Net Assets: Invested in Capital Assets, Net of Related Debt 56,616,809 50,161,157 106,777,966 - Restricted For: Police and Municipal Court 865,631 - 865,631 - PEG Capital Fees 409,870 - 409,870 - Tourism Development 390,561 - 390,561 - Parks and Tree Mitigation 368,526 - 368,526 72,160 Unrestricted 5,652,889 11,577,645 17,230,534 3,254,437 TOTAL NET ASSETS 64,304,286 61,738,802 126,043,088 3,326,597 TOTAL LIABILITIES & NET ASSETS 128,898,684$ 74,140,586$ 203,039,270$ 4,761,381$ Primary Government See Accompanying notes to basic financial statements. 16 CITY OF SCHERTZ, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2012 Operating Capital Charges for Grants and Grants and Functions and Programs Expenses Services Contributions Contributions Primary Government: Governmental Activities: General Government 6,514,329$ 2,429,114$ 418,784$ 1,106,313$ Public Safety 9,103,676 2,216,385 266,914 - Public Environment 3,586,087 - - - Parks and Recreation 1,425,517 416,816 3,149 100 Cultural 899,487 257,752 5,331 - Health 357,658 36,746 21,339 - Administration 2,415,696 1,156,026 - - Interest and Other Fees 2,250,972 - - - Total Governmental Activities 26,553,422 6,512,839 715,517 1,106,413 Business-Type Activities Water and Sewer 16,349,967 17,411,568 - 828,853 EMS 3,758,425 3,561,114 - - Total Business-Type Activities 20,108,392 20,972,682 - 828,853 Total Primary Government 46,661,814$ 27,485,521$ 715,517$ 1,935,266$ Component Units:1,516,271$ 146,211$ 49,480$ 72,160$ General Revenues: Taxes: Ad Valorem Sales Franchise Fees Hotel/Motel Mixed Drink Investment Earnings Miscellaneous Total General Revenues Transfers Change in Net Assets Net Assets at Beginning of Year Net Assets at End of Year Program Revenues 17 Governmental Business-Type Component Activities Activities Total Units (2,560,118)$ (2,560,118)$ -$ (6,620,377) (6,620,377) - (3,586,087) (3,586,087) - (1,005,452) (1,005,452) - (636,404) (636,404) - (299,573) (299,573) - (1,259,670) (1,259,670) - (2,250,972) (2,250,972) - (18,218,653) (18,218,653) - 1,890,454$ 1,890,454 - (197,311) (197,311) - 1,693,143 1,693,143 - (18,218,653) 1,693,143 (16,525,510) - (1,248,420) 11,298,204 - 11,298,204 - 5,309,018 - 5,309,018 2,659,194 1,647,712 - 1,647,712 - 470,290 - 470,290 - 28,586 - 28,586 - 50,947 36,409 87,356 9,318 604,277 666,645 1,270,922 17,283 19,409,034 703,054 20,112,088 2,685,795 (62,294) 62,294 - - 1,128,087 2,458,491 3,586,578 1,437,375 63,176,199 59,280,311 122,456,510 1,889,222 64,304,286$ 61,738,802$ 126,043,088$ 3,326,597$ Primary Government Net (Expense) Revenue and Changes in Net Assets See Accompanying notes to basic financial statements. 18 CITY OF SCHERTZ, TEXAS BALANCE SHEET –GOVERNMENTAL FUNDS SEPTEMBER 30, 2012 General Capital Debt Fund Projects Service ASSETS Cash and Cash Equivalents 1,125,445$ -$ -$ Investments 2,573,411 - - Receivables (net of allowances) Taxes 1,529,976 - 63,989 Accounts and Other 2,063,204 46,425 - Due from Other Funds 379,566 - 116,144 Inventory 63,556 - - Restricted Assets: Cash and Cash Equivalents - 409,375 929 Investments - 17,891,149 132,312 TOTAL ASSETS 7,735,158$ 18,346,949$ 313,374$ LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable 868,897$ 85,880$ -$ Accrued Salaries and Benefits 645,523 - - Accrued Interest Payable - - 28,135 Customer Deposits 28,350 - - Due to Other Governments 256,769 - - Due to Other Funds - 912,928 - Unearned/ Deferred Revenues 1,958,802 - 57,565 Total Liabilities 3,758,341 998,808 85,700 Fund Balances: Nonspendable: Inventory 63,556 - - Restricted for: Police - - - Municipal Court 527,513 - - PEG Capital Fees 409,870 - - Capital Improvement - 17,104,595 - Debt Service - - 227,674 Tourism Development - - - Parks and Tree Mitigation - - - Historical Committee - - - Assigned for: Property Replacement 322,656 - - Special Events 92,555 - - Capital Improvement - 243,546 - Unassigned 2,560,667 - - Total Fund Balances 3,976,817 17,348,141 227,674 TOTAL LIABILITIES AND FUND BALANCES 7,735,158$ 18,346,949$ 313,374$ 19 Nonmajor Total Governmental Governmental Funds Funds 88,533$ 1,213,978$ 977,898 3,551,309 71,914 1,665,879 - 2,109,629 - 495,710 - 63,556 - 410,304 - 18,023,461 1,138,345$ 27,533,826$ 9,780$ 964,557$ - 645,523 - 28,135 - 28,350 - 256,769 21,793 934,721 - 2,016,367 31,573 4,874,422 - 63,556 338,118 338,118 - 527,513 - 409,870 - 17,104,595 - 227,674 390,561 390,561 368,526 368,526 9,567 9,567 - 322,656 - 92,555 - 243,546 - 2,560,667 1,106,772 22,659,404 1,138,345$ 27,533,826$ See accompanying notes to basic financial statements. 20 CITY OF SCHERTZ, TEXAS RECONCILIATION OF BALANCE SHEET SEPTEMBER 30, 2012 TOTAL FUND BALANCE - TOTAL GOVERNMENTAL FUNDS 22,659,404$ Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital Assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.101,396,956 Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. 1,963,860 Deferred charges, consisting of debt issue costs, are amortized over the life of the bond in the governmental activities, but were recognized in full in the governmental funds.902,625 Long-term liabilities, including bonds payable and capital leases, are not due and payable in the current period and therefore, not reported in the funds: Bonds Payable (61,201,300) Unamortized Premiums, Discounts, Losses on Refundings (208,254) Capital Lease Payable (60,189) Accrued Interest Payable (379,351) Compensated Absences (769,465) (62,618,559) TOTAL NET ASSETS - GOVERNMENTAL ACTIVITIES 64,304,286$ See accompanying notes to basic financial statements. 21 CITY OF SCHERTZ,TEXAS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Debt General Capital Service Fund Projects Fund REVENUES Taxes 13,965,625$ -$ 4,306,882$ Permits and Fees 1,146,301 - - Service Fees 2,699,448 - - Fines and Fees 1,979,678 - - Intergovernmental 466,864 45,084 366,825 Investment Earnings 19,307 5,867 23,902 Miscellaneous 748,040 143,942 - TOTAL REVENUES 21,025,263 194,893 4,697,609 EXPENDITURES Current: General Government 5,464,293 195,833 - Public Safety 8,654,249 - - Public Environment 976,327 - - Parks and Recreation 1,118,465 - - Cultural 821,351 - - Health 346,318 - - Administration 2,349,598 - - Debt Service: Principal 36,998 - 2,287,900 Interest and Fiscal Charges 1,707 - 2,263,474 Bond Issue Costs 100 172,481 82,390 Capital Outlay 454,811 760,324 - TOTAL EXPENDITURES 20,224,217 1,128,638 4,633,764 Excess (Deficiency) of Revenues Over (Under) Expenditures 801,046 (933,745) 63,845 OTHER FINANCING SOURCES (USES) Proceeds from Issuance of Debt - 7,625,000 - Premium on Bonds Issued - 175,473 - Proceeds from Refunding Bonds - - 6,745,000 Payment to Refund Agent - - (6,698,421) Transfers In 37,250 100,000 - Transfers (Out)(64,679) - - TOTAL OTHER FINANCING SOURCES (USES)(27,429) 7,900,473 46,579 Net Change in Fund Balance 773,617 6,966,728 110,424 Fund Balances at Beginning of Year 3,203,200 10,381,413 117,250 Fund Balances at End of Year 3,976,817$ 17,348,141$ 227,674$ 22 Other Nonmajor Total Governmental Governmental Funds Funds 470,290$ 18,742,797$ 217,160 1,363,461 - 2,699,448 47,935 2,027,613 - 878,773 1,873 50,949 391 892,373 737,649 26,655,414 347,566 6,007,692 36,600 8,690,849 - 976,327 121,139 1,239,604 6,293 827,644 - 346,318 - 2,349,598 - 2,324,898 - 2,265,181 - 254,971 84,708 1,299,843 596,306 26,582,925 141,343 72,489 - 7,625,000 - 175,473 - 6,745,000 - (6,698,421) 2,385 139,635 (137,250) (201,929) (134,865) 7,784,758 6,478 7,857,247 1,100,294 14,802,157 1,106,772$ 22,659,404$ See accompanying notes to basic financial statements. 23 CITY OF SCHERTZ,TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2012 NET CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS 7,857,247$ Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeded capital outlay in the current period.(1,497,667) Proceeds from the sale of capital assets are reported as revenues on the governmental fund statements. However, in the statement of activities, these proceeds are reduced by the net book value of the capital asset (original cost less accumulated depreciation through the sale date). This amount represents the net book value of capital assets disposed in the current period.(3,336) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds.190,352 The issuance of long-term debt (e.g. bonds, leases) provides current financial resources to governmental funds, which the repayment of the principal of long-term debt consumes the current financial reources of governmental funds. Neither transaction, however, has any affect on net assets. This amount is the net effect of these differences in the treatment of long-term debt and related items. Issuance of Debt (14,370,000) Payment to Refund Agent 6,698,421 Premiums on Issuance of Debt (175,473) Bond Issue Costs 254,870 Principal Repayments 2,324,898 Amortization of Bond Issue Costs (50,730) Amortization of Premiums, Discounts, Losses (2,200) (5,320,214) Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds: Compensated Absences (167,131) Accrued Interest 68,836 (98,295) CHANGE IN NET ASSETS - GOVERNMENTAL ACTIVITIES 1,128,087$ See accompanying notes to basic financial statements. 24 CITY OF SCHERTZ,TEXAS STATEMENT OF NET ASSETS -PROPRIETARY FUNDS SEPTEMBER 30, 2012 Governmental Activities Water Internal and Sewer Schertz Service ASSETS System EMS Total Fund Current Assets: Cash and Cash Equivalents 1,012,440$ -$ 1,012,440$ -$ Investments 3,283,359 - 3,283,359 - Accounts Receivable, Net of Allowance: Customer Accounts 2,025,276 798,386 2,823,662 - Due from Other Governments 785,138 - 785,138 - Due from Other Funds 832,782 - 832,782 - Accrued Interest 3,090 - 3,090 - Prepaid Expenses 9,583 1,495 11,078 - Inventory 93,926 68,193 162,119 - Total Current Assets 8,045,594 868,074 8,913,668 - Noncurrent Assets: Restricted Assets: Cash and Cash Equivalents 500,939 - 500,939 - Investments 5,394,494 301,415 5,695,909 - Deferred Charges 157,317 8,919 166,236 - Capital Assets: Land 910,413 - 910,413 - Buildings and Improvements 76,411,348 6,500 76,417,848 - Machinery, Equipment, and Vehicles 1,478,951 1,308,747 2,787,698 - Construction in Progress 84,996 - 84,996 - Less: Accumulated Depreciation (19,922,940) (1,020,410) (20,943,350) - Total Noncurrent Assets 65,015,518 605,171 65,620,689 - TOTAL ASSETS 73,061,112$ 1,473,245$ 74,534,357$ -$ Business-Type Activities - Enterprise Funds See accompanying notes to basic financial statements. 25 CITY OF SCHERTZ,TEXAS STATEMENT OF NET ASSETS -PROPRIETARY FUNDS (CONTINUED) SEPTEMBER 30, 2012 Governmental Activities Water Internal and Sewer Schertz Service System EMS Total Fund LIABILITIES & NET ASSETS Current Liabilities: Accounts Payable 1,099,385$ 241,708$ 1,341,093$ -$ Accrued Liabilities 34,373 58,739 93,112 - Customer Deposits 458,563 - 458,563 - Accrued Interest Payable 55,915 1,589 57,504 - Due to Other Funds - 393,771 393,771 - Unearned Revenue 29,278 - 29,278 - Compensated Absences 16,803 26,997 43,800 - Current Portion of Long-Term Debt 714,326 91,667 805,993 Total Current Liabilities 2,408,643 814,471 3,223,114 - Noncurrent Liabilities: Compensated Absences 67,211 107,990 175,201 - Long-Term Debt (Net of Current Portion)9,168,907 228,333 9,397,240 - Total Noncurrent Liabilities 9,236,118 336,323 9,572,441 - TOTAL LIABILITIES 11,644,761 1,150,794 12,795,555 - Net Assets: Investment in Capital Assets, Net of Related Debt 49,876,320 284,837 50,161,157 - Unrestricted 11,540,031 37,614 11,577,645 - TOTAL NET ASSETS 61,416,351 322,451 61,738,802 - TOTAL LIABILITIES & NET ASSETS 73,061,112$ 1,473,245$ 74,534,357$ -$ Business-Type Activities - Enterprise Funds See accompanying notes to basic financial statements. 26 CITY OF SCHERTZ, TEXAS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Governmental Activities Water Internal and Sewer Schertz Service System EMS Total Fund OPERATING REVENUES Fees Charged to Users 17,361,484$ 3,561,114$ 20,922,598$ -$ Charges for Premiums - - - 1,826,845 Other Charges 50,084 - 50,084 - TOTAL OPERATING REVENUES 17,411,568 3,561,114 20,972,682 1,826,845 OPERATING EXPENSES Personnel Services 1,727,498 2,725,196 4,452,694 1,826,845 Water Purchase 1,620,344 - 1,620,344 - Sewage Treatment 5,665,555 - 5,665,555 - General and Administrative 4,723,937 313,746 5,037,683 - Contractual Services 167,157 119,953 287,110 - Supplies and Maintenance 280,635 452,109 732,744 - Depreciation 1,748,196 130,982 1,879,178 - TOTAL OPERATING EXPENSES 15,933,322 3,741,986 19,675,308 1,826,845 OPERATING INCOME (LOSS)1,478,246 (180,872) 1,297,374 - NONOPERATING REVENUES (EXPENSES) Investment Earnings 35,740 669 36,409 - Lease Income 184,016 - 184,016 - Miscellaneous 373,024 109,605 482,629 - Interest Expense (387,615) (14,087) (401,702) - Amortization of Bond Issue Costs (29,030) (2,352) (31,382) - TOTAL NONOPERATING REVENUES (EXPENSES)176,135 93,835 269,970 - INCOME BEFORE CONTRIBUTIONS AND TRANSFERS 1,654,381 (87,037) 1,567,344 - Transfers In (Out)32,364 29,930 62,294 - Capital Contributions 828,853 - 828,853 - CHANGE IN NET ASSETS 2,515,598 (57,107) 2,458,491 - NET ASSETS AT BEGINNING OF YEAR 58,900,753 379,558 59,280,311 - NET ASSETS AT END OF YEAR 61,416,351$ 322,451$ 61,738,802$ -$ Business-Type Activities - Enterprise Funds See accompanying notes to basic financial statements. 27 CITY OF SCHERTZ, TEXAS STATEMENT OF CASH FLOWS -PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Governmental Activities Water Internal and Sewer Schertz Service System EMS Total Fund Cash Flows From Operating Activities: Cash Received From Customers and Users 17,258,432$ 3,561,490$ 20,819,922$ -$ Cash Received from Interfund Services - - - 1,826,845 Cash Paid to Employees for Services (1,713,331) (2,668,892) (4,382,223) (1,826,845) Cash Paid to Supplier for Goods & Services (12,564,502) (1,281,563) (13,846,065) - Net Cash Provided (Used) by Operating Activities 2,980,599 (388,965) 2,591,634 - Cash Flows From Noncapital Financing Activities: Other Cash Received From Nonoperating Activity 373,024 109,605 482,629 - Cash Advances From/(To) Other Funds 36,203 382,210 418,413 - Net Cash Provided (Used) by Noncapital Financing Activities 409,227 491,815 901,042 - Cash Flows From Capital and Related Financing Activities: Acquisition and Construction of Capital Assets (246,435) - (246,435) - Payments Received from Capital Grants 220,000 - 220,000 - Interest Paid on Long-Term Debt (398,118) (14,452) (412,570) - Principal Paid on Long-Term Debt (697,100) (88,400) (785,500) - Net Cash Provided (Used) by Capital and Related Financing Activities (1,121,653) (102,852) (1,224,505) - Cash Flows From Investing Activities: Purchase of Investments (2,706,763) (667) (2,707,430) - Payments from Lease 184,016 - 184,016 - Interest and Investment Earnings 41,038 669 41,707 - Net Cash Provided (Used) by Investing Activities (2,481,709) 2 (2,481,707) - Net Increase (Decrease) in Cash and Cash Equivalents (213,536) - (213,536) - Cash and Cash Equivalents at Beginning of Year: Cash and Cash Equivalents 955,289 - 955,289 - Restricted Cash and Cash Equivalents 771,626 - 771,626 - 1,726,915 - 1,726,915 - Cash and Cash Equivalents at End of Year: Cash and Cash Equivalents 1,012,440 - 1,012,440 - Restricted Cash and Cash Equivalents 500,939 - 500,939 - 1,513,379$ -$ 1,513,379$ -$ Noncash Capital and Related Financing Transactions: Developer Contributions of Capital Assets 828,853$ -$ -$ -$ Business-Type Activities - Enterprise Funds See accompanying notes to basic financial statements. 28 CITY OF SCHERTZ, TEXAS STATEMENT OF CASH FLOWS -PROPRIETARY FUNDS (CONTINUED) FOR THE YEAR ENDED SEPTEMBER 30, 2012 Governmental Activities Water Internal and Sewer Schertz Service System EMS Total Fund Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities: Operating Income 1,478,246$ (180,872)$ 1,297,374$ -$ Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Depreciation 1,748,196 130,982 1,879,178 - Decrease (Increase) in Assets: Accounts Receivable (net)(87,394) 376 (87,018) - Prepaid Expenses (9,583) (1,495) (11,078) - Inventory 9,370 5,495 14,865 - Increase (Decrease) in Liabilities: Withdrawals in Excess of Deposits - (444,832) (444,832) - Accounts Payable (106,661) 45,077 (61,584) - Accrued Liabilities 4,513 15,069 19,582 - Customer Deposits 81,289 - 81,289 - Unearned Revenue (147,031) - (147,031) - Compensated Absences 9,654 41,235 50,889 - NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 2,980,599$ (388,965)$ 2,591,634$ -$ Business-Type Activities - Enterprise Funds 29 NOTES TO BASIC FINANCIAL STATEMENTS 30 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A.Reporting Entity The City of Schertz is a municipal corporation governed by an elected mayor and five-member council. The accompanying financial statements present the City and its discretely presented component units, entities for which the City is considered to be financially accountable. The discretely presented component units are reported in a separate column in the government-wide financial statements to emphasize that they are legally separate from the City. Discretely presented component units -The component units' column in the government-wide financial statements includes the financial data of the component units of the City of Schertz, Texas. The component units are presented as governmental fund types. Following is a summary of the component units: 1.Schertz Economic Development Corporation -The Corporation was organized for the purpose of promoting economic development in order to eliminate unemployment and underemployment and to promote and encourage employment and public welfare of, for, and on behalf of the City. The board of directors consists of seven (7) members appointed by the city council. The City is financially accountable for the Corporation because the city council approves the corporation's budget. 2.Library Advisory Board -The library provides services to the citizens of the City of Schertz as well as surrounding communities. The function of the library board is to work cooperatively with City management to provide funding and oversight for special projects of the library. All projects must be approved by the city council. The library's governing board is appointed by the city council. 3.Parks and Recreation Foundation –The Corporation was organized to improve and expand the community parks, trails, venues, and recreational programs providing adventure and opportunities for all. The majority of the foundation’s governing board are employees of the City, the accounting records are maintained by the finance department, cash is pooled with City funds, and the City provides financing for the foundation and includes the Foundation as part of the City budget process. The City and its citizens are the sole beneficiaries of the Foundation. Complete financial statements for the Schertz Economic Development Corporation may be obtained at City Hall located at 1400 Schertz Parkway, Schertz, Texas 78154. Separate financials are not issued for the Library Advisory Board or Parks and Recreation Foundation. B.Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.Likewise, the primary government is reported separately from legally separate component units for which the primary government is financially accountable. 31 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B.Government-Wide and Fund Financial Statements (Continued) 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 of 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. C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.Revenues are considered to be available when they are collectible within the current period or soon thereafter to pay liabilities of the current period.For this purpose, the City 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. Property and sales taxes, utility franchises, 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 City. The City reports the following major governmental funds: The General Fund is the City's primary operating fund which accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds. 32 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) The Capital Projects Fund accounts for financial resources to be used for the acquisition and construction of major capital facilities and is principally financed by the sale of bonds or certificates of obligation and grants. The government reports the following major proprietary funds: The Water and Sewer System Fund accounts for the water and sewer services provided to the citizens through user charges. The EMS Fund accounts for the emergency medical services provided to the citizens of the City and other participating governments through user charges. Internal Service Fund accounts for the City’s group medical insurance program. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board (GASB).Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this are charges between the City's general government function and various other functions of the City. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applications for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. General revenues include all taxes and investment earnings. 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 water and sewer enterprise fund and the EMS enterprise fund are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. D.Cash and Cash Equivalents The City's cash and cash equivalents are considered to be cash on hand and demand deposits. 33 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) E.Investments The City is authorized 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 of the United States; (4) obligations of states,agencies, counties, cities, and other political subdivisions of any state having been rated of not less than "AA" or its equivalent; (5) certificates of deposit issued by state and national banks domiciled in Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation (FDIC) or its successor, or secured by obligations mentioned above; and (6) fully collateralized direct repurchase agreements having a defined termination date.In addition, the City is authorized to invest in local government investment pools. The investment pools operate in accordance with appropriate state laws and regulations and have regulatory oversight from the Texas Public Funds Investment Act Sec. 2256.0016. The fair value of the City's position in each pool is the same as the fair value of the pool shares. F.Receivables and Payables Activities between the funds that are representative of interfund loans outstanding at the end of the fiscal year are referred to 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". Accounts receivable are reported net of allowances for uncollectible accounts.The allowance account represents management's estimate of uncollectible accounts based upon experience and historical trends. Property taxes for the City are levied each October 1 on the taxable value as of the preceding January 1, the date a lien attaches, for all taxable real and personal property located in the City. Taxes are due by January 31 following the October 1 assessment date and become delinquent on February 1, at which time they begin accruing penalty and interest. The enforceable legal claim date for property taxes is the assessment date; therefore, the City did not record a receivable for accrual of future taxes at year end. Accordingly, no current taxes receivable are reported. Delinquent taxes have been reported in the financial statements net of the allowance for uncollectible taxes. Tax revenues are recognized as they become available. Accordingly, an amount equal to taxes not yet available has been reported as unearned revenue at the government fund level. G.Inventories All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. H.Restricted Assets Certain proceeds of the City's enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because they are maintained in separate bank accounts and their use is limited by applicable bond covenants. 34 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) I.Capital Assets Capital assets, which include land, buildings and improvements, machinery, equipment, vehicles, and infrastructure assets (i.e., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements.Capital assets are defined by the City as assets with an initial,individual cost of more than $5,000 and an estimated useful life in excess of one year. When capital assets are purchased, they are capitalized and depreciated in the government-wide financial statements and the proprietary fund statements. Capital assets are recorded as expenditures of the current period in the governmental fund financial statements. Capital assets are valued at cost where historical records are available and at an estimated cost where no records exist.Donated capital assets are valued at their estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements to capital assets that materially extend the life of the asset or add to the value are capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during construction will not be capitalized in the governmental activities on the government-wide financial statements; however capitalization of interest is required for business-type activities. There was no capitalized interest during the current fiscal year. Capital assets are depreciated over their useful lives on a straight-line basis as follows: Useful Lives Assets (Years) Buildings and Improvements 10 - 50 Machinery, Equipment, and Vehicles 2 - 20 Infrastructure 15 - 30 J.Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation and compensatory time benefits. There is no liability for unpaid accumulated sick leave since the City does not have a policy to pay any amounts when employees separate from service with the City. All vacation and compensatory time pay is accrued when incurred in the government-wide and proprietary fund financial statements.A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. 35 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) K.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 assets. Bond premiums and discounts, losses on defeasance, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method.Bonds payable are reported net of the applicable bond premium or discount and losses on defeasance. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. L.Fund Equity Fund balances in governmental funds are classified as follows: Nonspendable –Represents amounts that cannot be spent because they are either not in spendable form (such as inventory or prepaid items) or legally required to remain intact. Restricted –Represents amounts that are constrained by external parties, constitutional provisions or enabling legislation. Committed –Represents amounts that can only be used for a specific purpose because of a formal action by the government’s highest level of decision making authority: an ordinance adopted by City Council prior to the end of the fiscal year. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. Assigned –Represents amounts which the City intends to use for a specific purpose but do not meet the criteria of restricted or committed. The City Council and City Manager are the only entities that may make assignments at this time. Unassigned –Represents the residual balance that may be spent on any other purpose of the City. When an expenditure is incurred for a purpose in which multiple classifications are available, the City considers restricted balances spent first, committed second, and assigned third. 36 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) M.Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consist of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used for the acquisition, construction or improvements of those assets, and adding back unspent proceeds. Net assets are reported as restricted when there are limitations imposed by creditors, grantors, or laws or regulations of other governments. N.Estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent 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. O.Budgetary Information Annual budgets are adopted on a basis consistent with generally accepted accounting principles for all governmental funds except the library grant special revenue fund, police department forfeiture special revenue fund and the capital projects fund, which adopts project-length budgets. NOTE 2 -CASH, CASH EQUIVALENTS AND INVESTMENTS As of September 30, 2012, the City had the following pooled investment funds: Weighted Average Primary Component Primary Component Maturity Investment Type Government Unit Government Unit in Days LOGIC 2,876,347$ -$ 2,876,347$ -$ - Lone Star Investment Pool 21,233,871 - 21,233,871 - - MBIA Municipal Investors 1,060,462 2,677,096 1,060,462 2,677,096 - Federated Money Market 1,267,126 44,761 1,267,126 44,761 - Schertz Bank & Trust - Certificate of Deposit 1,055,909 1,037,007 1,055,909 1,037,007 90 Capital One - U.S. Agency Securities 3,060,323 - 3,060,323 - 715 Total 30,554,038$ 3,758,864$ 30,554,038$ 3,758,864$ 75 Fair ValueBook Value Interest Rate Risk.As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy limits the City's investment portfolio to highly liquid investments to meet unanticipated cash requirements, and/or to redeploy cash into other investments expected to outperform current holdings. 37 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 2 -CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued) Credit Risk. State law limits investments in certificates of deposit to guaranteed or insured by the Federal Deposit Insurance Corporation, or its successor or the National Credit Union Share Insurance Fund, or its successor and investment pools continuously rated no lower than AAA or an equivalent rating by at least one nationally recognized rating service. The City's investment policy does not further limit its investment choices. As of September 30, 2012, the City's investments in the pooled investment funds were rated AAAm by Standard & Poor's. The City has invested in Federal Home Loan Mortgage Corporation and Federal National Mortgage Association. Custodial Credit Risk -Deposits. In the case of deposits, this is the risk that in the event of a bank failure, the government’s deposits may not be returned. As of September 30, 2012,the City’s petty cash on hand was $3,100. The carrying amount of cash and cash equivalents (including certificates of deposit) was $4,329,985 and the bank balance was $5,164,724. Of the bank balance, $250,000 was covered by federal deposit insurance at Schertz Bank and Trust and the City’s depository had pledged securities having a face value of $17,065,000 and a market value of $6,169,428 as collateral for the City’s deposits. Funds were fully insured and collateralized. All collateral is held in the City’s name. As of September 30, 2012, the Economic Development Corporation (Component Unit) held funds of $194,666 in the pooled cash of the primary government, $200 in petty cash on hand, and $1,037,007 in certificates of deposit. The Corporation’s funds are fully secured under City’s pledged securities. As of September 30, 2012, the Library Advisory Board and the Parks and Recreation Foundation (Component Units) held funds of $11,645 and $127,871, respectively. Custodial Credit Risk -Investments. For an investment, this is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. All of the government securities owned by the City are held by its agent in the City’s name. NOTE 3 -PROPERTY TAX Taxes are levied on and payable as of October 1. The City has contracted with the Guadalupe County Tax Assessor-Collector to collect taxes on its behalf. Current taxes become delinquent February 1. Current year delinquent taxes not paid by July 1 are turned over to attorneys for collection action. The total taxable value as of October 1, 2011, upon which the fiscal 2012 levy was based, was $2,151,848,489 (i.e., market value less exemptions). The estimated market value was $2,662,036,427, making the taxable value 80.8% of the estimated market value. The City is permitted by the Constitution of the State of Texas to levy taxes up to $2.50 per $100 of taxable assessed valuation for all governmental purposes. Pursuant to a decision of the Attorney General of the State of Texas, up to $1.50 per $100 of assessed valuation may be used for the payment of long-term debt. The combined tax rate to finance general governmental services, including the payment of principal and interest on long-term debt for the year ended September 30, 2012, was $0.4843 per $100 of assessed value, which means that the City has a tax margin of $2.0157 for each $100 value and could increase its annual tax levy by approximately $43,374,810 based upon the present assessed valuation before the limit is reached. 38 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 3 -PROPERTY TAX (Continued) However, the City may not adopt a tax rate that exceeds the tax rate calculated in accordance with the Texas Property Tax Code without holding a public hearing. The Property Tax Code subjects an increase in the effective tax rate to a referendum election, if petitioned by registered voters, when the effective tax rate increase is more than eight percent (8%) of the previous year’s effective tax rate. Property taxes are recorded as receivables and unearned revenues at the time the taxes are assessed. In governmental funds, revenues are recognized as the related ad valorem taxes are collected. Additional amounts estimated to be collectible in the time to be a resource for payment of obligations incurred during the fiscal year and therefore susceptible to accrual in accordance with generally accepted accounting principles have been recognized as revenue. In the government-wide financial statements, the entire levy is recognized as revenue, net of estimated uncollectible amounts (if any), at the levy date. NOTE 4 -RECEIVABLES Receivables as of year-end for the government’s individual major funds and nonmajor funds in the aggregate, including the applicable allowances for uncollectible accounts,are as follows: Capital Debt Nonmajor Water and Schertz General Projects Service Funds Sewer Fund EMS Receivables: Property Taxes 124,863$ -$ 66,026$ -$ -$ -$ Sales Taxes 1,014,474 - - - - - Occupancy Taxes - - - 71,914 - - Franchise Taxes 395,017 - - - - - Customers 65,334 - - - 2,067,862 1,218,513 Court Fines 4,416,118 - - - - - Grants 175,511 - - - - - Other 25,000 46,425 - - 785,138 24,724 Gross Receivables 6,216,317 46,425 66,026 71,914 2,853,000 1,243,237 Less: Allowance for Uncollectibles 2,623,137 - 2,037 - 42,586 444,851 Net Total Receivables 3,593,180$ 46,425$ 63,989$ 71,914$ 2,810,414$ 798,386$ Governmental Funds Proprietary Funds 39 CITY OF SCHERTZ,TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 4 –RECEIVABLES (Continued) Governmental funds report deferred revenue in connection with receivables for revenue that is not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of unearned/ deferred revenue and unavailable revenue reported in the governmental funds were as follows: Unavailable General Fund Delinquent Property Taxes Receivable 108,935$ Court Fines 1,797,360 Permits 3,870 Library 20,000 Other 28,637 Total General Fund 1,958,802 Debt Service Fund Delinquent Property Taxes Receivable 57,565 Total Debt Service Fund 57,565 Total Governmental Funds 2,016,367$ The Schertz Economic Development Corporation approved a loan to SPV Ventures for $150,000 for twenty years at 0%. Management considers the loan to be fully collectible. Additionally, there is no imputed interest included in the face amount of the Note Receivable. The balance of the note as of September 30, 2012 was $120,080. NOTE 5 -INTERFUND BALANCES AND TRANSFERS The composition of interfund balances as of September 30, 2012 is as follows: Due From Due To Amount Purpose EMS Water & Sewer 35,998$ Structured loan between funds Capital Projects Debt Service 116,144 Premiums and accrued interest on bonds Capital Projects Water & Sewer 796,784 Portion of bond proceeds for water projects EMS General Fund 357,773 Short-term cash flow borrowing Nonmajor Governmental General 21,793 Short-term cash flow borrowing The following schedule briefly summarizes the City’s transfer activity: Transfer From Transfer To Amount Purpose Nonmajor Governmental General 37,250$ Hotel tax subsidy for special events General Nonmajor Governmental 2,385 Supplement Funding General Water & Sewer 32,364 Allocation of miscellaneous receipts General EMS 29,930 Allocation of miscellaneous receipts Nonmajor Governmental Capital Projects 100,000 Contribute to skate park construction 40 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 6 -CAPITAL ASSETS Capital asset activity for the year ended September 30, 2012 was as follows: Beginning Ending Balance Increases Deletions Transfers Balance Governmental Activities: Capital Assets, Not Being Depreciated: Land 7,442,117$ -$ -$ -$ 7,442,117$ Construction in Progress 1,552,178 956,158 - (1,757,059) 751,277 Total Capital Assets Not Being Depreciated 8,994,295 956,158 - (1,757,059) 8,193,394 Capital Assets, Being Depreciated: Buildings and Improvements 35,037,432 - - - 35,037,432 Machinery, Equipment, and Vehicles 5,717,322 541,532 (116,864) (20,288) 6,121,702 Streets and Infrastructure 77,314,528 1,057,546 - 1,757,059 80,129,133 Total Capital Assets Being Depreciated 118,069,282 1,599,078 (116,864) 1,736,771 121,288,267 Accumulated Depreciation: Buildings and Improvements (5,752,179) (976,927) - - (6,729,106) Machinery, Equipment, and Vehicles (3,313,282) (499,096) 113,528 20,288 (3,678,562) Streets and Infrastructure (15,100,157) (2,576,880) - - (17,677,037) Total Accumulated Depreciation (24,165,618) (4,052,903) 113,528 20,288 (28,084,705) Total Capital Assets Being Depreciated, Net 93,903,664 (2,453,825) (3,336) 1,757,059 93,203,562 Governmental Activities Capital Assets, Net 102,897,959$ (1,497,667)$ (3,336)$ -$ 101,396,956$ Beginning Ending Balance Increases Deletions Transfers Balance Business-Type Activities: Capital Assets, Not Being Depreciated: Land 910,413$ -$ -$ -$ 910,413$ Construction in Progress 3,697,506 95,485 - (3,707,995) 84,996 Total Assets Not Being Depreciated 4,607,919 95,485 - (3,707,995) 995,409 Capital Assets, Being Depreciated: Buildings and Improvements 71,829,995 879,858 - 3,707,995 76,417,848 Machinery, Equipment, and Vehicles 2,667,463 99,947 - 20,288 2,787,698 Total Capital Assets Being Depreciated 74,497,458 979,805 - 3,728,283 79,205,546 Accumulated Depreciation: Buildings and Improvements (17,207,516) (1,651,204) - - (18,858,720) Machinery, Equipment, and Vehicles (1,836,368) (227,974) - (20,288) (2,084,630) Total Accumulated Depreciation (19,043,884) (1,879,178) - (20,288) (20,943,350) Total Capital Assets Being Depreciated, Net 55,453,574 (899,373) - 3,707,995 58,262,196 Business-Type Activities Capital Assets, Net 60,061,493$ (803,888)$ -$ -$ 59,257,605$ 41 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 6 -CAPITAL ASSETS (Continued) Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: General Government 678,133$ Public Safety 377,834 Public Environment 2,601,475 Parks and Recreation 300,573 Cultural 59,140 Health 11,640 Administration 24,108 Total Depreciation Expense - Governmental Activities 4,052,903$ Business-Type Activities: Water and Sewer System 1,748,196$ EMS 130,982 Total Depreciation Expense - Business Type Activities 1,879,178$ NOTE 7 -OPERATING LEASE The City made agreements with the following telecommunication companies for cellular tower space. The following are the minimum lease receivables. Fiscal Year Ending September 30,AT&T Clearwire Sprint Verizon Total 2013 53,785$ 31,945$ 56,611$ 44,621$ 186,962$ 2014 - 32,903 - - 32,903 53,785$ 64,848$ 56,611$ 44,621$ 219,865$ NOTE 8 -CAPITAL LEASE The City has entered into a lease agreement to finance equipment. The lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of the future minimum lease payments at the inception date. The assets acquired through capital leases are as follows: Assets: Equipment 148,294$ Less Accumulated Depreciation (37,074) Total 111,220$ Future minimum obligations and the net present value of these minimum lease payments as of September 30, 2012 are as follows: Year Ending September 30, 2013 38,705$ 2014 22,578 Total Payments 61,283 Less: Amount Representing Interest (1,094) Present Value of Minimum Lease Payments 60,189$ 42 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 9 -LONG TERM DEBT The City issues a variety of long-term debt instruments in order to acquire and/or construct major capital facilities and equipment for governmental activities. These instruments include general obligation bonds, certificates of obligation, and capital leases. These debt obligations are secured by either future property or hotel tax revenue or liens on property and equipment. A summary of the terms of general obligation bonds and combination of tax and revenue certificates of obligation outstanding at September 30, 2012, follows: Issue Amount Maturity Rate Balance Primary Government General Obligation Bonds 2006 Series 15,000,000$ 2031 4.0% - 5.25%13,655,000$ 2007 Series 6,000,000 2027 4.07%4,775,000 2008 Series 9,900,000 2028 4.13%8,645,000 2009 Series 9,500,000 2033 2.0% - 5.50%8,190,000 2010 Series, Refunding 2,865,000 2021 2.0% - 4.0%2,550,000 2011 Series 8,250,000 2036 3.0% - 6.0%8,160,000 2011A Series, Refunding 6,745,000 2024 2.33%6,605,000 2012 Series 7,625,000 2032 2.00%7,625,000 Certificates of Obligation 2003 Series 3,360,000$ 2013 2.0% - 3.9%210,000 2004 Series 7,750,000 2013 4.0% - 4.7%325,000 2007 Series CIB 2 438,900 2016 4.01%201,300 2007 Series CIB 4 569,500 2016 4.01%260,000 Total Governmental Long-Term Obligations 61,201,300$ Revenue Bonds 2005 Series 3,200,000$ 2025 3.0% - 4.0%2,355,000$ General Obligation Bonds 2011 Series, Refunding 2,675,000 2021 2.0% - 3.0%2,405,000 Certificates of Obligation 2007 Series CIB 1 6,600,000$ 2026 4.01%5,150,000 2007 Series CIB 2 226,100 2016 4.01%103,700 2007 Series CIB 4 280,500 2016 4.01%130,000 2010 Tax Notes 310,000$ 2015 1.20% - 2.55%190,000 Total Business-Type Long-Term Obligations 10,333,700$ Economic Development Corporation Certificates of Obligation 2007 Series CIB 5 1,300,000$ 2016 4.01%585,000$ 2010 Tax Notes 1,270,000$ 2015 1.20% - 2.55%775,000 Total Economic Development Corporation Long-Term Obligations 1,360,000$ 43 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 9 -LONG-TERM DEBT (Continued) Annual debt service requirements of bonded debt as of September 30, 2012, are as follows: September 30,Principal Interest Total 2013 2,789,850$ 2,370,106$ 5,159,956$ 2014 2,947,516 2,268,549 5,216,065 2015 3,066,134 2,166,937 5,233,071 2016 3,182,800 2,061,061 5,243,861 2017 3,175,000 1,950,794 5,125,794 2018-2022 15,855,000 8,061,476 23,916,476 2023-2027 15,540,000 4,968,667 20,508,667 2028-2032 12,020,000 1,895,540 13,915,540 2033-2036 2,625,000 227,800 2,852,800 Total 61,201,300$ 25,970,930$ 87,172,230$ Governmental Activities September 30,Principal Interest Total 2013 820,467$ 368,561$ 1,189,028$ 2014 847,166 342,390 1,189,556 2015 883,867 315,121 1,198,988 2016 837,200 287,414 1,124,614 2017 795,000 259,802 1,054,802 2018-2022 3,715,000 894,745 4,609,745 2023-2026 2,435,000 225,245 2,660,245 Total 10,333,700$ 2,693,278$ 13,026,978$ Business-Type Activities Fiscal Year Ending September 30,Principal Interest Total 2013 390,000$ 38,504$ 428,504$ 2014 400,000 27,671 427,671 2015 415,000 15,610 430,610 2016 155,000 6,216 161,216 Total 1,360,000$ 88,001$ 1,448,001$ Economic Development Corporation 44 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 9 -LONG-TERM DEBT (Continued) Changes in Long-Term Debt Balance Balance Due Within 9/30/2011 Additions Reductions 9/30/2012 One Year Governmental Activities: General Obligation Bonds 44,715,000$ 7,625,000$ (1,290,000)$ 51,050,000$ 1,825,000$ Unamortized Premium 413,730 175,473 (19,255) 569,948 27,297 General Obligation Refunding Bonds 2,790,000 6,745,000 (380,000) 9,155,000 320,000 Unamortized Premium 116,523 - (12,712) 103,811 12,712 Deferred Loss on Refunding - (501,272) 35,764 (465,508) (41,773) Certificates of Obligation 7,910,800 - (6,914,500) 996,300 644,850 Unamortized Discount (10,723) - 10,723 - - Capital Lease 97,188 - (36,999) 60,189 37,792 Compensated Absences 602,334 287,598 (120,467) 769,465 153,893 Total Governmental Activities 56,634,852$ 14,331,799$ (8,727,446)$ 62,239,205$ 2,979,771$ Business-Type Activities: Revenue Bonds 2,490,000$ -$ (135,000)$ 2,355,000$ 140,000$ Unamortized Discount (13,320) - 975 (12,345) (975) General Obligation Refunding Bonds 2,675,000 - (270,000) 2,405,000 285,000 Unamortized Premium 9,440 - (969) 8,471 969 Deferred Loss on Refunding (141,061) - 14,468 (126,593) (14,468) Certificates of Obligation 5,704,200 - (320,500) 5,383,700 335,467 Tax Notes 250,000 - (60,000) 190,000 60,000 Compensated Absences Payable 168,112 84,511 (33,622) 219,001 43,800 Total Business-Type Activities 11,142,371$ 84,511$ (804,648)$ 10,422,234$ 849,793$ Economic Development Corporation: Certificates of Obligation 715,000$ -$ (130,000)$ 585,000$ 135,000$ Tax Notes 1,025,000 - (250,000) 775,000 255,000 Compensated Absences 4,801 6,811 (4,801) 6,811 6,811 Total Economic Development 1,744,801$ 6,811$ (384,801)$ 1,366,811$ 396,811$ Compensated absences for governmental activities are generally liquidated by the general fund. In August 2012, the City issued $7,625,000 of general obligation bonds, with the payment of the related principal and interest to be made from an annual ad valorem tax levied against all taxable property within the City. The bonds were issued to provide funds to construct athletic fields and a natatorium, the final portion of the bonds authorized in 2010. In the government-wide financial statements, bond issuance costs are deferred and amortized over the life of the bonds. Bond issuance costs are reported as deferred charges. 45 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 9 -LONG-TERM DEBT (Continued) During the year ended September 30, 2012, the City issued $6,745,000 of general obligation bonds to provide resources to advance refund portions of the 2003 and 2004 certificates of obligation totaling $6,295,000. As a result, the refunded portion of the certificates has been removed from the Statement of Net Assets and is considered defeased even though it was outstanding as of September 30, 2012. The advance refunding was undertaken to result in an economic gain (difference between the present values of the debt service payments on the old and new debt) of $505,543. Bonded debt of the City consists of various series of general obligation bonds, revenue bonds, certificates of obligation, and tax notes. General obligation bonds and certificates of obligation are direct obligations of the City for which its full faith and credit are pledged, and are payable from taxes levied on all taxable property located within the City. Revenue bonds are generally payable from pledged revenues generated by the water and sewer fund. The debenture agreement for water and sewer bonds requires that funds be available for 1/12th of the principal and 1/6th of the interest requirements of the next fiscal year. The City is required to accumulate a reserve fund in an amount equal to the average principal and interest on the revenue bonds. The City has purchased a surety bond through MBIA Insurance Corporation to fund the required reserve amount. NOTE 10 -RETIREMENT PLAN A.Plan Description The City provides pension benefits for its eligible employees through a nontraditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent multiple-employer public employee retirement system. The plan provisions that have been adopted by the City are within the options available in the governing state statutes of TMRS. TMRS issues publicly available comprehensive annual financial report that includes financial statements and required supplementary information (RSI) for TMRS; the report also provides detailed explanations of the contribution, benefits and actuarial methods and assumptions used by the System. This report may be obtained from TMRS’ website at www.TMRS.com. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. Plan provisions for the City were as follows: Plan Year 2011 Plan Year 2012 Employee deposit rate 7.0%7.0% Matching ratio (City to employee)2 to 1 2 to 1 Years required for vesting 5 5 Service retirement eligibility (expressed as age/years of service)60/5, 0/20 60/5, 0/20 Updated Service Credit 100% Repeating, Transfers 100% Repeating, Transfers Annuity Increase (to retirees)70% of CPI Repeating 70% of CPI Repeating 46 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 10 -RETIREMENT PLAN (Continued) B.Contributions Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the Projected Unit Credit actuarial cost method. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the portion of an active member’s projected benefit allocated annually; the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for the City. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits, such as Updated Service Credits and Annuity Increases. The City contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect. The annual pension cost and net pension obligation (asset) are as follows: Annual Actual Percentage of Net Pension Fiscal Year Pension Cost Contribution Made APC Contributed Obligation 2012 2,120,746$ 2,120,746$ 100%-$ 2011 2,089,658 2,089,658 100%- 2010 1,926,623 1,926,623 100%- The required contribution rates for fiscal year 2012 were determined as part of the December 31, 2009 and 2010 actuarial valuations. Additional information as of the latest actuarial valuation, December 31, 2011, also follows: Actuarial Valuation Date December 31, 2009 December 31, 2010 December 31, 2011 Actuarial Cost Method Projected Unit Credit Projected Unit Credit Projected Unit Credit Amortization Method Level percent of payroll Level Percent of Payroll Level Percent of Payroll Remaining Amortization Period 28.1 years - Closed Period 27.1 years - Closed Period 26.1 years - Closed Period Amortization of New Gains/Losses 30 years 30 years 30 years Asset Valuation Method 10-year Smoothed 10-year Smoothed Market 10-year Smoothed Market Investment Rate of Return 7.5%7.0%7.0% Projected Salary Increases Varies by age and service Varies by age and service Varies by age and service Inflation Rate 3.0%3.0%3.0% Cost-of-Living Adjustments 2.1%2.1%2.1% 47 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 10 -RETIREMENT PLAN (Continued) B.Contributions (Continued) The funded status as of December 31, 2011, the most recent actuarial valuation date, is as follows: Actuarial UAAL as a Actuarial Actuarial Value Accrued Unfunded Percentage of Valuation Date of Assets Liability (AAL)Funded Ratio AAL (UAAL)Covered Payroll Covered Payroll 12/31/2011 22,377,323$ 35,296,880$ 63.4%12,919,557$ 13,125,349$ 98.4% Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revisions as actual results are compared to past expectations and new estimates are made about the future. Actuarial calculations are based on the benefits provided under the terms of the substantive plan in effect at the time of each valuation, and reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used to include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The schedule of funding progress, presented as Required Supplementary Information following the notes to the financial statements, presents multi-year information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits. C.Other Post-Employment Benefits The City also participates in the cost sharing multiple-employer defined benefit group-term life insurance plan operated by TMRS known as Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance, to provide group-term life insurance coverage to both current and retired employees. The City may terminate coverage under and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1. The death benefit for active employees provides a lump-sum payment approximately equal to the employee’s annual salary (calculated based on the employee’s actual earnings, for the 12-month period preceding the month of death); retired employees are insured for $7,500; this coverage is an “other postemployment benefit,” or OPEB. The City contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation. The rate is equal to the cost of providing one-year term life insurance. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year; the intent is not to pre-fund retiree life insurance during the employees’ entire careers. The City’s contributions to the TMRS SDBF for the years ended 2012, 2011, and 2010 were $22,274, $25,723, and $21,794, respectively, which equaled the required contributions each year. NOTE 11 -JOINT VENTURE A joint venture is a legally separate entity that results from a contractual arrangement and that is owned, operated, or governed by two or more participating governments. The following entity meets the criteria as a joint venture: 48 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 11 -JOINT VENTURE (Continued) Schertz/Seguin Local Government Corporation The Schertz/Seguin Local Government Corporation is a public, nonprofit corporation organized to aid, assist, and act on behalf of the cities of Schertz and Seguin in acquiring, constructing, maintaining, and operating a water utility system. The participating governments have an ongoing financial responsibility to fund the operation of the corporation through either purchase of services or by subsidizing the operations. Contributions to the corporation are reflected as “operating expenses” in the water and sewer fund and totaled $1,594,536 for the year ended September 30, 2012. Separate financial statements for the Schertz/Seguin Local Government Corporation may be obtained from the City of Seguin, 210 East Gonzales Street, Seguin, Texas 78156. The City of Schertz is jointly liable, together with the City of Seguin, for operating deficits and long-term debt of the Schertz/Seguin Local Government Corporation. Following is a summary of financial data as reported in the Corporation’s audited financial statements dated September 30,2011: ASSETS: Current Assets 4,959,186$ Restricted Cash and Cash Equivalents 18,345,207 Property, Plant & Equipment 59,995,340 Other Assets 2,157,966 TOTAL ASSETS 85,457,699$ LIABILITIES & NET ASSETS: Current Liabilities 6,795,025$ Revenue Bonds (Less Current Maturities)73,889,840 TOTAL LIABILITIES 80,684,865 NET ASSETS: Invested in Capital Assets, Net of Related Debt (2,712,485) Restricted 5,487,016 Unrestricted 1,998,303 TOTAL NET ASSETS 4,772,834 TOTAL LIABILITIES AND NET ASSETS 85,457,699$ The Corporation had revenue bonds outstanding in the amount of $77,605,000 (as of September 30, 2011) to provide funds to build, improve, extend, enlarge and repair the Corporation’s utility system, fund a reserve, and pay the costs of bond issuance. The bond resolution pledges intergovernmental contract revenues from the cities of Schertz and Seguin (the participating governments) to bond holders. Under the intergovernmental water supply contract, the participating governments are unconditionally obligated to pay their respective shares of annual contract revenue bond debt service from the operation of their respective utility systems. 49 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 11 -JOINT VENTURE (Continued) Cibolo Valley Local Government Corporation The Cibolo Valley Local Government Corporation (CVLGC) is a public nonprofit corporation incorporated in March 2012 to assist and act on behalf of the cities of Schertz, Converse and Cibolo to obtain additional water sources. The City of Schertz has contributed $125,000 for the initial participation in CVLGC. Audited financial statements are currently unavailable. NOTE 12 -COMMITMENTS AND CONTINGENCIES Tax Increment Financing (the “Zone”) The City is a principal in the City of Schertz Tax Increment Reinvestment Zone #2, pursuant to Chapter 311 of the Texas Tax Code. Under the terms of the Zone agreement, the City of Schertz, Bexar County, and San Antonio River Authority are funding infrastructure improvements through tax increment financing to the Sedona Development Project. At the time the Zone was created, the property tax base was “frozen” and increment taxes resulting from the increases to property tax base are being used to finance Zone improvements. The total projected cost is a combined figure of $45,000,000. Project costs of the developer will be funded up to 100% of the tax increment generated by the City of Schertz, Bexar County, and San Antonio River Authority (SARA). The City of Schertz (combined with SARA) have committed up to $32,877,000 of the total $45,000,000. The Zone has a statutory termination date of December 31, 2027. The TIRZ has collected $146,569 as of September 30, 2012, which will be used to reimburse the developer for infrastructure improvements. 380 Agreements To encourage economic growth, the City has entered into various 380 agreements with businesses in the City. These agreements involve rebates of future ad valorem taxes and or sales taxes. These agreements are rebates of future taxes, and should not have a significant impact on current tax base in future years. Once the terms of the 380 agreements expire, the tax base of the City will be increased to include these new businesses. Litigation The City is the subject of various claims and litigation that have arisen in the course of its operations. Management is of the opinion that the City’s liability in these cases, if decided adversely to the City, will not have a material effect on the City’s financial position. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The City contracts with the Texas Municipal League Intergovernmental Risk Pool, a public entity risk pool currently operating as a common risk management and insurance program providing insurance coverage in the following areas: general liability, automobile liability and physical damage, law enforcement liability, worker's compensation, real and personal property, mobile equipment, and errors and omissions liability. TML is a multi-employer group that provides for a 50 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2012 NOTE 12 -COMMITMENTS AND CONTINGENCIES (Continued) Risk Management (Continued) combination of risk sharing among pool participants and stop loss coverage. Contributions are set annually by the provider. Liability by the City is generally limited to the contributed amounts. Annual contributions for the year ended September 30, 2012 were $369,540 for property and casualty and workers compensation coverage. There were no significant increases or decreases in coverage from fiscal year 2011. Construction Commitments The City of Schertz has entered into commitments for various projects as follows: Primary Government:Estimated Project Expended to Estimated Future Cost to City Date Commitment Governmental Activities: Skate Park Project 125,000$ -$ 125,000$ Woodland Oaks Detention Facility 32,000 5,830 26,170 Chelsea Drive Drainage 123,101 8,153 114,948 Natatorium 6,160,500 132,384 6,028,116 Soccer Fields Improvement 3,000,000 239,724 2,760,276 Athletic Fields Improvements 3,000,000 21,850 2,978,150 Schertz Animal Services Facility 2,250,000 204,767 2,045,233 FM 78 and Main Street 1,000,000 20,430 979,570 Playscape Relocation Project 464,500 75,940 388,560 Ware Seguin Road - Phase II 342,400 2,700 339,700 Lower Seguin Road 500,000 - 500,000 Lazy Oak Reconstruction 213,539 - 213,539 Laura Heights Street Project 80,394 - 80,394 Main Street 454,666 - 454,666 Total Governmental Commitments 17,746,100 711,778 17,034,322 Business-Type Activities: FM 3009 & 2252 Waterline Relocation 372,803 24,123 348,680 FM1518 Waterline Relocation 169,890 19,776 150,114 IH35 Waterline Replacement 275,464 16,012 259,452 Aviation Heights Waterline Replacement 213,539 - 213,539 Northcliffe Infiltration Project 400,000 - 400,000 East Live Oak Water Plan Upgrades 245,000 19,960 225,040 South Regional Water Reclamation 1,834,000 - 1,834,000 Town Creek Sewer Project - Phase III 873,220 - 873,220 Total Business-Type Activities 4,383,916 79,871 4,304,045 Total Estimated Future Commitments 22,130,016$ 791,649$ 21,338,367$ 51 REQUIRED SUPPLEMENTARY INFORMATION 52 CITY OF SCHERTZ, TEXAS REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2012 Variance With 2012 Final Budget - Actual Positive Original Final Amounts (Negative) REVENUES Taxes 13,420,725$ 13,420,725$ 13,965,625$ 544,900$ Permits and Fees 1,219,100 1,219,100 1,146,301 (72,799) Service Fees 2,901,305 2,901,305 2,699,448 (201,857) Fines and Fees 2,168,319 2,168,319 1,979,678 (188,641) Intergovernmental 212,800 388,310 466,864 78,554 Investment Earnings 33,175 33,175 19,307 (13,868) Miscellaneous 643,700 643,700 748,040 104,340 TOTAL REVENUES 20,599,124 20,774,634 21,025,263 250,629 EXPENDITURES General Government: Council 61,500 61,500 46,728 14,772 City Manager 777,776 888,194 891,016 (2,822) Municipal Court 341,433 346,369 337,747 8,622 Customer Relations 110,406 112,657 103,785 8,872 Planning & Zoning 317,133 241,457 229,803 11,654 Legal 258,000 258,000 550,794 (292,794) Facility Maintenance 956,891 968,365 882,015 86,350 City Secretary 183,052 185,026 177,335 7,691 Nondepartmental 1,427,904 1,527,827 1,225,076 302,751 Community & Media Relations 256,660 313,786 314,768 (982) Records Management 64,544 65,531 56,603 8,928 Schertz Tales 433,205 434,500 419,732 14,768 Engineering 245,326 246,744 195,816 50,928 Geographic Information Systems 130,517 132,491 127,223 5,268 Citizens Assistance 52,000 52,000 52,281 (281) Special Events 103,600 103,600 82,048 21,552 Total General Government 5,719,947 5,938,047 5,692,770 245,277 Public Safety: Police Department 5,035,122 5,090,947 5,038,641 52,306 Fire Department 2,879,767 2,905,993 2,779,954 126,039 Inspection 446,682 453,115 436,088 17,027 Marshal Service 646,608 654,073 598,748 55,325 Total Public Safety 9,008,179 9,104,128 8,853,431 250,697 Public Environment: Streets 1,078,305 1,091,806 976,327 115,479 Total Public Environment 1,078,305$ 1,091,806$ 976,327$ 115,479$ Budgeted Amounts 53 CITY OF SCHERTZ, TEXAS REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL (CONTINUED) YEAR ENDED SEPTEMBER 30, 2012 Variance With 2012 Final Budget - Actual Positive Original Final Amounts (Negative) EXPENDITURES (Continued) Parks and Recreation: Parks 793,322$ 800,057$ 790,074$ 9,983$ Pools 243,003 243,003 235,985 7,018 Community/Civic Center 186,927 155,366 131,211 24,155 Total Parks and Recreation 1,223,252 1,198,426 1,157,270 41,156 Cultural: Library 826,765 838,817 821,351 17,466 Total Cultural 826,765 838,817 821,351 17,466 Health: Animal Control 383,787 386,672 346,318 40,354 Total Health 383,787 386,672 346,318 40,354 Administration: Information Technology 1,160,176 989,124 918,510 70,614 Human Resources 385,476 387,881 346,134 41,747 Finance 449,959 455,881 447,861 8,020 Purchasing & Asset Management 259,622 263,014 264,559 (1,545) Fleet Service 410,809 457,243 399,686 57,557 Total Administration 2,666,042 2,553,143 2,376,750 176,393 TOTAL EXPENDITURES 20,906,277 21,111,039 20,224,217 886,822 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (307,153) (336,405) 801,046 1,137,451 OTHER FINANCING SOURCES (USES) Transfers In 463,256 463,256 37,250 (426,006) Transfers Out (5,150) (5,150) (64,679) (59,529) TOTAL OTHER FINANCING SOURCES (USES)458,106 458,106 (27,429) (485,535) NET CHANGE IN FUND BALANCE 150,953 121,701 773,617 651,916 FUND BALANCE - BEGINNING 3,203,200 3,203,200 3,203,200 - FUND BALANCE - ENDING 3,354,153$ 3,324,901$ 3,976,817$ 651,916$ Budgeted Amounts 54 CITY OF SCHERTZ, TEXAS NOTES TO SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE –BUDGET AND ACTUAL SEPTEMBER 30, 2012 Budgetary Information –The budget is prepared in accordance with accounting principles generally accepted in the United States of America. The City maintains strict budgetary controls. The objective of these controls is to ensure compliance with legal provision embodied in the annual appropriated budget approved by the City Council and as such is a good management control device. Annual budgets are adopted for the general fund; debt service fund;special revenue funds; hotel motel tax, park fund,police forfeiture fund, library grant fund, and the historical committee fund. Project-length financial plans are adopted for capital projects funds. Of these budgets, only the General Fund, Debt Service and Economic Development Corporation are legally adopted. Budgetary preparation and control is exercised at the department level. Actual expenditures may not legally exceed appropriations at the fund level. The City did not exceed the budgeted expenditures in any funds with legally adopted budgets during 2012. However, the budget for the Police Forfeiture Fund was exceeded. 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 reappropriated and honored during the subsequent year. 55 CITY OF SCHERTZ, TEXAS REQUIRED SUPPLEMENTARY INFORMATION TEXAS MUNICIPAL RETIREMENT SYSTEM ANALYSIS OF FUNDING PROGRESS LAST EIGHT CALENDAR YEARS UNFUNDED ACTUARIAL ACCRUED LIABILITY UNFUNDED AS A ACTUARIAL ACTUARIAL FUNDING ACTUARIAL ANNUAL PERCENTAGE CALENDAR VALUE OF ACCRUED RATIO ACCRUED COVERED OF COVERED YEAR ASSETS **LIABILITY*(1)/(2)LIABILITY PAYROLL PAYROLL 2004 5,122,816$ 7,950,619$ 64.4%2,827,803$ 6,144,053$ 46.0% 2005 6,042,437 9,003,970 67.1%2,961,533 7,662,928 38.6% 2006 7,290,175 11,798,002 61.8%4,507,827 8,478,634 53.2% 2007 8,811,205 19,057,935 46.2%10,246,730 10,047,726 102.0% 2008 11,216,663 22,068,312 50.8%10,851,649 11,626,232 93.3% 2009 13,946,029 25,584,067 54.5%11,638,038 12,321,349 94.5% 2010 18,696,437 31,792,634 58.8%13,096,197 12,612,346 103.8% 2011 22,377,323 35,296,880 63.4%12,919,557 13,125,349 98.4% * As of December 31 of the preceding year, the date of the actuarial valuation. ** Assets are stated cost as of December 31 of the preceding year. 56 SUPPLEMENTARY INFORMATION Comparative Statements o General Fund o Debt Service Fund Combining and Comparative Individual Fund Statements -Nonmajor Governmental Funds o Hotel Occupancy Fund -will account for proceeds of hotel occupancy taxes to be used strictly for those kinds of programs that promote the tourism industry. o Park Fund -will account for revenues from developers' fees (in lieu of park land dedication), grants, and donations and is designed to monitor and manage improvement of park system and tree mitigation. o Police Forfeitures Fund -will account for revenue received from drug related cases in conjunction with other law enforcement agencies. o Library Grant Fund -will account for funds from a state grant to be used for purchasing computers at the library to be used for access to the internet. o Historical Committee Fund -will account for funds received for the preservation of the history of the city. Combining Statements –Discretely Presented Component Units o Library Board o Economic Development Corporation o Parks and Recreation Foundation 57 CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS GENERAL FUND SEPTEMBER 30, 2012 AND 2011 2012 2011 ASSETS Cash and Cash Equivalents 1,125,445$ 814,125$ Investments 2,573,411 2,557,520 Receivables (net of allowances): Taxes 1,529,976 1,387,743 Accounts and Other 2,063,204 1,659,317 Due from Other Funds 379,566 4,485 Inventory 63,556 43,504 TOTAL ASSETS 7,735,158$ 6,466,694$ LIABILITIES AND FUND BALANCE Liabilities: Accounts Payable 868,897$ 1,095,463$ Accrued Salaries and Benefits 645,523 216,868 Customer Deposits 28,350 20,800 Due to Other Governments 256,769 129,444 Due to Other Funds - 2,831 Unearned Revenue 1,958,802 1,798,088 Total Liabilities 3,758,341 3,263,494 Fund Balance: Nonspendable: Inventory 63,556 43,504 Restricted for: Municipal Court 527,513 472,248 Library - 174,720 PEG Capital Fees 409,870 317,453 Assigned for: Property Replacement 322,656 202,723 Special Events 92,555 93,447 Unassigned 2,560,667 1,899,105 Total Fund Balance 3,976,817 3,203,200 TOTAL LIABILITIES AND FUND BALANCE 7,735,158$ 6,466,694$ 58 CITY OF SCHERTZ, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND FOR THE YEARS ENDED SEPTEMBER 30, 2012 AND 2011 2012 2011 REVENUES Taxes 13,965,625$ 13,132,674$ Permits and Fees 1,146,301 1,674,094 Service Fees 2,699,448 2,660,333 Fines and Fees 1,979,678 1,452,610 Intergovernmental 466,864 143,285 Investment Earnings 19,307 17,103 Miscellaneous 748,040 517,626 TOTAL REVENUES 21,025,263 19,597,725 EXPENDITURES Current: General Government 5,464,293 4,938,378 Public Safety 8,654,249 8,004,262 Public Environment 976,327 846,150 Parks and Recreation 1,118,465 1,133,477 Cultural 821,351 831,838 Health 346,318 365,297 Administration 2,349,598 2,347,640 Debt Service: Principal 36,998 36,220 Interest and Fiscal Charges 1,707 2,485 Bond Issue Costs 100 100 Capital Outlay 454,811 239,909 TOTAL EXPENDITURES 20,224,217 18,745,756 Excess (Deficiency) of Revenues Over (Under) Expenditures 801,046 851,969 OTHER FINANCING SOURCES (USES) Transfers In 37,250 38,898 Transfers Out (64,679) (74,569) TOTAL OTHER FINANCING SOURCES (USES)(27,429) (35,671) Net Change in Fund Balance 773,617 816,298 Fund Balance at Beginning of Year 3,203,200 2,386,902 Fund Balance at End of Year 3,976,817$ 3,203,200$ 59 CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS DEBT SERVICE FUND SEPTEMBER 30, 2012 AND 2011 2012 2011 ASSETS Receivables (net of allowances): Taxes 63,989$ 58,017$ Due from Other Funds 116,144 66,486 Restricted: Cash and Cash Equivalents 929 11,696 Investments 132,312 88,647 TOTAL ASSETS 313,374$ 224,846$ LIABILITIES AND FUND BALANCE Liabilities: Accrued Interest Payable 28,135$ 57,695 Unearned Revenue 57,565 49,901 Total Liabilities 85,700 107,596 Fund Balance: Restricted for: Debt Service 227,674 117,250 Total Fund Balance 227,674 117,250 TOTAL LIABILITIES AND FUND BALANCE 313,374$ 224,846$ 60 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL DEBT SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 (WITH COMPARATIVE ACTUAL TOTALS FOR 2011) Variance with 2012 Final Budget-2011 Actual Positive Actual Original Final Amounts (Negative)Amounts REVENUES Property Taxes 4,281,098$ 4,281,098$ 4,306,882$ 25,784$ 3,433,642$ Intergovernmental - - 366,825 366,825 364,325 Investment Earnings 2,250 2,250 23,902 21,652 1,320 TOTAL REVENUES 4,283,348 4,283,348 4,697,609 414,261 3,799,287 EXPENDITURES Debt Service: Principal 2,285,187 1,842,900 2,287,900 (445,000) 1,964,850 Interest and Fiscal Charges 1,991,480 2,433,767 2,263,474 170,293 2,005,529 Bond Issue Costs - 82,390 82,390 - 88,353 TOTAL EXPENDITURES 4,276,667 4,359,057 4,633,764 (274,707) 4,058,732 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 6,681 (75,709) 63,845 139,554 (259,445) OTHER FINANCING SOURCES Transfers In - - - - 6,792 Proceeds from Refunding Bonds - 6,745,000 6,745,000 - 2,865,000 Premium on Bonds Issued - - - - 127,116 Payment to Refund Agent - (6,698,421) (6,698,421) - (2,908,428) TOTAL OTHER FINANCING SOURCES - 46,579 46,579 - 90,480 Net Change in Fund Balance 6,681 (29,130) 110,424 139,554 (168,965) FUND BALANCE, BEGINNING 117,250 117,250 117,250 - 286,215 FUND BALANCE, ENDING 123,931$ 88,120$ 227,674$ 139,554$ 117,250$ Budgeted Amounts 61 CITY OF SCHERTZ, TEXAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2012 Hotel Police Occupancy Park Forfeitures Fund Fund Fund ASSETS Cash and Cash Equivalents 26,790$ 51,775$ -$ Investments 298,455 319,532 359,911 Accounts Receivable, Net of Allowance Taxes 71,914 - - TOTAL ASSETS 397,159$ 371,307$ 359,911$ LIABILITIES AND FUND BALANCE Liabilities Accounts Payable 6,598$ 2,781$ -$ Due to Other Funds - - 21,793 Total Liabilities 6,598 2,781 21,793 Fund Balance Restricted for: Tourism Development 390,561 - - Tree Mitigation - 217,600 - Parks - 150,926 - Police Forfeiture - - 338,118 Historical Committee - - - Total Fund Balances 390,561 368,526 338,118 TOTAL LIABILITIES AND FUND BALANCE 397,159$ 371,307$ 359,911$ Special Revenue Funds 62 Library Historical Grant Committee Fund Fund Totals -$ 9,968$ 88,533$ - - 977,898 - - 71,914 -$ 9,968$ 1,138,345$ -$ 401$ 9,780$ - - 21,793 - 401 31,573 - - 390,561 - - 217,600 - - 150,926 - - 338,118 - 9,567 9,567 - 9,567 1,106,772 -$ 9,968$ 1,138,345$ Special Revenue Funds 63 CITY OF SCHERTZ, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES –NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Hotel Police Occupancy Park Forfeitures Fund Fund Fund REVENUES Occupancy Tax 470,290$ -$ -$ Licenses and Permits - 217,160 - Fines and Fees - - 47,935 Investment Earnings 421 656 796 Miscellaneous - - - TOTAL REVENUES 470,711 217,816 48,731 EXPENDITURES Current: General Government 344,417 - - Public Safety - - 36,600 Parks and Recreation - 121,139 - Cultural - - - Capital Outlay - 19,900 64,808 TOTAL EXPENDITURES 344,417 141,039 101,408 Excess (Deficiency) of Revenues Over (Under) Expenditures 126,294 76,777 (52,677) OTHER FINANCING SOURCES (USES) Transfers In - - - Transfers Out (37,250) (100,000) - TOTAL OTHER FINANCING SOURCES (USES)(37,250) (100,000) - Net Change in Fund Balance 89,044 (23,223) (52,677) Fund Balances, Beginning 301,517 391,749 390,795 Fund Balances, Ending 390,561$ 368,526$ 338,118$ Special Revenue Funds 64 Library Historical Grant Committee Fund Fund Totals -$ -$ 470,290$ - - 217,160 - - 47,935 - - 1,873 - 391 391 - 391 737,649 - 3,149 347,566 - - 36,600 - - 121,139 6,293 - 6,293 - - 84,708 6,293 3,149 596,306 (6,293) (2,758) 141,343 - 2,385 2,385 - - (137,250) - 2,385 (134,865) (6,293) (373) 6,478 6,293 9,940 1,100,294 -$ 9,567$ 1,106,772$ Special Revenue Funds 65 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL HOTEL OCCUPANCY FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 (WITH COMPARATIVE ACTUAL TOTALS FOR 2011) Variance with 2012 Final Budget-2011 Actual Positive Actual Original Final Amounts (Negative)Amounts REVENUES Occupancy Tax 390,754$ 390,754$ 470,290$ 79,536$ 391,181$ Investment Earnings 500 500 421 (79) 385 Miscellaneous - - - - 600 TOTAL REVENUES 391,254 391,254 470,711 79,457 392,166 EXPENDITURES Current: General Government 360,136 345,336 344,417 919 341,028 Capital Outlay - 14,800 - 14,800 - TOTAL EXPENDITURES 360,136 360,136 344,417 15,719 341,028 Excess (Deficiency) of Revenues Over (Under) Expenses 31,118 31,118 126,294 95,176 51,138 OTHER FINANCING SOURCES (USES) Transfers In 20,132 20,132 - (20,132) - Transfers Out (51,250) (51,250) (37,250) 14,000 - TOTAL OTHER FINANCING SOURCES (USES)(31,118) (31,118) (37,250) (6,132) - Net Change in Fund Balance - - 89,044 89,044 51,138 FUND BALANCE, BEGINNING 301,517 301,517 301,517 - 250,379 FUND BALANCE, ENDING 301,517$ 301,517$ 390,561$ 89,044$ 301,517$ Budgeted Amounts 66 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL PARK FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 (WITH COMPARATIVE ACTUAL TOTALS FOR 2011) Variance with Original and 2012 Final Budget-2011 Final Actual Positive Actual Budget Amounts (Negative)Amounts REVENUES Licenses and Permits 325,000$ 217,160$ (107,840)$ 121,573$ Investment Earnings 600 656 56 639 TOTAL REVENUES 325,600 217,816 (107,784) 122,212 EXPENDITURES Current: Parks and Recreation 246,000 121,139 124,861 119,372 Capital Outlay 18,000 19,900 (1,900) - TOTAL EXPENDITURES 264,000 141,039 122,961 119,372 Excess (Deficiency) of Revenues Over (Under) Expenditures 61,600 76,777 (230,745) 2,840 OTHER FINANCING USES Transfers Out - (100,000) 100,000 - TOTAL OTHER FINANCING - (100,000) 100,000 - Net Change in Fund Balance 61,600 (23,223) (130,745) 2,840 FUND BALANCE, BEGINNING 391,749 391,749 - 388,909 FUND BALANCE, ENDING 453,349$ 368,526$ (130,745)$ 391,749$ 67 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL POLICE FORFEITURES FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 (WITH COMPARATIVE ACTUAL TOTALS FOR 2011) Variance with 2012 Final Budget-2011 Actual Positive Actual Original Final Amounts (Negative)Amounts REVENUES Fines and Fees 25,200 25,200 47,935$ 22,735$ 23,642$ Investment Earnings - - 796 796 583 TOTAL REVENUES 25,200 25,200 48,731 23,531 24,225 EXPENDITURES Current: Public Safety 25,000 25,000 36,600 (11,600) 42,342 Capital Outlay - 29,252 64,808 (35,556) - TOTAL EXPENDITURES 25,000 54,252 101,408 (47,156) 42,342 Net Change in Fund Balance 200 (29,052) (52,677) (23,625) (18,117) FUND BALANCE, BEGINNING 390,795 390,795 390,795 - 408,912 FUND BALANCE, ENDING 390,995$ 361,743$ 338,118$ (23,625)$ 390,795$ Budgeted Amounts 68 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL LIBRARY GRANT FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 (WITH COMPARATIVE ACTUAL TOTALS FOR 2011) Variance with Original and 2012 Final Budget-2011 Final Actual Positive Actual Budget Amounts (Negative)Amounts REVENUES Operating Grants 15,000$ -$ (15,000)$ 15,419$ TOTAL REVENUES 15,000 - (15,000) 15,419 EXPENDITURES Current: Cultural 15,000 6,293 8,707 13,029 TOTAL EXPENDITURES 15,000 6,293 8,707 13,029 Net Change in Fund Balance - (6,293) (23,707) 2,390 FUND BALANCE, BEGINNING - 6,293 6,293 3,903 FUND BALANCE, ENDING -$ -$ (17,414)$ 6,293$ 69 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL HISTORICAL COMMITTEE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2012 (WITH COMPARATIVE ACTUAL TOTALS FOR 2011) Variance with Original and 2012 Final Budget-2011 Final Actual Positive Actual Budget Amounts (Negative)Amounts REVENUES Sale of Merchandise 1,000$ 391$ (609)$ 717$ TOTAL REVENUES 1,000 391 (609) 717 EXPENDITURES Current General Government 6,150 3,149 3,001 3,947 TOTAL EXPENDITURES 6,150 3,149 3,001 3,947 OTHER FINANCING SOURCES (USES) Transfers In 5,150 2,385 (2,765) 3,230 TOTAL OTHER FINANCING SOURCES (USES)5,150 2,385 (2,765) 3,230 Net Change in Fund Balance - (373) (373) - FUND BALANCE, BEGINNING 9,940 9,940 - 9,940 FUND BALANCE, ENDING 9,940$ 9,567$ (373)$ 9,940$ 70 CITY OF SCHERTZ, TEXAS COMBINING STATEMENT OF NET ASSETS DISCRETELY PRESENTED COMPONENT UNITS SEPTEMBER 30, 2012 Schertz The Economic Library Parks and Development Advisory Recreation Corporation Board Foundation Total ASSETS Current Assets: Cash and Cash Equivalents 194,866$ 11,675$ 129,671$ 336,212$ Investments 3,714,103 44,761 - 3,758,864 Accounts Receivable - Sales Tax 507,237 - - 507,237 Accounts Receivable - Other 345 - 20,000 20,345 Accrued Interest Receivable 852 - - 852 Prepaid Expenses - - 2,367 2,367 Total Current Assets 4,417,403 56,436 152,038 4,625,877 Other Assets: Notes Receivable 120,080 - - 120,080 Deferred Charges 15,424 - - 15,424 Total Other Assets 135,504 - - 135,504 TOTAL ASSETS 4,552,907$ 56,436$ 152,038$ 4,761,381$ LIABILITIES AND NET ASSETS Liabilities Current Liabilties: Accounts Payable 45,332$ 594$ 9,139$ 55,065$ Accrued Liabilities 6,066 - - 6,066 Accrued Interest Payable 6,842 - - 6,842 Compensated Absences 6,811 - - 6,811 Current Portion of Long-Term Debt 390,000 - - 390,000 Total Current Liabilities 455,051 594 9,139 464,784 Long-Term Liabilities: Long-Term Debt 970,000 - - 970,000 Total Long-Term Liabilities 970,000 - - 970,000 Total Liabilities 1,425,051 594 9,139 1,434,784 Net Assets Restricted for Veteran's Park - - 72,160 72,160 Unrestricted Net Assets 3,127,856 55,842 70,739 3,254,437 Total Net Assets 3,127,856 55,842 142,899 3,326,597 TOTAL LIABILITIES AND NET ASSETS 4,552,907$ 56,436$ 152,038$ 4,761,381$ 71 CITY OF SCHERTZ, TEXAS COMBINING STATEMENT OF ACTIVITIES DISCRETELY PRESENTED COMPONENT UNITS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Schertz The Economic Library Parks and Development Advisory Recreation Corporation Board Foundation Total EXPENSES General Government (485,528)$ -$ -$ (485,528)$ Parks and Recreation - - (159,088) (159,088) Cultural - (17,480) - (17,480) Economic Development (802,235) - - (802,235) Interest and Fiscal Charges (51,940) - - (51,940) TOTAL EXPENSES (1,339,703) (17,480) (159,088) (1,516,271) REVENUES Program Revenues: Charges for Services - 21,515 124,696 146,211 Operating Contributions and Grants - 1,050 48,430 49,480 Capital Contributions and Grants - - 72,160 72,160 Total Program Revenues - 22,565 245,286 267,851 General Revenues: Sales Taxes 2,659,194 - 2,659,194 Interest Revenues 9,195 84 39 9,318 Miscellaneous Revenue 16,850 - 433 17,283 Total General Revenues 2,685,239 84 472 2,685,795 Change in Net Assets 1,345,536 5,169 86,670 1,437,375 Beginning Net Assets 1,782,320 50,673 56,229 1,889,222 Ending Net Assets 3,127,856$ 55,842$ 142,899$ 3,326,597$ 72 CITY OF SCHERTZ,TEXAS COMBINING BALANCE SHEET DISCRETELY PRESENTED COMPONENT UNITS SEPTEMBER 30, 2012 Schertz The Economic Library Parks and Development Advisory Recreation Corporation Board Foundation Total ASSETS Cash and Cash Equivalents 194,866$ 11,675$ 129,671$ 336,212$ Investments 3,714,103 44,761 - 3,758,864 Accounts Receivable - Sales Tax 507,237 - - 507,237 Accounts Receivable - Other 345 - 20,000 20,345 Note Receivable 120,080 - - 120,080 Accrued Interest Receivable 852 - - 852 Prepaid Items - - 2,367 2,367 TOTAL ASSETS 4,537,483$ 56,436$ 152,038$ 4,745,957$ LIABILITIES AND FUND BALANCE Liabilities Accounts Payable 45,332$ 594$ 9,139$ 55,065$ Accrued Liabilities 6,066 - - 6,066 Total Liabilities 51,398 594 9,139 61,131 Fund Balance Nonspendable: Long-Term Note Receivable 120,080 - - 120,080 Prepaid Items - - 2,367 2,367 Restricted for Veteran's Park - - 72,160 72,160 Assigned for Youth Activities - - 11,090 11,090 Unassigned 4,366,005 55,842 57,282 4,479,129 Total Fund Balances 4,486,085 55,842 142,899 4,684,826 TOTAL LIABILITIES AND FUND BALANCE 4,537,483$ 56,436$ 152,038$ 4,745,957$ TOTAL FUND BALANCE 4,486,085$ 55,842$ 142,899$ 4,684,826$ Amounts reported in the statement of net assets are different because for the statement of net assets: Deferred charges, consisting of debt issue costs, are amortized over the life of the bond rather than recognized in full in the fund statements:15,424 - - 15,424 Long-term liabilities (including employee compensated absences) are not payable in the current period and, therefore, are deferred in the funds Principal (1,360,000) - - (1,360,000) Accrued Interest Payable (6,842) - - (6,842) Compensated Absences (6,811) - - (6,811) TOTAL NET ASSETS 3,127,856$ 55,842$ 142,899$ 3,326,597$ 73 CITY OF SCHERTZ, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE DISCRETELY PRESENTED COMPONENT UNITS FOR THE YEAR ENDED SEPTEMBER 30, 2012 Schertz The Economic Library Parks and Development Advisory Recreation Corporation Board Foundation Total REVENUES Sales Taxes 2,659,194$ -$ -$ 2,659,194$ Grants and Contributions - 1,050 120,590 121,640 Charges for Services - 21,515 124,696 146,211 Investment Earnings 9,195 84 39 9,318 Miscellaneous Income 16,848 - 433 17,281 TOTAL REVENUES 2,685,237 22,649 245,758 2,953,644 EXPENDITURES Current: General Government 483,518 - - 483,518 Parks and Recreation - - 159,088 159,088 Cultural - 17,480 - 17,480 Economic Development 802,235 - - 802,235 Debt Service: Principal 380,000 - - 380,000 Interest and Fiscal Charges 48,329 - - 48,329 TOTAL EXPENDITURES 1,714,082 17,480 159,088 1,890,650 Net Change in Fund Balance 971,155 5,169 86,670 1,062,994 FUND BALANCE, BEGINNING 3,514,930 50,673 56,229 3,621,832 FUND BALANCE, ENDING 4,486,085$ 55,842$ 142,899$ 4,684,826$ NET CHANGE IN FUND BALANCE 971,155$ 5,169$ 86,670$ 1,062,994$ Amounts reported in the statement of activities are different because: The issuance of long-term debt provides and the repayment of principal consumes the current financial resources of governmental funds. Neither transaction however has any affect on net assets. This amount is the net effect of these transactions: Principal Repayments 380,000 - - 380,000 Amortization of Bond Issue Costs (5,166) - - (5,166) Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds: Compensated Absences (2,010) - - (2,010) Accrued Interest 1,557 - - 1,557 CHANGE IN NET ASSETS 1,345,536$ 5,169$ 86,670$ 1,437,375$ 74 STATISTICAL SECTION This part of the City of Schertz's annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Financial Trends (Tables 1 through 4) Net Assets by Component Change in Net Assets Fund Balances, Governmental Funds Changes in Fund Balances, Governmental Funds These schedules contain trend information to help reader understand how the City's financial performance and well-being have changed over time. Revenue Capacity (Tables 5 through 12) Tax Revenues by Source, Governmental Funds Total Water and Sewer Consumption and Rates Principal Water and Sewer Consumers Assessed Value and Estimated Actual Value of Taxable Property Direct and Overlapping Property Tax Rates Principal Property Taxpayers Property Tax Levies and Collections Taxable Assessed Value These schedules contain information to help readers assess the factors affecting the City’s ability to generate its property and sales tax. Debt Capacity (Tables 13 through 17) Ratios of Outstanding Debt by Type Ratios of General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Debt Margin Information Pledged Revenue Coverage These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information (Tables 18 through 19) Demographic and Economic Statistics Principal Employers These schedules offer demographic and economic indicators to help the reader understand how the City’s financial activities take place and to help make comparisons over time and with other governments. Operating Information (Tables 20 through 22) Full-time Equivalent City Government Employees by Function Operating Indicators by Function/Program Capital Asset Statistics by Function/Program These schedules contain information about the City’s operations and resources to help the reader understand how the City’s financial information relates to the services the City provides and the activities it performs. 75 CITY OF SCHERTZ, TEXAS NET ASSETS, BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) 2003 2004 2005 2006 Governmental Activities Invested in Capital Assets, Net of Related Debt 11,066,897$ 16,228,134$ 17,699,797$ 13,257,031$ Restricted 491,313 7,037,607 4,813,496 15,888,549 Unrestricted 7,448,061 985,750 6,957,173 8,759,630 Total Governmental Activities Net Assets 19,006,271$ 24,251,491$ 29,470,466$ 37,905,210$ Business-Type Activities Invested in Capital Assets, Net of Related Debt 21,806,626$ 22,901,982$ 24,970,976$ 24,783,839$ Restricted 1,384,083 1,010,662 428,712 1,253,711 Unrestricted 5,294,283 3,988,006 5,377,968 9,879,126 Total Business-Type Activities Net Assets 28,484,992$ 27,900,650$ 30,777,656$ 35,916,676$ Primary Government Invested in Capital Assets, Net of Related Debt 32,873,523$ 39,130,116$ 42,670,773$ 38,040,870$ Restricted 1,875,396 8,048,269 5,242,208 17,142,260 Unrestricted 12,742,344 4,973,756 12,335,141 18,638,756 Total Primary Government Net Assets 47,491,263$ 52,152,141$ 60,248,122$ 73,821,886$ Fiscal Year 76 TABLE 1 2007 2008 2009 2010 2011 2012 32,932,355$ 44,206,232$ 57,324,482$ 54,010,139$ 55,415,699$ 56,616,809$ 663,973 1,058,514 1,170,786 1,067,599 2,279,621 2,034,588 12,720,293 9,092,711 2,017,577 5,876,642 5,480,879 5,652,889 46,316,621$ 54,357,457$ 60,512,845$ 60,954,380$ 63,176,199$ 64,304,286$ 18,788,933$ 41,350,184$ 50,047,301$ 50,778,490$ 51,838,589$ 50,161,157$ 1,995,213 - - - - - 23,658,181 10,286,447 3,633,244 4,217,098 7,441,722 11,577,645 44,442,327$ 51,636,631$ 53,680,545$ 54,995,588$ 59,280,311$ 61,738,802$ 51,721,288$ 85,556,416$ 107,371,783$ 104,788,629$ 107,254,288$ 106,777,966$ 2,659,186 1,058,514 1,170,786 1,067,599 2,279,621 2,034,588 36,378,474 19,379,158 5,650,821 10,093,740 12,922,601 17,230,534 90,758,948$ 105,994,088$ 114,193,390$ 115,949,968$ 122,456,510$ 126,043,088$ Fiscal Year 77 CITY OF SCHERTZ, TEXAS CHANGE IN NET ASSETS LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) 2003 2004 2005 2006 Expenses Governmental Activities General Government 1,934,433$ 2,113,226$ 2,656,327$ 2,910,487$ Public Safety 3,705,722 4,586,498 5,558,596 6,403,122 Public Environment 816,265 703,180 782,654 856,260 Parks and Recreation 366,728 315,921 351,627 384,696 Cultural 451,215 310,013 339,124 396,078 Health 156,927 192,506 221,950 231,149 Administration 696,017 760,347 955,757 1,047,206 Interest and Other Fees 499,011 707,090 862,744 823,818 Total Governmental Activities Expenses 8,626,318 9,688,781 11,728,779 13,052,816 Business-Type Activities Water and Sewer 8,300,590 8,302,505 8,937,553 9,821,823 EMS 2,248,651 2,509,858 3,789,791 3,474,249 Total Business-Type Activities 10,549,241 10,812,363 12,727,344 13,296,072 Total Primary Government Expenses 19,175,559$ 20,501,144$ 24,456,123$ 26,348,888$ Program Revenues Governmental Activities Charges for Service: General Government 1,022,953$ 967,261$ 1,102,665$ 917,099$ Public Safety 1,033,713 1,118,241 1,475,618 1,684,786 Parks and Recreation 34,248 203,579 141,523 143,254 Cultural 155,644 180,707 146,429 149,225 Health 117,983 36,095 44,611 44,178 Administration 438,408 414,541 472,571 393,043 Operating Grants and Contributions 2,788,821 2,280,629 1,789,763 1,567,164 Capital Grants and Contributions - 2,153,213 3,808,133 5,382,779 Total Governmental Aactivities Program Revenues 5,591,770 7,354,266 8,981,313 10,281,528 Business-Type Activities Charges for Service: Water and Sewer 8,135,299 7,534,841 9,308,362 11,223,658 EMS 2,014,126 1,723,611 3,443,429 3,904,818 Capital Grants and Contributions 279,913 1,045,334 2,055,366 3,148,100 Total Business-Type Activities Program Revenues 10,429,338 10,303,786 14,807,157 18,276,576 Total Primary Government Program Revenues 16,021,108$ 17,658,052$ 23,788,470$ 28,558,104$ Fiscal Year 78 TABLE 2 2007 2008 2009 2010 2011 2012 4,121,075$ 5,082,004$ 5,713,297$ 5,694,714$ 5,878,984$ 6,514,329$ 5,920,046 7,227,406 7,755,056 7,897,298 8,390,740 9,103,676 1,864,450 2,300,425 2,740,755 2,966,642 3,152,119 3,586,087 837,652 1,184,866 1,095,405 1,354,415 1,436,436 1,425,517 450,974 490,817 735,740 803,096 858,336 899,487 272,730 330,736 377,125 345,455 374,516 357,658 1,482,780 1,947,507 1,742,573 2,112,308 2,387,518 2,415,696 1,412,066 1,982,984 1,780,791 2,188,588 2,189,935 2,250,972 16,361,773 20,546,745 21,940,742 23,362,516 24,668,584 26,553,422 9,502,039 12,379,584 13,568,065 14,434,709 15,280,871 16,349,967 5,114,911 2,976,112 3,365,544 3,690,007 3,659,031 3,758,425 14,616,950 15,355,696 16,933,609 18,124,716 18,939,902 20,108,392 30,978,723$ 35,902,441$ 38,874,351$ 41,487,232$ 43,608,486$ 46,661,814$ 2,186,229$ 1,601,472$ 1,893,779$ 2,033,232$ 1,665,784$ 2,429,114$ 1,307,295 1,643,635 1,481,004 1,986,536 2,815,029 2,216,385 196,436 155,168 208,236 504,400 344,042 416,816 201,779 210,311 207,643 245,768 206,895 257,752 33,148 41,390 33,930 36,728 39,743 36,746 936,955 479,313 834,489 900,246 896,242 1,156,026 493,281 590,944 987,588 551,524 549,851 715,517 5,640,431 8,750,859 6,184,328 1,276,465 2,998,115 1,106,413 10,995,554 13,473,092 11,830,997 7,534,899 9,515,701 8,334,769 13,007,618 13,620,440 14,668,137 15,147,332 17,073,075 17,411,568 5,017,343 3,150,428 2,889,518 3,061,414 3,564,852 3,561,114 2,755,376 5,190,039 2,241,726 973,437 2,175,889 828,853 20,780,337 21,960,907 19,799,381 19,182,183 22,813,816 21,801,535 31,775,891$ 35,433,999$ 31,630,378$ 26,717,082$ 32,329,517$ 30,136,304$ Fiscal Year 79 CITY OF SCHERTZ, TEXAS CHANGE IN NET ASSETS (CONTINUED) LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) 2003 2004 2005 2006 Net (Expenses) Revenue Governmental Activities (3,034,548)$ (2,334,515)$ (2,747,466)$ (2,771,288)$ Business-Type Activities (119,903) (508,577) 2,079,813 4,980,504 Total Primary Government Net Expenses (3,154,451)$ (2,843,092)$ (667,653)$ 2,209,216$ Governmental Revenues and Other Changes in Net Assets Governmental Activities Taxes: Ad Valorem 3,984,262$ 4,410,567$ 4,908,108$ 5,705,805$ Sales 2,035,655 1,703,994 2,227,282 3,136,970 Franchise Fees 671,009 659,847 786,298 961,462 Hotel/Motel 43,177 37,688 42,982 202,108 Mixed Drink 4,243 5,064 6,437 20,068 Bingo 4,528 4,749 4,946 5,124 Unrestricted Investment Earnings 93,690 114,323 356,080 552,091 Gain Sale of Capital Asset - - - - Miscellaneous 16,028 58,770 83,337 112,306 Transfers 410,802 584,733 199,123 510,098 Total Governmental Activities 7,263,394 7,579,735 8,614,593 11,206,032 Business-Type Activities Interest and Investment Earnings 94,731 61,025 170,610 473,205 Gain Sale of Capital Asset - 327,900 - - Miscellaneous 158,372 120,043 177,554 195,409 Transfers (410,802) (584,733) (199,123) (510,098) Total Business-Type Activities (157,699) (75,765) 149,041 158,516 Total Primary Government 7,105,695$ 7,503,970$ 8,763,634$ 11,364,548$ Changes In Net Assets Government Activities 4,228,846$ 5,245,220$ 5,867,127$ 8,434,744$ Business-Type Activities (277,602) (584,342) 2,228,854 5,139,020 Total Primary Government 3,951,244$ 4,660,878$ 8,095,981$ 13,573,764$ Fiscal Year 80 TABLE 2 (Continued) 2007 2008 2009 2010 2011 2012 (5,366,219)$ (7,073,653)$ (10,109,745)$ (15,827,617)$ (15,152,883)$ (18,218,653)$ 6,163,387 6,605,211 2,865,772 1,057,467 3,873,914 1,693,143 797,168$ (468,442)$ (7,243,973)$ (14,770,150)$ (11,278,969)$ (16,525,510)$ 7,309,127$ 7,841,928$ 8,980,102$ 9,715,645$ 10,280,768$ 11,298,204$ 4,016,381 4,117,173 4,011,855 4,160,495 4,702,217 5,309,018 1,004,116 1,240,642 1,462,199 1,448,620 1,542,046 1,647,712 259,176 273,558 305,073 348,147 391,181 470,290 29,451 32,364 31,790 32,144 33,630 28,586 6,781 4,751 5,105 4,651 2,173 - 1,453,645 1,310,310 339,403 92,208 35,008 50,947 - 23,706 17,714 20,910 - - 923,574 270,057 51,285 430,911 303,444 604,277 (1,224,621) - 1,060,607 15,421 84,235 (62,294) 13,777,630 15,114,489 16,265,133 16,269,152 17,374,702 19,346,740 976,595 409,972 128,233 36,824 37,950 36,409 - 57,527 (94,978) - - - 161,048 121,594 205,494 236,173 457,094 666,645 1,224,621 - (1,060,607) (15,421) (84,235) 62,294 2,362,264 589,093 (821,858) 257,576 410,809 765,348 16,139,894$ 15,703,582$ 15,443,275$ 16,526,728$ 17,785,511$ 20,112,088$ 8,411,411$ 8,040,836$ 6,155,388$ 441,535$ 2,221,819$ 1,128,087$ 8,525,651 7,194,304 2,043,914 1,315,043 4,284,723 2,458,491 16,937,062$ 15,235,140$ 8,199,302$ 1,756,578$ 6,506,542$ 3,586,578$ Fiscal Year 81 CITY OF SCHERTZ, TEXAS FUND BALANCES -GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 2003 2004 2005 2006 Nonspendable Fund Balance: Inventory 8,128$ 7,464$ 10,571$ 16,706$ Prepaid Items 60,825 58,087 - - Total Nonspendable Fund Balance 68,953 65,551 10,571 16,706 Restricted Fund Balance: LEOSE - - - 10,505 Municipal Court - - - 205,344 Writing Next Chapter - - - - PEG Capital Fees - - - - Capital Improvement 563,966 8,144,795 5,135,834 15,134,814 Debt Service 323,166 247,293 263,740 347,739 Tourism Development 272,482 290,688 187,953 378,823 Tree Mitigation 168,147 167,064 326,267 343,091 Park Fund 83,671 82,835 134,275 179,601 Police Forfeiture 215,591 325,181 327,212 293,873 Library Grant 3,905 422 702 6,275 Tax Increment Financing 88,376 88,829 - - Total Restricted Fund Balance 1,719,304 9,347,107 6,375,983 16,900,065 Assigned Fund Balance: Property Replacement - - - - Special Events - - - - Capital Improvement 1,311,429 - - - Recycling 1,256 6,774 10,009 12,733 Historical Committee - - - - Forfeited Property - - - - Municipal Court Renovation - - - - Total Assigned Fund Balance 1,312,685 6,774 10,009 12,733 Unassigned Fund Balance 4,119,454 4,319,428 4,864,647 7,202,709 Total Governmental Funds 7,220,396$ 13,738,860$ 11,261,210$ 24,132,213$ Fiscal Year 82 TABLE 3 2007 2008 2009 2010 2011 2012 67,333$ 46,014$ 44,217$ 46,473$ 43,504$ 63,556$ - - - - - - 67,333 46,014 44,217 46,473 43,504 63,556 10,810 11,018 11,832 12,353 13,004 - 191,663 269,961 332,117 402,744 459,244 527,513 - - 130,930 149,381 174,720 - - - - - 317,453 409,870 17,612,092 16,416,440 14,342,553 3,914,323 10,219,300 17,104,595 556,884 429,289 444,369 286,215 117,250 227,674 470,743 502,883 180,710 250,379 301,517 390,561 271,071 271,071 191,834 164,424 173,999 217,600 180,223 169,529 94,870 224,485 217,750 150,926 341,981 383,104 343,619 408,912 390,795 338,118 6,093 14,304 401 3,903 6,293 - - - - - - - 19,641,560 18,467,599 16,073,235 5,817,119 12,391,325 19,366,857 579,708 400,247 201,850 202,341 202,723 322,656 127,500 88,778 62,263 142,465 93,447 92,555 - - - - 162,113 243,546 6,780 14,748 - - - - - - 10,149 9,940 9,940 9,567 - - - - - - - - - - - - 713,988 503,773 274,262 354,746 468,223 668,324 8,876,682 5,269,890 1,209,451 1,372,779 1,899,105 2,560,667 29,299,563$ 24,287,276$ 17,601,165$ 7,591,117$ 14,802,157$ 22,659,404$ Fiscal Year 83 CITY OF SCHERTZ, TEXAS CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 2003 2004 2005 2006 REVENUES Taxes 6,747,330$ 7,322,727$ 8,569,435$ 10,587,264$ Permits and Fees 941,515 852,577 1,421,575 1,475,619 Service Fees 944,506 793,096 872,286 1,820,940 Fines and Fees 646,613 842,322 915,704 1,157,480 Intergovernmental 2,003,743 1,710,277 956,791 19,278 Other Revenue 287,865 490,266 659,430 710,580 TOTAL REVENUES 11,571,572 12,011,265 13,395,221 15,771,161 EXPENDITURES Current: General Government 1,861,367 1,919,255 2,422,655 2,527,624 Public Safety 3,530,470 3,833,243 4,542,384 5,020,684 Public Environment 324,330 452,612 500,880 558,020 Parks and Recreation 351,357 490,330 542,621 604,521 Cultural 415,834 298,179 325,498 384,127 Health 156,927 181,074 208,499 216,655 Administration 693,308 852,769 1,048,905 1,290,154 Capital Outlay 4,767,695 3,827,879 4,360,483 6,127,735 Debt Service: Principal 783,000 1,233,000 1,236,000 1,155,000 Interest and Fiscal Charges 508,166 609,522 884,069 803,664 Bond Issue Costs 46,272 111,802 - 165,125 TOTAL EXPENDITURES 13,438,726 13,809,665 16,071,994 18,853,309 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,867,154) (1,798,400) (2,676,773) (3,082,148) OTHER FINANCING SOURCES (USES) Bonds Issued 3,360,000 7,750,000 - 15,000,000 Premium (Discount) on Bond Issue - (17,869) - 123,057 Capital Lease - - - 319,996 Transfers In 467,502 2,275,896 583,126 529,598 Transfers (Out)(56,700) (1,691,163) (384,003) (19,500) TOTAL OTHER FINANCING SOURCES (USES)3,770,802 8,316,864 199,123 15,953,151 NET CHANGE IN FUND BALANCE 1,903,648$ 6,518,464$ (2,477,650)$ 12,871,003$ Debt Service as a percentage of Noncapital Expenditures 19.4%25.7%24.8%21.0% Fiscal Year 84 TABLE 4 2007 2008 2009 2010 2011 2012 13,083,505$ 13,524,472$ 14,780,663$ 15,731,293$ 16,957,498$ 18,742,797$ 1,062,054 992,953 822,105 1,330,472 1,795,667 1,363,461 1,807,098 1,592,072 1,904,703 2,297,577 2,490,829 2,699,448 1,397,101 1,387,677 1,517,821 1,655,183 1,452,610 2,027,613 153,349 526,839 797,659 534,267 1,048,957 878,773 2,356,690 1,752,254 1,025,103 975,925 576,875 943,322 19,859,797 19,776,267 20,848,054 22,524,717 24,322,436 26,655,414 3,802,451 9,657,680 4,718,403 4,976,495 5,157,498 6,007,692 5,665,671 6,638,352 7,235,501 7,409,720 7,885,119 8,690,849 655,930 745,307 884,158 816,939 846,150 976,327 736,993 800,079 771,046 939,795 958,509 1,239,604 439,767 667,995 786,860 866,441 919,608 827,644 263,918 295,156 348,448 331,860 360,746 346,318 1,586,889 1,949,871 1,729,732 2,096,113 2,347,641 2,349,598 5,504,679 10,281,603 14,963,950 11,347,876 2,956,511 1,299,843 1,458,000 1,910,043 4,696,928 1,768,086 2,001,070 2,324,898 1,377,961 1,620,178 1,950,358 2,145,155 2,008,114 2,265,181 52,300 122,290 191,066 - 244,237 254,971 21,544,559 34,688,554 38,276,450 32,698,480 25,685,203 26,582,925 (1,684,762) (14,912,287) (17,428,396) (10,173,763) (1,362,767) 72,489 8,076,733 9,900,000 9,681,678 - 8,206,572 7,671,579 - - - - 283,000 175,473 - - - 148,294 - - 354,150 593,294 2,778,593 242,539 348,846 139,635 (1,578,771) (593,294) (1,717,986) (227,118) (264,611) (201,929) 6,852,112 9,900,000 10,742,285 163,715 8,573,807 7,784,758 5,167,350$ (5,012,287)$ (6,686,111)$ (10,010,048)$ 7,211,040$ 7,857,247$ 24.5%18.8%45.1%25.5%24.4%19.1% Fiscal Year 85 CITY OF SCHERTZ, TEXAS TAX REVENUE BY SOURCE –GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS TABLE 5 Fiscal Mixed Hotel Total Year Property Sales & Use Franchise Beverage Bingo Occupancy Revenue 2012 11,287,191$ 5,309,018$ 1,647,712$ 28,586$ -$ 470,290$ 18,742,797$ 2011 10,286,251 4,702,217 1,542,046 33,630 2,173 391,181 16,957,498 2010 9,737,236 4,160,495 1,448,620 32,144 4,651 348,147 15,731,293 2009 8,964,642 4,011,855 1,462,199 31,790 5,105 305,073 14,780,664 2008 7,855,984 4,117,173 1,240,642 32,364 4,751 273,558 13,524,472 2007 7,767,600 4,016,381 1,004,116 29,451 6,781 259,176 13,083,505 2006 6,261,532 3,136,970 961,462 20,068 5,124 202,108 10,587,264 2005 5,501,490 2,227,282 786,298 6,437 4,946 42,982 8,569,435 2004 4,911,385 1,703,994 659,847 5,064 4,749 37,688 7,322,727 2003 3,988,718 2,035,655 671,009 4,243 4,528 43,177 6,747,330 *Property tax is the largest revenue source of the City. 86 CITY OF SCHERTZ, TEXAS TOTAL WATER AND SEWER CONSUMPTION AND RATES LAST TEN FISCAL YEARS (UNAUDITED) TABLE 6 Fiscal Year Total Water &Water & Water & Sewer Ended Sewer Consumption Sewer Rate Per September 30, (In Gallons)Base Rate 1,000 Gallons 2012 1,604,952,300 18.94$ 2.34$ 2011 1,676,323,900 18.94 2.34 2010 1,231,376,600 18.94 2.25 2009 1,511,567,900 18.94 2.16 2008 855,779,200 15.94 1.92 2007 614,508,100 15.94 1.72 2006 714,230,400 15.94 1.69 2005 528,766,500 15.94 1.52 2004 489,400,300 13.70 1.47 2003 494,171,600 13.70 1.47 87 CITY OF SCHERTZ, TEXAS PRINCIPAL WATER AND SEWER CONSUMERS CURRENT YEAR AND NINE YEARS AGO (UNAUDITED) TABLE 7 Total Percentage of Total Percentage of Water Total City Water Total City Consumption Water Consumption Water TAXPAYERS (in Gallons)Rank Consumption (in Gallons)Rank Consumption City of Schertz (Soccer Field)25,141,000 1 1.57% Waterford Ridge Apts.10,948,800 2 0.68% SYSCO 10,102,300 3 0.63% Sycamore Creek Apts.9,055,100 4 0.56% Beck Readymix Concrete 8,567,600 5 0.53%789,300 5 0.16% Texas Machining Tech.7,733,700 6 0.48% Pecan Grove TX LLC 6,766,200 7 0.42% Tri-County 35 Bus. Park 6,447,400 8 0.40% Manco Structures LTD 6,275,400 9 0.39% Marshall Shredding Company 5,966,500 10 0.37% John A Howard 9,997,700 1 2.02% Atrium Inn 1,155,600 2 0.23% HEB 987,400 3 0.20% Denny's 893,600 4 0.18% Randolph Brooks FCU 659,500 6 0.13% Landscape of Texas 570,300 7 0.12% Samuel Clemens High School 483,000 8 0.10% Keebler Company 464,900 9 0.09% Taco Bell KFC Pizza Hut 427,000 10 0.09% TOTAL 97,004,000 6.04%16,428,300 3.32% Total City Water Consumption 1,604,952,300 494,171,600 2012 2003 88 CITY OF SCHERTZ, TEXAS ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS (UNAUDITED) TABLE 8 Fiscal Year Ended Total Taxable Total Direct September 30,Assessed Value Tax Rate 2012 2,388,205,570$ 0.4843 2011 2,330,508,707 0.4493 2010 2,279,124,755 0.4342 2009 1,891,409,716 0.4090 2008 1,939,016,982 0.4090 2007 2,195,057,857 0.4317 2006 1,870,979,126 0.3977 2005 1,589,745,469 0.3760 2004 1,433,017,426 0.3825 2003 1,024,412,810 0.3825 Source:Bexar, Comal and Guadalupe County Appraisal Districts NOTES:Property in the City of Schertz is reassessed every year at estimated actual value. For this reason, assessed value is equal to estimated actual value. Tax rates are per $100 of assessed value. Property tax is the largest revenue source of the City. 89 CITY OF SCHERTZ, TEXAS DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS (UNAUDITED) TABLE 9 Schertz- Cibolo- Fiscal Basic Debt Universal Comal Year Rate Service Total City ISD ISD 2012 0.2993 0.1850 0.4843 1.4350 1.4300 2011 0.2993 0.1500 0.4493 1.4350 1.3700 2010 0.2842 0.1500 0.4342 1.4200 1.3100 2009 0.2590 0.1500 0.4090 1.3850 1.3100 2008 0.2590 0.1500 0.4090 1.3150 1.3100 2007 0.2805 0.1512 0.4317 1.6100 1.6400 2006 0.3005 0.0972 0.3977 1.7200 1.8000 2005 0.2888 0.0872 0.3760 1.7400 1.8200 2004 0.2946 0.0879 0.3825 1.7800 1.8300 2003 0.3091 0.0734 0.3825 1.7300 1.8000 Comal Guadalupe Community Fiscal Hospital River College Year County District Authority District County County 2012 0.3269 0.2762 0.0174 0.1416 0.3504 0.4036 2011 0.3269 0.2762 0.0167 0.1416 0.3340 0.3999 2010 0.3269 0.2662 0.0160 0.1359 0.3130 0.3895 2009 0.3269 0.2610 0.0160 0.1359 0.3080 0.3895 2008 0.3269 0.2374 0.0160 0.1346 0.3180 0.3895 2007 0.3269 0.2439 0.0160 0.1371 0.3152 0.4031 2006 0.3312 0.2439 0.0164 0.1071 0.3537 0.4031 2005 0.3312 0.2439 0.0164 0.1071 0.3337 0.4031 2004 0.3337 0.2439 0.0164 0.1071 0.3337 0.4131 2003 0.3337 0.2439 0.0164 0.1071 0.3337 0.4131 City Direct Rates Bexar Overlapping School Districts Overlapping Counties Source:Bexar, Comal and Guadalupe County Tax Offices NOTE:Overlapping rates are those of local and county governments that apply within the City of Schertz. Not all overlapping rates apply to all City of Schertz property owners. 90 CITY OF SCHERTZ, TEXAS PRINCIPAL PROPERTY TAX PAYERS CURRENT YEAR AND NINE YEARS AGO (UNAUDITED) TABLE 10 Percentage Percentage of of Total City Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Value Rank Value Republic Beverage Co. Distribution 51,762,770$ 1 2.17%22,050,000$ 1 2.15% AOH-Vantage at Schertz LLC 17,367,333 2 0.73% San Antonio MTA LP 17,153,935 3 0.72% Wal-Mart Real Estate Business Trust 14,529,843 4 0.61% City Bank 14,108,720 5 0.59% Eye Care Centers of America Inc.13,293,056 6 0.56% H.E.Butt Grocery Co.12,040,678 7 0.50%9,425,244 2 0.92% Atlantic Financial Group LTD 10,313,859 8 0.43%7,087,559 3 0.69% EM Limited Partnership 9,857,599 9 0.41% Lowe's Home Center Inc.8,284,756 10 0.35% C & W Ranches LTD 6,354,626 4 0.62% Sycamore Apartment LTD 5,026,690 5 0.49% AER Manufacturing Inc.4,647,442 6 0.45% PSP Industries 4,260,870 7 0.42% Negley Paint Co. Inc.4,147,184 8 0.40% Guadalupe Valley Electric CO-OP 3,961,790 9 0.39% Garden Ridge Pottery 3,262,687 10 0.32% TOTALS 168,712,549$ 7.06%70,224,092$ 6.86% TOTAL TAXABLE ASSESSED VALUE 2,388,205,570$ 1,024,412,810$ 2012 2003 Source: Bexar, Comal and Guadalupe County Appraisal Districts 91 CITY OF SCHERTZ, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (UNAUDITED) TABLE 11 Fiscal Year Taxes Levied Collections In Ended for the % of Subsequent % of September 30,Fiscal Year Amount Levy Years Amount Levy 2012 11,239,572$ 11,159,974$ 99.29%-$ 11,159,974$ 99.29% 2011 9,978,430 9,895,240 99.17%53,781 9,895,240 99.17% 2010 9,639,945 9,559,899 99.17%55,565 9,615,464 99.75% 2009 8,800,927 8,703,978 98.90%81,572 8,785,550 99.83% 2008 7,793,405 7,711,714 98.95%73,076 7,784,790 99.89% 2007 7,048,818 6,957,827 98.71%78,964 7,036,791 99.83% 2006 5,645,611 5,576,559 98.78%62,985 5,639,544 99.89% 2005 4,858,508 4,796,062 98.71%57,813 4,853,875 99.90% 2004 4,360,470 4,252,349 97.52%104,187 4,356,536 99.91% 2003 3,918,379 3,881,204 99.05%35,315 3,916,519 99.95% Fiscal Year of Levy Collected Within Total Collections To Date Source:Guadalupe County Tax Office 92 CITY OF SCHERTZ, TEXAS TAXABLE ASSESSED VALUE LAST TEN FISCAL YEARS (UNAUDITED) TABLE 12 Fiscal Year Taxable Total Taxable Total Ended Value Residential Commercial Tax-Exempt Other Assessed Direct September 30,January 1,Property Property Property Property Value*Tax Rate 2012 2011 1,354,392,093$ 1,204,329,462$ (273,127,857)$ 102,611,872$ 2,388,205,570$ 0.4843 2011 2010 1,300,581,118 1,206,144,575 (284,231,660) 108,014,674 2,330,508,707 0.4493 2010 2009 1,265,356,113 1,200,076,287 (304,622,372) 118,314,727 2,279,124,755 0.4342 2009 2008 1,147,403,041 656,276,237 (86,062,834) 173,793,272 1,891,409,716 0.4090 2008 2007 1,074,280,935 728,323,513 (125,049,238) 261,461,772 1,939,016,982 0.4090 2007 2006 1,392,720,883 423,317,359 (21,195,965) 400,215,580 2,195,057,857 0.4317 2006 2005 1,201,285,889 344,827,561 (16,046,859) 340,912,535 1,870,979,126 0.3977 2005 2004 1,068,235,628 262,553,018 (11,646,100) 270,602,923 1,589,745,469 0.3760 2004 2003 985,774,636 248,629,342 (10,777,023) 209,390,471 1,433,017,426 0.3825 2003 2002 - - - - 1,024,412,810 0.3825 *Taxable Assessed Value is before any applicable freeze adjustments. Source: Bexar, Comal, and Guadalupe County Appraisal Districts. Note: Taxable values presented above prior to fiscal year 2010 do not include Bexar and Comal Counties. Information for fiscal year 2003 was not available. 93 CITY OF SCHERTZ, TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (UNAUDITED) General General Certificates Obligation Fiscal Obligation of Tax Capital Refunding Year Bonds Obligation Notes Lease Bonds 2012 51,050,000$ 996,300$ -$ 60,190$ 9,155,000$ 2011 44,715,000 7,910,800 - 97,188 2,790,000 2010 37,530,000 11,575,650 - 133,408 - 2009 38,485,000 12,373,850 - - - 2008 32,790,000 13,158,700 - 107,078 - 2007 23,950,000 14,032,893 - 215,854 - 2006 18,740,000 13,560,000 - 319,996 - 2005 4,045,000 14,250,000 160,000 - - 2004 4,456,000 14,785,000 450,000 - - 2003 4,844,000 7,600,000 730,000 - - Governmental Activities NOTES:a Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. b.See Table 18 for personal income and population data for the City. These ratios are calculated using personal income and population for the prior calendar year. 94 TABLE 13 General Certificates Public Obligation Total Percent Revenue of Facility Refunding Tax Primary of Gross *Per Bonds Obligation Loan Bonds Notes Government Income Capita 2,355,000$ 5,383,700$ -$ 2,405,000$ 190,000$ 71,595,190$ 7.99%2,145 2,490,000 5,704,200 - 2,675,000 250,000 66,632,188 7.84%2,056 5,460,000 6,149,350 - - 310,000 61,158,408 7.14%1,944 5,805,000 6,571,150 7,000 - - 63,242,000 6.92%1,932 6,230,000 6,976,300 14,000 - - 59,276,078 7.06%1,849 6,645,000 7,237,107 21,000 - - 52,101,854 5.88%1,639 7,055,000 - 28,000 - - 39,702,996 1.56%1,262 7,445,000 - 34,000 - - 25,934,000 1.35%968 4,625,000 - 40,000 64,000 - 24,420,000 2.43%923 4,990,000 - 46,000 126,000 - 18,336,000 2.01%764 Business-Type Activities 95 CITY OF SCHERTZ, TEXAS RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS (UNAUDITED) TABLE 14 General Percentage of General Certificates Obligation Actual Taxable Fiscal Obligation of Tax Refunding Value of Per Year Bonds Obligation Notes Bonds Total Property Capita 2012 51,050,000$ 996,300$ -$ 9,155,000$ 61,201,300$ 2.56%1,833 2011 44,715,000 7,910,800 - 2,790,000 55,415,800 2.38%1,710 2010 37,530,000 11,575,650 - - 49,105,650 2.15%1,561 2009 38,485,000 12,373,850 - - 50,858,850 2.69%1,554 2008 32,790,000 13,158,700 - - 45,948,700 2.37%1,433 2007 23,950,000 14,032,893 - - 37,982,893 1.73%1,195 2006 18,740,000 13,560,000 - - 32,300,000 1.73%1,027 2005 4,045,000 14,250,000 160,000 - 18,455,000 1.16%689 2004 4,456,000 14,785,000 450,000 - 19,691,000 1.37%744 2003 4,844,000 7,600,000 730,000 - 13,174,000 1.29%549 General Bonded Debt Outstanding NOTE:Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. See Table 8 for the City's property tax value data. City population data can be found in Table 18. 96 CITY OF SCHERTZ, TEXAS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT (UNAUDITED) TABLE 15 Estimated Estimated Share of Debt Percentage Overlapping Governmental Unit Outstanding Applicable*Debt Debt repaid with property taxes: Alamo CCD 542,561,545$ 0.11%596,818$ Bexar County 584,984,786 0.11%643,483 Bexar County Hospital District 744,835,000 0.11%819,319 Comal County 47,053,782 2.68%1,261,041 Comal ISD 512,180,991 2.89%14,802,031 Guadalupe County 16,964,785 19.13%3,245,363 San Antonio River Authority 34,265,000 0.08%27,412 Schertz-Cibolo-Universal ISD 272,675,515 50.98%139,009,977 Subtotal, Overlapping Debt 160,405,444 City Governmental Activities Direct Debt 61,201,300 TOTAL NET OVERLAPPING DEBT 221,606,744$ NOTES:The overlapping debt was received from the Municipal Advisory Council of Texas. Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. 97 CITY OF SCHERTZ, TEXAS DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (UNAUDITED) TABLE 16 Assessed Value, 2011 Tax Roll 2,388,205,570$ Debt Limit - Texas statues do not provide a legal debt limit for cities; however, through accepted practice a practical "economic" debt limit is considered to be 10% of the assessed value.238,820,557$ Amount of Applicable Debt: General Bonded Debt 61,201,300$ Less Debt Service Fund Balance (227,674) 60,973,626 DEBT MARGIN 177,846,931$ Total Net Debt as a Percentage of Debt Margin 34.28% 2009 2010 2011 Assessed Value 1,891,409,716$ 1,933,159,122$ 1,968,808,829$ Debt Margin 189,140,972$ 193,315,912$ 196,880,883$ Total Net Debt Applicable to Limit 50,414,481 48,819,435 55,298,550 Total Debt Margin 138,726,491$ 144,496,477$ 141,582,333$ 2006 2007 2008 Assessed Value 1,397,297,729$ 1,423,205,878$ 1,939,016,982$ Debt Margin 139,729,773$ 142,320,588$ 193,901,698$ Total Net Debt Applicable to Limit 18,392,261 23,488,500 45,466,903 Total Debt Margin 121,337,512$ 118,832,088$ 148,434,795$ 2003 2004 2005 Assessed Value 1,024,412,713$ 1,139,992,157$ 1,292,156,383$ Debt Margin 102,441,271$ 113,999,216$ 129,215,638$ Total Net Debt Applicable to Limit 4,520,834 4,208,707 3,781,530 Total Debt Margin 97,920,437$ 109,790,509$ 125,434,108$ Fiscal Year 98 CITY OF SCHERTZ, TEXAS PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS (UNAUDITED) TABLE 17 Utility Less: Net Fiscal Service Operating Available Year Charges Expenses Revenue Principal Interest Coverage 2012 17,411,568$ 14,185,126$ 3,226,442$ 785,500$ 408,135$ 2.70 2011 16,843,780 13,229,037 3,614,743 577,824 409,801 3.66 2010 14,993,648 12,399,880 2,593,768 615,400 502,629 2.32 2009 14,533,390 9,973,940 4,559,450 685,400 534,634 3.74 2008 13,620,440 9,040,264 4,580,176 665,400 558,569 3.74 2007 13,476,288 7,896,319 5,579,969 645,800 501,397 4.86 2006 11,289,876 6,955,000 4,334,876 390,000 354,965 5.82 2005 9,381,042 6,136,390 3,244,652 380,000 213,290 5.47 2004 7,583,136 5,653,184 1,929,952 365,000 226,795 3.26 2003 8,228,571 5,359,309 2,869,262 285,000 236,913 5.50 Water Revenue Bonds Debt Service NOTE:D etails regarding the City's outstanding debt can be found in the notes to the basic financial statements. Operating expenses do not include depreciation, interest, amortization or joint venture expenses. 99 CITY OF SCHERTZ, TEXAS DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (UNAUDITED) TABLE 18 Education Per Capita Level In Personal Personal Median Years of School Unemployment Year Population Income Income Age Schooling Enrollment Rate 2012 33,382 895,739,206$ 26,833$ 36.8 15.4 13,016 5.5% 2011 32,409 850,069,800 26,229 37.8 15.4 12,533 5.6% 2010 31,465 856,236,720 27,212 34.4 15.4 12,330 5.7% 2009 32,730 913,919,790 27,923 36.5 13.9 11,700 5.1% 2008 32,057 839,701,058 26,194 35.1 14.0 10,991 5.0% 2007 31,788 885,836,196 27,867 36.3 14.0 9,470 4.0% 2006 31,452 2,543,051,460 80,855 36.1 18.0 8,380 4.4% 2005 26,780 1,926,713,880 71,946 35.1 15.9 7,712 3.6% 2004 26,463 1,005,594,000 38,000 32.7 15.0 7,257 4.1% 2003 24,000 912,000,000 38,000 35.1 14.6 7,245 2.4% Sources:Population, personal income, median age and education level information provided by City Economic Development Corporation. School enrollment provided by Schertz-Cibolo -Universal City Independent School District. Unemployment data provided by the Texas Workforce Commission. 100 CITY OF SCHERTZ, TEXAS TOP TEN PRINCIPAL EMPLOYERS CURRENT YEAR AND FIVE YEARS AGO (UNAUDITED) TABLE 19 Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment Schertz/Cibolo/UC ISD 944 1 5.86%1,300 1 9.47% Sysco Central Texas 582 2 3.62% Vision Works 542 3 3.37% Wal-Mart Stores 385 4 2.39%420 2 3.06% H.E.B. Grocery Co.346 5 2.15%220 4 1.60% City of Schertz 344 6 2.14%232 3 1.69% Brandt Engineering 300 7 1.86% Republic Beverage Company 250 8 1.55%100 9 0.73% Valero Diamon Distribution 170 9 1.06%167 5 1.22% Federal Express Freight 141 10 0.88%165 6 1.20% Metro Ambulance LP 110 7 0.80% Manco 100 8 0.73% Lowe's 83 10 0.60% 4,004 24.87%2,897 21.11% 2012 2007 Source:City Economic Development Corporation Note:Principal employer information is not available prior to 2007. 101 CITY OF SCHERTZ, TEXAS FULL-TIME EQUIVALENT CITY GOVERNMENTAL EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS (UNAUDITED) TABLE 20 Function 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 General Government City Manager 3 4 4 3 4 7 7 6 6 6 Court Support 3 4 4 4 4 0 0 0 0 0 Municipal Court 2 2 2 3.5 5 6 4 5 5 5 Customer Relations 0 0 0 0 2 4 4 4 3.5 4.5 Planning and Zoning 2 2 2 3 4 5 4 4 4 4 Facility Maintenance 5 6 6 6.5 9 11 10 13.5 14.7 14 City Secretary 2 2 2 2 2 2 2 2 2 2 Media Relations 1 1 1 1 2 3 3 3 3 3 Records Management 0 1 15 2 2 3 3 1 1 1 Schertz Tales 0 0 0 0 0 0 0 2 2 2 Engineer 0 0 0 0 1 3 1 2 2 4 GIS 0 0 0 0 0 0 4 2 2 2 Administration Information Tecynology 2 2 2 3 3 3 3 3 4 5 Human Resources 2 2 2 2 2 3 3 4 4 4 Finance 4 5 5 5 5 6 6 6 6 6 Purchasing 0 0 0 0 1 2 2 5 5 4 Fleet Service 2 2 3 3 3 3 3 3 4 4 Public Safety Police 46.5 50.5 53.5 62 66 69 70 67 69.1 72.5 Fire 24 30 31 32 32 32 32 32 32 32 Inspections 6 6 6 6 8 8 7 6 7 7 Marshal Services 0 0 0 0 0 0 5 5 8 8 Health Animal Control 5.5 5 5 5 5 6 6 6 6 6 Parks and Recreation Parks 5 6 7 7 9 8 8 8 8.5 9 Pools 8 14.5 15 12.5 12.5 0 0 0 0 0 Event Facilities 0 0 0 0 1 1 1 1 2 2 Cultural Library 7 8.5 8.5 9.5 9.5 14 15 14 14.5 15 Public Environment Streets 9 13 12 11 11 13 13 13 14 14 Water and Sewer Business Office 12 11 9 10 9 10 10 10 10 10 Public Works 20 21 21 23 25 20 22 21 21 21 Drainage 0 0 0 0 5 6 7 7 7 7 EMS 27.5 28 32 32.5 33.5 50 54 44 44 45 Economic Development 1 2 2 3 3 3 4 4 3 3 TOTAL 199.5 228.5 250 251.5 278.5 301 313 303.5 314.3 322 Full-Time Equivalent Employees as of September 30, Source:City Adopted Budgets 102 CITY OF SCHERTZ, TEXAS OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) Function 2003 2004 2005 2006 2007 General Government Building Permits Issued 7,119 3,055 3,434 9,948 5,811 Schertz Tales Number of Magazines printed - - - - 72,000 Police CFS 11,089 11,875 12,770 16,642 25,478 Arrests 670 631 729 526 608 Traffic Violations 9,157 9,652 11,157 10,487 13,461 Accidents 875 1,127 1,169 1,192 1,484 Fire Number of Rescue/Other Responses 929 1,082 1,131 1,216 1,459 Number of Fire Responses 89 90 128 129 103 Number of Inspections 254 301 331 356 302 Number of Training Classes Conducted 186 213 136 136 694 Number of Pre-Plan Inspections EMS Requests for Transport 4,109 4,727 4,966 5,171 6,256 Actual Transports 2,377 2,712 2,767 2,937 3,634 EMT Students - - - - 45 Marshal Service Warrants Issued - - - - - Warrants Cleared - - - - - Food Establishment Permits - - - - - Food Establishment Inspection - - - - - Foster/Adoption Inspections - - - - - Parks Facility Reservations 300 333 294 416 516 Community and Civic Centers Civic Center - - - - - Community Center Rentals - - - - - North Community Center Rentals - - - - - Animal Services Number of Animals Handled - - - - - Number of Adoptions - - - - - Number of Return to Owners - - - - - Number of Transfers - - - - - Library Annual Circulation 225,573 238,602 257,765 276,873 292,909 Library Visits 162,263 171,811 175,976 181,603 179,630 Library Program Attendance 4,328 5,170 5,254 5,064 6,680 Registered Users 12,779 14,492 17,101 19,342 19,595 Water New Connections 439 425 425 532 91 Water Main Breaks 18 26 39 46 29 Total Consumption (thousands of gallons)10,747,349 10,373,621 11,030,621 13,322,380 11,535,927 Daily Average Consumption (thousands of gallons)29,854 28,816 30,639 37,007 31,606 Peak Daily Consumption (thousands of gallons)6,757 6,869 6,939 10,540 5,379 Total Customers 8,045 9,389 9,673 10,118 10,598 Average Use Per Connection 3,565 6,329 5,957 7,060 1,089 Sewer Total Customers 7,261 7,887 8,664 8,990 9,391 Facilities Maintenance Number of Buildings Maintained 8 9 9 12 14 Square Footage 73,505 89,452 89,452 111,642 127,589 Fiscal Year Source:Various City Departments. Prior year information for some functions is not available. 103 TABLE 21 2008 2009 2010 2011 2012 2,869 5,181 4,806 4,950 2,643 108,000 120,000 144,000 168,000 168,000 37,829 36,319 37,269 26,205 19,434 719 873 790 762 666 18,820 20,452 19,259 13,231 20,881 1,475 1,491 1,606 1,575 1,665 978 1,536 1,671 1,657 1,799 141 135 76 110 74 461 447 425 616 429 595 264 107 142 168 452 642 536 714 6,619 7,061 7,281 7,443 7,545 4,193 4,341 4,575 4,801 4,766 73 80 80 85 79 - 5,974 5,444 4,141 2,888 - 3,836 4,023 3,985 4,118 - 134 129 118 123 - 209 202 244 180 - 34 27 18 14 983 671 719 237 234 - 484 594 354 325 - - 635 666 816 - - - 241 307 - 1,804 2,021 1,802 1,463 - 255 249 257 291 - 252 279 313 149 - 415 451 300 312 278,826 263,131 392,528 414,074 410,312 175,435 188,118 257,235 254,934 256,349 7,444 10,499 10,610 13,767 16,035 23,327 20,360 24,628 28,589 30,475 1,474 446 509 439 271 72 72 25 76 52 14,460,239 15,115,679 12,313,766 16,763,239 16,131,415 39,617 38,550 33,736 45,927 44,196 5,804 7,520 7,040 11,000 9,290 10,900 10,198 10,134 12,234 12,557 6,378 6,913 5,054 5,725 5,517 6,378 9,974 9,499 10,907 10,988 16 19 19 19 19 135,091 166,591 166,591 166,591 166,591 Fiscal Year 104 CITY OF SCHERTZ, TEXAS CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) Function 2003 2004 2005 2006 2007 Police Stations 1 1 1 1 1 Patrol Units 21 26 27 34 33 Fire Stations 1 1 2 2 2 Training Facility 1 1 1 1 1 Fire Vehicles 11 11 11 12 12 Marshal Service Vehicles - - - - - Streets Streeets, paved (miles)102 102 102 102 107 Streets, unpaved (miles)9 9 9 9 9 Sidewalks (miles)17 17 21 32 32 Parks and Recreation Parks 7 7 7 7 7 Playground 20 20 20 20 20 Swimming Pools 1 1 1 1 1 Baby Pools 1 1 1 1 1 Baseball/Softball Diamonds 12 12 12 12 12 Soccer Fields - - - - - Community Centers 1 1 1 1 1 Animal Control Control Vehicle 2 2 2 2 3 Library Facility 1 1 1 1 1 Volumes in Collection 41,275 46,961 49,289 52,818 56,282 Water Number of Reservoirs - 1 1 1 - Number of Pump Stations - 1 1 1 2 Water Mains (Miles)155 159 166 171 177 Sewer Sanitary Sewers (Miles)54 54 54 54 59 Storm Sewers (Miles)4 4 4 4 6 Facilities Maintenance Vehicles 4 4 4 4 4 Generators 2 2 3 3 3 Fiscal Year Source:Various City Departments 105 TABLE 22 2008 2009 2010 2011 2012 1 1 1 1 1 33 38 40 42 42 2 2 2 2 2 1 - - - - 14 13 13 13 13 - 5 7 8 8 122 124 125 132 134 7 7 7 5 5 50 50 50 100 101 7 11 12 17 17 20 20 19 15 15 2 2 2 2 2 2 2 2 2 2 12 12 12 9 9 - 12 12 12 12 2 2 4 4 4 3 3 3 3 3 1 1 1 1 1 60,650 64,400 71,929 73,904 81,468 - - - - - - 5 5 5 5 182 188 190 192 192 71 78 78 84 85 8 9 9 10 10 4 5 5 5 4 3 3 3 3 3 Fiscal Year 106 COMPLIANCE SECTION 107 INDEPENDENT AUDITOR’S REPORT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the City Council and management City of Schertz We have audited the financial statements of the City of Schertz, as of and for the year ended September 30, 2012 and have issued our report thereon dated February 11, 2013. 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. Internal Control Over Financial Reporting Management of the City of Schertz is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the City of Schertz’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Schertz’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Schertz’s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City of Schertz’s financial statements will not be prevented or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 108 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Schertz’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the City of Schertz in a separate letter dated February 11, 2013. This report is intended for the information and use of management, City Council, Audit Committee, State and others within the organization and is not intended to, and should not, be used by anyone other than these specific parties. Armstrong, Vaughan & Associates, P.C. February 11, 2013 Communication with Those Charged with Governance To the Audit Committee City of Schertz, Texas We have audited the basic financial statements of the City of Schertz, as of and for the year ended September 30, 2012, and have issued our report thereon dated February 11, 2013. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility under Generally Accepted Auditing Standards (and when applicable, Government Auditing Standards) As communicated in our engagement letter dated March 4, 2011, our responsibility, as described by professional standards, is to plan and perform our audit to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing 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 over financial reporting. Accordingly, as part of our audit, we considered the internal control of City of Schertz solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Other Information in Documents Containing Audited Financial Statements Pursuant to professional standards, our responsibility as auditors for other information (statistical section) in documents containing City of Schertz ’s audited financial statements does not extend beyond the financial information identified in the audit report, and we are not required to perform any procedures to corroborate such other information. However, in accordance with such standards, we have read the information and considering whether such information, or the manner of its presentation, was materially inconsistent with its presentation in the financial statements. Our responsibility also includes communicating to you any information which we believe is a material misstatement of fact. Nothing came to our attention that caused us to believe that such information, or its manner of presentation, is materially inconsistent with the information, or manner of its presentation, appearing in the financial statements. 2 Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by City of Schertz is included in Note 1 to the financial statements. There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during 2012. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. The most sensitive accounting estimates affecting the financial statements are: Useful lives of capital assets Allowance for uncollectible receivables for o Water revenues o EMS billings o Property taxes We evaluated the key factors and assumptions used to develop the estimates and determined that they are reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units. Significant Difficulties Encountered during the Audit We encountered no difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Summarized below is an uncorrected financial statement misstatement whose effects, as determined by management, are immaterial, both individually and in the aggregate, to the financial statements taken as a whole and each applicable opinion unit. Miscellaneous income is overstated by $85,525 in both the General Fund and Governmental Activities because of a reversal of an overstated payable in the prior year. In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. None of the misstatements identified by us as a result of our audit procedures and corrected by management were 3 material, either individually or in the aggregate, to the financial statements taken as a whole or applicable opinion units. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the City of Schertz’financial statements or the auditor’s report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management, which are included in the attached letter dated February 11, 2013. Management’s Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Other Matters In planning and performing our audit of the financial statements we became aware of an opporunity to strengthen the City’s internal controls with the following suggestion: Condition: The municipal court issues a large volume of manual receipts (approximately 1,750 per year) even though registers are available to immediately post payments into the accounting records. Presently, no one is reviewing these manual receipts to ensure they are all recorded in the City’s financial statements. We randomly sampled 25 of these manual receipts and found no instances in which a manual receipt was issued but not recorded on the City’s records. Effect: A common fraud scheme in municipal court is to issue manual receipts for cash payments, dismiss the citation, and steal the cash. While we have found no evidence of this in our testing, the opportunity exists. In addition, the manual receipts must be entered into the the accounting system after the fact, increasing data entry time and opportunity for errors to occur. Suggestion: The root cause of the manual receipts should be investigated to determine the most effective method to reduce the volume to a level that can be more easily monitored. This may involve additional registers and/or relocating the registers, particularly on court days. In addition, someone in court should be assigned the task of verifying the manual receipts are eventually entered into the accounting software. This verification should be documented by either attaching a duplicate register receipt to the manual receipt book or initialing the receipt book. Public Funds Investment Act As a part of our audit, we review the City’s compliance with the Public Funds Investment Act. Our procedures determined that the City is in compliance, in all material effects, with the provisions of the Act. 4 Other Significant Findings or Issues In the normal course of our professional association with City of Schertz, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating and regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as City of Schertz’ auditors. New Pronouncements –GASB Statement No. 68 The Governmental Accounting Standards Board has approved Statement No. 68, Accounting and Financial Reporting for Pensions –an amendment of GASB Statement No. 27,with implementation in periods beginning after June 15, 2014. The statement established accounting and financial reporting for employers with defined benefit pensions. For the first time, a net pension liability (or asset); defined as the net of assets held in trust for pension benefits net of a total pension liability;will be recognized on the statement of net assets (net position). Any annual changes will flow to the statement of activities. There are many provisions of the statement that will affect the City of Schertz. Required note disclosures will include ten years of data as supplementary information. We recommend the City become familiar with the new statement provisions and the potential effect implementation will have on the government-wide statement of net assets (position). Trend Analysis We have prepared the attached “Trend Analysis” as a financial planning tool for council and staff. Sound financial management dictates that a minimum fund balance be maintained that is sufficient to ensure operations will continue uninterrupted and emergencies that arise from time to time will be met. A rule of thumb for a minimum fund balance for the general fund is three to six months average operating expenditures (exclusive of capital outlay and debt service expenditures). The attachment details the trends over the last five years. This is presented for additional analysis and as a planning tool. We make no recommendation regarding the analysis of this information. This report is intended solely for the information and use of the Audit Committee, City Council, and management of City of Schertz and is not intended to be and should not be used by anyone other than these specified parties. Armstrong, Vaughan & Associates, P.C. February 11, 2013 7 TREND ANALYSIS 9/30/08 9/30/09 9/30/10 9/30/11 9/30/12 GENERAL GOVERNMENT FUND BALANCE - GENERAL FUND (1)5,758,915$ 1,508,497$ 1,775,951$ 1,899,105$ 2,560,667$ AVERAGE MONTHLY OPERATING EXPENDITURES (2)1,272,974 1,341,646 1,419,172 1,505,360 1,644,217 GROWTH RATE PER YEAR - AVERAGE MONTHLY OPERATING EXPENDITURES 2.50%5.40%5.78%6.07%9.22% # MONTHS AVERAGE EXPENDITURES IN FUND BALANCE 4.5 1.1 1.3 1.3 1.6 GENERAL BONDED DEBT (NET OF DEBT SERVICE RESERVES)45,466,903 50,414,481 48,819,435 55,298,550 61,181,877 RATIO OF GENERAL BONDED DEBT TO FUND EQUITY 7.9/1 33.4/1 27.5/1 29.1/1 24.0/1 (1) Includes unassigned fund balance only (2) Exclusive of Capital Outlay and Debt Service Expenditure CITY OF SCHERTZ, TEXAS 5 50464871.2 Agenda No. 3 CITY COUNCIL MEMORANDUM City Council Meeting: March 5, 2013 Department: City Manager Subject: Resolution No. 13-R-14 – GRMC Prescription Access Program BACKGROUND Goal Assist City residents in need with securing necessary prescriptions Community Benefit Healthier citizens Summary of Recommended Action Since at least 2000, the City has provided $5,000 per year to Guadalupe Regional Medical Center in Seguin to assist in the provision of prescriptions to needy Schertz residents. The Hospital is required to provide a report to the City twice annually to document the assistance received by Schertz residents. FISCAL IMPACT $5,000 each year for 5 years ($2,500 payable March 1 and September 1 of each year), cancellable at any time. RECOMMENDATION Approval of Resolution No. 13-R-14 ATTACHMENT Resolution No. 13-R-14, with Interlocal Agreement attached. 50465067.2 RESOLUTION NO. 13-R-14 A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS AUTHORIZING AN INTERLOCAL AGREEMENT WITH GUADALUPE REGIONAL MEDICAL CENTER, AND OTHER MATTERS IN CONNECTION THEREWITH WHEREAS, the City staff of the City of Schertz (the “City”) has recommended that the City enter into an interlocal agreement with Guadalupe Regional Medical Center relating to a prescription access program; and WHEREAS, the City Council has determined that it is in the best interest of the City to contract with Guadalupe Regional Medical Center pursuant to the Interlocal Agreement attached hereto as Exhibit A (the “Agreement”). BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS THAT: Section 1. The City Council hereby authorizes the City Manager to execute and deliver the Agreement with Guadalupe Regional Medical Center in substantially the form set forth on Exhibit A. Section 2. The recitals contained in the preamble hereof are hereby found to be true, and such recitals are hereby made a part of this Resolution for all purposes and are adopted as a part of the judgment and findings of the City Council. Section 3. All resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Resolution are hereby repealed to the extent of such conflict, and the provisions of this Resolution shall be and remain controlling as to the matters resolved herein. Section 4. This Resolution shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. Section 5. If any provision of this Resolution or the application thereof to any person or circumstance shall be held to be invalid, the remainder of this Resolution and the application of such provision to other persons and circumstances shall nevertheless be valid, and the City Council hereby declares that this Resolution would have been enacted without such invalid provision. Section 6. It is officially found, determined, and declared that the meeting at which this Resolution is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Resolution, was given, all as required by Chapter 551, Texas Government Code, as amended. Section 7. This Resolution shall be in force and effect from and after its final passage, and it is so resolved. 50465067.2 PASSED AND ADOPTED, this 5th day of March, 2013. CITY OF SCHERTZ, TEXAS Michael R. Carpenter, Mayor ATTEST: Brenda Dennis, City Secretary (CITY SEAL) 50465067.2 A-1 EXHIBIT A INTERLOCAL AGREEMENT 50464875.3 INTERLOCAL AGREEMENT This Interlocal Agreement, effective as of March 5, 2013 (this “Agreement”), is between the City of Schertz, Texas, a political subdivision of the State of Texas (the “City”), and Guadalupe Regional Medical Center, a political subdivision of the State of Texas created pursuant to the Texas Health & Safety Code, Chapter 265, as amended (the “Hospital”). WHEREAS, certain citizens in the City need assistance to buy prescription medication; WHEREAS, the Hospital desires to contract with the City to provide a prescription assistance program to qualified citizens of the City in order to preserve and protect such citizens’ health and safety; WHEREAS, the City and the Hospital have determined to enter into this Agreement relating to the provision of a prescription assistance program within the City and to set out the terms, rights, duties, and responsibilities of the City and the Hospital with respect thereto; WHEREAS, the City acknowledges that the Hospital may contract with the Guadalupe Valley Hospital Foundation to manage the prescription assistance program within the City; WHEREAS, the City and the Hospital have determined that the provision of a prescription assistance program is a public purpose and within their statutory powers of government; and WHEREAS, the City and the Hospital are political subdivisions of the State of Texas and are authorized to execute this Agreement pursuant to Texas Government Code Chapter 791.001, as amended; NOW, THEREFORE, THE CITY AND THE HOSPITAL, ACTING BY AND THROUGH THEIR DULY AUTHORIZED OFFICERS, HEREBY COVENANT AND AGREE AS FOLLOWS: Section 1. Purpose. (a) The Hospital agrees that during the term of this Agreement the Hospital shall provide prescription medications free of charge or at a low cost to citizens of the City who qualify for assistance under the guidelines established by each drug manufacturer, as described to the City by the Hospital. (b) The Hospital shall observe and comply with all applicable federal, state, county, and City laws, rules, ordinances, and regulations which in any manner affect the provision of the services described in this Agreement. (c) The Hospital agrees to provide a written report to the City Council of the City on or about March 1 (received for 2013) and September 1 of each year that documents that the payments by the City described in Section 3 have primarily benefitted citizens of the City. Due to patient privacy considerations, reports containing specific patient information shall not be made available to the City without the appropriate written consent of the patient or the patient’s authorized representative. Such reports shall contain at least the information set forth on Exhibit A. 50464875.3 2 (d) The Hospital further agrees to provide the City (at the City’s request from time to time) with the complete budget for the Hospital’s prescription drug program. Section 2. Term and Renewal. This Agreement shall be for a term commencing with the effective date of this Agreement through and including September 30, 2018; provided, either party may terminate this Agreement at any time by written notice to the other party. This Agreement may thereafter be renewed for succeeding periods upon written agreement by the City and the Hospital. Section 3. Consideration. In consideration of the Hospital’s provision of a prescription assistance program to qualifying citizens of the City pursuant to this Agreement, the City agrees to pay the Hospital $5,000 in each City fiscal year, $2,500 of which shall be paid on or about March 1 (March 6 in 2013) and $2,500 of which shall be paid on or about September 1. Section 4. Authorization. This Agreement has been duly authorized by the governing bodies of the City and the Hospital. Section 5. Severability. If any portion of this Agreement shall be declared illegal or held unenforceable for any reason, the remaining portions hereof shall continue in full force and effect. Section 6. Amendments. This Agreement represents the complete understanding of the City and the Hospital with respect to the matters described herein. This Agreement may not be amended or altered without the written consent of both parties and the consent of the City. Section 7. Governing Law. This Agreement shall be governed by the laws of the State of Texas. [The remainder of this page intentionally left blank.] 50464875.3 3 IN WITNESS WHEREOF, the undersigned have entered into this Interlocal Agreement, effective as of the date first above written. Date of Execution CITY OF SCHERTZ, TEXAS March __, 2013 By City Manager Date of Execution GUADALUPE REGIONAL MEDICAL CENTER March __, 2013 By Administrator 50464875.3 Exhibit A Report Information Guadalupe Regional Medical Center Prescription Assistance Program for Schertz Enrollees The following data relates to the following period (check one and complete the dates)  March 1, 20__ to August 31, 20__  September 1, 20__ to February 28 (29), 20__ BENEFIT Total number of patients served by the Program _____ Total number of Schertz resident patients served by the Program _____ Total number of prescriptions provided by the Program _____ Number of prescriptions provided to Schertz residents by the Program _____ Retail dollar value of total prescriptions provided by the Program $_________ Retail dollar value of prescriptions provided to Schertz residents by the Program $_________ Number of prescriptions per patient per month: _____ Average prescription retail price (3 month supply) $_________ Average annual retail prescription benefit per patient $_________ Sources of Program funds: Schertz contribution to the Program $_________ Contributions to the Program of other cities or other governments (insert name below) _______________________ $_________ _______________________ $_________ _______________________ $_________ _______________________ $_________ Contributions to the Program by GRMC $_________ Payments by patients $_________ Grants received for the Program $_________ Other sources of funds (identify sources) _______________________ $_________ _______________________ $_________ _______________________ $_________ _______________________ $_________ Total $_________ 50605407.1 Agenda No. 4 CITY COUNCIL MEMORANDUM City Council Meeting: March 5, 2013 Department: Police Department Subject: Resolution 13-R-15 -- Interlocal Agreement with Comal County District Attorney BACKGROUND Goal Establish agreement with Comal Country District Attorney to share money, property, and proceeds seized or forfeited in joint District Attorney/Police Department operations. Community Benefit The City will receive a portion of seized or forfeited money, property, and proceeds. Summary of Recommended Action Approval of Resolution authorizing Interlocal Agreement FISCAL IMPACT Funds and property will be received from time to time by the City. The City will be responsible for maintaining, towing, and storing any such property received by it. RECOMMENDATION Approval of Resolution 13-R-15 ATTACHMENT(S) Resolution 13-R-15, with Interlocal Agreement attached RESOLUTION NO. 13-R-15 A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS AUTHORIZING AN INTERLOCAL AGREEMENT WITH THE COMAL COUNTY DISTRICT ATTORNEY, AND OTHER MATTERS IN CONNECTION THEREWITH WHEREAS, the City staff of the City of Schertz (the “City”) has recommended that the City enter into an interlocal agreement with the Comal County District Attorney relating to the disposition of forfeited property; and WHEREAS, the City Council has determined that it is in the best interest of the City to contract with the Comal County District Attorney pursuant to the Interlocal Agreement attached hereto as Exhibit A (the “Agreement”). BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS THAT: Section 1. The City Council hereby authorizes the City Manager to execute and deliver the Agreement with the Comal County District Attorney in substantially the form set forth on Exhibit A. Section 2. The recitals contained in the preamble hereof are hereby found to be true, and such recitals are hereby made a part of this Resolution for all purposes and are adopted as a part of the judgment and findings of the City Council. Section 3. All resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Resolution are hereby repealed to the extent of such conflict, and the provisions of this Resolution shall be and remain controlling as to the matters resolved herein. Section 4. This Resolution shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. Section 5. If any provision of this Resolution or the application thereof to any person or circumstance shall be held to be invalid, the remainder of this Resolution and the application of such provision to other persons and circumstances shall nevertheless be valid, and the City Council hereby declares that this Resolution would have been enacted without such invalid provision. Section 6. It is officially found, determined, and declared that the meeting at which this Resolution is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Resolution, was given, all as required by Chapter 551, Texas Government Code, as amended. Section 7. This Resolution shall be in force and effect from and after its final passage, and it is so resolved. 50605413.1 PASSED AND ADOPTED, this 5th day of March, 2013. CITY OF SCHERTZ, TEXAS Michael R. Carpenter, Mayor ATTEST: Brenda Dennis, City Secretary (CITY SEAL) 50605413.1 A-1 EXHIBIT A INTERLOCAL AGREEMENT 50602102.2 Agenda No. 5 CITY COUNCIL MEMORANDUM City Council Meeting: March 5, 2013 Department: Planning, City Attorney Subject: Resolution No. 13-R-13 Approval of forms of a Community Facilities Agreement, Construction Performance Bond, and Performance Escrow Agreement BACKGROUND Goal Authorize templates for security provided to the City to assure performance by developers of certain public infrastructure improvements in connection with subdivision development. Community Benefit Provides a streamlined mechanism for the City to receive acceptable performance security from developers for the completion of public infrastructure improvements. Summary of Recommended Action Developers occasionally want to record their plats prior to completion of all public infrastructure improvements. The UDC permits developers to do so if staff believes it is appropriate and if the developer provides security to the City equal to at least 125% of the cost of the uncompleted improvements. The additional security is provided pursuant to a “Community Facilities Agreement” under the UDC, which in turn provides for either a construction performance bond or a performance escrow agreement as the security instrument to secure the developer’s obligation to the City to complete the improvements. The Resolution authorizes a template City form of Community Facilities Agreement and template City forms of a Construction Performance Bond and a Performance Escrow Agreement so that routine project-specific Community Facilities Agreements and performance security instruments will not have to be approved by separate City Council action. Note that Section 1 of the form Community Facilities Agreement provides staff with certain discretion in finalizing the terms of the Agreement. 50602102.2 FISCAL IMPACT Adequate security provided to the City to assure completion of public infrastructure improvements. RECOMMENDATION Approval of Resolution 13-R-13 ATTACHMENT(S) Approval of Resolution 13-R-13, with Forms of Community Facilities Agreement, Construction Performance Bond, and Performance Escrow Agreement RESOLUTION NO. 13-R-13 A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS AUTHORIZING FORMS OF A COMMUNITY FACILITIES AGREEMENT, CONSTRUCTION PERFORMANCE BOND, AND PERFORMANCE ESCROW AGREEMENT, AND OTHER MATTERS IN CONNECTION THEREWITH WHEREAS, the City staff of the City of Schertz (the “City”) has recommended that the City Council approve template forms of a Community Facilities Agreement, a Construction Performance Bond, and a Performance Escrow Agreement to be utilized on routine projects when a developer proposes to provide security for the completion of public infrastructure improvements in a subdivision to allow the developer to record the plat of the subdivision; and WHEREAS, the City Council has determined that it is in the best interest of the City to do so. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS THAT: Section 1. The City Council hereby authorizes the City Manager (a) to complete and execute and deliver Community Facilities Agreements from time to time with developers utilizing the format set forth on Exhibit A in order to comply with Section 21.4.15.F. of the City’s Unified Development Code (the “UDC”) and (b) to accept or enter into Construction Performance Bonds and Performance Escrow Agreements utilizing completed versions of the formats set forth in Exhibit B and Exhibit C, respectively, in order to comply with Section 21.3.15.6. of the UDC. (Exhibits A, B, and C are hereby designated the “City Forms”.) In addition, the City Manager may enter into Community Facilities Agreements and accept or enter into Construction Performance Bonds and Performance Escrow Agreements utilizing different forms of such instruments if the City Manager or his designee and the City Attorney determine that such alternative forms contain terms substantially similar to the City Forms. Section 2. The recitals contained in the preamble hereof are hereby found to be true, and such recitals are hereby made a part of this Resolution for all purposes and are adopted as a part of the judgment and findings of the City Council. Section 3. All resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Resolution are hereby repealed to the extent of such conflict, and the provisions of this Resolution shall be and remain controlling as to the matters resolved herein. Section 4. This Resolution shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. Section 5. If any provision of this Resolution or the application thereof to any person or circumstance shall be held to be invalid, the remainder of this Resolution and the application of such provision to other persons and circumstances shall nevertheless be valid, and the City Council hereby declares that this Resolution would have been enacted without such invalid provision. 50602111.1 Section 6. It is officially found, determined, and declared that the meeting at which this Resolution is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Resolution, was given, all as required by Chapter 551, Texas Government Code, as amended. Section 7. This Resolution shall be in force and effect from and after its final passage, and it is so resolved. PASSED AND ADOPTED, this 5th day of March, 2013. CITY OF SCHERTZ, TEXAS Michael R. Carpenter, Mayor ATTEST: Brenda Dennis, City Secretary (CITY SEAL) 50602111.1 A-1 EXHIBIT A FORM OF COMMUNITY FACILITIES AGREEMENT See attached 50602111.1 B-1 EXHIBIT B FORM OF PERFORMANCE BOND See attached 50602111.1 C-1 EXHIBIT C FORM OF PERFORMANCE ESCROW AGREEMENT See attached After Recording, Please Return To: FORM Fulbright & Jaworski L.L.P. 300 Convent Street, Suite 2100 San Antonio, Texas 78205 Attention: Katherine Tapley 50603208.2 STATE OF TEXAS § § KNOW ALL PERSONS BY THESE PRESENTS: COUNTY OF ______[A]______ § COMMUNITY FACILITIES AGREEMENT This COMMUNITY FACILITIES AGREEMENT (this “Agreement”) is between _____________________[B]________________________, a Texas ______[C]_____________ (the “Owner”), and the CITY OF SCHERTZ, a Texas municipal corporation (the “City”), and is effective upon the execution of this Agreement by the Owner and the City (the “Effective Date”). WHEREAS, the Owner is the owner of the real property located in the City of Schertz, Texas, described on Exhibit A (the “Property”). WHEREAS, the Owner submitted to the City a final plat application (the “Final Plat”) for _______[D]________ Subdivision, [Unit __,] which the Owner seeks to develop on the Property (the “Subdivision”). WHEREAS, on ____[E]______ __, 201_, the City’s Planning and Zoning Commission (the “Commission”) approved the Final Plat (the “Plat Approval Date”). WHEREAS, a copy of the Final Plat, as finally approved by the Commission on the Plat Approval Date, is attached as Exhibit B. WHEREAS, certain public infrastructure improvements shown on the Final Plat have not been completed, and the Owner desires to record the Final Plat in the records of Bexar County, Texas. NOW THEREFORE, in consideration of the agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby stipulated, the Owner and the City agree as follows: 1. Ownership of the Property. The Owner hereby represents and warrants that, as of the Effective Date, it has not conveyed, assigned, or transferred all or any portion of its interest in the Property to any other person or entity (any such person or entity referred to herein as “Purchaser”), nor is it a party to any contract or other understanding to do so. So long as the Owner has any obligation under this Agreement, the Owner agrees with the City that it shall not make any such conveyance, assignment, or transfer unless this Agreement is attached to and incorporated by reference into the instrument of conveyance, assignment, or transfer and (a) the City [approves such conveyance, assignment, or transfer in writing and] [INCLUSION OR 50603208.2 -2- NON-INCLUSION OF THIS REQUIREMENT SHALL BE DETERMINED BY STAFF] receives a contemporaneous copy of such instrument, and (b) the Purchaser under any such instrument agrees to be bound by the terms of this Agreement. This Agreement shall be recorded in the real property records of Bexar County, Texas, and the terms hereof shall run with the Property. 2. Construction of Improvements; Covenants. The Owner covenants and agrees to the following: (a) The Owner shall construct, or cause to be constructed, the public infrastructure improvements described on Exhibit C (the “Improvements”). (b) The Improvements shall be built and completed in accordance with City design standards within ____[F]______ after the Plat Approval Date. (c) On or before the date on which the Final Plat of the Subdivision is filed of record, the Owner shall deliver to the City a fully-executed contract to build and complete the Improvements (the “Contract”) assigned on behalf of the Owner to the City for enforcement by the City if the Owner does not build and complete the Improvements. The price set forth in the Contract (the “Contract Price”) shall be effective for at least the term of the Surety. (d) On or before the date on which the Final Plat of the Subdivision is filed of record, the Owner shall provide surety to the City in the form attached hereto as Exhibit D (the “Surety”) in the amount of one hundred twenty-five percent (125%) of the Contract Price, with such total amount of the required surety being ___________________[G]_______________ and __/100 Dollars ($__________). [The Developer shall also pay $100.00 to Schertz Bank & Trust Company for its fee as Surety holder.] (e) If the Owner fails to construct the Improvements in accordance with this Agreement, the City may utilize the Surety to construct, or complete the construction of, the Improvements in accordance with the Contract. (f) The Owner shall warranty the Improvements for a period of one (1) year following the date that the City accepts the Improvements and shall provide a maintenance bond or other security of a type and in a form acceptable to the City in the City’s sole discretion, in the amount of twenty percent (20%) of the costs of the Improvements throughout such one (1) year period following acceptance by the City of the Improvements. 3. Approval of Agreement. The City has approved the execution and delivery of this Agreement pursuant to Section 21.4.15(F.)(1.) of the City’s Unified Development Code, and the Owner represents and warrants that it has taken all necessary action to authorize its execution and delivery of this Agreement. 50603208.2 -3- 4. Recordation of Final Plat. Upon execution and delivery of this Agreement by the City and the Developer and the City’s acceptance of the original executed Surety, the Developer may file the Final Plat in the real property records of _____[A]_____ County, Texas. 5. Governmental Immunity. The City does not waive or relinquish any immunity or defense on behalf of itself, its officers, employees, Councilmembers, and agents as a result of the execution of this Agreement and the performance of the covenants and actions contained herein. 6. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, representatives, successors, and assigns, and the terms hereof shall run with the Property and the Subdivision. 7. Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all signatory parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same Agreement. 8. Effect of Waiver or Consent. No waiver or consent, express or implied, by any party to or of any breach or default by any party in the performance by such party of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such party of the same or any other obligations of such party hereunder. Failure on the part of a party to complain of any act of any party or to declare any party in default, irrespective of how long such failure continues, shall not constitute a waiver by such party of its rights hereunder until the applicable statute of limitation period has run. 9. Integration. This Agreement is the complete agreement between the parties as to the subject matter hereof and cannot be varied except by the written agreement of the Owner and the City. The Owner and the City each agrees that there are no oral agreements, understandings, representations or warranties which are not expressly set forth herein. 10. Notices. Any notice or communication required or permitted hereunder shall be deemed to be delivered three (3) days after such notice is deposited in the United States mail, postage fully prepaid, registered or certified mail return receipt requested, and addressed to the intended recipient at the address shown herein. Any address for notice may be changed by written notice delivered as provided herein. All notices hereunder shall be in writing and served as follows: If to the Owner: __________[H]___________ ________________________ _______________, TX _____ Attention: _______________ 50603208.2 -4- With a copy to: ___________[I]___________ ________________________ _______________, TX _____ Attention: _______________ If to the City: City of Schertz 1400 Schertz Parkway Schertz, TX 78154 Attention: City Manager With a copy to: Fulbright & Jaworski L.L.P. 300 Convent Street, Suite 2100 San Antonio, TX 78205 Attention: Katherine Tapley 11. Legal Construction. If any provision in this Agreement is for any reason unenforceable, to the extent the unenforceability does not destroy the basis of the bargain among the parties, such unenforceability will not affect any other provision hereof, and this Agreement will be construed as if the unenforceable provision had never been a part of this Agreement. Whenever the context requires, the singular will include the plural and neuter include the masculine or feminine gender, and vice versa. Article and section headings in this Agreement are for reference only and are not intended to restrict or define the text of any section. This Agreement will not be construed more or less favorably between the parties by reason of authorship or origin of language. 12. Recitals; Exhibits. Any recitals in this Agreement are represented by the parties hereto to be accurate, constitute a part of the parties’ substantive agreement, and are fully incorporated herein as matters of contract and not mere recitals. Further, any exhibits to this Agreement are incorporated herein as matters of contract and not mere exhibits. 13. Time. Time is of the essence. Unless otherwise specified, all references to “days” mean calendar days. Business days exclude Saturdays, Sundays, and legal public holidays. If the date for performance of any obligation falls on a Saturday, Sunday, or legal public federal or Texas state holiday, the date for performance will be the next following regular business day. 14. Survival of Covenants. Any of the representations, warranties, covenants, and obligations of the parties, as well as any rights and benefits of the parties, pertaining to a period of time following the termination of this Agreement shall survive termination of this Agreement. 50603208.2 -5- 15. No Joint Venture. It is acknowledged and agreed by the parties that the terms hereof are not intended to, and shall not be deemed to, create a partnership or joint venture among the parties. 16. Attorneys’ Fees and Expenses. In the event that the Owner should default under any of the provisions of this Agreement and the City should employ one or more attorneys or incur other expenses for the collection of the payments due under this Agreement or the enforcement of performance or observance of any obligation or agreement on the part of the Owner herein contained, the Owner agrees to pay to the City reasonable fees of such attorneys and such other expenses so incurred by the City. 17. Choice of Law. This Agreement will be construed under the laws of the State of Texas without regard to choice-of-law rules of any jurisdiction. Venue shall be in the State District Courts of Guadalupe County, Texas with respect to any lawsuit arising out of or construing the terms and provisions of this Agreement. No provision of this Agreement shall constitute consent by suit by any party. [ Signatures and acknowledgments on the following pages ] 50603208.2 S-1 Signature Page to Community Facilities Agreement This Community Facilities Agreement has been executed by the parties as of the dates of the Acknowledgments to be effective as of the latter of such dates. The Owner: ____________[B]_______________, a Texas _____[C]_______________ By: Name: Title: Date: THE STATE OF TEXAS § § COUNTY OF _____________ § This instrument was acknowledged before me on the ____ day of __________, 201_ by ____________, the ________ of _________________________, a Texas ________________, on behalf of said _______________________. (SEAL) Notary Public in and for The State of Texas My Commission Expires: 50603208.2 S-2 Signature Page to Community Facilities Agreement This Community Facilities Agreement has been executed by the parties as of the dates of the Acknowledgments to be effective as of the latter of such dates. The City: CITY OF SCHERTZ, a Texas municipal corporation By: Name: John C. Kessel, City Manager Date: THE STATE OF TEXAS § § COUNTY OF GUADALUPE § This instrument was acknowledged before me on the ____ day of _________, 201_ by John C. Kessel, City Manager of the City of Schertz, Texas, a Texas municipal corporation, on behalf of said City. (SEAL) Notary Public in and for The State of Texas My Commission Expires: 50603208.2 A-1 EXHIBIT A The Property [ SEE ATTACHED ] 50603208.2 B-1 EXHIBIT B The Final Plat [ SEE ATTACHED ] 50603208.2 C-1 EXHIBIT C The Improvements [DESCRIBE IN DETAIL ALL REQUIRED WORK.] 50603208.2 D-1 EXHIBIT D The Surety [ SEE ATTACHED ] 50603208.2 Blanks in the Community Facilities Agreement form to be completed as follows: [A] County where the Property is located [B] Full legal name of the Owner [C] Form of entity of the Owner (corporation, limited liability company, partnership, etc.) [D] Name of the Subdivision (add Unit designation, if applicable) [E] Date of P&Z approval of Final Plat [F] Time period for completion of the public infrastructure improvements [G] Amount of surety, spelled out and in numerals (125% of the Contract Price for completion of incomplete public infrastructure improvements); delete reference to $100 deposit if the Surety is a Construction Performance Bond [H] Notice details for the Owner [I] Notice details for an additional Owner notice party (optional) Exhibit A – Metes and bounds of property Exhibit B – Copy of Final Plat Exhibit C – Detailed description of public infrastructure improvements to be completed Exhibit D – Final form of Surety, with all required attachments FORM 50496891.1 CONSTRUCTION PERFORMANCE BOND STATE OF TEXAS ) ) COUNTY OF GUADALUPE ) KNOW ALL BY THESE PRESENTS that _____________[A]__________________, whose address is ___________________[B]_____________________________ (the “Principal”), and ________________[C]___________________, a corporation organized and existing under the laws of the State of ____[D]________ and fully licensed to transact business in the State of Texas, as surety (the “Surety”), are held and firmly bound unto the CITY OF SCHERTZ, a Texas municipal corporation organized and existing under the laws of the State of Texas (the “Beneficiary”), in the penal sum of ______[E]___________ Dollars ($___[F]_________) plus twenty-five percent (25%) of the stated penal sum as an additional sum of money representing additional court expenses, attorneys’ fees, and liquidated damages arising out of or connected with the below identified Contract (for a total sum of _____________[G]______________________ Dollars ($_______[H]________) (the “Total Sum”) in lawful money of the United States to be paid to the Beneficiary, its successors and assigns, for the payment of which sum well and truly to be made, we bind ourselves, our heirs, executors, administrators, and successors and assigns, jointly and severally, firmly by these presents. The Total Sum of this Bond shall automatically be increased by 125% of the amount of any change order or supplemental agreement which increases the Contract price, but in no event shall a change order or supplemental agreement which reduces the Contract price decrease the Total Sum of this Bond. THE OBLIGATION TO PAY SAME is conditioned as follows: WHEREAS, the Principal entered into a Contract with __________[I]_____________, dated on or about the ___________[J]_____________ (the “Contract”), a complete copy of which is attached hereto as Exhibit A and being incorporated herein and made a part hereof as fully and to the same extent as if written herein word for word, to furnish all permits, licenses, bonds, insurance, products, materials, equipment, labor, supervision, and other accessories necessary for the construction of the following Project improvements: Project Name: ______[K]_________ Project Number: ____[L]_________ in the City of Schertz, Texas, as more particularly described and designated in the Contract. NOW, THEREFORE, if the Principal shall well, truly, and faithfully perform and fulfill all of the undertakings, covenants, terms, conditions, and agreements of the Contract in accordance with all Contract documents, including but not limited to plans and specifications relating thereto, during the original term thereof and any extension thereof which may be granted in writing by the Beneficiary, with or without notice to the Surety, and during the life of any guaranty or warranty required under the Contract, and shall also well and truly perform and fulfill all the undertakings, covenants, terms, conditions, and agreements of any and all duly authorized modifications of any and all Contract documents that may hereafter be made, notice 50496891.1 - 2 - of which modifications to the Surety being hereby waived (except for written notice to the Surety of any increase in the Total Sum); and, if the Principal shall fully indemnify and save harmless the Beneficiary from and against all costs and damages which the Beneficiary may suffer by reason of the Principal’s failure to so perform herein and shall fully reimburse and repay the Beneficiary all outlay and expense which the Beneficiary may incur in making good any default or deficiency, then this obligation shall be void; otherwise, it shall remain in full force and effect and the Beneficiary may demand payment hereon, and the Surety shall make immediate payment hereon to the Beneficiary. PROVIDED FURTHER, if any legal action be filed on this Bond, exclusive venue shall lie in Guadalupe County, Texas. AND PROVIDED FURTHER, the Surety, for value received, hereby stipulates and agrees that no change, extension of time, alteration, or addition to the terms of the Contract or to the work to be performed thereunder or the plans, specifications, and all other Contract documents related to the Project shall in any way affect its obligation on this Bond, and (except for written notice to the Surety of any increase in the Total Sum) it does hereby waive notice of any such change, extension of time, alteration, or addition to the terms of the Contract, or to the plans, specifications, or other Contract documents or to the work to be performed thereunder. This Bond is given pursuant to the provisions of Chapter 2253 of the Texas Government Code, and any other applicable statutes of the State of Texas. The undersigned and designated agent is hereby designated by the Surety herein as the Resident Agent in Guadalupe County or ___[M]____ County to whom any requisite notices may be delivered and on whom service of process may be had in matters arising out of such suretyship, as provided by Article 7.19-1 of the Texas Insurance Code, as amended. IN WITNESS WHEREOF, this instrument is executed in six copies, each one of which shall be deemed an original, this, the ________ day of ________________, 20____. PRINCIPAL: _________[A]_________________ By: Name: Title: SURETY: _____________[C]_________________ By: Name: Title: 50496891.1 - 3 - The Resident Agent of the Surety in Guadalupe County or __[M]____ County, Texas, for delivery of all notices hereunder and service of process relating hereto is: Name: [N] Physical Address: City, State, Zip Code: Mailing Address: City, State, Zip Code: 50496891.1 A-1 EXHIBIT A The Contract [Attach complete copy of the Contract.] 50496891.1 Blanks in the Construction Performance Bond form to be completed as follows: [A] Full legal name of the Principal [B] Complete address of the Principal [C] Full legal name of the Surety [D] State of incorporation of the Surety [E] Dollar amount of the total projected costs of the uncompleted improvements covered by the bond, spelled out [F] Same as [E], in numerals [G] Dollar amount of 125% of [E], spelled out [H] Same as [G], in numerals [I] Full legal name of the other party to the Contract for the bonded Project [J] Date (month, day and year) of the Contractor’s Contract with the Principal [K] City’s name for the bonded Project [L] City’s project number for the bonded Project [M] Texas County in which the Surety’s office is located. [N] Name of Surety’s Resident Agent and physical and mailing addresses EXHIBIT A – Complete copy of the final Contract FORM PERFORMANCE ESCROW AGREEMENT This PERFORMANCE ESCROW AGREEMENT (this “Agreement”) is among _______________[A]____________________, a Texas ______[B]___________ (the “Developer”), CITY OF SCHERTZ, TEXAS, a Texas home rule city (the “City”), and SCHERTZ BANK & TRUST COMPANY, a Texas banking corporation (the “Escrow Bank”) as of ____[C]_____ ___, 201_ (the “Effective Date”). Recitals: WHEREAS, the Developer, the City, and the Escrow Bank (the “Parties”) desire to execute this Agreement in order to set forth the terms of the Developer’s obligations to complete a project relating to _________________[D]______________________ Subdivision [Unit ___], a copy of the final plat of which is attached hereto as Exhibit A. Agreement: NOW, THEREFORE, for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Developer, the City, and the Escrow Bank hereby agree as follows: 1. The Project. The infrastructure project covered by this Agreement (the “Project”) is the completion of __________________________[E]_____________________________________, as further described on Exhibit B attached hereto and made a part hereof. The Developer is obligated, at its sole expense, to complete construction of the Project and submit the completed Project to the City for acceptance. The purpose of this Agreement is to set forth the terms whereby the Developer is escrowing funds with the Escrow Bank as security for the City in the event the Developer does not complete the Project when and as required and to authorize the City to utilize the escrowed funds to complete the Project, including reimbursing the City for any and all third-party actual expenses incurred by the City which are directly related to and arising from this Agreement. The Developer has contracted with both (a) ________[F]__________ (the “Engineer”) for all necessary engineering work, oversight of the construction, and all submittals to and coordination with the City, and (b) ______[G]________ (the “Contractor”) to do all of the construction of the Project. 2. Escrowed Funds. The Escrow Bank hereby acknowledges receipt on the Effective Date of the sum of $_____[H]______ from the Developer (the “Escrowed Funds”). The Escrow Bank hereby agrees to hold and disburse the Escrowed Funds in strict accordance with the terms and provisions of this Agreement. The Developer has also made the deposit required by Section 5 hereof. 3. Escrow Account. The Escrow Bank shall hold the Escrowed Funds in a separate interest- bearing account at the Escrow Bank (the “Escrow Account”). Earnings on the Escrowed Funds shall be deposited to the credit of a subaccount of the Escrow Account. The Developer’s tax identification number is _____[I]_____. The City’s tax identification number is 74-1469344. 4. Distribution of Funds. The Escrowed Funds and the earnings thereon shall be distributed as set forth in this Section 4. 50602119.1 - 2 - (a) Disbursement of Escrowed Funds. In the event that either (a) construction of the Project has not Commenced (as defined herein) within 30 days after the Effective Date of this Agreement, or (b) the Project has not been completed and dedicated to and accepted by the City within 120 days after the Effective Date of this Agreement, the City may instruct the Escrow Bank to disburse funds to such persons or entities, in such amounts, and at such times as necessary to complete the Project, including to reimburse the City for Project costs incurred by the City. As used in the first sentence of this paragraph, the term “Commenced” shall mean the placement of construction barricades and the start of necessary clearing and grading work. The Developer and the Contractor shall give the City and the Escrow Bank written notice of the date construction of the Project has Commenced. The Developer and the Engineer shall also give the City and the Escrow Bank written notice of the date when construction of the Project is completed and the date the Project is submitted to the City for its acceptance. The City’s disbursement instructions to the Escrow Bank must be in writing and signed by the City Manager or his designated representative, with a copy to the Developer. After (i) the City has accepted the Project and (ii) the City has been reimbursed from the Escrow Account for any remaining expenses of the City relating to the City’s completion of the Project, the City shall, within 20 days of the later of such events, provide written instruction to the Escrow Bank, with a copy to the Developer, to return any remaining portion of the Escrowed Funds (excluding earnings thereon in the subaccount) to the Developer. After the Project has been accepted by the City, the City shall provide the Developer with a report describing its use of any Escrowed Funds. The Escrow Bank shall have no obligation to investigate or determine the occurrence or non- occurrence of any fact or event related to such instruction, but shall disburse funds in accordance with any such instruction received from the City. (b) Disbursement of Earnings. Upon disbursement in full of the Escrowed Funds pursuant to Section 4(a), earnings thereon held in the subaccount shall be disbursed as follows: (i) if all of the Escrowed Funds have been returned to the Developer pursuant to Section 4(a), all earnings on the Escrowed Funds in the subaccount shall be disbursed to the Developer; (ii) if all of the Escrowed Funds have been disbursed to or at the direction of the City to complete the Project pursuant to Section 4(a), all earnings on the Escrowed Funds in the subaccount shall be disbursed to the City; and (iii) if a portion of the fully-disbursed Escrowed Funds has been returned to the Developer and a portion has been disbursed to or at the direction of the City to complete the Project pursuant to Section 4(a), the earnings on the Escrowed Funds shall be disbursed to the Developer and the City in proportion to the disbursements of the Escrowed Fund to the Developer and the City. The Account shall thereupon be closed and this Agreement shall terminate. (c) No Disbursement at Developer’s Direction. The Developer agrees that it has no authority to direct the Escrow Bank regarding the disbursement by the Escrow Bank of money held by it pursuant to this Agreement other than to provide wiring instructions to the Escrow Bank regarding City-authorized disbursements to the Developer. 5. Escrow Fee. In addition to the Escrowed Funds, the Escrow Bank further acknowledges receipt of $100.00 from the Developer as payment in full for the Escrow Bank’s services under this Agreement. 50602119.1 - 3 - 6. Liability of the Escrow Bank. The Escrow Bank shall be liable only to hold the Escrowed Funds and the earnings thereon and to deliver same to the persons or entities in accordance with the provisions of this Agreement and any amendments hereto, it being expressly understood that, by acceptance hereof, the Escrow Bank is acting in the capacity of a depository only and shall not be liable or responsible to anyone for any damages, losses or expenses, unless same shall be caused by the Escrow Bank’s gross negligence or willful malfeasance. It is further understood and agreed that the Escrow Bank shall have no duty to investigate or inquire regarding genuiness or validity of any written instruction received purporting to be from the City and containing a signature purporting to be of an authorized representative thereof, and the Escrow Bank shall incur no liability for acting in accordance with such written instruction. 7. Interpleader by Escrow Bank. Subject to Subsection 4(c) of this Agreement, in the event of conflicting demands or instructions or other occurrences received by the Escrow Bank which the Escrow Bank in its sole judgment exposes it to potential liability, the Escrow Bank may file a petition in interpleader and place the funds held in escrow into the registry of an applicable Court. 8. Amendments. Except for the termination of this Agreement pursuant to Section 4, this Agreement shall not be modified, revoked, released, or terminated, except by the written agreement of the Developer, the City, and the Escrow Bank. Should, at any time, any attempt be made to modify this Agreement in a manner that would materially increase the duties and responsibilities of the Escrow Bank, or to modify this Agreement in any manner that the Escrow Bank shall reasonably deem undesirable, the Escrow Bank may resign by notifying the parties hereto in writing, by certified mail, postage prepaid, return receipt requested, to their respective addresses set forth hereinbelow; provided, such resignation shall not be effective until a successor banking entity agrees to assume the obligations of the Escrow Bank hereunder and the Escrow Bank has transferred the Escrowed Funds and earnings to date thereon to the successor banking entity. 9. Entire Agreement. THIS AGREEMENT IS THE ENTIRE AGREEMENT AMONG THE PARTIES REGARDING THE ESCROWED FUNDS AND THE EARNINGS THEREON AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES REGARDING THE ESCROWED FUNDS. 10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. 11. Notices. Any notices, consents or other communications required or permitted to be given pursuant to this Agreement must be in writing and must be given by hand delivery, facsimile transmission or certified mail (postage prepaid, return receipt requested), and shall (except to the extent otherwise expressly provided herein) be deemed to have been given and received (whether actually received or not) when a letter containing such notice, consent or other communication, is (i) received, if sent via facsimile transmission or hand delivered or (ii) deposited in an official depository under the regular care and custody of the United States Postal 50602119.1 - 4 - Service located within the confines of the continental United States of America, if mailed, addressed to the parties hereto at the following respective addresses: To the Developer: __________[J]____________ ________________________ ______________, TX _____ Attention: ______________ With a copy to: __________[K]___________ ________________________ ______________, TX _____ Attention: ______________ To the City: City of Schertz, Texas 1400 Schertz Parkway Schertz, TX 78154 Attention: City Manager With a copy to: Fulbright & Jaworski L.L.P. 300 Convent Street, Suite 2100 San Antonio, TX 78205 Attn: Katherine Tapley Telephone: (210) 270-7191 Fax: (210) 270-7205 e-mail: ktapley@fulbright.com To the Escrow Bank: Schertz Bank & Trust 519 Main Street Schertz, TX 78154 Attention: Mark Sunderman or to such other substitute address and/or addressee as any party hereto shall designate by written notice to the other party in accordance with the terms of this Section; provided, however, that no such notice of change of address and/or addressee shall be effective unless and until actually received by the party to whom such notice is sent. 50602119.1 - 5 - 12. Multiple Counterparts; Binding Effect. This Agreement may be executed in multiple counterparts each of which shall be an original and all of which together shall constitute one instrument. This Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the Parties and their respective successors and assigns. 13. No Relationship. The Parties agree that nothing contained herein shall create a third- party beneficiary relationship as to any other persons or entities. Accordingly, this Escrow Agreement is executed solely for the benefit of the Parties. 14. Invalidity. If one or more of the provisions hereof shall for any reason be held to be invalid, illegal, or unenforceable in any respect under applicable law, such invalidity, illegality, or unenforceability shall not affect any other provisions hereof, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. 15. Headings. The captions or headings at the beginning of the various paragraphs or sections of this Agreement are inserted for convenience only, and shall not add to or subtract from the meaning or contents of each paragraph or section. [ Signatures on the Following Page ] 50602119.1 S-1 The parties have executed this Escrow Agreement to be effective as of the Effective Date. THE DEVELOPER: ___________[A]___________ By: Name: Title: THE CITY: THE CITY OF SCHERTZ, TEXAS By: John C. Kessel, City Manager THE ESCROW BANK: SCHERTZ BANK & TRUST COMPANY By: Mark Sunderman, President 50602119.1 A-1 Exhibit A _____[D]_______ Subdivision [Unit __] Plat 50602119.1 B-1 Exhibit B Project Description and Drawing [Describe in detail all required work] 50602119.1 Blanks in the Performance Escrow Agreement form to be completed as follows: [A] Full legal name of the Developer [B] Form of entity of the Developer (corporation, limited liability company, partnership, etc.) [C] Effective Date of the Agreement [D] Name of the subdivision (add Unit designation, if applicable) [E] General description of public infrastructure improvements to be completed [F] Full legal name of Developer’s Engineer [G] Full legal name of Developer’s Contractor [H] Amount of surety (125% of anticipated cost of completion of incomplete public infrastructure improvements) [I] Developer’s tax identification number [J] Notice details for the Developer [K] Notice details for an additional Developer notice party (optional) EXHIBIT A – Copy of the final plat EXHIBIT B – Detailed description of public infrastructure improvements to be completed Agenda No. 6 CITY COUNCIL MEMORANDUM City Council Meeting: March 5, 2013 Department: Public Works Subject: Ordinance No. 13-F-03 - Amending Ordinance 11-F-35 - Bexar Waste Franchise Renewal (Final Reading) BACKGROUND The Solid Waste Franchise contract with Bexar Waste was extended on November 15, 2011 for an additional two years ending December 31, 2013. Council requested staff and legal council work together to acquire a new contract with Bexar Waste and bring it back to council for discussion. The discussion at the Council meeting on December 18, 2012 led to this agreement which includes the remainder of 2013 and an additional 6 years ending December 31, 2019 (for a total of seven (7) years) with an option to extend an additional 6 years. Mr. Henry Gutierrez is in full agreement with this contract. Below are the current and proposed rates for the 7 year contract. Current Rates (ending 12/31/13) 2012-Residential $11.36, Recycling $1.87- Total $13.23 2013- NO CHANGE, same as 2012 Proposed Rates (1/1/14 through 12/31/18) 2014-Residential $11.70, Recycling $1.93- Total $13.63- increase of 2.98% 2015-NO CHANGE, same as 2014 2016-Residential $12.05, Recycling $1.99- Total $14.04-increase of 2.98% 2017-NO CHANGE, same as 2016 2018-Residential $12.41, Recycling $2.05- Total $14.46-increase of 2.98% 2019- NO CHANGE, same as 2018 *Commercial Rates will adjust accordingly, 2.98% every other year. Goal Continue to provide high quality solid waste disposal services. Secure a long term rate schedule. The City Council approved this on first reading at their meeting of January 29, 2013. Community Benefit All residents will continue to receive great service at an affordable cost. The city continues to receive the lowest rates in comparison to our surrounding cities even with the proposed rate increases. Bexar Waste also utilizes local Schertz businesses such as Schertz Bank and Trust, Wright Oil, GCR Tires and Becks Landfill for his day to day operations. Summary of Recommended Action Staff recommends Council approve Ordinance No. 13-F-03 authorizing an extension of seven (7) years, starting March 6, 2013 until December 31, 2019 with an option to renew for an additional six (6) years. FISCAL IMPACT Continued collection of franchise fees with scheduled rate increases. RECOMMENDATION Staff recommends Council approve Ordinance No.13-F-03 Final Reading. ATTACHMENTS Ordinance 13-F-03 50553904.6 ORDINANCE NO. 13-F-03 AN ORDINANCE GRANTING CIBOLO WASTE INCORPORATED, DBA BEXAR WASTE INC., A FRANCHISE FOR MUNICIPAL SOLID WASTE COLLECTION, RECYCLING, AND HOUSEHOLD HAZARDOUS WASTE COLLECTION AND DISPOSAL PROGRAM; IMPOSING PROVISIONS AND CONDITIONS RELATING TO THE EXERCISE OF SAME; AND PROVIDING FOR PENALTIES NOT TO EXCEED $200 FOR VIOLATION THEREOF; REPEALING ALL ORDINANCES OR PARTS OF ORDINANCES IN CONFLICT WITH THIS ORDINANCE. WHEREAS, it is found to be in the public interest and necessary to protect the health and safety of the citizens of Schertz to have a municipal solid waste collection and disposal service in the City of Schertz, Texas; and WHEREAS, pursuant to Ordinance Nos. 01-F-2, 03-F-22, 07-F-07, and 11-F-35, the City has had a two-year renewing non-exclusive franchise relationship with the Franchisee named below; and WHEREAS, City staff recommends that the City Council award a seven-year non- exclusive Franchise to the Franchisee; and WHEREAS, the City Council has reviewed the Franchisee’s record of service and continues to be satisfied with the qualifications of the Franchisee; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS: I. Section 1. SHORT TITLE. This Ordinance shall be known and may be cited as the Bexar Waste Municipal Solid Waste Collection and Disposal Franchise Ordinance of the City of Schertz, Texas. Section 2. DEFINED TERMS. a. Municipal Solid Waste or MSW is defined as garbage, trash, refuse, brush, yard waste, and other waste generated in residences and commercial establishments as well as debris resulting from traffic accidents in the City (excluding wrecked or disabled vehicles which are removable by a wrecker service). b. White Waste is defined as refrigerators, washing machines, tires, large pieces of furniture or other bulky items. c. Temporary is defined as any period of less than thirty (30) days. 50553904.6 2 d. Permanent is defined as any period thirty (30) days or more. e. Household Hazardous Waste is defined as toxic automotive products; fungicides, herbicides, insecticides, and weed killers; toxic household products; paints, thinners, and other wood treatment products. f. Recycling is defined as the curbside residential collection of that fraction of MSW that is reusable and has resale value. Section 3. GRANTS OF AUTHORITY a. Grant of Franchise. There is hereby granted by the City of Schertz (the “City”), to Cibolo Waste Incorporated, dba Bexar Waste Inc., a corporation organized under the laws of the State of Texas (the “Franchisee”), the right and privilege to operate and maintain within the City of Schertz a service for the collection and disposal of MSW. The relationship of the Franchisee and the City is purely contractual. No other function or relationship is implied. b. Non-Exclusive Franchise. The right and privilege granted herein by the City to the Franchisee for the purpose set forth shall not be exclusive. The City reserves the right to grant additional franchises for the collection and disposal services set forth in this Ordinance. c. Use of Public Ways. The City hereby grants the Franchisee, under the terms, conditions, and consideration of this Ordinance, renewed and extended permission for the occupation or use of the streets, alleys, easements, and public ways within the City of Schertz for the purpose of collection and disposal of MSW, to the extent necessary to accomplish the objects of this Ordinance. Section 4. INDEMNIFICATION, INSURANCE AND BONDS. a. Indemnification. THE FRANCHISEE SHALL INDEMNIFY AND SAVE HARMLESS THE CITY, AND ALL AGENTS, OFFICERS, EMPLOYEES, AND REPRESENTATIVES THEREOF FROM AND AGAINST ANY AND ALL LOSS SUSTAINED BY THE CITY ON THE ACCOUNT OF ANY SUIT, JUDGMENT, CLAIM, OR DEMAND WHATSOEVER, RESULTING FROM THE NEGLIGENCE ON THE PART OF THE FRANCHISEE, ITS AGENTS, OR EMPLOYEES IN THE PERFORMANCE OF SERVICES UNDER THIS ORDINANCE. The provisions of this Section 4.a. shall survive the termination of this franchise as to events occurring during the term of this franchise or as to claims made regarding such events for a period of two (2) years following the termination of this franchise. b. Insurance. The Franchisee agrees to carry general liability insurance naming the City as additional insured in the minimum amount of $1,000,000 for each occurrence and $2,000,000 annual aggregate; automobile liability naming the City as additional insured in the amount of $1,000,000 combined single limit, and worker compensation/employer liability insurance. (1) Such policy or policies shall provide by endorsement that it may only be cancelled or amended by the insurance company only after thirty (30) days’ prior written notice to the City Manager. 50553904.6 3 (2) A certificate or certificates issued by the insurer evidencing the coverage, cancellation, and amendment provisions set forth in this Section 4b. must be submitted to and approved by the City Attorney no later than the date of second and final reading of this Ordinance, and a certificate or certificates issued by the insurer confirming the continuing effectiveness of such coverage, cancellation, and amendment provisions shall be submitted to the City Secretary no later than January 10 of each year of this franchise commencing January 10, 2014. (3) Upon written request by the City Manager either the original policy (or policies) or copies certified by the insurer must be delivered to the City Secretary. c. Bond. The Franchisee shall furnish an annually renewable bond to the City in the amount of $300,000 guaranteeing the faithful performance of the Franchisee’s obligations under the terms of this Ordinance, which bond shall be in force no later than the date of second and final reading and be subject to these requirements: (1) The bond shall be conditioned upon the requirement that the Franchisee shall well and truly observe, fulfill, and perform each term and condition of this franchise and that in case of any breach of condition of the bond, an amount (subject to the required dollar limits of the bond) shall be recoverable from the principal and surety thereof by the City for all liquidated damages for the failure of the Franchisee to well and faithfully observe and perform any provision of this Ordinance, and for any amount billed to the Franchisee by the City for the cost of the City’s performing or causing to be performed the Franchisee’s obligations hereunder. (2) Such bond must provide by endorsement that it cannot be cancelled or amended by the bonding company prior to thirty (30) days’ written notice to the City Manager. (3) Such bond shall be in a form and contain such additional provisions as may be required by the City Attorney. (4) Such bond shall be executed by the Franchisee as principal and one or more sureties approved by the City Manager. (5) Either the bond or bonds or copies thereof certified by the surety must be on file with the City Secretary of the City. d. Termination. Failure of the Franchisee to comply with the provisions of this Section 4. shall be cause for termination of this franchise as set forth in Section 10.c. 50553904.6 4 Section 5. MINIMUM QUALITY AND PERFORMANCE STANDARDS. Acceptance of this Ordinance by the Franchisee carries with it expectations of both efficiency and quality of service by the Franchisee. The standards below are considered minimum standards. a. Quality of Service. Customer satisfaction is the ultimate measure of the quality of service. The Franchisee will make every reasonable effort to insure the rate paying customer is treated with due courtesy and respect. The property of the customer will be treated without abuse. Informal complaints will be resolved as quickly as possible with the customer receiving the benefit of the doubt. Formal complaints will be resolved as provided in Section 13. b. Equipment and Maintenance Thereof. All equipment, including motor vehicles and trucks necessary for the performance by the Franchisee of this Ordinance shall, on the effective date of the franchise granted by this Ordinance, be in good condition and repair. Stand-by equipment shall always be available. The trucks used in collection of MSW shall be all metal, watertight, with completely enclosed "Packer" type bodies that are designed and manufactured for the collection of garbage and refuse. Such collection vehicles shall be painted and numbered in letters of a contrasting color on each side of the vehicle and maintained in a mechanically sound and safe condition. All vehicles shall be kept in a clean and sanitary condition and shall be cleaned inside and outside at least once each week. c. Times and Frequencies of Pickup and Holidays. (1) The Franchisee shall make no collections in residential areas prior to 7:00 a.m., and collections in business districts shall not be commenced earlier than 6:00 a.m. When a business is within 500 feet of a residence, the residential area times will apply. (2) There shall be once a week pickup of MSW for all residential customers who have been provided uniform 96 gallon MSW containers by the Franchisee at no charge to the customer (“Zone 1”). If no such container has been provided to a residential customer, there will be twice weekly pickup of MSW from such customers (“Zone 2”). The Franchisee shall provide the City and update from time to time a current map of the City showing Zone 1 and Zone 2 residential customers. The number of pickups may vary for commercial activities, which shall be established by separate contract between the Franchisee and the customer. Upon written request by the City, the Franchisee shall provide the City with a summary of all such commercial pickup arrangements. (3) Collection will be made for all residential accounts twice weekly regardless of National or State holidays, except for Christmas Day, New Year’s Day, July 4, and Thanksgiving Day. The Franchisee may observe any or all the holidays noted above. However, the Franchisee shall collect MSW at least one day per cycle during those weeks when holidays are observed. 50553904.6 5 d. Routes and Pickup Points. (1) The Franchisee will provide proposed routes for purposes of the collection of regular garbage, small brush and limb pickup as follows: Zone 1 Monday Tuesday Wednesday Zone 2 Monday and Thursday Tuesday and Friday Wednesday and Saturday The City must approve such routes prior to commencement of operations. (2) Trash containers shall be placed so that they are accessible from the curbline without the collector entering upon private property. Special cases to allow for front building line collection will be authorized by mutual agreement of the Franchisee and the City when the residents at any house are mentally or physically incapable of placing containers at the curbline. (3) No trash containers will be placed on the curbline by the customer earlier than twenty-four (24) hours prior to the time of collection nor later than twenty-four (24) hours after the time of collection. e. Types of Containers. Trash containers shall be watertight receptacles of solid and durable grade of metal or plastic, not to exceed thirty (30) gallons in capacity (except as set forth in Section 4.c.(2)) or plastic or other waterproof bags manufactured for the purpose of containing garbage or refuse; the combined weight of the garbage and container shall not exceed seventy-five (75) pounds. Containers shall be provided with suitable lifting handle or handles on the outside and close-fitting cover equipped with a handle. The container must not have any inside structures, such as inside bands, and reinforcing angles or anything within the container to prevent free discharge of the contents. Containers that have deteriorated or that have been damaged to the extent of having jagged or sharp edges capable of causing injury to garbage collectors or other persons whose duty it is to handle the containers, or to such an extent that the covers will not fit securely, need not be accepted by the Franchisee. f. Special Pickups. The Franchisee shall invoice the City for all Special Pickups the Franchisee’s actual costs (which shall not include a Franchisee’s overhead charge) for the City’s use in invoicing customers. (1) Brush and Trees. All brush and large trimmings to be collected by the Franchisee shall be placed by customers at the curbline. Trees, brush, and limbs cannot exceed four inches (4”) in diameter nor five feet (5’) in length. All limbs and brush must be in bundles not to exceed sixty (60) pounds each. Leaves 50553904.6 6 and grass clippings and small brush items are to be placed in cardboard containers, plastic trash bags, or trash cans. (2) Dead Animals. Dead animals shall not be placed in trash containers. Dead animals in excess of seventy-five (75) pounds are not required to be accepted by the Franchisee. Dead household pets shall be picked up by the Franchisee at no charge. The City’s animal services department will pick up other dead small animals at no charge, and the Franchisee will in turn pick up those dead small animals from the City’s animal services department at no charge to the City. The Franchisee shall pick up large dead animals located in a right-of-way. If such dead large animal identifiably belongs to an individual or entity (i.e., a cow that has been identifiably branded or tagged), such individual or entity shall pay the Franchisee the charge associated with the pick-up. However, if the dead large animal does not identifiably belong to an individual or entity (i.e., a wild deer), the City shall pay the cost for the pick-up. The owner shall be responsible for the removal and disposal of large dead animals, such as cows, horses, mules, and goats. (3) Traffic Accident Debris. The Franchisee will provide 24-hour a day, 7 days a week, pick up service of debris resulting from traffic accidents upon telephone or radio notice from the City by a police officer or other City employee. The Franchisee may invoice and collect from the individual(s) or company(ies) involved in such traffic accident or their respective insurers for the collection and disposal of accident materials. The Franchisee will have no obligation to remove wrecked or disabled vehicles. If the Franchisee fails to adequately respond with a roll-off unit or other suitable equipment (all as determined by the City) within one (1) hour, the Franchisee agrees that the City may contact another person or entity of the City’s choosing to remove such debris, and all costs incurred by the City as a result thereof shall be reimbursed to the City by the Franchisee within ten (10) business days of the City’s invoicing of the Franchisee. In such case, such person or entity shall not be required to hold a solid waste disposal franchise with the City. (4) Special Services. The Franchisee will provide services for special residential pickups, such as new move-ins, tree trimming, and similar circumstances. The Franchisee may charge a fee for this service to be billed by the City. g. Area of Service and Interruption in Service. (1) The Franchisee will collect MSW and recycling material from all residences and MSW from all commercial businesses in the City not delinquent in the payment for the authorized services provided, or as directed by the City. (2) In the event that the collection and disposal of MSW shall be interrupted by any reason for more than forty-eight (48) hours, the City shall have the right to make temporary independent arrangements for the purpose of 50553904.6 7 continuing this necessary service to its citizens in order to provide and protect the public health and safety. Costs of the temporary independent arrangements shall be borne by the Franchisee and shall be reimbursed to the City by the Franchisee within ten (10) business days of the City’s invoicing of the Franchisee. (3) If the interruption in service described in the paragraph next above continues for a period of thirty (30) days, the City shall have the right to terminate the rights and privileges granted in this Ordinance. h. Office Hours, Staffing, and Service Logs. (1) The Franchisee shall establish and maintain an office in the City with telephone service and shall keep said office open for business from 9:00 a.m. to 5:00 p.m. each and every day except Saturday, Sunday and legal national holidays, as a minimum. (2) The office mentioned in subsection 5h(1) shall be staffed with sufficient competent personnel to handle calls and inquiries during office hours. A daily log of all service calls, complaints and inquiries taken therein shall be maintained by the Franchisee and be available to the City upon request. Section 6. TEMPORARY AND PERMANENT ROLL-OFF CONTAINERS. Rocks, waste, scrap, building materials, or other trash resulting from construction or major remodeling; resulting from a general cleanup of vacant or improved property just prior to its occupancy; or resulting from sizable amounts of trees, brush, and debris cleared from property in preparation for construction, will be removed by the Franchisee as part of the Franchisee’s regular service but rates will be derived from approved rates described in Section 16. Section 7. CHANGES IN TIMES AND ROUTES OF COLLECTION. The City Council reserves the right to change or alter the times and routes of collection. The Franchisee shall be given at least five (5) days’ notice if any such action is scheduled to be discussed by City Council. No changes in collection schedule or routes shall be made by the Franchisee without approval by the City. Section 8. DISPOSAL OF MSW. The Franchisee shall have the responsibility for the disposal of all MSW collected under this Ordinance, and all of such materials shall be disposed of in compliance with the laws of the State of Texas and/or the rules, regulations and standards established from time to time by the Federal Government of the United States of America and the Texas Commission on Environmental Quality. 50553904.6 8 Section 9. SERVICES TO THE CITY. a. City Property Pickup. The Franchisee will provide pickup twice weekly for the City at all City properties at no cost to the City. Containers used by the City will be of the size and type appropriate to the volume and characteristics of material. b. Special City Events. The Franchisee will provide special pickup during not more than ten (10) City annual events (designated each year by the City in writing to the Franchisee) at no charge. Placement of containers will be at the direction of the Director of Public Works. The Franchisee will provide one twenty (20) cubic yard roll-off container at no charge to the City for each such event. c. White Waste. Twice each year, the Franchisee will pick up White Waste. (1) The Franchisee will provide special pickup services daily at designated locations during the Schertz Annual Spring Cleanup. This pickup will include large household appliances, furniture (and other bulky items) tires or other material not normally collected during twice weekly pickup. The dates will be established by the City. This service will be at no cost to the City or the public. Notice of the Cleanup dates shall be published in local media at the expense of the Franchisee. (2) The Franchisee will provide special pickup services daily at designated locations during the Schertz Annual Fall Cleanup. Scheduling will be at the discretion of the Franchisee, with a minimum of 150 days between the Schertz Annual Spring Cleanup and the Schertz Annual Fall Cleanup. This pickup will include large household appliances, furniture (and other bulky items) tires or other material not normally collected during twice weekly pickup. This service will be at no cost to the City or the public. Notice of the Cleanup dates shall be published in local media at the expense of the Franchisee. d. Household Hazardous Waste. (1) Twice each year in conjunction with the Spring and Fall cleanup period, a program to collect and dispose of Household Hazardous Waste will be planned and conducted by the Franchisee. The cost of this program will be borne by the Franchisee. The Franchisee will provide documents detailing costs for each event and recommend adjustments to the program based on participation levels and volume of material collected. (2) The Franchisee may, with approval by the City, engage a third party to collect and dispose of Household Hazardous Waste where such materials constitute a serious health hazard or the materials require special handling beyond the capabilities of the Franchisee. Any program established will fully comply with the laws of the State of Texas and rules established by the Texas Commission on Environmental Quality. 50553904.6 9 e. Biohazardous Waste. The Franchisee will make provisions for the disposal of biohazardous waste resulting from City operations at no cost to the City. Section 10. DURATION OF THE FRANCHISE AND RENEWAL OPTIONS; TERMINATION. a. Term and Acceptance. Subject to the requirements relating to insurance and the performance bond set forth in Sections 4.b.(2) and 4.c., this Ordinance and the rights, privileges, and authority hereby granted shall take effect and be in force from and after final passage hereof, as provided by law, and shall continue in force and effect for a term ending December 31, 2019, provided that, within thirty (30) days after the adoption of this Ordinance on second reading, the Franchisee shall file with the City its unconditional acceptance of this Ordinance and promise to comply with and abide by all of its provisions, terms, and conditions. Such acceptance and promise in writing shall be duly executed, and sworn to by an authorized official of the Franchisee on behalf of the Franchisee before a notary public or other officer authorized by law to administer oaths. b. Renewal. This Ordinance may be renewed for an additional period of six (6) years unless either the City or the Franchisee gives written notification of the termination of this Ordinance to the other one-hundred twenty (120) days prior to the expiration of the seven (7) year term of this Ordinance. c. Termination. (1) The City may terminate this franchise for failure by the Franchisee to comply with the provisions of Section 4.a. (Indemnification), 4.b. (Insurance), and/or 4.c. (Performance Bond). Upon the City’s determination that the Franchisee has failed to comply with any or all of such provisions, the City may notify the Franchisee in writing that it is exercising its right to terminate this franchise on thirty (30) days’ (or longer, at the option of the City) written notice to the Franchisee; provided, the termination of this franchise by the City due to the Franchisee’s failure to comply with Section 4.a. shall not terminate the Franchisee’s contractual obligations to the City and all agents, officers, employees, and representatives of the City under such Section 4.a. (2) The City may terminate this franchise as a result of the Franchisee having twenty-five (25) or more unresolved complaints outstanding as set forth in Section 13. The City may notify the Franchisee that it is exercising its right to terminate this franchise on thirty (30) days’ (or longer, at the option of the City) written notice to the Franchisee. (3) The City may terminate this franchise for failure by the Franchisee to comply with any other provision of this Ordinance if (a) the City has notified the Franchisee in writing of such failure and the Franchisee has failed to correct such failure to the satisfaction of the City within thirty (30) days (or longer period, at the option of the City) of the receipt of such notice or (b) the City has 50553904.6 10 notified the Franchisee in writing of such failure twice within a six (6) month period. Such termination shall be effective upon thirty (30) days’ (or longer, at the option of the City) written notice to the Franchisee. (4) Following receipt of notice of termination under 10.c.(1), (2), or (3) above, the Franchisee shall be responsible for continuing compliance with all provisions of this Ordinance until the effective date of termination unless explicitly directed otherwise in writing by the City. Section 11. SEPARABILITY, COMPLIANCE WITH APPLICABLE LAWS, AND NON- CONTESTABILITY BY THE FRANCHISEE. a. Severability. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held invalid or unconstitutional by any court of competent jurisdiction, such portion shall be deemed a separate, distinct, and independent provision, and such holdings shall not affect the validity of the remaining portions thereof. b. City Regulations. At all times during the term of this Ordinance, the Franchisee shall be subject to all lawful exercise by the City of its police power and to such reasonable regulations as the City shall from time to time provide, pursuant to the exercise of such police power. c. Rights of City. The Franchisee, by acceptance of this Ordinance, expressly acknowledges and accepts the right of the City to issue such franchise and further agrees to fully comply with all appropriate regulations promulgated by any appropriate government agency of competent jurisdiction. Section 12. SALE, TRANSFER, OR ASSIGNMENT OF FRANCHISE RIGHTS OR ASSETS. The Franchisee shall not sell, transfer, or assign its rights under this Ordinance, or substantially all of its assets, to any other person or corporation without the prior written approval of the City Council, such approval not to be unreasonably withheld. Section 13. COMPLAINTS AND RESOLUTION. a. Complaints. Complaints from or by the public or a particular customer must be in writing and mailed (or presented) to the City Manager or designated representative for action. b. Penalties. The Franchisee will pay a penalty of not less than $25 or more than $200 for each customer complaint not satisfactorily resolved. Satisfactory resolution will be determined by the City Manager. The Franchisee may appeal to City Council, which will make a final determination. The penalty will be deducted from the Franchisee proceeds the for billing cycle following City Manager determination unless appealed, in which case City Council will provide further instruction. Twenty-five (25) unresolved complaints will be a basis for contract review by City Council for possible franchise termination. 50553904.6 11 Section 14. INVESTIGATION AND PUBLIC HEARING. The City Council shall have full power to examine or cause to be examined at any time, and at all times, the books, papers and records of the Franchisee with relation to the operation of the MSW collection system within the City of Schertz. In this connection, the City shall have the right, through its City Council, to take testimony and compel the attendance of witnesses or the production of books, papers and records and to examine witnesses under oath and under such rules and regulations as it may adopt. If any officer, agent, or employee of the Franchisee refuses to give testimony before the City Council, the City Council shall have power to terminate this Ordinance. Section 15. NOTICES. Where written notices are provided for in this Ordinance, same shall be sufficient to notify the Franchisee if mailed by certified mail to the proper address as specified on page S-2 in this Ordinance and shall be sufficient to notify the City if mailed by certified mail to City of Schertz, 1400 Schertz Parkway, Schertz, Texas 78154, Attention: City Manager. Section 16. SERVICE RATES. Rates for services provided under this Ordinance are contained in Exhibit “A” attached hereto and incorporated herein for all purposes. Section 17. BILLING, COLLECTION, AND PAYMENT. a. Billing and Collection. For the purpose of convenience, the billing and collection of the charges levied for all MSW service shall be done by the Utilities Department of the City, and all such fees shall be payable at the Municipal Offices. The City will prorate a new customer service to the nearest half-month charge relative to the commencement of service. (Service shall be considered commencing when water is turned on to that customer). All charges shall be due and payable each month concurrent with utility bills, and, if not paid on or before the due date, the City shall assess a ten percent (10%) penalty for delinquency and collection expenses. Utilities will be discontinued by the City for lack of payment of any garbage bill or any part thereof. b. Franchise Fee. The Franchisee shall be paid by the City at the rate of eighty-five percent (85%) of the amount collected, excluding penalties and excepting recycling fees, for each customer served for which billing is made by the City. The Franchisee shall be paid what is due within ten (10) days after closing date of each billing period with the last month payment hereunder to be made during the first calendar month after the expiration of the term hereof or after the cancellation hereof, as the case may be. Section 18. RECYCLING a. Frequency of Pickup. The Franchisee will collect recyclable material once each week from residences wishing to participate. Each residence address will be charged a fee for this service, whether participating or not. The Franchisee will transport such collected recyclables. 50553904.6 12 b. Recycling Containers. The Franchisee shall provide appropriate bins for recycling to each residence at no charge. Bins will be replaced at the City’s expense if the bins are stolen and a police report corroborates the theft. Additional bins may be purchased by the homeowner or resident at the City’s cost. c. Customer Participation. Participation in the recycling program is voluntary but highly encouraged. Failing to actively participate does not relieve the homeowner or resident from payment of recycling fees. d. Recycling Proceeds. The proceeds from the Franchisee’s sale of recycling materials shall be retained by the Franchisee. Section 19. PENALTIES . a. Providing Franchise Service Without a Franchise. Any person or entity who shall perform franchise services described in this Ordinance, without authority of a duly awarded franchise and payment of consideration, shall be cited by the appropriate City agency, and shall be subject to a penalty not to exceed two hundred dollars ($200) for each and every day such a service is unlawfully performed. b. Failure to Provide Services By Franchisee. Any person or entity, upon being named a Franchisee and awarded a franchise under this Ordinance, who fails to provide the services described in this Ordinance, shall be cited by the appropriate City agency, and is subject to a fine of two hundred dollars ($200) for each and every day such service is not performed. c. Failure of Franchisee to Meet Service Standards. Any person or entity, upon being named a Franchisee and awarded a franchise under this Ordinance, who fails to comply with the service standards described in this Ordinance shall be cited by the appropriate City agency, and is subject to a fine of one hundred dollars ($100) for each and every failure to comply with service standards described in this Ordinance. d. Removal of Recycling Material. Any person or entity (excepting the homeowner or resident who placed recycling material at curbside or any authorized agent of the City) who removes any recyclable material in bins, bags, or cans set at curbside for recycling collection is subject to prosecution under the laws of the State of Texas. II. City of Schertz Ordinance Nos. 01-F-2, 03-F-22, 07-F-07, 11-F-35, and any other Ordinances and parts of Ordinances in conflict with this Ordinance are hereby repealed. [Remainder of page intentionally left blank.] 50553904.6 S-1 III. PASSED ON FIRST READING, the 29 th day of January, 2013. PASSED, APPROVED, AND ADOPTED ON SECOND READING the 5th day of March, 2013. Michael R. Carpenter, Mayor ATTEST: Brenda Dennis, City Secretary (Seal of City) 50553904.6 S-2 ACCEPTED: CIBOLO WASTE INCORPORATED, AS FRANCHISEE By: Title: Notice Address: Cibolo Waste Incorporated P.O. Box 577 Schertz, TX 78154 Attention: Henry Gutierrez STATE OF TEXAS § § COUNTY OF GUADALUPE § This instrument was acknowledged on _________________ _____, 2013 by Henry Gutierrez, President of Cibolo Waste Incorporated, a Texas corporation, on behalf of such corporation. (NOTARY SEAL) Notary Public in and for the State of Texas Commission Expires 50553904.6 Exhibit “A”- 1 Exhibit “A” Rates 50553904.6 Exhibit “A”- 2 50553904.6 Exhibit “A”- 3 50553904.6 Exhibit “A”- 4 50553904.6 Exhibit “A”- 5 50553904.6 Exhibit “A”- 6 March 5, 2013 JACKSON A&E ASSOCIATES, INC Bond passed in 2010 for the creation of a separate adoption facility and renovations to the existing facility in the amount of $2,250,000.00. Base bids for construction received on November 29, 2012 from twelve respondents ranged from $2,265,000.00 to $3,114,780.00. An evaluation team selected D.Wilson Construction Company as the most qualified and best value to the City. D.Wilson’s initial Base bid was $2,378,000.00 The Team participated in a series of VE items and a reduction in scope and have a current project cost of $1,800,000.00 which is in budget. The remaining $450,000.00 of the budget is allocated for design and consulting services, FF&E, Materials Testing and contingency. ANIMAL CONTROL RENOVATION AND EXPANSION Project Number GA6 Elements of Project Total Project Actual Project Summary Cost Items within Element Estmated Cost Expenditures Budget To Date Category "A" Cost of Construction TRADE CONTRACTOR WORK W/ BONDS & INSURANCE $1,800,000.00 Base Project CONSTRUCTION CONTINGENCIES $50,000.00 Total - Category "A" Cost of Construction $1,850,000.00 -$ Category "B" Cost of Professional Services DESIGN AND CONSULTING SERVICES Architectural & Engineering Services $244,479.00 185,964.96$ Owner's Representative Services $50,562.00 28,062.00$ Design Contingency $0.00 -$ Material Testing Services $18,000.00 -$ Other reimbursable expenses $22,000.00 10,965.89$ Total - Category "B" Cost of Professional Services $335,041.00 224,992.85$ Category "C" Cost of Owner's Administrative / FF & E Work OWNER'S ADMINISTRATIVE COST Right of Way (ROW) Off Site Construction Trailer OWNER'S F F & E ITEMS - Furnishings / Fixtures / Equipment New Purchase & Installation Items $65,000.00 Moving Costs for Existing Items $0.00 Security Systems / Equip. / Training / Implementation $0.00 Total - Category "C" Cost of Owner's Admin. / FF & E Work $65,000.00 -$ Category "D" Owner's Project Contingency OWNER'S PROJECT CONTINGENCY Miscellaneous Expenses $50,000.00 Approved Change Orders Total - Category "D" Owner's Project Contingency $50,000.00 -$ TOTAL PROJECT COST $2,250,041.00 224,992.85$ February 12, 2013 While the Animal Adoption Center can be built within the current budget, both facilities would need to remain open and staffed. This necessitates two additional staff positions which are estimated to cost approximately $95,000 per year. With an additional $125,000 the left side of the facility can be finished out, which will not require the existing facility to be staffed on a regular basis. Discussion