HomeMy WebLinkAboutItem 01 - City Audit I L..L III :#....I
MEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: BRUNO RUMBELOW, CITY MANAGER
MEETING DATE: FEBRUARY 5, 2013
SUBJECT: FILING OF ANNUAL CITY AUDIT
RECOMMENDATION:
A representative from Pattillo, Brown & Hill, LLC, the City's auditing firm, will make a
presentation to the City Council filing the annual audit report in compliance with the City
Charter, Article 3, and Section 3.14.
BACKGROUND:
The firm of Pattillo, Brown & Hill, LLC completed the audit of the City's FY 2012 financial
statements in compliance with the requirements of the City Charter, Article 3, Section
3.14. The auditor's opinion letter states that the financial statements of the City of
Grapevine present fairly the financial position of the City. The opinion rendered is an
"unqualified opinion", meaning there is no material exceptions found to the fairness
criteria under which the records were audited.
The management letter does not note any specific recommendations relative to the
procedures in selected departments; however the Finance Division continues to work
closely with City staff to update and improve internal controls, administrative policies and
internal financial reporting.
The report also includes an audit of Tax Increment Financing Districts One and Two.
Also, a single audit of all Federal Grant Awards is included in the Comprehensive
Annual Financial Report.
The auditor is filing his report with the City Council. No formal action on the part of the
Council is required.
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PATTILLO, BROWN & HILL, L_L_P.
CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS
To the Honorable Mayor and
Members of the City Council
City of Grapevine, Texas
We have audited the financial statements of the governmental activities, the business-type
activities, the discretely presented component unit, each major fund, and the aggregate remaining fund
information of the City of Grapevine, Texas, for the year ended September 30, 2012. Professional
standards require that we provide you with information about our responsibilities under generally
accepted auditing standards, Government Auditing Standards and OMB Circular A-133, as well as
certain information related to the planned scope and timing of our audit. We have communicated such
information in our letter to you dated September 5, 2012. Professional standards also require that we
communicate to you the following information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The
significant accounting policies used by the City are described in Note 1 to the financial statements. No
new accounting policies were adopted and the application of existing policies was not changed during
the year ended September 30, 2012. We noted no transactions entered into by the City during the year
for which there is a lack of authoritative guidance or consensus. All significant transactions have been
recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management
and are based on management's 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 significantly from those expected. The most sensitive estimates affecting the financial
statements include management's estimate of:
• Uncollectible accounts receivable
• Accumulated depreciation on capital assets
• Health claims payable
• Annual OPEB cost and net OPEB obligation.
We evaluated the key factors and assumptions used to develop these estimates in determining
that they are reasonable in relation to the financial statements taken as a whole.
401 WEST HIGHWAY 6■P.O.BOX 20725■WACO,TX 76702-0725■(254)772-4901■FAX:(254)772-4920■www.pbhcpa.com
AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■HILLSBORO,TX(254)582-2583
TEMPLE,TX(254)791-3460■ALBUQUERQUE,NM(505)266-5904
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Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified
during the audit, other than those that are trivial, and communicate them to the appropriate level of
management. Management has corrected all such misstatements. In addition, none of the misstatements
detected as a result of audit procedures and corrected by management were material, either individually
or in the aggregate, to the financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could
be significant to the financial statements or the auditors' report. We are pleased to report that no such
disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the
management representation letter dated January 25, 2013.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principle to the City's financial statements or a determination of
the type of auditor's opinion that may be expressed on those statements, our professional standards
require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the City's auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.
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Other Matters
With respect to the supplementary information accompanying the financial statements, we made
certain inquiries of management and evaluated the form, content, and methods of preparing the
information to determine that the information complies with accounting principles generally accepted in
the United States of America, the method of preparing it has not changed from the prior period, and the
information is appropriate and complete in relation to our audit of the financial statements. We
compared and reconciled the supplementary information to the underlying accounting records used to
prepare the financial statements or to the financial statements themselves.
Significant Forthcoming Accounting Standards
The Financial Reportia Entity: Omnibus an Amendment of GASB Statements No. 14 and No.
34
Governmental Accounting Standards Board Statement No. 61 ("GASB 61"), The
Financial Reporting Entity: Omnibus an Amendment of GASB Statements No. 14 and No. 34, is
effective for periods beginning after June 15, 2012. This Standard was issued in November 2010
to address several issues pertaining to government reporting of component units and other related
organizations that have arisen since the issuance of GASB Statement No. 14, The Financial
Reporting Entity.
The objective of Statement 61 is to improve financial reporting for a governmental entity
by amending criteria for including, presenting and disclosing information about component units
and other related organizations to be more relevant to financial statement users' needs and to
provide additional guidance on specific reporting issues born from the change in the government
reporting model that occurred as a result of GASB Statement No. 34, Basic Financial
Statements and Management's Discussion and Analysis for State and Local Governments.
Financial Reporting ofDeferred Outflows of Resources, Deferred Inflows of Resources, and Net
Position
Governmental Accounting Standards Board Statement No. 63 ("GASB 63"), Financial
Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position,
is effective for periods beginning after December 15, 2011. This Statement provides financial
reporting guidance for deferred outflows of resources and deferred inflows of resources.
Concepts Statement No. 4, Elements of Financial Statements, introduced and defined those
elements as a consumption of net assets by the government that is applicable to a future reporting
period, and an acquisition of net assets by the government that is applicable to a future reporting
period, respectively. Previous financial reporting standards do not include guidance for reporting
those financial statement elements, which are distinct from assets and liabilities.
Concepts Statement No. 4 also identifies net position as the residual of all other elements
presented in a statement of financial position. This Statement amends the previous net asset
reporting requirements by incorporating deferred outflows of resources and deferred inflows of
resources into the definitions of the required components of the residual measure and by
renaming that measure as net position, rather than net assets.
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Accounting and Financial Reporting for Pensions an amendment of GASB Statement No. 27
Governmental Accounting Standards Board Statement No. 68 ("GASB 68"), Accounting
and Financial Reporting for Pensions an amendment of GASB Statement No. 27, is effective
for periods beginning after June 15, 2014. The primary objective of this Statement is to improve
accounting and financial reporting by state and local governments for pensions. The new
standards are intended to provide more comparable and visible information within the annual
financial statements of governments that provide defined benefit pensions.
Notably, GASB 68 requires employers to report the difference between the actuarial total
pension liability and the fair value of the legally restricted plan assets as the net pension liability
on the statement of net position. Previously, a liability was only recorded if the actual
contributions made to the plan were less than the actuarial calculated contributions for the year.
These new standards relate only to the accounting and reporting of defined benefit
pensions within the GAAP based financial statements of governmental entities. They do not
establish requirements as to the actual funding of these benefits. These decisions are left to
management and the governing body.
This Statement may have a material impact on recorded pension liabilities compared to
application of current standards. Your processes should be updated to incorporate the new
information requirements and begin gathering information now to determine the future impacts
on financial reporting.
This information is intended solely for the use of the City Council and management of the City
of Grapevine, Texas, and is not intended to be and should not be used by anyone other than these
specified parties.
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January 25, 2013
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CITY OF GRAPEVINE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED SEPTEMBER 30, 2012
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CITY OF GRAPEVINE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED SEPTEMBER 30, 2012
Prepared by: Department of Administrative Services
Finance Division
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CITY OF GRAPEVINE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012
HOME RULE, COUNCIL-MANAGER FORM OF GOVERNMENT
William D. Tate
MAYOR
CITY COUNCIL
Chris Coy Darlene Freed
Shane Wilbanks Mike Lease
Sharron Spencer Roy Stewart
Bruno Rumbelow
CITY MANAGER
Jennifer Hibbs
ASSISTANT CITY MANAGER
John F. McGrane
DIRECTOR OF ADMINISTRATIVE SERVICES
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CITY OF GRAPEVINE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
SEPTEMBER 30,2012
Page
Number
INTRODUCTORY SECTION
Letterof Transmittal..................................................................................................... i—iv
Certificate of Achievement for Excellence in Financial Reporting.............................. v
OrganizationChart........................................................................................................ vi
Administrative Officials................................................................................................ vii
FINANCIAL SECTION
Independent Auditors' Report....................................................................................... 1 -2
Management's Discussion and Analysis ...................................................................... 3 - 10
Basic Financial Statements
Government-wide Financial Statements
Statementof Net Assets.......................................................................................... 11
Statement of Activities............................................................................................ 12 - 13
Fund Financial Statements
Balance Sheet—Governmental Funds.................................................................... 14 - 15
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets............................................................................. 16
(continued)
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CITY OF GRAPEVINE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
(Continued)
SEPTEMBER 30,2012
Page
Number
FINANCIAL SECTION (Continued)
Fund Financial Statements (Continued)
Statement of Revenues, Expenditures and Changes in
Fund Balances —Governmental Funds ................................................................ 17- 18
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities......................................................................................... 19
Statement of Net Assets —Proprietary Funds ......................................................... 20 -21
Statement of Revenues, Expenses and Changes in
Fund Net Assets —Proprietary Funds .................................................................. 22
Statement of Cash Flows —Proprietary Funds........................................................ 23 -24
Statement of Fiduciary Net Assets —Fiduciary Funds............................................ 25
Statement of Changes in Net Assets —Trust Fund ................................................. 26
Notes to Financial Statements.................................................................................... 27 -65
Required Supplementary Information (Unaudited)
GeneralFund.............................................................................................................. 66
HotelOccupancy Tax ................................................................................................ 67
CrimeDistrict............................................................................................................. 68
Schedule of Funding Progress for Participation—in Texas
Municipal Retirement System................................................................................. 69
Schedule of Funding Progress Post-Retirement Health Care Benefit Plan ............... 70
Notes to Required Supplementary Information......................................................... 71
(continued)
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CITY OF GRAPEVINE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
(Continued)
SEPTEMBER 30,2012
Page
Number
FINANCIAL SECTION (Continued)
Combining and Individual Fund Statements and Schedules
Nonmajor Governmental Funds
Combining Balance Sheet....................................................................................... 72 -75
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances................................................................................... 76-79
Budgetary Comparison Schedule—4B Transit....................................................... 80
Budgetary Comparison Schedule—Debt Service Fund.......................................... 81
Agency Funds
Combining Statement of Changes in Assets and Liabilities................................... 82 -83
STATISTICAL SECTION (Unaudited)
Page
Table Number
Net Assets by Component.............................................................................. 1 84- 85
Changes in Net Assets ................................................................................... 2 86 -89
Fund Balances —Governmental Funds .......................................................... 3 90-91
Changes in Fund Balances —Governmental Funds ....................................... 4 92 -95
Taxable Sales by Category............................................................................. 5 96
(continued)
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CITY OF GRAPEVINE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
(Continued)
SEPTEMBER 30,SEPTEMBER 30,2012
Page
Table Number
STATISTICAL SECTION (Unaudited)
Direct and Overlapping Sales Tax Rates ....................................................... 6 97
Assessed Value and Estimated Actual Value
ofTaxable Property..................................................................................... 7 98
Property Tax Rates —Direct and Overlapping Governments ........................ 8 99
Principal Property Taxpayers......................................................................... 9 100
Property Tax Levies and Collections............................................................. 10 101
Ratios of Outstanding Debt by Type ............................................................. 11 102
Ratios of General Bonded Debt Outstanding................................................. 12 103
Direct and Overlapping Governmental Activities Debt................................. 13 104
Legal Debt Margin Information..................................................................... 14 105
Pledged Revenue Coverage—Proprietary Fund—
Waterworks and Sewer System Revenue Bonds ........................................ 15 106
Pledged Revenue Coverage—Proprietary Fund—Golf................................. 16 107
Pledged Revenue Coverage—Tax Increment Financing
District Reinvestment Zone Number One................................................... 17 108
Pledged Revenue Coverage—Tax Increment Financing
District Reinvestment Zone Number Two.................................................. 18 109
(continued)
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CITY OF GRAPEVINE, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
(Continued)
SEPTEMBER 30,2012
Page
Table Number
STATISTICAL SECTION (Unaudited)
Demographic and Economic Statistics .......................................................... 19 110
Principal Employers....................................................................................... 20 111
Fulltime Equivalent City Government Employees
by Function/Program .................................................................................. 21 112
Operating Indicators by Function/Program ................................................... 22 113
Capital Asset Statistics by Function/Program................................................ 23 114
SINGLE AUDIT 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................................................................................ 115 - 116
Independent Auditors' Report on Compliance With Requirements
That Could Have a Direct and Material Effect on Each Major
Program and Internal Control Over Compliance in Accordance
With OMB Circular A-133 ........................................................................................ 117 - 118
Schedule of Expenditures of Federal Awards............................................................... 119
Notes to Schedule of Expenditures of Federal Awards ................................................ 120
Schedule of Findings and Questioned Costs................................................................. 121
Summary Schedule of Prior Audit Findings................................................................. 122
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INTRODUCTORY SECTION
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"VINEA
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January 25, 2013
To the Honorable Mayor,
Members of the City Council, and
Citizens of the City of Grapevine, Texas
The Department of Administrative Services is pleased to submit the Comprehensive Annual Financial Report for
the City of Grapevine. The City's Management assumes responsibility for both the accuracy of the data and the
completeness and fairness of the presentation, based upon a comprehensive framework of internal control that it
has established for the purpose. Because the cost of internal control should not exceed anticipated benefits, the
objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any
material misstatements. To the best of our knowledge and belief, the enclosed data is accurate in all material
respects. The data is reported in a manner designed to present fairly the financial position and results of
operations of the various funds of the City government. To enable the reader to gain an understanding of the
City's financial activities, all necessary disclosures have been included.
This report fulfills the requirement of state law which requires the City file to the State an annual financial
statement and audit opinion within 180 days after the last day of the municipality's fiscal year.
Pattillo, Brown & Hill, LLP have issued an unqualified ("clean") opinion on the City of Grapevine's financial
statements for the year ended September 30, 2012. The independent auditors' report is located at the front of the
financial section of this report.
The Management and Discussion Analysis (MD&A) is a narrative introduction, overview, and analysis to
accompany the basic financial statements. The MD&A can be found immediately following the independent
auditors' report. The letter of transmittal is designed to complement and should be read in conjunction with the
MD&A. The statistical section includes selected financial and demographic information, generally presented on a
multi-year basis.
The City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act
of 1996 and U. S. Office of Management and Budget Circular A-133, Audits of State and Local Governments.
Information related to this single audit can be found in the Federal Awards Section of this report.
Profile of the City of Grapevine
Incorporated in February 1907, Grapevine is a home rule City operating under a Council-Manager form of
government. Policymaking and legislative authority are vested in the City Council, which consists of a Mayor
and a six-member Council. The City Manager is appointed by the City Council and is responsible for carrying
out policies and for the daily management of the City. Council members serve three-year staggered terms, with
two Council members elected each year. The Mayor is elected to serve a three-year term.
Administrative Services s 200 South 1Vlain Street s Gralevine,Texas s 76051 s 817-410-3113 s Fax 817-410-3005
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The City provides a full range of services, including police and fire protection, emergency ambulance service,
sanitation, planning and zoning, public improvements, water and sewer services, culture and recreation and
general administrative services.
Component units are legally separate organizations that a primary government must include as a part of its
financial reporting entity. The City has included financial statements for five blended component units due to
their fiscal dependency on the primary government. The Tax Reinvestment Zones Numbers One and Two (the
"TIFS"), The Crime Control and Protection District"Crime District," The Grapevine 4B Economic Development
Corporation, and the 4B Transit Fund, which accounts for local sales tax used to fund Grapevine's participation in
the commuter rail development project with the Fort Worth Transit Authority (The "T"). The 4B Economic
Development Fund accounts for the local sales tax used to stimulate the local economy, development,
redevelopment and design and construction of the Main Street Rail Station.
The Heritage Foundation is a legally separate organization that is a discretely presented component unit of the
City. The Foundation was organized to promote the preservation, protection and economic development of
Grapevine's physical and cultural heritage. Additional information on all six component units can be found in
Note 1 in the notes to the financial statements.
The annual budget serves as the foundation for the City of Grapevine's financial planning and control. The
budget is prepared by fund, and department (e.g. police). Department heads may transfer resources within a
department as they see fit. Transfers between departments,however,need approval from the governing Council.
The City is located in the center of the Dallas/Fort Worth metropolitan complex, 21 miles northwest of downtown
Dallas and 19 miles northeast of downtown Fort Worth. Three major freeways, State Hwy 114, State Hwy 121,
and Interstate Hwy 635, intersect in the heart of Grapevine, providing excellent access to Dallas, Fort Worth and
the area shopping, entertainment and employment centers. The City is located in Northeast Tarrant County and is
home to the Dallas/Fort Worth International Airport. Two-thirds of the airport,including all terminal buildings,is
located within Grapevine city limits. The City is approximately 35 square miles and based on the 2010 Census
serves a population of 47,000.
Local Economy
The City addressed several challenges due to modest increases in revenue resources the past few years. During
FY12 we experienced a sales tax receipt increase of 2.4% and hotel occupancy tax receipts increased by 1.2%
over the previous year. Though we remain cautiously optimistic these trends will continue, we continue to
monitor sales tax collections closely. We also have seen increases in the TMRS contribution rates, a decrease in
insurance claim costs with our new third party insurance provider and we expect these trends to continue next
year,we also expect a slight increase in revenue resources.
Traffic congestion continues to be a challenge as the DFW Connector project is still underway with completion
scheduled sooner than originally planned. At the end of December 2012, this major construction project is
scheduled to be completed in the summer of 2013. To assist local vendors who have been impacted by this
construction project, the City and the Chamber of Commerce continues to support the incentive program called
"Unwind the Vine" that draws customers by winding their way through the construction to shop and dine at these
business locations.
Long-term Financial Planning
The City Council establishes their long term financial goals each year as a part of the budget process. The long-
range financial forecasting is not intended to be a budget, or a proposed plan. Instead, it sets the stage for the
budget process, assisting both the Council and staff in establishing priorities and allocating resources
appropriately. For fiscal year 2012, the Council continued with the following goals:
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(1) Maintain financial stability and strong fiscal management
(2) Sustain existing programs at high service levels
(3) Provide a safe and secure community
(4) Address future transportation needs
(5) Continue to enhance tourism development
(6) Invest in "Quality of Life" capital projects
The established goals of the Council for the long-term are a continuation of the goals set in fiscal year 2007. The
three goals established by the Council were: 1) long-range financial health of the General Fund, 2) improve the
employee compensation plan, and 3) stabilize the City's economic base. The long-range financial forecast is
based on assumptions regarding the regional and state economy over the next three years.
For FY 2012, the City maintained financial stability and a strong fiscal management. The General, Debt Service,
Utility Enterprise, and Stormwater Drainage funds ended FY 2012 with fund balances that meet or exceed their
requirement. The City maintained existing services, transferred $3,000,000 to the Quality of Life CIP Fund and
$1,500,000 to the Special Revenue —Crime District. In meeting the goal to provide a safe, secure community, the
Police responded to 67,634 calls for service, Fire responded to 5,135 calls for service and 3,026 ambulance runs.
Addressing future transportation needs, the staff held meetings to discuss the design and land-use plans for the
commuter rail station and surrounding properties. The station will be located at Main Street and Dallas Road.
Major Initiatives and Developments
Grapevine continues to build its reputation as a top notch tourist and attraction destination. In 2012, Merlin
Entertainment-Legoland Discovery Center at Grapevine Mills Mall constructed a 6,500 square foot expansion to
accommodate a children's driving attraction. Grapevine Mills Mall is also planning a$40 million remodel and is
focusing on attracting a more upscale mix of retail and recent new additions to Grapevine Mills Mall include
H&M, Coach,Under Armor and others.
Grapevine also continues to be very active in economic development initiatives. In FY 2012, several projects
were completed, with plans for additional developments next year. Due to the City's high median incomes,
location to major highways and the DFW airport, and a large tourist industry, the City has positive attributes for
developers. Management seeks to remain competitive through selective and targeted recruitment efforts. The
City welcomed several new restaurants in 2012,including Eatzi's Restaurant which opened in a remodeled vacant
Luby's building; Pappadeaux Seafood Kitchen, Jake's restaurant, Grimaldi's Pizza, Mi Dia From Scratch and
Jimmy John's Sandwich Shop.
There were several new, remodel and expansion commercial developments during 2012. One Star Retail and
Office opened in a remodeled historic replica existing building on Main Street which attracted a restaurant,
convenience store and other smaller retailers. Golf Galaxy opened in a remodeled vacant Albertson's building.
The Towers of Grapevine located at the northeast corner of State Highway 114 and William D. Tate Avenue had a
redevelopment project that involved the demolition of several buildings and the construction of a 13,000 square
foot retail building. A 301-unit Marriott Courtyard/Towneplace Suites is under construction on the Silverlake
Crossing site at Bass Pro Court and State Highway 26. A new 312 multi-family and 36 single-family residential
unit was permitted and is currently under construction. Baylor Grapevine Hospital has a $100 million expansion
underway that adds a new patient tower, and expansions in operation rooms, operating suites and other medical
services.
Recognized nationally as a tourist and recreation destination, the Grapevine Shuttle provides local transportation
of visitors from Grapevine hotels to the historic downtown area, restaurants, and retail establishments. The new
Convention&Visitors Bureau(CVB) office was officially dedicated and opened on May 18, 2012.
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In November 2012, the Grapevine citizens authorized to issue and sell general obligation bonds of the City. This
will provide funding for the construction of a new Public Safety Building that will house both police and court
and replace the current building location on Dallas Road. The new funding will also involve constructing,
improving, equipping, and renovation to and expansion of the existing Community Activities Center which will
include a senior component.
Awards and Acknowledgements
The City Charter requires an annual audit of the books of account, financial records, and transactions of all
administrative departments of the City. The City Charter specifies that independent accountants selected by the
City Council conduct such audits. Pattillo, Brown & Hill, LLP was selected by the City Council to conduct this
year's audit. The independent auditor's report on the basic financial statements is included in the financial section
of this report.
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 for its comprehensive annual financial report
("CAFR") for the fiscal year ended September 30, 2011. This was the 25"' consecutive year that the City has
received this prestigious award. In order to be awarded a Certificate of Achievement, the City published an easily
readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues
to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to
determine its eligibility for another certificate.
In addition, the City of Grapevine has also received the GFOA's Distinguished Budget Presentation Award for its
annual budget document for the fiscal year ended September 30, 2011. This is the 25"' consecutive year that the
City has received this prestigious award. In order to qualify for the Distinguished Budget Presentation Award, the
City's budget document was judged proficient in several categories including policy documentation, financial
planning, and organization.
The preparation of this report would not have been possible without the efficient and dedicated services of the
entire finance division staff. We would also like to express our appreciation to all members of the City who
assisted and contributed to the preparation of this report.
We would like to thank the members of the City Council for their interest and support in planning and conducting
the financial operations of the City in a responsible and professional manner.
Respectfully submitted,
/-WwImw'
Karen L. Walker
Controller
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Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Grapevine
Texas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2011
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports(CAFRs)achieve the highest
standards in government accounting
and financial reporting.
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President
Executive Director
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City of Grapevine ENA #I
Organization Chart
Citizens
of
6np" 'no
Mayan&Council"
�CityAttorney Boards and .
Commissions "
Animal Shelter Advisory Board
Board of Zoning Adjustments
Municipal;Court ! Building Board of Appeals
,Jude Convention&Visitors Bureau Advisory Board
Golf Course Advisory Board
Grapevine Heritage Foundation
Health Officer Historic Preservation Commission
Housing Authority Board of Commissioners
Library Board
Parks and Recreation Board
City"Manager Planning and Zoning Commission
Senior Citizens Advisory Board
Teen Court Advisory Board
Grapevine 4B Economic Development Board
Assistant City
Mana er
Administrative Et Works Convention&'
Parks� e�reation' Public orks
Services visitors Bureau "
Administration Administration Administration Sales,Promotions&Administration
Accounting Senior Activities Center Engineering Heritage Programs&Preservation
Purchasing Park Maintenance Streets Facilities
Human Resources Recreation Traffic Operations Festivals&New Vintage
Municipal Court Aquatics Environmental Services Grapevine Vintage Railroad
Risk Management Athletics Programs Facility Services Tourism Incentives
Utility Billing Recreation Programs Fleet Services Sister Cities
Grapevine Golf Course Community Activities Center Water Distribution&Treatment Wine Pouring Society
Grapevine Housing Authority Lake Parks Wastewater Collection&Treatment Visitor Shuttle System
Debt Service Keep Grapevine Beautiful Stormwater Drainage Grapevine Township Revitalization
4B Transit&Economic Devl.
Development,
Police City Secretary
'Services,,
Administration Administration Administration Administration
Animal Control Prevention Building Inspections
Uniform Operations Operations Planning
Criminal Investigations Training
Technical Services Emergency Management
Commercial Vehicle Enforcement
Information Library
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CITY OF GRAPEVINE, TEXAS
ADMINISTRATIVE OFFICALS
Bruno Rumbelow
City Manager
Jennifer Hibbs Jodi Brown
Assistant City Manager City Secretary
John F. Boyle, Jr. David Florence
City Attorney Municipal Court Judge
John F. McGrane Stan Laster
Director ofAdministrative Services Director ofPublic Works
Scott Williams Steve Bass
Director of Development Services Fire Chief
Edward Salame Janis Roberson
Chief of Police Library Director
Douglas M. Evans Russell E. Pulley
Director of Parks and Recreation Director of Golf
P.W. McCallum Carolyn Van Duzee
Executive Director, Convention & Visitors Bureau Personnel Director
Karen L. Walker Robert Smeby
Controller Purchasing Agent
Gary W. Livingston
Budget Manager
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FINANCIAL SECTION
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PATTILLO, BROWN & HILL, I,_L.P.
CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and
Members of the City of Council
City of Grapevine, Texas
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the discretely presented component unit, each major fund and the aggregate
remaining fund information of the City of Grapevine, Texas (the "City"), 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's 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 the 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
discretely presented component unit, each major fund and the aggregate remaining fund information of
the City 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
January 25, 2013, on our consideration of the City's internal control over financial reporting and our
tests of its compliance with certain provisions of laws, regulations, contracts, grants, 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 our financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in conjunction with
this report in considering the results of our audit.
1
401 WEST HIGHWAY 6■P.O.BOX 20725■WACO,TX 76702-0725■(254)772-4901■FAX:(254)772-4920■www.pbhcpa.com
AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■HILLSBORO,TX(254)582-2583
TEMPLE,TX(254)791-3460■ALBUQUERQUE,NM(505)266-5904
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Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis, the Schedule of Revenues, Expenditures and Changes in Fund
Balance—Budget and Actual—General Fund, the Schedule of Revenues, Expenditures and Changes in
Fund Balance—Budget and Actual—Hotel Occupancy Tax Fund, the Schedule of Revenues,
Expenditures and Changes in Fund Balance—Budget and Actual—Crime District Fund, the Schedule of
Funding Progress for Participation in the Texas Municipal Retirement System, and the Schedule of
Funding Progress – Post-Retirement Health Care Plan be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which consisted
of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We do
not express an opinion or provide any assurance on the information because the limited procedures do
not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's financial statements as a whole. The introductory section, combining
and individual nonmajor fund financial statements and schedules, and statistical section are presented for
purposes of additional analysis and are not a required part of the financial statements. The
accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional
analysis as required by U. S. Office of Management and Budget Circular A-133, Audits of States, Local
Governments, and Nonprofit Organizations, and is also not a required part of the financial statements.
The combining and individual fund statements and schedules and the Schedule of Expenditures of
Federal Awards 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
accounting and other records used to prepare the financial statements or to the financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in
the United States of America. In our opinion, the information is fairly stated in all material respects in
relation to the financial statements as a whole. The introductory and statistical sections have not been
subjected to the auditing procedures applied in the audit of the basic financial statements and,
accordingly, we do not express an opinion or provide any assurance on it.
PCU4&0
January 25, 2013
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MANAGEMENT'S
DISCUSSION AND ANALYSIS
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Management's Discussion and Analysis
As management of the City of Grapevine (the "City"), we offer readers of the City's financial statements
this narrative overview and analysis of the financial activities of the City for the fiscal year ended
September 30, 2012.
FINANCIAL HIGHLIGHTS
• The assets of the City exceeded its liabilities at the close of the most recent fiscal year by
$264,390,736 (net assets). Of this amount, $24,999,587 of(unrestricted net assets) may
be used to meet the City's ongoing obligations to citizens and creditors.
• At the end of the current fiscal year, unassigned fund balance for the General Fund was
$11,741,652 or 30% of total General Fund expenditures.
• The City transferred$3,000,000 to the Quality of Life CIP Fund.
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 is improving or deteriorating.
The statement of activities presents information showing how the City's net assets changed during the
fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the
change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported
in this statement for some items that will only result in cash flows in future fiscal periods (e.g.,
uncollected taxes and earned but unused compensated absences).
Both of the government-wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenues (governmental activities) from other functions that
are intended to recover all or a significant portion of their costs through user fees and charges (business-
type activities). The governmental activities of the City include general government, public safety,
culture and recreation,public works, transportation, and intergovernmental. The business-type activities
of the City include water and sewer and the golf course.
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The government-wide financial statements include not only the City itself (known as the primary
government), but also include the Heritage Foundation and the Tax Reinvestment Zones Numbers One
and Two, which are legally separate entities. A blended presentation has been used to report the
financial information for the Tax Reinvestment Zones Numbers One and Two component units. Three
new blended component units were established April 1, 2007. The Crime Control and Protection
District (Crime District) was established to account for the accumulation and use of sales tax proceeds
designated for crime reduction programs. The Grapevine 4B Economic Development Corporation
consists of two funds. The 4B Transit Fund accounts for local sales tax used to fund Grapevine's
participation in the commuter rail development project with the Fort Worth Transit Authority (The "T").
The 4B Economic Development Fund accounts for the local sales tax used to stimulate the local
economy, development, and redevelopment. The Heritage Foundation is a discretely presented
component unit and is presented as a separate column in the government-wide financial statements.
Fund financial statementsA fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. The City, like other state
and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements. All of the funds of the City can be divided into three categories: governmental
funds, proprietary funds, and fiduciary funds. The fund financial statements for governmental funds,
proprietary funds, and fiduciary funds can be found in the financial section of this report.
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 current sources and uses of
spendable resources, as well as on balances of spendable resources available at the end of the fiscal year.
Such information may be useful in evaluating a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, the reader may better understand the long-term impact of the City's near-term financing
decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues,
expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison
between governmental funds and governmental activities.
The City maintains 20 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, Special Revenue Fund—Hotel Occupancy Tax, Special Revenue
Fund—Crime District, Special Revenue Fund–Grant Fund, Debt Service Fund, Debt Service Fund—Tax
Reinvestment Zone Number One (TIF 41), all of which are considered to be major funds. Data from the
other 14 governmental funds are combined into a single, aggregate presentation. Individual fund data for
each of these non-major governmental funds is provided in the form of combining statements elsewhere in
this report.
Proprietary funds—There are two types of Proprietary funds, Enterprise Funds and Internal Service
Funds. The City maintains one type of proprietary fund, enterprise funds. Enterprise funds are used to
report the same functions presented as business-type activities in the government-wide financial
statements. The City uses enterprise funds to account for its Water, Sewer, and Lake Enterprise. The
City has no Internal Service Funds.
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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 Fund and the Lake Enterprise Fund (golf course), which are both major funds.
Fiduciary funds—Fiduciary funds are used to account for resources held for the benefit of parties
outside the City. Fiduciary funds are not reflected in the government-wide financial statements because
the resources of those funds are not available to support the City's own programs. The accounting used
for fiduciary funds is similar to the accounting used for proprietary funds. Agency Funds are one of the
City's fiduciary fund types. The agency funds account for funds held in an agency capacity for the
Industrial Development Corporation and the Police Department entitled "Police Department Case
Settlement." The second type of fiduciary fund is the Grapevine Health Reimbursement Account
(HRA), a trust fund. See Note 1 for additional information pertaining to fiduciary funds.
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.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Analysis of the City's Financial Position
As noted earlier, net assets may serve over time as a useful indicator of a government's financial
position. As of September 30, 2012, the City's assets exceeded liabilities by $264,390,736.
The largest portion of the City's net assets ($158,513,447) reflects its investment in capital assets (e.g.,
land, building, equipment, improvements, construction in progress, and infrastructure), less any debt
used to acquire capital assets still outstanding. The City uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the City's
investment in 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 net assets represents resources that are subject to external restrictions
on how they may be used. Restricted net assets are for (1) use of impact fees for construction purposes
$7,808,747 and (2) debt service $29,963,361 (3) public safety $1,077,565 (4) economic development
$35,553,085 (5) transportation $368,831, (6) culture and recreation $152,167, and (7) tourism
$5,953,946. Unrestricted net assets of$24,999,587 are 9% of all net assets and may be used to meet the
City's ongoing obligations to citizens and creditors.
For fiscal year-end 2012, the City 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.
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Condensed Schedule of Net Assets
Governmental Activities Business-type Activities Totals
2012 2011 2012 2011 2012 2011
Current and other assets $ 131,713,324 $ 119,238,229 $ 27,392,403 $ 26,542,066 $ 159,105,727 $ 145,780,295
Capital assets 169,132,206 171,461,146 81,456,580 82,813,060 250,588,786 254,274,206
Total assets 300,845,530 290,699,375 108,848,983 109,355,126 409,694,513 400,054,501
Long-term liabilities 113,151,357 120,703,301 15,366,748 16,714,421 128,518,105 137,417,722
Other liabilities 12,973,521 13,793,584 3,812,151 3,660,373 16,785,672 17,453,957
Total liabilities 126,124,878 134,496,885 19,178,899 20,374,794 145,303,777 154,871,679
Net assets:
Invested in capital assets,
net ofrelated debt 88,342,250 84,069,474 70,171,197 70,771,261 158,513,447 154,840,735
Restricted 71,908,953 61,711,766 8,968,749 7,132,993 80,877,702 68,844,759
Unrestricted 14,469,449 10,421,250 10,530,138 11,239,850 24,999,587 21,661,100
Total net assets $ 174,720,652 $ 156,202,490 $ 89,670,084 $ 89,144,104 $ 264,390,736 $ 245,346,594
Analysis of the City's operations
Governmental activities — Governmental activities increased the City's net assets by $18,518,162.
Significant reasons for this increase are as follows:
Overall total revenues for fiscal year 2012 were higher by $2,987,308 from the previous year, and
though charges for services were slightly down, we experienced an increase in sales and property tax
collections as well as the hotel occupancy tax. Overall the City's operating expenses were decreased by
$1,722,243, though the general fund and transportation expenses were down, public safety, cultural and
recreation, public works and intergovernmental were higher than the previous year. Total capital assets
overall decreased due to deletions and depreciation, but several major capital additions were added due
to the completion and opening of the new Convention and Visitors Bureau headquarters, the completion
of two new public downtown parking lots, operating equipment purchases and the Meadowmere Boat
Ramp Improvements. Long term liabilities continued to decrease as we continue to cash fund operating
equipment purchases and pay off long-term debt.
Business-type activities — Business-type activities increased the City's net assets by $525,980. The
increase is primarily due to the continued improvements made to the Water and Sewer system and
reduction in long-term liabilities.
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The following table provides a summary of the City's operations for the year ended September 30, 2012
and 2011.
CITY OF GRAPEVINE'S CHANGES IN NET ASSETS
Governmental Activities Business-type Activities Totals
2012 2011 2012 2011 2012 2011
Revenues:
Program revenues:
Charges for services $ 17,799,878 $ 18,171,571 $ 23,560,412 $ 24,029,590 $ 41,360,290 $ 42,201,161
Operating grants
and contributions 1,124,029 1,212,344 - - 1,124,029 1,212,344
Capital grants
and contributions 810,155 1,302,301 810,155 1,302,301
General revenues:
Property taxes 32,048,214 29,559,074 32,048,214 29,559,074
Hotel occupancy taxes 12,326,427 12,104,905 12,326,427 12,104,905
Sales taxes 46,932,217 45,571,831 46,932,217 45,571,831
Mixed beverage taxes 1,051,264 1,222,767 1,051,264 1,222,767
Franchise taxes 6,355,695 6,401,305 - - 6,355,695 6,401,305
Investment earnings 286,292 338,108 67,957 74,634 354,249 412,742
Miscellaneous 170,318 32,975 - - 170,318 32,975
Total revenues 118,904,489 115,917,181 23,628,369 24,104,224 142,532,858 140,021,405
Expenses:
General government 18,370,262 22,525,693 - - 18,370,262 22,525,693
Public safety 28,263,804 27,587,685 28,263,804 27,587,685
Culture and recreation 27,953,844 26,673,427 27,953,844 26,673,427
Public works 11,056,248 10,562,631 11,056,248 10,562,631
Transportation 7,788,997 7,901,336 7,788,997 7,901,336
Intergovernmental 4,040,040 3,394,189 4,040,040 3,394,189
Interest on long-term debt 4,589,793 5,140,270 - - 4,589,793 5,140,270
Water and sewer - - 18,372,558 18,972,115 18,372,558 18,972,115
Lake enterprise - - 3,053,170 3,061,829 3,053,170 3,061,829
Total expenses 102,062,988 103,785,231 21,425,728 22,033,944 123,488,716 125,819,175
Increases in net assets
before transfers 16,841,501 12,131,950 2,202,641 2,070,280 19,044,142 14,202,230
Transfers 1,676,661 1,638,119 ( 1,676,661) ( 1,638,119) -
Change in net assets 18,518,162 13,770,069 525,980 432,161 19,044,142 14,202,230
Net assets,beginning 156,202,490 142,432,421 89,144,104 88,711,943 245,346,594 231,144,364
Net assets,ending $ 174,720,652 $ 156,202,490 $ 89,670,084 $ 89,144,104 $ 264,390,736 $ 245,346,594
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
Governmental funds — As of the end of the current fiscal year, the City of Grapevine's governmental
funds reported combined ending fund balances of $115,249,737, an increase of $12,187,827 compared
with the prior year. Unassigned fund balance is $9,964,912 (9%), which is available for spending at the
City's discretion. The remainder of fund balance is not available for new spending because it has
already been (1) classified as nonspendable $685,533 (2) restricted for debt service, capital projects,
public safety, economic development, transportation, tourism, and culture and recreation programs
$89,557,899 (3) committed for stormwater drainage and public arts $3,779,664 (4) or assigned for
capital projects and culture and recreation programs $11,261,729.
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Significant changes in fund balances of major funds are as follows:
General Fund — The fund balance increased $2,799,685 for FY 2012. The General Fund transferred
$3,000,000 to the Quality of Life Fund (nonmajor fund) for CIP projects designated by the City Council.
The hotel occupancy and sales tax increased the fund by $1,581, 908 and with new assessments added,
property tax increased fund revenues by $2,489,140. Overall operating expenditures decreased from the
previous year as the city continues to move towards energy efficient equipment and programs that assist
in reducing health care costs and insurance risk.
Special Revenue — Hotel Occupancy Tax Fund — Tax revenues increased $221,522 due to a slight
increase in occupancy rates at the hotels over the prior year. Due to the increase in tax revenue and an
increase in operational costs of$1,379,913 the fund balance increased by $1,097,605 from the previous
year.
Special Revenue — Crime District Fund — The Crime District Fund had increased sales tax revenues of
$310,068; however, operating expenditures increased by $708,556 with the final budget increased the
fund balance by $259,658. The General Fund transferred a net $1,500,000 to the Crime District Fund in
FY 2012 and the ending fund balance for FY 2012 was $415,406.
Special Revenue—Grant Fund—The decrease in the fund balance of$115,200 was primarily due to the
timing of grant funding. Payments from granting agencies were not received within the availability
period set by the City, therefore the funding was deferred. The City also received less grant funding in
FY 2012 than it did in FY 2011. Grant expenditures decreased from $1,447,595 in FY 2011 to $999,749
in FY 2012.
Debt Service Fund — This fund has a total fund balance of $12,252,396 which is restricted for the
payment of debt service. The $2,960,283 increase in fund balance was due to property tax revenue
collections.
Debt Service Fund — TIF 41 — The Debt Service had a total fund balance of $32,493,685. The
$1,978,564 increase in fund balance was primarily due to increased property tax collections, while
expenditures for economic development, intergovernmental expenditures, and transfers out also
increased for FY 2012.
Proprietary Funds —
The City of Grapevine's proprietary funds provide the same type of information found in the government-
wide financial statements, but in more detail. Factors concerning the finances of the proprietary funds
have already been addressed in the discussion of the City of Grapevine's business-type activities.
General Fund Budgetary Highlights
Significant amendment changes:
The government general fund transfers out increased to $8,312,138 from the General Fund to Capital
Equipment, Quality of Life, Special Revenue Fund — Crime District (CCPD) and Permanent
Capital/Street Maintenance. Overall the General Government department operating expenditures
decreased from the previous year. The Fleet Services expenditure budget was increased by $102,841
due to increased vehicle maintenance and repairs costs, General Administration expenditure budget was
increased by $61,000 for additional training costs associated with Grapevine Leadership and Values
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Training, and Park Maintenance expenditure budget was increased by $93,700 for operating costs
associated with the operations of the two new spray parks.
Significant budget variances:
For the year ended September 30, 2012, revenues exceeded final budget in the General Fund due to tax
receipts being greater than anticipated and increased revenue for services provided and actual
expenditures were lower than budgeted.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Major capital asset events during the current fiscal year included the following amounts:
The City completed and dedicated the new Convention and Visitors Headquarters building expending
$527,245 in FY 2012.
The City completed two new downtown parking areas expending $212,432 in FY 2012.
Capital assets—The City's investment in capital assets for its governmental and business-type activities
as of September 30, 2012, amounted to $250,588,786 (net of accumulated depreciation). This
investment in capital assets includes land, buildings, improvements, machinery and equipment,
infrastructure, intangible assets and construction in progress. The total net decrease in the City's
investment in capital assets for the current fiscal year was $3,849,192.
CITY OF GRAPEVINE'S CAPITAL ASSETS AT YEAR-END
Governmental Activities Business-type Activities Totals
2012 2011 2012 2011 2012 2011
Land and improvements $ 47,821,876 $ 47,821,876 $ 1,643,545 $ 1,643,545 $ 49,465,421 $ 49,465,421
Construction in progress 3,725,009 14,971,571 2,122,792 824,891 5,847,801 15,796,462
Buildings 33,115,271 23,089,510 839,774 890,536 33,955,045 23,980,046
Improvements other
than buildings 18,786,261 17,129,134 2,243,878 2,609,560 21,030,139 19,738,694
Machinery and equipment 9,328,850 8,009,318 509,853 331,619 9,838,703 8,340,937
Water storage rights - - 146,683 163,772 146,683 163,772
Infrastructure 56,354,939 60,439,737 73,950,055 76,512,909 130,304,994 136,952,646
Total $ 169,132,206 $ 171,461,146 $ 81,456,580 $ 82,976,832 $ 250,588,786 $ 254,437,978
Additional information on the City's capital assets can be found in Note 5 in the notes to the financial
statements.
Long-term debt—At the end of the current fiscal year, the City had total bonded debt outstanding of
$109,082,774. Of this amount, $108,292,774 comprises debt backed by the full faith and credit of the
City and $790,000 represents bonds secured solely by specific revenue sources from the proprietary
funds.
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CITY OF GRAPEVINE'S OUTSTANDING BONDS AND NOTES PAYABLE AT YEAR-END
Governmental Activities Business-type Activities Totals
2012 2011 2012 2011 2012 2011
General obligation bonds $ 40,355,000 $ 45,335,000 $ 12,510,000 $ 14,100,000 $ 52,865,000 $ 59,435,000
Certificates of obligation 50,794,060 55,472,663 - - 50,794,060 55,472,663
Revenue bonds - - 790,000 1,035,000 790,000 1,035,000
Notes payable 3,604,730 4,851,986 - - 3,604,730 4,851,986
Premium on bonds issued 3,787,206 4,215,793 666,750 728,276 4,453,956 4,944,069
Discount on bonds issued ( 24,159) ( 25,258) - - ( 24,159) ( 25,258)
Deferred loss on refunding ( 2,896,959) ( 3,260,068) ( 503,854) ( 583,419) ( 3,400,813) ( 3,843,487)
$ 95,619,878 $ 106,590,116 $ 13,462,896 $ 15,279,857 $ 109,082,774 $ 121,869,973
Additional information on the City's long-term debt can be found in Note 8 of the notes to the financial
statements.
CONTACTING THE CITY'S FINANCIAL MANAGEMENT
The financial report is designed to provide our citizens, customers, investors and creditors with a general
overview of the City's finances. If you have questions about this report or need additional information,
contact the Finance Division, City of Grapevine, 200 S. Main Street, Grapevine, Texas 76051.
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BASIC
FINANCIAL STATEMENTS
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CITY OF GRAPEVINE, TEXAS
STATEMENT OF NET ASSETS
SEPTEMBER 30,2012
Component
Primary Government Unit
Governmental Business-type Heritage
Activities Activities Total Foundation
ASSETS
Cash and investments $ 113,038,028 $ 13,299,600 $ 126,337,628 $ 478,006
Receivables,net
Taxes 12,135,543 - 12,135,543 -
Accounts 2,478,910 2,712,256 5,191,166 -
Pledges - - - 38,875
Internal balances 925,925 ( 925,925) -
Due from primary government - - - 11,362
Due from other governments 1,383,516 - 1,383,516 -
Inventory 458,720 44,247 502,967
Accrued interest 50,379 12,176 62,555 227
Prepaid expenses 198,189 - 198,189
Restricted assets:
Cash and investments - 12,064,900 12,064,900 -
Capital assets(net of accumulated depreciation)
Non-depreciable 51,546,885 3,766,337 55,313,222 450,067
Depreciable 117,585,321 77,690,243 195,275,564 1,176,416
Deferred charges(net of accumulated amortization) 1,044,114 185,149 1,229,263 -
Total assets 300,845,530 108,848,983 409,694,513 2,154,953
LIABILITIES
Accounts payable 7,170,981 2,338,754 9,509,735 1,356
Contracts and retainage payable 40,333 88,680 129,013 -
Accrued and other liabilities 1,699,474 107,586 1,807,060
Developer deposits 1,529,613 - 1,529,613
Interest payable 497,331 63,173 560,504
Due to component unit 11,362 - 11,362
Unearned revenue 2,024,427 339,256 2,363,683
Customer deposits - 874,702 874,702
Noncurrent liabilities:
Due within one year:
Compensated absences 720,146 57,350 777,496
Notes payable 1,273,211 - 1,273,211
Bonds payable 9,810,142 1,935,000 11,745,142
Sales tax obligation 201,656 - 201,656
Due in more than one year:
Compensated absences 2,160,440 172,050 2,332,490
Notes payable 2,331,519 - 2,331,519
Bonds payable 82,205,006 11,527,896 93,732,902
Sales tax obligation 945,803 - 945,803
Net OPBB obligation 8,861,731 1,168,697 10,030,428
Net pension obligation 4,641,703 505,755 5,147,458 -
Total liabilities 126,124,878 19,178,899 145,303,777 1,356
NET ASSETS
Invested in capital assets,net ofrelated debt 88,342,250 70,171,197 158,513,447 1,626,483
Restricted for:
Use of impact fees - 7,808,747 7,808,747 -
Debt service 28,803,359 1,160,002 29,963,361
Public safety 1,077,565 - 1,077,565
Economic development 35,553,085 35,553,085
Transportation 368,831 368,831
Culture and recreation 152,167 152,167
Tourism 5,953,946 - 5,953,946 -
Unrestricted 14,469,449 10,530,138 24,999,587 527,114
Total net assets $ 174,720,652 $ 89,670,084 $ 264,390,736 $ 2,153,597
The accompanying notes are an integral part of these financial statements.
11
L..EM # I
CITY OF GRAPEVINE, TEXAS
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30,2012
Program Revenue
Operating Capital Grants
Charges for Grants and and
Functions/Programs Expenses Services Contributions Contributions
Primary government:
Governmental activities:
General government $ 18,370,262 $ 2,547,110 $ 440,508 $ 389,896
Public safety 28,263,804 3,735,541 510,247 -
Culture and recreation 27,953,844 10,099,266 173,274 21,728
Public works 11,056,248 1,417,961 - 398,531
Transportation 7,788,997 - - -
Intergovernmental 4,040,040 - - -
Interest on long-term debt 4,589,793 - - -
Total governmental activities 102,062,988 17,799,878 1,124,029 810,155
Business-type activities:
Water and sewer 18,372,558 20,481,210 - -
Lake Enterprise 3,053,170 3,079,202 - -
Total business-type activities 21,425,728 23,560,412 - -
Total primary government $ 123,488,716 $ 41,360,290 $ 1,124,029 $ 810,155
Component unit:
Heritage Foundation $ 143,247 $ 2,781 $ 26,187 $ 34,076
General revenues:
Taxes:
Property
Franchise
Hotel occupancy
Sales
Mixed beverage
Investment income
Miscellaneous
Transfers
Total general revenues and transfers
Change in net assets
Net assets-beginning
Net assets-ending
The accompanying notes are an integral part of these financial statements.
12
L..ENA # I
Net(Expense)Revenue and Changes in Net Assets Component
Primary Government Unit
Governmental Business-type Heritage
Activities Activities Total Foundation
$( 14,992,748) $ - $( 14,992,748) $ -
( 24,018,016) - ( 24,018,016) -
( 17,659,576) - ( 17,659,576) -
( 9,239,756) - ( 9,239,756) -
( 7,788,997) - ( 7,788,997) -
( 4,040,040) - ( 4,040,040) -
( 4,589,793) - ( 4,589,793) -
( 82,328,926) - ( 82,328,926) -
- 2,108,652 2,108,652 -
- 26,032 26,032 -
- 2,134,684 2,134,684 -
( 82,328,926) 2,134,684 ( 80,194,242) -
- - - ( 80,203)
32,048,214 - 32,048,214 -
6,355,695 - 6,355,695 -
12,326,427 - 12,326,427 -
46,932,217 - 46,932,217 -
1,051,264 - 1,051,264 -
286,292 67,957 354,249 2,183
170,318 - 170,318 6,931
1,676,661 ( 1,676,661) - -
100,847,088 ( 1,608,704) 99,238,384 9,114
18,518,162 525,980 19,044,142 ( 71,089)
156,202,490 89,144,104 245,346,594 2,224,686
$ 174,720,652 $ 89,670,084 $ 264,390,736 $ 2,153,597
13
L..EM # I
CITY OF GRAPEVINE, TEXAS
BALANCESHEET
GOVERNMENTAL FUNDS
AS OF SEPTEMBER 30,2012
Special Revenue
Hotel Crime
General Occupancy Tax District Grant Debt Service
ASSETS
Cash and investments $ 8,276,143 $ 6,394,598 $ $ 142 $ 12,208,612
Receivables(net of allowances for uncollectibles)
Accounts 1,652,633 247,665 -
Taxes 4,633,598 1,020,110 1,837,794 540,787
Accrued interest 5,411 2,268 - 5,865
Inventory 440,667 1,031 -
Due from other funds 3,742,976 479,158
Advances to other funds 28,624 - -
Due from other governments 5,302 - 1,243,175
Prepaid items 184,015 14,174 - - -
Total assets $ 18,969,369 $ 8,159,004 $ 1,837,794 $ 1,243,317 $ 12,755,264
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 1,985,676 $ 1,970,339 $ 284,999 $ 95,213 $
Accrued liabilities 1,382,679 90,226 212,555 -
Due to other funds - - 924,834 1,132,671
Due to component unit 11,362 - -
Advances from other funds - 28,624 - -
Deferred revenue 3,206,056 89,302 814,967 502,868
Contracts and retainage payable - - - -
Developer deposits - - - - -
Total liabilities 6,574,411 2,189,853 1,422,388 2,042,851 502,868
Fund balances:
Nonspendable:
Inventory 440,667 1,031 - - -
Prepaid items 184,015 14,174
Advances to other funds 28,624 - -
Restricted for:
Debt service - 12,252,396
Capital projects - -
Public safety 415,406
Economic development -
Transportation
Culture and recreation -
Tourism 5,953,946
Committed for:
Stormwater drainage operations -
Public arts
Assigned for:
Capital projects
Culture and recreation - -
Unassigned 11,741,652 - - ( 799,534) -
Total fund balances 12,394,958 5,969,151 415,406 ( 799,534) 12,252,396
Total liabilities and fund balances $ 18,969,369 $ 8,159,004 $ 1,837,794 $ 1,243,317 $ 12,755,264
The accompanying notes are an integral part of these financial statements.
14
L..ENA # I
Debt Service
Nonmajor Total
Governmental Governmental
TIF#1 Funds Funds
$ 31,482,278 $ 54,676,255 $ 113,038,028
- 578,612 2,478,910
1,056,548 3,046,706 12,135,543
15,111 21,724 50,379
- 17,022 458,720
- 4,222,134
- 28,624
135,039 1,383,516
- - 198,189
$ 32,553,937 $ 58,475,358 $ 133,994,043
$ $ 2,834,754 $ 7,170,981
14,014 1,699,474
1,238,704 3,296,209
- 11,362
- - 28,624
60,252 294,265 4,967,710
- 40,333 40,333
- 1,529,613 1,529,613
60,252 5,951,683 18,744,306
- 17,022 458,720
- 198,189
- - 28,624
9,528,975 7,076,703 28,858,074
- 17,654,483 17,654,483
- 662,159 1,077,565
22,964,710 12,528,123 35,492,833
- 368,831 368,831
152,167 152,167
- 5,953,946
3,179,406 3,179,406
600,258 600,258
10,626,784 10,626,784
634,945 634,945
( 977,206) 9,964,912
32,493,685 52,523,675 115,249,737
$ 32,553,937 $ 58,475,358 $ 133,994,043
15
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L..EM # I
CITY OF GRAPEVINE, TEXAS
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET ASSETS
AS OF SEPTEMBER 30,2012
Total fund balances-governmental funds balance sheet $ 115,249,737
Amounts reported for governmental activities in the Statement of Net Assets are
different because:
Capital assets used in governmental activities are not reported in the funds. 169,132,206
Certain receivables will not be collected soon enough to pay for the current
period's expenditures and are,therefore,deferred in the funds. 2,943,283
Accrued bond interest is not due and payable in the current period and
therefore is not reported in the funds. ( 497,331)
Long-term liabilities, including bonds payable,are not due and payable in the
current period and therefore are not reported in the funds. Long-term
liabilities consist of:
Bonds payable ( 92,015,148)
Notes payable ( 3,604,730)
Compensated absences ( 2,880,586)
Sales tax obligation ( 1,147,459)
Net OPEB obligation ( 8,861,731)
Net pension obligation ( 4,641,703)
Deferred charges recognized on Statement of Net Assets, not recognized in
governmental balance sheet: Deferred bond issue costs 1,044,114
Net assets of governmental activities $ 174,720,652
The accompanying notes are an integral part of these financial statements.
16
L..EM # I
CITY OF GRAPEVINE, TEXAS
STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30,2012
Special Revenue
Hotel Crime
General Occupancy Tax District Grant Debt Service
REVENUES
Property tax $ 8,764,524 $ $ $ $ 10,950,313
Hotel occupancy tax - 12,326,427 - -
Sales tax 24,007,859 - 11,286,914
Mixed beverage tax 1,051,264 -
Franchise tax 6,355,695
Licenses and permits 1,541,902 -
Intergovernmental 125,415 - 243 785,869
Charges for services 3,498,239 6,146,246 -
Fines and forfeitures 1,970,453 - - -
Investment income 38,265 16,582 3,435 36,694
Contributions - - - - -
Miscellaneous 282,160 350,841 51,177 -
Total revenues 47,635,776 18,840,096 11,290,592 837,046 10,987,007
EXPENDITURES
Current:
General government 13,738,841 - - - -
Public safety 12,166,267 - 12,384,894 178,779
Culture and recreation 8,119,965 15,060,909 - -
Public works 5,100,712 - -
Transportation - 16,173
Economic development -
Intergovernmental - - - -
Capital outlay 210,096 13,159 146,040 804,797 -
Debt service,
Principal 257,856 - - - 7,710,859
Interest and fiscal charges - 2,743,010
Other - - - 11,800
Total expenditures 39,593,737 15,074,068 12,530,934 999,749 10,465,669
EXCESS(DEFICIENCY)OF REVENUES
OVER(UNDER)EXPENDITURES 8,042,039 3,766,028 ( 1,240,342) ( 162,703) 521,338
OTHER FINANCING SOURCES(USES)
Transfers in 3,069,784 366,970 1,500,000 47,503 2,438,945
Transfers out ( 8,312,138) ( 3,035,393) - - -
Sale of capital assets - - - - -
Total other financing sources and uses ( 5,242,354) ( 2,668,423) 1,500,000 47,503 2,438,945
NET CHANGE IN FUND BALANCES 2,799,685 1,097,605 259,658 ( 115,200) 2,960,283
FUND BALANCES,BEGINNING 9,595,273 4,871,546 155,748 ( 684,334) 9,292,113
FUND BALANCES,ENDING $ 12,394,958 $ 5,969,151 $ 415,406 $( 799,534) $ 12,252,396
The accompanying notes are an integral part of these financial statements.
17
L..ENA # I
Debt Service
Nonmajor Total
Governmental Governmental
TIF#1 Funds Funds
$ 6,695,890 $ 5,736,208 $ 32,146,935
- - 12,326,427
11,637,444 46,932,217
- 1,051,264
6,355,695
- 1,541,902
100,333 1,011,860
3,927,770 13,572,255
- 46,812 2,017,265
66,261 125,055 286,292
- 194,064 194,064
- 221,394 905,572
6,762,151 21,989,080 118,341,748
- 240,727 13,979,568
808,771 25,538,711
1,651,536 24,832,410
960,609 6,061,321
- 7,772,824 7,788,997
500,000 2,661 502,661
1,441,980 2,598,060 4,040,040
- 8,271,585 9,445,677
1,940,000 1,255,000 11,163,715
404,025 1,417,011 4,564,046
- 13,661 25,461
4,286,005 24,992,445 107,942,607
2,476,146 ( 3,003,365) 10,399,141
- 7,821,133 15,244,335
( 497,582) ( 1,722,561) ( 13,567,674)
- 112,025 112,025
( 497,582) 6,210,597 1,788,686
1,978,564 3,207,232 12,187,827
30,515,121 49,316,443 103,061,910
$ 32,493,685 $ 52,523,675 $ 115,249,737
18
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L..EM # I
CITY OF GRAPEVINE, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30,2012
Net change in fund balances-total governmental funds $ 12,187,827
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. This is
the amount of capital assets recorded in the current period. 7,858,789
Depreciation on capital assets is reported in the statement of activities but does not require the use of
current financial resources. Therefore, depreciation is not reported as expenditures in the
governmental funds. ( 8,335,335)
The issuance of long-term debt (e.g. bonds) provides current financial resources to governmental
funds,while the repayment of the principal of long-term debt consumes the current financial resources
of governmental funds. Neither transaction, however, has any effect on net assets. Also,
governmental funds report the effect of issuance costs,premiums, discounts, and similar items when
debt is first issued, whereas the amounts are deferred and amortized in the statement of activities.
This amount is the net effect of these differences in the treatment of long-term debt and related items.
Repayment of principal of long-term debt 11,163,715
Amortization of:
Bond issuance costs-deferred charges ( 147,257)
Loss on refunding 64,379
The net effect of various miscellaneous transactions involving capital assets (i.e., the sales, trade-ins,
and donations)is to decrease net assets. ( 1,217,678)
Interest is accrued in the government-wide financial statements but not at the fund level. This
represents the change in the accrual during the period. 57,131
Current year changes in certain long-term liabilities do not require the use of current financial
resources and,therefore,are not reported as expenditures in governmental funds.
Compensated balances liability ( 125,762)
Net OPEB obligation ( 2,888,403)
Net pension obligation ( 661,985)
Revenues in the statement of activities that do not provide current financial resources are not reported
as revenues in the funds. 562,741
Change in net assets of governmental activities $ 18,518,162
The accompanying notes are an integral part of these financial statements.
19
L..EM # I
CITY OF GRAPEVINE, TEXAS
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
SEPTEMBER 30,2012
Business-type Activities-Enterprise Funds
Water Lake
and Sewer Enterprise Total
ASSETS
Current assets:
Cash and cash equivalents $ 13,299,600 $ - $ 13,299,600
Receivables,net 2,675,333 36,923 2,712,256
Accrued interest 12,122 54 12,176
Inventory - 44,247 44,247
Total current assets 15,987,055 81,224 16,068,279
Noncurrent assets:
Restricted cash and investments:
Revenue bond reserve fund 284,764 - 284,764
Revenue bond interest and sinking fund 923,927 - 923,927
Customer deposits 869,949 - 869,949
Revenue bond construction 1,957,193 220,320 2,177,513
Impact fees 7,808,747 - 7,808,747
Total restricted cash and investments 11,844,580 220,320 12,064,900
Capital assets:
Land 550,882 1,092,663 1,643,545
Buildings,structure and improvements 112,284,701 8,850,775 121,135,476
Vehicles,machinery and equipment 1,016,885 92,833 1,109,718
Construction in progress 2,122,792 - 2,122,792
Water storage rights 146,683 - 146,683
Less accumulated depreciation ( 38,681,256) ( 6,020,378) ( 44,701,634)
Net capital assets 77,440,687 4,015,893 81,456,580
Deferred charges 162,482 22,667 185,149
Total noncurrent assets 89,447,749 4,258,880 93,706,629
Total assets 105,434,804 4,340,104 109,774,908
(continued)
20
L..EM # I
CITY OF GRAPEVINE, TEXAS
STATEMENT OF NET ASSETS
ENTERPRISE FUNDS
(Continued)
SEPTEMBER 30,2012
Business-type Activities-Enterprise Funds
Water Lake
and Sewer Enterprise Total
LIABILITIES
Current liabilities:
Accounts payable $ 2,238,108 $ 100,646 $ 2,338,754
Accrued liabilities 80,406 27,180 107,586
Due to other funds 7,481 918,444 925,925
Deferred revenue 339,256 - 339,256
Compensated absences 31,509 25,841 57,350
Retainage payable 88,680 - 88,680
Accrued bond interest payable 48,689 14,484 63,173
General obligation bonds payable 1,365,000 315,000 1,680,000
Revenue bonds payable 255,000 - 255,000
Customer deposits 874,702 - 874,702
Total current liabilities 5,328,831 1,401,595 6,730,426
Noncurrent liabilities:
General obligation bonds payable 8,491,598 2,492,731 10,984,329
Revenue bonds payable 543,567 - 543,567
Net OPEB obligation 765,333 403,364 1,168,697
Net pension obligation 346,223 159,532 505,755
Compensated absences 94,528 77,522 172,050
Total noncurrent liabilities 10,241,249 3,133,149 13,374,398
Total liabilities 15,570,080 4,534,744 20,104,824
NET ASSETS
Invested in capital assets,net of related debt 68,742,715 1,428,482 70,171,197
Restricted for:
Impact fees 7,808,747 - 7,808,747
Debt service 1,160,002 - 1,160,002
Unrestricted 12,153,260 ( 1,623,122) 10,530,138
Total net assets $ 89,864,724 $( 194,640) $ 89,670,084
The accompanying notes are an integral part of these financial statements.
21
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L..EM # I
CITY OF GRAPEVINE, TEXAS
STATEMENT OF REVENUES,EXPENSES AND CHANGES
IN FUND NET ASSETS-PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30,2012
Business-type Activities-Enterprise Fund
Water Lake
and Sewer Enterprise Total
OPERATING REVENUES
Charges for services $ 20,149,115 $ 3,061,401 $ 23,210,516
Miscellaneous 332,095 17,801 349,896
Total operating revenues 20,481,210 3,079,202 23,560,412
OPERATING EXPENSES
Salaries and benefits 2,830,003 1,253,908 4,083,911
Maintenance,repairs,and supplies 9,191,991 326,504 9,518,495
Depreciation 2,529,720 402,428 2,932,148
General and administrative 3,396,529 958,913 4,355,442
Total operating expenses 17,948,243 2,941,753 20,889,996
OPERATING INCOME 2,532,967 137,449 2,670,416
NONOPERATING REVENUES(EXPENSES)
Investment income 67,292 665 67,957
Interest and fiscal agent charges ( 424,315) ( 111,417) ( 535,732)
Total nonoperating revenues(expenses) ( 357,023) ( 110,752) ( 467,775)
INCOME BEFORE TRANSFERS 2,175,944 26,697 2,202,641
TRANSFERS
Transfers out ( 1,444,541) ( 232,120) ( 1,676,661)
Total transfers ( 1,444,541) ( 232,120) ( 1,676,661)
CHANGE IN NET ASSETS 731,403 ( 205,423) 525,980
TOTAL NET ASSETS,BEGINNING 89,133,321 10,783 89,144,104
TOTAL NET ASSETS,ENDING $ 89,864,724 $( 194,640) $ 89,670,084
The accompanying notes are an integral part of these financial statements.
22
L..EM # I
CITY OF GRAPEVINE, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30,2012
Business-type Activities-Enterprise Funds
Water Lake
and Sewer Enterprise Total
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 20,679,796 $ 3,099,261 $ 23,779,057
Cash paid to employees ( 2,509,324) ( 1,251,641) ( 3,760,965)
Cash paid to suppliers for goods and services ( 12,380,081) ( 1,201,290) ( 13,581,371)
Net cash provided by operating activities 5,790,391 646,330 6,436,721
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Principal repayment on bonds ( 1,540,000) ( 295,000) ( 1,835,000)
Interest and related fees paid on long-term debt ( 274,208) ( 119,525) ( 393,733)
Acquisition and construction of capital assets ( 1,411,896) - ( 1,411,896)
Net cash used by capital and related
financing activities ( 3,226,104) ( 414,525) ( 3,640,629)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received on investments and cash equivalents 80,753 746 81,499
Net cash provided by investing activities 80,753 746 81,499
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfer out ( 1,444,541) ( 232,120) ( 1,676,661)
Net cash used by noncapital
financing activities ( 1,444,541) ( 232,120) ( 1,676,661)
NET INCREASE IN CASH
AND CASH EQUIVALENTS 1,200,499 431 1,200,930
CASH AND CASH EQUIVALENTS,BEGINNING 23,943,681 219,889 24,163,570
CASH AND CASH EQUIVALENTS,ENDING $ 25,144,180 $ 220,320 $ 25,364,500
(continued)
23
L..EM # I
CITY OF GRAPEVINE, TEXAS
STATEMENT OF CASHFLOWS
PROPRIETARY FUNDS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30,2012
Business-type Activities-Enterprise Funds
Water Lake
and Sewer Enterprise Total
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
Operating income $ 2,532,967 $ 137,449 $ 2,670,416
Adjustments to reconcile operating income to net cash
provided(used)by operating activities:
Depreciation 2,529,720 402,428 2,932,148
(Increase)decrease in assets:
Customer receivable 242,230 20,059 262,289
Inventories - ( 7,332) ( 7,332)
Increase(decrease)in liabilities:
Accounts payable 146,900 3,617 150,517
Accrued liabilities 33,097 ( 7,599) 25,498
Other liabilities 1,068 ( 50,903) ( 49,835)
Deferred revenue ( 43,644) - ( 43,644)
Customer deposits 5,017 - 5,017
Retainage payable 22,357 - 22,357
Increase(decrease)in net OPEB obligation 262,582 125,323 387,905
Increase(decrease)in net pension obligation 49,440 21,021 70,461
Compensated absences 8,657 2,267 10,924
Total adjustments 3,257,424 508,881 3,766,305
Net cash provided by operating activities $ 5,790,391 $ 646,330 $ 6,436,721
The accompanying notes are an integral part of these financial statements.
24
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L..EM # I
CITY OF GRAPEVINE, TEXAS
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
SEPTEMBER 30,2012
Grapevine
Health Care
Reimbursement
Agency Trust
ASSETS
Cash and cash equivalents $ 145,686 $ 1,751,970
Accrued interest receivable - 3,850
Total assets 145,686 1,755,820
LIABILITIES
Due to beneficiary 145,686
Total liabilities $ 145,686
NET ASSETS
Held in trust for Grapevine Health Care
Reimbursement $ 1,754,351
The accompanying notes are an integral part of these financial statements.
25
L..EM # I
CITY OF GRAPEVINE, TEXAS
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
TRUST FUND
FOR THE YEAR ENDED SEPTEMBER 30,2012
Grapevine
Health Care
Reimbursement
Trust
ADDITIONS
Employer contributions $ 321,750
Investment income 13,685
Total additions 335,435
DEDUCTIONS
Distributions 13,438
Change in net assets 321,997
NET ASSETS,BEGINNING 1,432,354
NET ASSETS,ENDING $ 1,754,351
The accompanying notes are an integral part of these financial statements.
26
L..EM # I
CITY OF GRAPEVINE, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Grapevine ("City") is a municipal corporation incorporated under Article XI of the
Texas Constitution (Home Rule Amendment). The City operates under a Council-Manager form
of government and provides such services as are authorized by its charter to advance the welfare,
health, safety and convenience of its citizens.
A. Reporting Entity
The City of Grapevine's basic financial statements include the separate governmental entities
that are controlled by or are dependent on the City. The determination to include separate
governmental entities is based on the criteria of Governmental Accounting Standards Board
("GASB") Statement No. 14. GASB Statement No. 14 defines the reporting entity as the
primary government and those component units for which the primary government is
financially accountable. To be financially accountable, a voting majority of the component
unit's board must be appointed by the primary government, and either (a) the primary
government must be able to impose its will, or (b) the primary government may potentially
benefit financially or be financially responsible for the component unit.
Blended component units, although legally separate entities, are, in substance, part of the
City's operations and so data from these units are combined with data of the primary
government. Discretely presented component units, on the other hand, are reported in a
separate column in the combined financial statements to emphasize it is legally separate from
the City.
Based on these criteria, the financial information of the following entities have been blended
or discretely presented within the financial statements.
Blended Component Units
Grapevine Tax Increment Financing District Reinvestment Zone Number One and Two (the
"TIFS") were formed to finance and make public improvements serving only the City, under
the authority of the Tax Increment Financing Act. The TIFS are governed by two separate
boards of directors, of which a voting majority is appointed by the City Council. The
chairman of the board is also designated by the City Council.
(continued)
27
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
A. Reporting Entity (Continued)
The Grapevine Crime Control and Prevention District (Crime District) was established to
account for the accumulation and use of sales tax proceeds designated for crime reduction
programs. One-half(1/2) cent of local sales and use tax within the district funds the Crime
District.
The Grapevine 4B Economic Development Corporation consists of two funds. The 4B
Transit Fund accounts for funds designated for Grapevine's participation in the commuter
rail development project with the Fort Worth Transit Authority (the "T"). The Economic
Development Fund accounts for funds used to stimulate the local economy, development,
and redevelopment. One-half(1/2) cent local sales and use tax within the district fund these
two blended component units. Three eighths (3/8th) of one-half cent of the local sales tax is
used to fund the 4B Transit Fund. One eighth (1/8th) of one-half cent of the local sales tax is
used to fund the Economic Development Fund. The Boards of Directors of these blended
component units include citizens as members, but are substantively the same as the City
Council.
Discretely Presented Component Unit
Grapevine Heritage Foundation (the "Foundation") is a Texas nonprofit corporation
governed by a 15-member board of directors appointed by City Council, which includes a
City Council member and the Director of the City's Convention and Visitor's Bureau. The
Foundation's operating budget is subject to the approval of the City Council. The City is
able to impose its will on the Foundation. The boards are not substantively the same. The
Foundation does not provide services to the City.
The accounting and reporting policies of the City relating to the funds included in the
accompanying financial statements conform to generally accepted accounting principles
applicable to state and local governments. The following represents the more significant
accounting and reporting policies and practices used by the City.
Complete financial statements for the TIFS may be obtained from the City of Grapevine,
Finance Department, 200 South Main St., Grapevine Texas 76051. Separate financial
statements for the Heritage Foundation, the Crime Control and Protection District, The 4B
Transit Fund, and the 4B Economic Development Fund are not prepared.
(continued)
28
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
B. Government-wide Fund Financial Statements
The basic financial statements include both government-wide (based on the City as a whole)
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 nonfiduciary
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 certain legally
separate component units for which the primary government is financially accountable.
The government-wide statement of activities demonstrates the degree to which the direct
expenses of a functional category (Public Safety, Public Works, etc.) or segment are offset by
program revenues. Direct expenses are those that are clearly identifiable with specific function
or segment. Program revenues include (1) charges to customers or applicants who purchase,
use, or directly benefit from goods, services, or privileges provided by a given function or
segment, and (2) grants and contributions that are restricted to meeting the operational or
capital requirements of a particular function or segment. Taxes and other items not properly
included among program revenues are reported instead as general revenues.
Separate fund based financial statements are provided for governmental funds, proprietary
funds, and fiduciary funds, even though the latter are excluded from the government-wide
financial statements. Major individual governmental funds and major individual enterprise
funds are reported as separate columns in the fund financial statements. GASB Statement
No. 34 sets forth minimum criteria (percentage of assets, liabilities, revenues or
expenditures/expenses of either fund category for the governmental and enterprise combined)
for the determination of major funds. The nonmajor funds are combined in a separate
column in the fund financial statements. The nonmajor funds are detailed in the combining
section of the statements.
The City's fiduciary funds are presented in the fund financial statements by type. Since by
definition these assets are being held for the benefit of a third party (other local governments,
individuals, pension participants, etc.) and cannot be used to address activities or obligations
of the City, these funds are not incorporated into the government-wide statements.
The government-wide focus is more on the sustainability of the City as an entity and the
change in aggregate financial position resulting from the activities of the fiscal period. The
focus of the fund financial statements is on the major individual funds of the governmental
and business-type categories, as well as the fiduciary funds, (by category) and the component
units. Each presentation provides valuable information that can be analyzed and compared to
enhance the usefulness of the information.
(continued)
29
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund financial
statements. Revenues are 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
revenue 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 level financial statements are reported using the current financial
resources measurement focus and the modified accrual basis of accounting. Revenues are
recognized as soon as they are both measurable and available. Revenues are considered to be
available when they are collectible within the current period or soon enough thereafter to pay
liabilities of the current period. For this purpose, the City considers revenues to be available
if they are collected within 60 days of the end of the current fiscal period. In applying the
susceptible to accrual concept to intergovernmental revenue, the legal and contractual
requirements of the numerous individual programs are used as guidance. Generally, monies
must be expended on a specific purpose or project before any amounts will be paid to the
City; therefore, revenues are recognized based upon the expenditures recorded. Ad valorem
taxes are recognized as revenues in the year for which they are levied. Sales taxes, franchise
taxes, hotel occupancy taxes, charges for services and fines are recognized as revenue as
earned, when measurable and available. Licenses, permits, and miscellaneous revenues
(except earnings on investments) are recorded as revenues when received in cash because
they are generally not measurable until actually received. Investment earnings are recorded
as earned since they are measurable and available.
Business-type activities and all proprietary funds are accounted for on a flow of economic
resources measurement focus. With this measurement focus, all assets and all liabilities
associated with the operation of these funds are included on the balance sheet. Proprietary
fund-type operating statements present increases (e.g., revenues) and decreases (e.g.,
expenses) in net total assets. 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 City's water and sewer
and municipal golf course are charges to customers for sales and services. Operating
expenses for the 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 non-operating revenues and expenses.
The City has elected to apply only those Financial Accounting Standards Board pronouncements
issued before November 30, 1989,for its Enterprise Funds.
(continued)
30
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. Measurement Focus,Basis of Accounting and Financial Statement Presentation(Continued)
Governmental Funds:
The focus of governmental fund measurement (in the fund financial statements) is upon
determination of financial position and changes in financial position (sources, uses, and
balances of financial resources) rather than upon net income. The following is a description
of the major governmental funds of the City:
The City reports the following major governmental funds:
The General Fund accounts for several of the City's primary services (Police
Administration, Fire, Public Works, Libraries, Parks and Recreation, etc.) and is
the primary operating unit of the City.
The Special Revenue Fund(Hotel Occupancy Tax Fund) accounts for all revenues
and expenditures relating to the hotel/motel occupancy tax received by the City.
The Special Revenue Fund (Crime District Fund) accounts for the accumulation
and use of sales tax proceeds designated for crime reduction programs.
The Special Revenue Fund (Grant Fund) is used to account for federal and state
funded grants.
The Debt Service Fund is used to account for the accumulation of resources for, and
the payment of, general long-term debt principal,interest and related costs.
The Tax Increment Financinz Number One (TIF#1)Debt Service Fund TIF 41
account was established by ordinances authorizing the issuance of Combination
Tax and Tax Increment Reinvestment Zone Certificate of Obligations Series 1996.
A property tax is levied for the payment of the debt as it becomes due and is
currently payable in annual installments as it becomes due.
(continued)
31
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. Measurement Focus,Basis of Accounting and Financial Statement Presentation(Continued)
Proprietary funds:
The focus of proprietary fund measurement is upon determination of operating income,
changes in net assets, financial position, and cash flows, which is similar to businesses. The
following is a description of the major proprietary funds of the City:
The Water and Sewer Fund accounts for the operation of the City's water and
sewer utility activities of the fund include administration, operation and
maintenance of the water and sewer system and billing and collection activities.
The fund also accounts for the accumulation of resources for, and the payment of,
long-term debt principal and interest for revenue bonds and obligations under
capital leases when due throughout the year. All costs are financed through
charges made to utility customers with rates reviewed regularly and adjusted if
necessary to ensure integrity of the fund.
The Lake Enterprise Fund includes the operations of a municipal golf course.
There are no nonmajor proprietary funds for the fiscal year end September 30, 2012.
Fiduciary Funds. There are four fiduciary funds: three agency funds and the Grapevine
Health Reimbursement Trust Fund (HRA). Agency Funds represent funds held in an agency
capacity for the Industrial Development Corporation, funds held for the Police Department
entitled "Police Department Case Settlement" and funds held for the W.D. Tate Scholarship.
These funds do not belong to the City. The Industrial Development Corporation is organized
solely for the purposes of promoting and developing commercial, industrial, manufacturing
and medical research enterprises to promote and encourage employment, public health and
welfare. The (HRA) is an employee benefit trust account organized solely for the purpose of
holding resources required to be held in trust for the members and beneficiaries of the
defined employee medical plans. Trust funds use the economic resources measurement
focus. Agency funds do not have a measurement focus.
As a general rule, the effect of interfund activity has been eliminated from the government-
wide financial statements. Exceptions to this general rule are charges between the City's
governmental and business-type activities. Eliminations of these charges would distort the
direct costs and program revenues reported for the various functions concerned.
When both restricted and unrestricted resources are available for use, it is the City's policy to
use the restricted resources first, and then use the unrestricted resources as needed.
(continued)
32
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Eauity
1. Cash and Investments
Cash consists of demand deposits (principally interest-bearing accounts).
Investments are stated at fair value. Fair value is the amount at which a financial
instrument could be exchanged in a current transaction between willing parties. The
City considers quoted market prices at September 30, 2012, to be the fair value of
investments.
For purposes of the statement of cash flows,proprietary funds consider all highly liquid
investments (including restricted assets) with a maturity of three months or less when
purchased to be cash equivalents.
2. Interfund Transactions, Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as either "due to/from other
funds" (i.e., the current portion of interfund loans) or "advances to/from other funds"
(i.e., the non-current portion of interfund loans). All other outstanding balances
between funds are reported as either "due to/from other funds" or "advances 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."
3. Property Taxes and Other Receivables
The City's property tax is levied each October 1, on the assessed value listed as of the
prior January 1 for all real property located in the City. The appraisal of property
within the City is the responsibility of the Central Appraisal Districts of Dallas, Denton,
and Tarrant Counties as required by legislation passed by the Texas Legislature. The
Appraisal Districts are required under such legislation to assess all property within their
Appraisal District on the basis of 100% of its appraised value and is prohibited from
applying any assessment ratios. The assessed value upon which the completed tax year
2011 levy was based was approximately $6,127,932,616. The value of property within
the Appraisal District must be reviewed every five years; however, the City may, at its
own expense, require annual reviews of appraised values. The City may challenge
appraised values established by the Appraisal District through various appeals and, if
necessary, legal action.
(continued)
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity (Continued)
3. Property Taxes and Other Receivables (Continued)
General property taxes are limited by the Texas Constitution to $2.50 per $100 of
assessed valuation. The combined tax rate to finance general governmental service and
debt service for the year ended September 30, 2012, was $348 per $100 of assessed
valuation.
Property taxes attach as an enforceable lien on property as of January 1 following the
levy date. Taxes are due by January 31 following the levy date. Property taxes levied
for 2012 are recorded as receivables, net of estimated uncollectibles. The net receivables
collected during 2012 and those considered "available" at year-end are recognized as
revenues in 2012. The City considers property taxes available if they are collected within
60 days after year-end. Prior year levies were recorded using these same principles. The
remaining receivables are reflected as deferred revenue.
All trade and property tax receivables are shown net of an allowance for uncollectibles.
The allowance for uncollectible accounts for utility billing is estimated based on a
percentage of sales. All other allowances for uncollectible accounts are based on
accounts outstanding in excess of 360 days of the invoice date. The property tax
receivable allowance is based on the average collection rate of delinquent taxes over the
last 20 years.
Property taxes are imposed nonexchange revenue. Assets from imposed nonexchange
transactions are recorded when the entity has enforceable legal claim to the asset, or
when the entity receives resources, whichever comes first. The enforceable legal claim
date for property taxes is the assessment date. The assessment date has been designated
in the enabling legislation as October 1.
4. Inventories and Prepaid Items
Inventories are valued at average cost on a first-in, first-out basis.
Inventories in the General Fund are recorded using the consumption method (i.e.,
recorded as an expenditure when used).
Prepaid items are for payments made by the City in the current year to provide services
occurring in the subsequent fiscal year. A reserve for prepaid items is recognized in the
governmental funds, and not available for other subsequent expenditures. Prepaids are
defined as payments of greater than $5,000 (amount not expressed in thousands) for a
period of one year or more.
(continued)
34
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity (Continued)
5. Restricted Assets
Certain proceeds of the City's general obligation, certificates of obligation and revenue
bonds, as well as certain resources set aside for their repayment, are classified as
restricted assets on the balance sheet because their use is limited by applicable bond
covenants or they are maintained in separate investment accounts. The "revenue bond
reserve fund" accounts are used to segregate resources accumulated for current debt
service payments. The "revenue bond interest and sinking fund" accounts are used to
report resources set aside to make up potential future deficiencies in the revenue bond
retirement accounts. The "revenue bond construction" accounts are used to report those
proceeds of revenue bond issuances that are restricted for use in construction of assets.
Also included in restricted assets are impact fees (see Note 13) and customer deposits.
6. Capital Assets
Capital assets, which include land improvements, construction-in-progress, buildings
and improvements, equipment, intangible assets and infrastructure assets (e.g., roads,
bridges, and similar items), are reported in the applicable governmental or business-
type activities columns in the government-wide financial statements. Capital assets,
other than infrastructure, are defined by the City as assets with an initial, individual cost
of more than $5,000 (amount not expressed in thousands) and an estimated useful life
in excess of two years. Infrastructure assets are defined by the City as assets costing in
excess of $50,000 (amounts not expressed in thousands) that have an estimated useful
life in excess of two years. Such assets are recorded at historical cost if purchased or
constructed. Donated capital assets are recorded at 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 assets lives are not capitalized.
Depreciation has been provided on a straight-line basis over the estimated useful lives
of the assets.
The estimated useful lives are as follows:
Assets Years
Buildings -wood framed 20
Buildings - metal storage 7
Buildings - steel framed 40
Water and sewer system 30-50
General infrastructure 20-30
Improvements other than buildings 10-20
Machinery and equipment 3-10
Motor vehicles 3-10
(continued)
35
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity (Continued)
7. Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused vacation,
compensatory time, and sick pay benefits. Employees are reimbursed upon termination
for accumulated vacation and only non-exempt employees are reimbursed for
compensatory time. Employees are not reimbursed upon termination for accumulated
sick leave. The liabilities for these amounts are accrued as they are incurred in the
government-wide and proprietary fund financial statements.
8. Long-term Debt
In the government-wide financial statements, and proprietary funds 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 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. Bond
issuance costs and losses on refundings are reported as deferred charges and amortized
on a straight line basis over the life of the related debt.
In the fund financial statements, governmental funds 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, are reported as debt service expenditures.
9. Fund Balance Classification
The governmental fund financial statements present fund balances based on
classifications that comprise a hierarchy that is based primarily on the extent to which
the City is bound to honor constraints on the specific purposes for which amounts in the
respective governmental funds can be spent. The classifications used in the
governmental fund financial statements are as follows:
• Nonspendable: This classification includes amounts that cannot be spent
because they are either (a) not in spendable form or (b) are legally or
contractually required to be maintained intact. Nonspendable items are
not expected to be converted to cash or are not expected to be converted to
cash within the next year.
(continued)
36
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity (Continued)
9. Fund Balance Classification (Continued)
• Restricted: This classification includes amounts for which constraints
have been placed on the use of the resources either (a) externally imposed
by creditors, grantors, contributors, or laws or regulations of other
governments, or (b) imposed by law through constitutional provisions or
enabling legislation.
• Committed: This classification includes amounts that can be used only for
specific purposes pursuant to constraints imposed by ordinance of the City
Council. These amounts cannot be used for any other purpose unless the
City Council removes or changes the specified use by taking the same type
of action that was employed when the funds were initially committed. This
classification also includes contractual obligations to the extent that
existing resources have been specifically committed for use in satisfying
those contractual requirements.
• Assigned: This classification includes amounts that are constrained by the
City's intent to be used for a specific purpose but are neither restricted nor
committed. This intent can be expressed by the City Council or City
Manager.
• Unassigned: This classification includes the residual fund balance for the
General Fund. The unassigned classification also includes negative
residual fund balance of any other governmental fund that cannot be
eliminated by offsetting of assigned fund balance amounts.
When an expenditure is incurred for purposes for which both restricted and unrestricted
fund balance is available, the City considers restricted funds to have been spent first.
When an expenditure is incurred for which committed, assigned, or unassigned fund
balances are available, the City considers amounts to have been spent first out of
committed funds, then assigned funds, and finally unassigned funds.
10. New Accounting Principles
Significant new accounting standards not yet implemented by the City include the
following.
Statement No. 61 ("GASB 61"), The Financial Reporting Entity: Omnibus an
amendment of GASB Statements No. 14 and No. 34 is effective for periods beginning
after June 15, 2012. The requirements of this Statement result in financial reporting
entity financial statements being more relevant by improving guidance for including,
presenting, and disclosing information about component units and equity interest
transactions of a financial reporting entity.
(continued)
37
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities, and Net Assets or Equity (Continued)
10. New Accounting Principles (Continued)
Statement No. 63 ("GASB 63"), Financial Reporting of Deferred Outflows of
Resources, Deferred Inflows of Resources, and Net Position, is effective for periods
beginning after December 15, 2011. The requirements of this Statement will improve
financial reporting by standardizing the presentation of deferred outflows of resources
and deferred inflows of resources and their effects on a government's net position.
Statement No. 65 ("GASB 65"), Items Previously Reported as Assets and Liabilities, is
effective for periods beginning after December 15, 2012. This Statement establishes
accounting and financial reporting standards that reclassify, as deferred outflows of
resources or deferred inflows of resources, certain items that were previously reported
as assets and liabilities and recognizes, as outflows of resources or inflows of resources,
certain items that were previously reported as assets and liabilities.
Statement No. 68 ("GASB 68"),Accounting and Financial Reporting for Pensions - an
Amendment of GASB Statement No. 27, is effective for periods beginning after June 15,
2014. The primary objective of this Statement is to improve accounting and financial
reporting by state and local governments for pensions. This Statement results from a
comprehensive review of the effectiveness of existing standards of accounting and
financial reporting for pensions with regard to providing decision-useful information,
supporting assessments of accountability and interperiod equity, and creating additional
transparency.
2. DEFICIT EQUITY BALANCES
The Grant Fund(Special Revenue—Major Fund) had a deficit fund balance Of($799,534). This
deficit can be attributed to the timing of grant payments from granting agencies. The deficit will
be funded in the subsequent period with the receipt of grant funding.
The Lake Parks Fund (Special Revenue — Nonmajor Fund) had a deficit fund balance of
($958,737). This deficit can be attributed to an increase in expenditures from the expansion of
the Vineyards Campground and cabins. This deficit will be funded by an increase in revenues
projected by the expansion efforts.
The Parks Open Space and Recreation (Capital Projects-Nonmajor Fund) had a deficit fund
balance of($1,447). The City anticipated the deficit equity balance in this fund. This deficit will
either be resolved with an increase in revenues or a transfer from other funds in 2013.
38
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3. CASH AND INVESTMENTS
As of September 30, 2012, the City had the following cash and investments:
Total City cash deposits $ 23,718,590
Total investments 117,059,600
Total City cash and investments $ 140,778,190
Cash and investments composition:
Primary government $ 138,402,528
Component unit 478,006
Trust and agency funds 1,897,656
Total cash and investments $ 140,778,190
Weighted Average
Investment Type Fair Value Maturity (Days)
TexPool $ 76,876,249 41
LOGIC 33,843,437 50
U. S. Treasury Bonds 311,523 65
Municipal Bonds 6,028,391 9
Total portfolio $ 117,059,600
Portfolio weighted average maturity (days) 42
Investment pools are not categorized as to investment risk since specific securities relating to the
City cannot be identified. Under the TexPool Participation Agreement, administrative and
investment services to TexPool are provided by Lehman Brothers, Inc. and Federated Investors,
Inc. through an agreement with the State of Texas Comptroller of Public Accountants. The State
Comptroller is the sole officer, director, and shareholder of the Texas Treasury Safekeeping
Trust Company authorized to operate TexPool. Under the LOGIC Participation Agreement,
administrative and investment services to LOGIC are provided by First Southwest Asset
Management, Inc. and JP Morgan Asset Management, Inc. as co administrators. The
administrators settle all trades for LOGIC and secure and value its assets every day. The fair
value of the City's position in these pools is the same as the value of the pool shares. As of
September 30, 2012, the City's investments in LOGIC and TexPool were both rated AAAm by
Standard&Poor's.
Interest Rate Risk. In accordance with its investment policy, the City minimizes the risk that the
interest earnings and the market value of investments in the portfolio will fall due to changes in
general interest rates, by:
(continued)
39
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3. CASH AND INVESTMENTS (Continued)
a. Structuring the investment portfolio so that investments mature to meet cash
requirements for ongoing operations, thereby avoiding the need to liquidate
investments prior to maturity.
b. Investing operating funds primarily in certificates of deposit, shorter-term
securities, money market mutual funds, or local government investment pools
functioning as money market mutual funds.
c. Diversifying maturities and staggering purchase dates to minimize the impact
of market movements over time.
Credit Risk. In accordance with its investment policy, the City minimizes credit risk, the risk of
loss due to the failure of the issuer or backer of the investment by:
a. Limiting investments to the safest types of investments.
b. Pre-qualifying the financial institutions and broker/dealers with which the
City will do business.
c. Diversifying the investment portfolio so that potential losses on individual
issuers will be minimized.
Concentration of Credit Risk. The City's investment policy allows up to 100% to be invested in
U. S. Treasury Bills/Notes/Bonds, and U. S. Agencies and Instrumentalities. The City's
investment in the securities of U. S. agencies are rated AAA by Standard &Poor's. TexPool and
LOGIC are public funds investment pools operating as a 2a-7 like pool and in full compliance
with the Public Funds Investment Act. As of September 30, 2012, the City's investments in
TexPool were rated AAAm and its investments in LOGIC were rated AAA.
Custodial Credit Risk. State statutes require that all City deposits in financial institutions be
fully collateralized by U. S. Government obligations or obligations of the State of Texas or its
agencies. The City's deposits were fully collateralized, or have a letter of credit issued by the
Federal Home Loan Bank as required by State statutes at September 30, 2012. The bank
balances were fully collateralized by government securities.
40
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4. RECEIVABLES
Receivables as of year-end for the City's individual major funds and nonmajor funds in the
aggregate, including the applicable allowances for uncollectible accounts, are as follows:
Less
Accrued Gross Allowance for
Interest Taxes Accounts Receivables Uncollectibles Total
General S 5,411 S 4,893,540 S 2,929,156 S 7,828,107 $( 1,536,465) S 6,291,642
Hotel Occupancy 2,268 1,020,110 262,653 1,285,031 ( 14,988) 1,270,043
Crime District - 1,837,794 - 1,837,794 - 1,837,794
Debt Service 5,865 794,431 - 800,296 ( 253,644) 546,652
Debt Service TIF #1 15,111 1,056,548 - 1,071,659 - 1,071,659
Water and Sewer 12,122 - 2,802,108 2,814,230 ( 126,775) 2,687,455
Lake Enterprise 54 - 36,923 36,977 - 36,977
Nonmajor funds 21,724 3,046,706 578,612 3,647,042 - 3,647,042
Total S 62,555 S 12,649,129 S 6,609,452 S 19,321,136 $( 1,931,872) S 17,389,264
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 deferred revenue and
unearned revenue reported in the governmental funds were as follows:
Unavailable Unearned
Governmental funds:
Franchise taxes - $ 1,641,653
Open space deposits - 31,604
Convention center deposits - 89,302
Camping and pavilion fees - 219,396
Delinquent property taxes receivable - general $ 533,228 -
Delinquent property taxes receivable- debt service 502,868 -
Grants 814,967
Property taxes receivable debt service - TIF 41 60,252 -
Construction cost sharing agreements 43,265 -
Ambulance fees 657,699 -
Municipal court fines 331,004 -
Miscellaneous - 42,472
Total $ 2,943,283 $ 2,024,427
The City considers franchise taxes exchange transactions as a lease of right-of-way for utility
lines. Because they are treated as exchange transactions, the payments are recorded as unearned
revenue and then are recognized in the period of exchange.
41
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5. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2012, was as follows:
Primary Government
Beginning Transfers Transfers and Ending
Balance and Additions Retirements Balance
Governmental activities:
Capital assets,not being depreciated:
Land $ 47,821,876 - - $ 47,821,876
Construction in progress 14,971,571 $ 861,882 $( 12,108,444) 3,725,009
Total assets not being depreciated 62,793,447 861,882 ( 12,108,444) 51,546,885
Capital assets,being depreciated:
Buildings 38,544,723 11,242,680 ( 57,945) 49,729,458
Improvement other than buildings 24,254,989 4,361,549 ( 1,501,085) 27,115,453
Equipment and vehicles 28,165,227 3,255,134 ( 632,085) 30,788,276
Infrastructure 121,490,558 - - 121,490,558
Total capital assets being depreciated 212,455,497 18,859,363 ( 2,191,115) 229,123,745
Less accumulated depreciation:
Buildings ( 15,455,213) ( 1,161,879) 2,905 ( 16,614,187)
Improvement other than buildings ( 7,125,855) ( 1,203,337) - ( 8,329,192)
Equipment and vehicles ( 20,155,909) ( 1,885,321) 581,804 ( 21,459,426)
Infrastructure ( 61,050,821) ( 4,084,798) - ( 65,135,619)
Total accumulated depreciation (103,787,798) ( 8,335,335) 584,709 (111,538,424)
Total capital assets being
depreciated, net 108,667,699 10,524,028 ( 1,606,406) 117,585,321
Governmental activities capital
assets,net $ 171,461,146 $ 11,385,910 $( 13,714,850) $ 169,132,206
(continued)
42
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5. CAPITAL ASSETS (Continued)
Beginning Transfers Transfers and Ending
Balance and Additions Retirements Balance
Business-type activities:
Capital assets,not being depreciated:
Land $ 1,643,545 - - $ 1,643,545
Construction in progress 824,891 $ 1,297,901 $ - 2,122,792
Total assets not being depreciated 2,468,436 1,297,901 - 3,766,337
Capital assets,being depreciated:
Buildings 2,432,585 - - 2,432,585
Improvement other than buildings 6,867,585 - - 6,867,585
Equipment and vehicles 906,174 285,047 ( 81,503) 1,109,718
Water storage rights 683,547 - - 683,547
Infrastructure 113,079,031 - ( 1,243,725) 111,835,306
Total capital assets being depreciated 123,968,922 285,047 ( 1,325,228) 122,928,741
Less accumulated depreciation:
Buildings ( 1,542,049) ( 50,762) - ( 1,592,811)
Improvement other than buildings ( 4,258,024) ( 365,683) - ( 4,623,707)
Equipment and vehicles ( 574,556) ( 74,396) 49,087 ( 599,865)
Water storage rights ( 519,775) ( 17,089) - ( 536,864)
Infrastructure ( 36,566,122) ( 2,424,218) 1,105,089 ( 37,885,251)
Total accumulated depreciation ( 43,460,526) ( 2,932,148) 1,154,176 ( 45,238,498)
Total capital assets being
depreciated,net 80,508,396 ( 2,647,101) ( 171,052) 77,690,243
Business-type activities capital
assets,net $ 82,976,832 $( 1,349,200) $( 171,052) $ 81,456,580
(continued)
43
L..ENA # 1
5. CAPITAL ASSETS (Continued)
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental activities:
General government $ 544,978
Public safety 989,419
Public works 4,487,372
Culture and recreation 2,313,566
Total depreciation expense - governmental activities $ 8,335,335
Business-type activities:
Water and sewer $ 2,529,720
Lake Enterprise 402,428
Total depreciation expense -business-type activities $ 2,932,148
Beginning Transfers Transfers and Ending
Balance and Additions Retirements Balance
Discretely Presented Component Unit:
Capital assets,not being depreciated:
Land $ 450,067 - - $ 450,067
Total assets not being depreciated 450,067 - - 450,067
Capital assets,being depreciated:
Building 1,031,174 - - 1,031,174
Improvements other than building 945,651 - - 945,651
Vehicles and equipment 31,275 - - 31,275
Total capital assets being depreciated 2,008,100 - - 2,008,100
Less accumulated depreciation:
Building ( 128,620) ( 27,651) - ( 156,271)
Improvements other than building ( 596,207) ( 47,931) - ( 644,138)
Vehicles and equipment ( 31,275) - - ( 31,275)
Total accumulated depreciation ( 756,102) ( 75,582) - ( 831,684)
Total capital assets being
depreciated,net 1,251,998 ( 75,582) - 1,176,416
Discretely presented component unit
capital assets,net $ 1,702,065 $( 75,582) $ - $ 1,626,483
(continued)
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5. CAPITAL ASSETS (Continued)
Construction Commitments
The City has active construction projects as of September 30, 2012. The projects include
building projects, street construction and improvements of existing streets, and repair and
maintenance of existing water and sewer systems. As of September 30, 2012, the City had
outstanding construction commitments totaling $4,394,171.
Project Commitment
Streets and drainage projects $ 1,046,037
Commuter rail project 112,544
Water and wastewater-new water lines,
repair and maintenance 3,235,590
Total $ 4,394,171
The commitment for building, street and drainage construction is funded from unexpended
general obligation, certificates of obligation, and revenue bond proceeds. Water and wastewater
projects are funded from unexpended revenue bond proceeds and operations.
6. INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS
The composition of interfund balances as of September 30, 2012, is as follows:
Due to/from Other Funds
Receivable Fund Payable Fund Amount
General Crime District $ 924,834
Grants 1,132,671
Lake Parks (nonmajor fund) 759,546
Water and Sewer 7,481
Lake Enterprise 918,444
Total General 3,742,976
Hotel Occupancy Tax General Facilities and Equipment(nonmajor fund) 479,158
Total $ 4,222,134
(continued)
45
I L..EM # 1
6. INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS (Continued)
Due to/from Other Funds (Continued)
Interfund balances for all the funds are created by short-term deficiencies in cash position in the
individual fund. It is anticipated that the balances will be repaid within one year or less. Due
to/from component unit and primary government:
Component unit- Heritage Hotel Occupancy Tax $ 11,362
In prior years, a total of $479,158 was advanced to the Hotel Occupancy Tax Fund from the
General Fund to provide financing resources for the purchase of land. The balance of this
advance at September 30, 2012 was $28,624.
Receivable Fund Payable Fund Amount
General Hotel Occupancy Tax $ 28,624
Interfund Transfers
The primary purpose of interfund transfers is the transfer of funds from one fund to support
expenditures of another fund in accordance with the authority established for the individual fund.
A summary of interfund transfers by fund type is as follows:
Transfers to
Hotel
Occupancy Crime Debt Nonmajor
General Tax District Grant Service Governmental Total
Transfers from:
General $ $ $ 1,500,000 $ 337 $ $ 6,811,801 $ 8,312,138
Hotel Occupancy Tax 1,024,323 - 1,966,070 45,000 3,035,393
Debt Service-TIF#1 - - 497,582 497,582
Water and Sewer 1,444,541 - 1,444,541
Lake Enterprise 232,120 - - - - 232,120
Nonmaj or governmental 368,800 366,970 47,166 472,875 466,750 1,722,561
Total $ 3,069,784 $ 366,970 $ 1,500,000 $ 47,503 $ 2,438,945 $ 7,821,133 $ 15,244,335
(continued)
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6. INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS (Continued)
Interfund Transfers (Continued)
Various nonmajor funds received transfers from the General Fund during fiscal year 2012. The
General Fund transferred $3,000,000 to the Quality of Life Fund for capital projects. Per
Council policy, revenues in excess of the 20%balance requirement in the General Fund are to be
transferred to the Quality of Life CIP Fund at fiscal year-end. The General Fund transferred
$1,500,000 to the Crime District Fund to supplement a decrease in anticipated sales tax revenues
for fiscal year 2012. In addition, the Street Maintenance and Capital Replacement Fund received
a $2,571,500 transfer for capital projects related to streets and general facilities, and $1,240,301
was transferred to the Capital Acquisition Fund for fleet, capital and technology equipment
purchases. There were transfers to the Debt Service Fund of $1,966,070 for payment of debt
obligations for the Hotel Occupancy Tax Fund, $113,863 for the Storm Drainage Fund, and
$336,566 for the Lake Parks Fund, $22,446 for the Municipal Court Technology Fund.
Transfers to the General Fund for $4,310,061 were for payments from other funds for insurance,
claims, fleet and IT costs administered by the General Fund.
7. LEASES
Operating Leases
Lake Parks:
The City entered into a 25-year lease agreement with the United States Corps of Engineers to
operate and maintain approximately 770 acres of property at Lake Grapevine. The City is
required to pay the cost to maintain and operate the property. Revenues generated from the
operations on the property will be used to maintain the property. The term of the operating lease
is from October 2004 through September 2029. The agreement covers the park areas of
Meadowmere Park, Oak Grove Park and Silver Lake Park.
Gaylord Texan Resort and Convention Center:
The City leased property from the United States Corps of Engineers (as referred to above (Lake
Parks). The City entered into a sublease agreement with the Gaylord Texan Resort and
Convention Center on March 18, 1994, for a portion of the land leased from the United States
Corps of Engineers. The contract is for 49 years and the rent payment is $1 per year. Gaylord
Texan Resort and Convention Center has a sublease hold deed of trust and security agreement.
The City agreed to sublease property to Gaylord Texan Resort and Convention Center so they
could secure financing.
(continued)
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L..EM # 1
7. LEASES (Continued)
Operating Leases (Continued)
Gaylord Texan Resort and Convention Center: (Continued)
The City and Gaylord Texan Resort and Convention Center entered into an amended agreement
in fiscal year 2008 pertaining to the United States Corps of Engineers leased property referred to
as the "Lease Property." This amendment does not become effective until the issuance of a
building permit for the expansion on this property. The "Lease Property" terms provide for
annual rents during the construction of the expansion of$54,360 with periodic fee increases due
upon substantial completion of the expansion of the Gaylord Texan Resort and Convention
Center. The annual rent will be adjusted every five years based on the terms of the contract. The
Land Lease shall commence upon the issuance of a building permit for the expansion and shall
have a primary term of 25 years with Gaylord Texan Resort and Convention Center having the
right to extend the term for one additional period of 25 years.
In the new amended agreement between the City and Gaylord Texan Resort and Convention
Center, the City also granted to Gaylord Texan Resort and Convention Center an option for the
right to lease the "Western Amenity Parcel." For a period of one year from the date of the Option
Election, Gaylord Texan Resort and Convention Center has the right to lease the "Western
Amenity Parcel," and to keep the option in effect, Gaylord Texan Resort and Convention Center
must continue paying annual rent at an amount based upon the contract terms. Gaylord Texan
Resort and Convention Center elected to pick up the option for the "Western Amenity Parcel" on
June 5, 2008, and paid the City of Grapevine $54,000 in accordance with the terms of the
agreement.
In May 2009, the City and Gaylord Texan Resort and Convention Center entered into a third
agreement and agreed to extend the required commencement date of the expansion from
September 12, 2009, until September 12, 2012, and extended the renewal dates for parcels 5 and
7, as defined in the agreement, until September 12, 2012. In September 2012, the City and the
Gaylord Texan Resort and Convention Center entered into a fourth agreement and agreed to
extend the required commencement date of the expansion until March 12, 2013.
Cowboys Golf Course:
The City entered into a 25-year lease agreement with the Cowboys Golf Course in 1994. The
rent fee is 3% of Cowboys' gross revenues from operations.
8. LONG-TERM LIABILITIES
General Obligation Bonds
The City issues general obligation bonds to provide funds for the acquisition and construction of
major capital facilities. General obligation bonds have been issued for both governmental and
business-type activities.
(continued)
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8. LONG-TERM LIABILITIES (Continued)
General Obligation Bonds (Continued)
General obligation bonds are direct obligations and pledge the full faith and credit of the City.
These bonds generally are issued as 20-year serial bonds with principal maturing each year.
A summary of the terms of general obligation bonds, combination tax and revenue bonds, and
certificates of obligation outstanding and their corresponding allocations to the governmental and
business-type activities at September 30, 2012, follows:
Purpose Interest Rates Amount
Governmental activities 2.5% - 5.25% $ 11,145,000
Governmental activities, refunding 2.5% - 5.25% 29,210,000
Total governmental 40,355,000
Business-type activities, refunding 2.0% - 5.25% 12,510,000
Total general obligation debt $ 52,865,000
Annual debt service requirements for general obligation bonds are as follows:
Governmental Activities Business-type Activities
Year Ending General G. O. General G. O.
September 30, Obligation Interest Obligation Interest
2013 $ 4,975,000 $ 1,667,270 $ 1,680,000 $ 499,203
2014 5,200,000 1,438,926 1,745,000 429,690
2015 5,525,000 1,217,787 1,825,000 356,003
2016 5,315,000 989,721 1,920,000 277,804
2017 4,145,000 781,160 1,850,000 202,791
2018-2022 13,345,000 1,660,907 3,490,000 229,476
2023-2027 1,850,000 151,071 - -
Total $ 40,355,000 $ 7,906,842 $ 12,510,000 $ 1,994,967
Certificates of Obligation
The City also issues certificates of obligation ("COs") to finance the acquisition and construction
of capital assets including certain capital improvement projects, municipal facilities, and
machinery and equipment. Interest rates on the outstanding COs range from 3.00% — 7.00%.
Annual debt service requirements to maturity for certificates of obligation of the primary
government are as follows:
(continued)
49
L..EM # 1
8. LONG-TERM LIABILITIES (Continued)
Certificates of Obligation (Continued)
Governmental Activities
Year Ending Certificates C. O.
September 30, of Obligation Interest
2013 $ 4,835,142 $ 2,287,500
2014 4,906,736 2,094,372
2015 4,788,386 1,875,583
2016 4,735,095 1,642,840
2017 2,406,864 1,476,168
2018-2022 13,721,837 5,584,041
2023-2027 13,940,000 2,066,213
2028-2030 1,460,000 77,233
Total $ 50,794,060 $ 17,103,950
Revenue Bonds
The City also issues bonds where the City pledges income derived from the acquired or
constructed assets to pay debt service. Water and sewer revenues are used for repayment of
these revenue bonds. Interest rates on outstanding water and sewer revenue bonds range from
2.00%—5.35%. Revenue bond debt service requirements to maturity are as follows:
Business-type Activities
Year Ending Revenue
September 30, Revenues Interest
2013 $ 255,000 $ 31,551
2014 265,000 21,670
2015 270,000 11,071
Total $ 790,000 $ 64,292
Notes Payable
The City issues tax notes to finance the construction of capital improvement projects, municipal
facilities, and machinery and equipment. The interest rates on the outstanding tax notes range
from 3.00%—4.25%.
(continued)
50
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8. LONG-TERM LIABILITIES (Continued)
Notes Payable (Continued)
Tax, Land and Other Notes debt service requirements to maturity are as follows:
Governmental Activities
Year Ending Tax, Land and Tax, Land and
September 30, Other Notes Other Interest
2013 $ 1,273,210 $ 124,025
2014 1,304,236 72,788
2015 855,341 29,906
2016 16,533 12,335
2017 17,816 11,051
2018-2022 112,103 32,233
2023-2027 25,491 965
Total $ 3,604,730 $ 283,303
The following is a summary of long-term liability transactions of the City for the year ended
September 30, 2012, (amounts expressed in thousands):
Balance Balance Due Within
09/30/11 Increases Reductions 09/30/12 One Year
Governmental activities:
General obligation bonds $ 45,335,000 $ $( 4,980,000) $ 40,355,000 $ 4,975,000
Certificates of obligation 55,472,663 ( 4,678,603) 50,794,060 4,835,142
Total bonds payable 100,807,663 ( 9,658,603) 91,149,060 9,810,142
Notes payable-taxes 4,625,000 ( 1,235,000) 3,390,000 1,260,000
Notes payable 226,986 ( 12,256) 214,730 13,211
Total notes payable 4,851,986 ( 1,247,256) 3,604,730 1,273,211
Total bonds and notes 105,659,649 ( 10,905,859) 94,753,790 11,083,353
Less deferred amount
on refunding ( 3,260,068) 363,109 ( 2,896,959) -
Premium on bond issues 4,215,793 ( 428,587) 3,787,206
Discount on bond issues ( 25,258) 1,099 ( 24,159) -
Net governmental bonds and
notes outstanding 106,590,116 ( 10,970,238) 95,619,878 11,083,353
Sales tax obligation 1,405,315 ( 257,856) 1,147,459 201,656
Net OPEB obligation 5,973,328 3,393,571 ( 505,168) 8,861,731 -
Net pension obligation 3,979,718 6,227,193 ( 5,565,208) 4,641,703 -
Compensated absences 2,754,824 2,277,938 ( 2,152,176) 2,880,586 720,146
Total governmental
long-term liabilities $ 120,703,301 $ 11,898,702 $( 19,450,646) $ 113,151,357 $ 12,005,155
(continued)
51
L..EM # 1
8. LONG-TERM LIABILITIES (Continued)
Notes Payable (Continued)
Balance Balance Due Within
09/30/11 Increases Reductions 09/30/12 One Year
Business-type activities:
Water and sewer obligations
General obligation bonds $ 11,190,000 $ - $(1,295,000) $ 9,895,000 $ 1,365,000
Water and sewer bonds 1,035,000 - ( 245,000) 790,000 255,000
Less deferred amount on refund ( 521,846) - 71,216 ( 450,630) -
Premium on bond issues 463,936 - ( 43,141) 420,795 -
Net water and sewer bonds payable 12,167,090 - (1,511,925) 10,655,165 1,620,000
Lake enterprise obligations
General obligation bonds 2,910,000 - ( 295,000) 2,615,000 315,000
Less deferred amount on refund ( 61,573) - 8,349 ( 53,224) -
Premium on bond issues 264,342 - ( 18,387) 245,955 -
Net Lake Enterprise bonds payable 3,112,769 - ( 305,038) 2,807,731 315,000
Net business-type bonds payable 15,279,859 - (1,816,963) 13,462,896 1,935,000
Net OPEB obligation 780,792 455,748 ( 67,843) 1,168,697 -
Net pension obligation 435,294 662,819 ( 592,358) 505,755 -
Compensated absences 218,476 181,715 ( 170,791) 229,400 57,350
Total business-type
long-term liabilities $ 16,714,421 $ 1,300,282 $(2,647,955) $ 15,366,748 $ 1,992,350
For the governmental activities, compensated absences and other long-term liabilities are
generally liquidated by the General Fund.
(continued)
52
L..EM # 1
8. LONG-TERM LIABILITIES (Continued)
Other Long-term Liabilities —Texas Comptroller of Public Accounts
As of September 30, 2012, the City of Grapevine has three payout agreements with the Texas
Comptroller of Public Accounts for overpayment of sales taxes that total $1,147,459. These
amounts will be withheld from sales tax receipts over a period not to exceed seven years.
Pledged Revenues
Proprietary Funds
The City has pledged future water and wastewater customer revenues, net of specified operating
expenses, to repay outstanding revenue and general obligation bonds funded with water and
wastewater customer revenues in the amount of $10,685,000 as noted in footnote 8 (long-term
liabilities). The bonds were used to make improvements in the City's water and wastewater
system. The bonds are payable from the net revenues of the City's utility system and are payable
through 2022. Average annual principal and interest payments on the bonds are expected to
require $1,230,003 each year. The total principal and interest remaining to be paid on the bonds
are $12,300,033. Principal and interest paid on the bonds for the current year and total customer
operating revenues were $2,056,437 and $20,481,210, respectively.
Golf
The City has pledged future customer revenues, net of specified operating expenses, to repay
outstanding general obligation bonds and Tax Notes funded with customer revenues in the
amount of $2,615,000 issue as noted in footnote 8 (long-term liabilities). The bonds were used
to make improvements in the City's Lake Enterprise system. The bonds are payable from the net
revenues of the City's Lake Enterprise system and are payable through 2019. Average annual
principal and interest payments on the bonds are expected to require $426,525 each year. The
total principal and interest remaining to be paid on the bond is $3,485,751. Principal and interest
paid on the bonds for the current year and total customer operating revenues were $469,431 and
$3,079,202, respectively.
Tax Increment Financing District#1
The Board of Directors for the Tax Increment Financing District 41 approved amending the
Financing and Project Plan to allow the creation of a 380 Category within the Financing and Plan
whereas all City funds contributed to date and additional funds contributed up to 2016-2017 be
placed in a 380 account in the TIF zone to incentivize further economic development in the zone.
The action was passed by the Board on September 8, 2009.
Tax Increment Financing District#2
The City has entered into a local agreement with the Grapevine-Colleyville Independent School
District where future ad valorem taxes collected for the zone will be used to contribute towards
the School's middle school debt. The total contribution that the City is obligated to pay is
$45,016,222 as of September 30, 2012. The annual amount is negotiated each year with the
school and the school bills the City. The City does not have title to the middle school
improvements.
53
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9. EMPLOYEES' RETIREMENT SYSTEM
Plan Description
The City provides pension benefits for all of its eligible employees through a non-traditional,joint
contributory, hybrid defined benefit plan in the statewide 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 a 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 contributions, benefits and actuarial methods and assumptions used by
the System. This report maybe 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 2010 Plan Year 2011 Plan Year 2012
Employee deposit rate 7.0% 7.0% 7.0%
Matching ratio (city to employee) 2 to 1 2 to 1 2 to 1
Years required for vesting 5 5 5
Service retirement eligibility
(expressed as age/years of service) 60/5, 0/20 60/5, 0/20 60/5, 0/20
Updated service credit 100%repeating, 100%repeating, 100%repeating,
transfers transfers transfers
Annuity increase (to retirees) 70% of CPI 70% of CPI 70% of CPI
repeating repeating repeating
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 cost contribution rate, which is calculated to
be a level percent of payroll from year to year. The normal cost contribution rate finances the
portion of an active member's projected benefit allocated annually; the prior service contribution
rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for
that 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.
(continued)
54
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9. EMPLOYEES' RETIREMENT SYSTEM (Continued)
Contributions (Continued)
The City contributes to the TMRS Plan at an actuarially determined rate. Both the employees
and the City make contributions monthly. Since the City needs to know its contribution rate in
advance for budgetary purposes, there is a one-year delay between the actuarial valuation that
serves as the basis for the rate and the calendar year when the rate goes into effect. The annual
pension cost and net pension obligation/(asset) are as follows:
Annual Required Contribution (ARC) S 6,846,621
Interest on Net Pension Obligation 309,051
Adjustment to the ARC ( 265,660)
Annual Pension Cost 6,890,012
Contributions Made ( 6,157,566)
Increase (Decrease)in Net Pension Obligation 732,446
Net Pension Obligation/(Asset),beginning of year 4,415,012
Net Pension Obligation/(Asset), ending of year S 5,147,458
Accounting Annual Actual Percentage Net
Year Pension Contribution of APC Pension
Ending Cost(APC) Made Contributed Obligation
09/30/10 S 7,084,739 S 5,384,642 76% S 2,878,216
09/30/11 7,530,037 5,993,241 80% 4,415,012
09/30/12 6,890,012 6,157,566 89% 5,147,458
(continued)
55
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9. EMPLOYEES' RETIREMENT SYSTEM (Continued)
Contributions (Continued)
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:
Valuation Date 12/31/09 12/31/10-prior to 12/31/10- 12/31/11
restructuring restructured
Actuarial cost method Projected Unit Credit Projected Unit Credit Projected Unit Credit Projected Unit Credit
Amortization method Level percent Level percent Level percent Level percent
of payroll of payroll of payroll of payroll
GASB 25 equivalent single 28.2 years; 27.2 years; 27.2 years; 26.2 years;
amortization period closed period closed period closed period closed period
Amortization period for new
gains/losses 30 years 30 years 30 years 30 years
Asset valuation method 10-year smoothed 10-year smoothed 10-year smoothed 10-year smoothed
market market market market
Actuarial Assumptions:
Investment rate of return 7.5% 7.5% 7.0% 7.0%
Projected salary increases' varies by age varies by age varies by age varies by age
and service and service and service and service
*Includes inflation at 3.0% 3.0% 3.0% 3.0%
Cost-of-living adjustments 2.1% 2.1% 2.1% 2.1%
Schedule of Funding Information
The funded status as of December 31, 2011, the most recent actuarial valuation date, is as follows:
Actuarial UAAL as a
Actuarial Accrued Unfunded Percentage
Actuarial Value of Liability Funded AAL Covered of Covered
Valuation Assets (AAL) Ratio (UAAL) Payroll Payroll
Date (a) (b) (a/b) (b-a) (c) (b-a)/(c)
12/31/2011 S 143,043,423 S 186,688,189 76.6% S 43,644,766 S 34,504,224 126.5%
(continued)
56
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9. EMPLOYEES' RETIREMENT SYSTEM (Continued)
Schedule of Funding Information (Continued)
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 revision 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 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 trend information about whether the actuarial value of
plan assets is increasing or decreasing over time relative to the actuarial accrued liability of
benefits.
10. COMMITMENTS AND CONTINGENCIES
The City is defendant in several pending lawsuits. City management estimates, based on the
advice of legal counsel, that the potential claims against the City, in excess of insurance
coverage, would not materially affect the basic financial statements of the City. The City
participates in a number of federal and state grant programs. These programs are subject to
program compliance audits by the grantors or their representatives. Any liability that may arise
as the result of these audits is not believed to be estimatable or probable.
Gaylord Texan Resort and Convention Center
The City of Grapevine, Texas has a Memorandum of Understanding with Opryland Hotel
Texas, Limited Partnership "Gaylord" whereas one cent ($.01) of the Hotel Occupancy Tax
[currently six cents($.06)] collected by the City from the Gaylord, for the immediately preceding
fiscal-year, shall be remitted each year back to the Gaylord. Per the agreement dated March 24,
1999, these payments will continue for a period of 20 years. Expenditures for fiscal year-end
2012 were $714,324.
On September 28, 2012, the City entered into a fourth addendum agreement with Opryland Hotel
— Texas, Limited Partnership related to the expansion of the Gaylord Texan Resort and
Convention Center. Gaylord Entertainment, Inc. will receive a payment from the City in the
amount equal to one-half of the "City Property Taxes" paid by Gaylord Texan Resort and
Convention Center to the City for a 10-year period. The term "City Property Taxes" means the
amount determined by multiplying the City ad valorem tax rate for the years in question times
the "Incremental Increase"in value with the base year being 2009.
The payment of Hotel Occupancy Taxes, as described in the preceding paragraph, will continue
for a period of 20 years. If a building permit is issued for the expansion of the Gaylord Hotel
prior to March 13, 2013, an additional one cent ($.02 total) will then be remitted back to the
Gaylord for the remainder of the 20 years.
(continued)
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10. COMMITMENTS AND CONTINGENCIES (Continued)
Great Wolf Lodge
The City of Grapevine, Texas entered into an incentive agreement with Great Wolf Resorts, Inc.
under Chapter 380 of the Texas Local Government Code. The Developer must complete the
project to construct a family oriented resort hotel featuring an indoor water park to be known as
the "Great Wolf Lodge." The Project is to be completed in two phases. In consideration of the
Developer's completion of the Project, the City agrees to provide the following incentives. For a
period of 10 years after the issuance of a Certificate of Occupancy for Phase I, the City shall
annually grant an amount to developer equal to one cent ($.01) of the Hotel Occupancy Tax rate
[currently six cents ($.06)] collected by the City from Phase I of the Project for the immediately
preceding Fiscal Year. For a period of 10 years after the issuance of a Certificate of Occupancy
for Phase I, the City shall annually grant an amount to Developer equal to one cent of the Hotel
Occupancy Tax rate [currently six cents ($.06)] collected by the City from Phase II of the Project
for the immediately preceding Fiscal Year. The City shall annually provide a grant in an amount
equal to one half of one cent of the municipal sales tax revenue collected on the "Property" for a
period of 10 years following the opening of Phase H. Incentives of $502,979 were earned in
fiscal year 2012 and were remitted by the City in fiscal year 2013 per contract.
Henry Schein
The City of Grapevine, Texas entered into a rebate agreement with Henry Schein, Inc. on March 6,
2007, for the rebate of Sales Tax Receipts from the one percent (1 %) sales and use tax under
Chapter 321 of the Texas Tax Code. The amount of the rebate is eighty seven and one half percent
(87.5 %) of the sales tax receipts for the sale of taxable items at the Henry Schein facility in
Grapevine, TX. The rebate does not apply to the one half of one percent (.5 %) sales and use tax
imposed on behalf of the Grapevine 4B Economic Development Corporation and one half of one
percent(.5 %) sales and use tax imposed on behalf of the Grapevine Crime Control and Prevention
District. The initial term of the agreement began on April 1, 2007, and continues until the 10th
anniversary date of the commencement date. Thereafter, the term of this agreement shall be
automatically renewed for two (2) successive terms of ten (10)years each. Rebate amounts earned
by Henry Schein, Inc. totaled$1,154,358 as of September 30, 2012.
Grapevine Mills Mall
The City Council and the Tax Increment Financing District Reinvestment Zone Number One
(TIF 41) Board of Directors of the City of Grapevine, Texas officially met on June 19, 2012. The
board discussed an Economic Development Agreement for the Grapevine Mills Mall for a
planned $40 million renovation with the focus on attracting a more upscale mix of retail. During
the meeting, City Manager Rumbelow recommended approval and authorization to execute an
Economic Development Agreement with Grapevine Mills LTD Partnership in an amount not to
exceed $14,000,000.00 for interior renovations ($10,000,000) and future exterior improvements
($4,000,000) at Grapevine Mills Mall. The Board unanimously approved the development
agreement.
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11. RISK MANAGEMENT
The City of Grapevine is exposed to various risks of loss related to tort liability, theft of and damage
to property and destruction of assets; public officials' errors and omissions; bodily injury and
property damage; injury to employees and natural disasters. During fiscal year 1987, the City of
Grapevine established a risk management program to account for and finance its risk of loss. In
fiscal year 1991, the Risk Management program was expanded to include implementation of the
SIR (Self Insured Retention) plan. Under this plan, the City provided insurance protection for all
known exposures,including all third party liability,law enforcement liability,public officials' errors
and omissions, and all bodily injury and property damage arising out of the City's operations on an
insured basis with various retentions up to $10,000 per occurrence. In addition, the City provides
protection for all its real property on a blanket building basis, including contents with agreed values
and replacement costs with $5,000 retention per occurrence. The City provides statutory workers'
compensation for all employees for bodily injury and indemnity loss of wages. The City provides
liability protection for all its commercial auto vehicles (fleet) on an insured basis up to $5,000 per
occurrence. The City also provides $10,000,000 excess umbrella liability over all liability
exposures. The City's loss experience has been very favorable with the experience modifier of.32
in the City's workers' compensation plan and similar loss ratios in the City's property and casualty
insurance fund. The City purchases commercial insurance for claims in excess of its retention
provided by the fund and for all other risks of loss. Risk management subrogates against third
parties that damage City property or create bodily injury to City staff. Settled claims have not
exceeded this commercial coverage in any of the past twenty fiscal years, nor has the City
experienced significant reductions in coverage. All funds of the City participate in the program and
make payments to the general fund based on actuarial estimates of the amounts needed to pay prior
and current year premiums and claims. All third party liability and property protection is provided
by A rated insurance carriers as defined by Best Key Rating Guide, A.M. Best Company. All
workers' compensation protection afforded the employees of the City of Grapevine is through the
Texas Municipal League Risk Retention Pool (TML Intergovernmental Risk Pool — Texas
Municipal League, 211 E. 7th Street, Austin, Texas 78701).
The City establishes the insurance claim liability based on estimates of the ultimate cost of claims
reported but unsettled and of claims incurred but not reported. Any claims incurred and not
reported are not believed to be significant to the City's financial statements. Activity for the last
two years is as follows:
2012 2011
Claims payable, beginning of year $ 745,054 $ 690,119
Current year claims and changes in estimates 5,977,450 6,001,783
Payments on claims ( 6,120,286) ( 5,946,848)
Claims payable at end of year $ 602,218 $ 745,054
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12. WATER STORAGE RIGHTS
Water storage rights of $683,547 net of accumulated amortization of $536,864, represent rights
in the Federal Reservoir at Lake Grapevine purchased through a long-term contract with the
federal government and are recorded at cost, with amortization being recorded using the straight-
line method over the initial term of the contract of 40 years. Approximately 8 years remains on
the contract.
13. IMPACT FEES
The City records impact fees received in excess of the cost of physical connection to the Water
and Sewer system as revenues. Corresponding cash is recorded as a restricted asset for future
expansion of the Water and Sewer system.
14. DEFERRED CHARGES
Deferred charges consist of expenses incurred in connection with the issuance of certain
outstanding bonds. Such charges are amortized on a straight-line basis over the lives of the
respective bonds.
15. WATER AND SEWER CONTRACTS
The City has separate contracts with the Trinity River Authority of Texas ("TRA") for the
purchase of treated water and for the transportation, treatment and disposal of wastewater, which
expire in 2014 and 2023, respectively. The contracts require the City to pay varying amounts
based on the costs associated with water purchased and wastewater transported and/or treated
and disposed. The costs include the City's proportionate share of TRA's operating and
maintenance expenses, related debt service costs,plus certain other miscellaneous charges.
Payments during 2012 for the purchase of treated water were $5,295,990 and payments made for
the transportation, treatment, and disposal of wastewater by TRA were $931,784. If the City
were unable to fulfill its obligations under the contracts, the only liability for future payment
would be its proportionate share of debt service requirements. In addition, the City does not
retain an ongoing financial interest in TRA and has no representation on the TRA Board;
therefore, the TRA contracts are not considered to be joint venture agreements.
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16. OTHER POSTEMPLOYMENT BENEFITS
Post-retirement Health Care Benefits
The City provides certain health care and life insurance benefits through a single-employer
defined benefit OPEB plan, under City ordinance, for all full and part-time employees that meet
eligibility requirements. Eligible individuals include retired employees who have satisfied the
requirement as defined by the Texas Municipal Retirement System and their dependents that
were covered prior to retirement. The requirement as defined by the Texas Municipal Retirement
System is any age with 20 years of service or 5 years of service for age 60 and above. City
Council members that serve three terms will be classified as retired employees when they leave
office. Currently, the City has 549 active employees and 107 retirees and beneficiaries eligible
to participate in the plan.
Retirees pay premiums for coverage in the OPEB programs. There is not a maximum employer
paid premium amount (capped benefit). Active employees do not contribute to the retiree health
care plan.
Retirees are eligible for medical, dental, vision, and prescription insurance until they become
Medicare eligible. Retirees are also eligible for a $20,000 life insurance policy. Once Medicare
eligible, retirees are eligible for dental, vision, and life insurance only. At that time, the City
medical plan will no longer be available. A supplement of $250 will be made available to all
retirees who either (1) retire after the age of 65 or (2) are covered pre-Medicare in the retiree
medical program. Spouses of retirees will receive the $250 supplement if they have been on the
plan for one year prior to retirement.
Retirees are eligible for benefits immediately upon retirement. If the employee returns to work
for an employer that offers health coverage, the retiree cannot rejoin the City's health plan at a
later date.
In the event that an active employee passes away, the spouse and dependents will become
eligible for retiree coverage if (1) the employee was eligible for retirement as defined by the
Texas Municipal Retirement System; and (2) the employee had dependent coverage at the time
of death. Coverage will continue under the plan as long as monthly retiree premiums are paid by
the specified due date, until dependents are no longer considered eligible dependents as defined
by the plan, until the covered dependent becomes Medicare eligible, or until a surviving spouse
remarries.
When the retiree or eligible dependent becomes Medicare eligible, the City medical plan will no
longer be available. Upon reaching Medicare eligibility retirees and their spouses may enroll in
the Senior Insurance Plan.
(continued)
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16. OTHER POSTEMPLOYMENT BENEFITS (Continued)
Post-retirement Health Care Benefits (Continued)
Annual OPEB Cost and Net OPEB Obligation
The City's annual other postemployment benefit (OPEB) cost (expense) is calculated based on
the annual required contribution of the employer (ARC), an amount actuarially determined in
accordance with the parameters of GASB Statement 45. The ARC represents a level of accrual
that is projected recognize the normal cost each year and to amortize any unfunded actuarial
liabilities (or funding excess) over a period not to exceed 30 years. The annual OPEB cost for the
fiscal year ending September 30, 2012, is as follows:
Annual Required Contribution (ARC) $ 3,826,977
Interest on Net OPEB Obligation 303,935
Adjustment to the ARC ( 281,593)
Annual OPEB Cost 3,849,319
Employer Contributions ( 573,011)
Increase(Decrease)in Net OPEB Obligation 3,276,308
Net OPEB Obligation/(Asset), beginning of year 6,754,120
Net Pension Obligation/(Asset), ending of year $ 10,030,428
Expenses for post-retirement health care benefits are recognized on a pay-as-you-go basis. In
addition to the employer contribution, the retirees paid $160,300 in the form of premiums which
funded current medical claims.
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and
the net OPEB obligation for fiscal year ending September 30, 2012 and the preceding two fiscal
years were as follows:
Annual Net
Fiscal Year OPEB Employer Percentage OPEB
Ended Cost Contribution Contributed Obligation
09/30/10 $ 2,523,606 $ 686,050 27% $ 3,771,007
09/30/11 3,727,986 744,873 20% 6,754,120
09/30/12 3,849,319 573,011 15% 10,030,428
(continued)
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16. OTHER POSTEMPLOYMENT BENEFITS (Continued)
Post-retirement Health Care Benefits (Continued)
Funding Status and Funding Progress
Actuarial UAAL as a
Actuarial Actuarial Accrued Unfunded Percentage
Valuation Value of Liability (AAL) Funded Covered of Covered
Date Assets (AAL) (UAAL) Ratio Payroll Payroll
12/31/10 - S 36,241,223 S 36,241,223 - % S 35,278,020 102.73%
The projection of future payments for an ongoing plan involves estimates of the value of
reported amounts and assumptions about the probability of occurrence of events far into the
future. Examples include assumptions about future employment, mortality, and the health care
cost trend. Amounts determined regarding the funded status of the plan and the annual required
contributions of the employer are subject to continual revision as actual results are compared
with past expectations and new estimates are made about the future.
Actuarial Methods and Assumptions
The Projected Unit Credit actuarial cost method is used to calculate the ARC for the City's
retiree health care plan. Using the plan benefits, the present health premiums and set of actuarial
assumptions, the anticipated future payments are projected. The projected unit credit method
then provides for a systematic recognition of the cost of these anticipated payments. The yearly
ARC is computed to cover the cost of benefits being earned by covered members as well as to
amortize a portion of the unfunded accrued liability.
Projections of health benefits are based on the plan as understood by the City and include the
types of benefits in force at the valuation date and the pattern of sharing benefit costs between
the City and its employees to that point. Actuarial calculations reflect a long-term perspective
and employ methods and assumptions that are designed to reduce short-term volatility in
actuarial accrued liabilities and the actuarial value of assets.
(continued)
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16. OTHER POSTEMPLOYMENT BENEFITS (Continued)
Post-retirement Health Care Benefits (Continued)
Significant methods and assumptions were as follows:
Actuarial Valuation Date 12/31/2010
Actuarial Cost Method Projected Unit Credit
Amortization Method Level as a percentage of payroll
Remaining Amortization Period 30 years; open
Asset Valuation Method Market Value
Actuarial Assumptions:
Inflation rate 3%per annum
Investment Rate of Return 4.5%,net of expenses
Payroll Growth Rate 3%per annum
General Inflation Rate 3%
Health Care Trend Initial rate of 9% declining to an ultimate
rate of 4.5% after 9 years
There is no separately issued audited benefit plan report available for the City's OPEB plan.
Actuarial valuations involve estimates of the value of reported amounts and assumptions about the
probability of events in the future. Amounts determined regarding the funded status and the annual
required contributions of the City's retiree health care plan are subject to continual revisions as
actual results are compared to past expectations and new estimates are made about the future. The
required schedule of funding progress presented as required supplementary information provides
multiyear trend information that shows whether the actuarial value of plan assets is increasing or
decreasing over time relative to the actuarial accrued liability for benefits.
17. EXPENDITURES OVER APPROPRIATIONS
Expenditures exceeded appropriations in the following funds by the following amounts. These
expenditures were funded by greater than expected revenues.
Fund Amount
Hotel Occupancy Tax S 63,105
Debt service fund 4,421
413-Transit 400,006
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18. SUBSEQUENT EVENTS
On December 4, 2012, the City issued $8,060,000 of General Obligation Refunding Bonds, Series
2012 and $1,225,000 of Public Property Finance Contractual Obligations, Series 2012. The
refunding bonds have a final maturity date of February 15, 2027, and have interest rates ranging
from 2.0-2.125%. The refunding bonds will be used to refund $7,880,000 in various certificates of
obligation and general obligation bonds. The contractual obligations will be used for the
acquisition of a fire truck. These obligations have a final maturity date of February 15, 2027, and
have interest rates ranging from 1.25-2.25%.
On November 19, 2012, the City of Grapevine resolved to issue anticipated General Obligation
Bonds for $38,600,000 to construct a new Public Safety Building that will house the Police
Department and Municipal Court and $30,100,000 for constructing, improving, equipping, and
renovation to and expansion of the existing Community Activities Center.
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REQUIRED
SUPPLEMENTARY INFORMATION
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CITY OF GRAPEVINE, TEXAS
GENERAL FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE YEAR ENDED SEPTEMBER 30,2012
Budgeted Amounts
Variance with
Final Budget-
Positive
Original Final Actual (Negative)
REVENUES
Taxes $ 38,324,457 $ 38,324,457 $ 40,179,342 $ 1,854,885
Licenses and permits 1,101,811 1,101,811 1,541,902 440,091
Intergovernmental 75,221 75,221 125,415 50,194
Charges for services 2,963,420 2,963,420 3,498,239 534,819
Fines and forfeitures 2,123,875 2,123,875 1,970,453 ( 153,422)
Investment income 60,000 60,000 38,265 ( 21,735)
Miscellaneous 200,000 200,000 282,160 82,160
Total revenues 44,848,784 44,848,784 47,635,776 2,786,992
EXPENDITURES
Current:
General government 13,964,110 14,359,933 13,738,841 621,092
Public safety 12,045,226 12,347,238 12,166,267 180,971
Culture and recreation 7,980,256 8,310,588 8,119,965 190,623
Public works 5,274,863 5,316,735 5,100,712 216,023
Capital outlay 35,950 415,373 210,096 205,277
Debt service principal - - 257,856 ( 257,856)
Total expenditures 39,300,405 40,749,866 39,593,737 1,156,129
EXCESS(DEFICIENCY)OF REVENUE
OVER(UNDER)EXPENDITURES 5,548,379 4,098,918 8,042,039 3,943,121
OTHER FINANCING SOURCES(USES)
Transfers in 2,854,422 2,854,422 3,069,784 215,362
Transfers out ( 8,311,801) ( 8,312,138) ( 8,312,138) -
Total other financing sources(uses) ( 5,457,379) ( 5,457,716) ( 5,242,354) 215,362
NET CHANGE IN FUND BALANCES 91,000 ( 1,358,798) 2,799,685 4,158,483
FUND BALANCES,BEGINNING 9,595,273 9,595,273 9,595,273 -
FUND BALANCES,ENDING $ 9,686,273 $ 8,236,475 $ 12,394,958 $ 4,158,483
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CITY OF GRAPEVINE, TEXAS
HOTEL OCCUPANCY TAX
BUDGETARY COMPARISON SCHEDULE
FOR THE YEAR ENDED SEPTEMBER 30,2012
Budgeted Amounts
Variance with
Final Budget-
Positive
Original Final Actual (Negative)
REVENUES
Taxes $ 11,432,340 $ 11,432,340 $ 12,326,427 $ 894,087
Charges for services 6,354,000 6,354,000 6,146,246 ( 207,754)
Investment income 6,000 6,000 16,582 10,582
Miscellaneous 98,000 98,000 350,841 252,841
Total revenues 17,890,340 17,890,340 18,840,096 949,756
EXPENDITURES
Current:
Culture and recreation 14,870,228 14,981,963 15,060,909 ( 78,946)
Capital outlay 29,000 29,000 13,159 15,841
Total expenditures 14,899,228 15,010,963 15,074,068 ( 63,105)
EXCESS(DEFICIENCY)OF REVENUE
OVER(UNDER)EXPENDITURES 2,991,112 2,879,377 3,766,028 886,651
OTHER FINANCING SOURCES(USES)
Transfers in 359,453 359,453 366,970 7,517
Transfers out ( 2,882,078) ( 2,857,078) ( 3,035,393) ( 178,315)
Total other financing sources(uses) ( 2,522,625) ( 2,497,625) ( 2,668,423) ( 170,798)
NET CHANGE IN FUND BALANCES 468,487 381,752 1,097,605 715,853
FUND BALANCES,BEGINNING 4,871,546 4,871,546 4,871,546 -
FUND BALANCES,ENDING $ 5,340,033 $ 5,253,298 $ 5,969,151 $ 715,853
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CITY OF GRAPEVINE, TEXAS
CRIME DISTRICT
BUDGETARY COMPARISON SCHEDULE
FOR THE YEAR ENDED SEPTEMBER 30,2012
Budgeted Amounts
Variance with
Final Budget-
Positive
Original Final Actual (Negative)
REVENUES
Taxes $ 11,350,000 $ 11,350,000 $ 11,286,914 $( 63,086)
Intergovernmental - 243 243 -
Investment income 13,649 13,649 3,435 ( 10,214)
Total revenues 11,363,649 11,363,892 11,290,592 ( 73,300)
EXPENDITURES
Current:
Public safety 12,578,902 12,622,224 12,384,894 237,330
Capital outlay 375,747 378,747 146,040 232,707
Total expenditures 12,954,649 13,000,971 12,530,934 470,037
EXCESS(DEFICIENCY)OF REVENUE
OVER(UNDER)EXPENDITURES ( 1,591,000) ( 1,637,079) ( 1,240,342) 396,737
OTHER FINANCING SOURCES(USES)
Transfers in 1,500,000 1,500,000 1,500,000 -
Total other financing sources(uses) 1,500,000 1,500,000 1,500,000 -
NET CHANGE IN FUND BALANCES ( 91,000) ( 137,079) 259,658 396,737
FUND BALANCES,BEGINNING 155,748 155,748 155,748 -
FUND BALANCES,ENDING $ 64,748 $ 18,669 $ 415,406 $ 396,737
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CITY OF GRAPEVINE, TEXAS
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF FUNDING PROGRESS FOR PARTICIPATION
IN TEXAS MUNICIPAL RETIREMENT SYSTEM
FOR THE YEAR ENDED SEPTEMBER 30,2012
Actuarial
Actuarial Accrued Unfunded UAAL as a
Actuarial Value of Liability Funded AAL Covered Percentage of
Valuation Assets (AAL) Ratio (UAAL) Payroll Covered Payroll
Date (a) (b) (a/b) (b-a) (c) (b-a)/(c)
12/31/2009 $ 83,121,394 $ 133,446,268 62.3% $ 50,324,874 $ 35,340,679 142.4%
12/31/2010 131,269,476 175,238,441 74.9% 43,968,965 35,278,020 124.6%
12/31/2011 143,043,423 186,688,189 76.6% 43,644,766 34,504,224 126.5%
Note:
2010 includes the impact of Senate Bill 350 enacted by the Texas Legislature in June 2011.This legislation provided a restructuring of
the Texas Municipal Retirement System funds effective December 31,2010.
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CITY OF GRAPEVINE, TEXAS
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF FUNDING PROGRESS
POST-RETIREMENT HEALTH CARE BENEFIT PLAN
FOR THE YEAR ENDED SEPTEMBER 30,2012
Actuarial
Actuarial Accrued Unfunded UAAL as a
Actuarial Value of Liability Funded AAL Covered Percentage of
Valuation Assets (AAL) Ratio (UAAL) Payroll Covered Payroll
Date (a) (b) (a/b) (b-a) (c) (b-a)/(c)
12/31/2008 $ - $ 23,744,606 0.0% $ 23,744,606 $ 34,375,838 69.1%
12/31/2010 - 36,241,223 0.0% 36,241,223 35,278,020 102.7%
(Note) This is the fourth year of implementation of GASB 45. Accordingly, only two years of funding progress are
available as GASB 45 only requires the City to have actuarial evaluations performed every two years. Additional years of
funding progress will be presented in future years,as they become available.
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CITY OF GRAPEVINE, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
SEPTEMBER 30,2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Budgets
The City follows these procedures in establishing budgetary data reflected in the financial
statements:
(1) Prior to August 1, the City Manager submits to the City Council a proposed
operating budget for the fiscal year commencing the following October 1. The
operating budget includes proposed expenditures and the means of financing them.
(2) Public hearings are conducted to obtain taxpayer comments.
(3) Prior to September 15, the budget is legally enacted through passage of an ordinance.
(4) The City Manager is authorized to transfer budgeted amounts between departments
within any fund; however, any revisions that alter the total expenditures of any fund
must be approved by the City Council, after public hearings. Total expenditures
may not exceed appropriations at the individual fund level.
(5) Budgets are legally adopted for the General Fund, Hotel Occupancy Tax Fund
(a Special Revenue Fund), the Crime District Fund (a Special Revenue Fund), the
4B —Transit Fund (a Special Revenue Fund), the Debt Service Fund and Enterprise
Funds. Budgetary control is maintained at the fund level.
(6) Budgets for the General, Hotel Occupancy Tax Special Revenue, Crime District
Special Revenue, 4B—Transit Fund, and Debt Service Fund are adopted in
accordance with generally accepted accounting principles. Budget amounts are as
amended by the City Council and adjusted for transfers of budgeted amounts
between departments within any fund, authorized by the City Manager.
(7) Budgetary comparison schedules are presented as required supplementary
information for the General Fund and for each major special revenue fund. The
Grant Special Revenue Fund does not have a legally adopted annual budget.
Capital Projects Funds have not been presented as such funds are budgeted over the
life of the respective project and not on an annual basis. Accordingly, formal
budgetary integration of these funds is not employed and comparison of actual
results of operations to budgetary data for such funds is not presented.
(8) The budgetary comparison schedules included in the required supplementary
information present a comparison of budgetary data to actual results of operations
for the General Fund, Hotel Occupancy Tax Fund (Special Revenue Fund), and
Crime District Fund (Special Revenue Fund). Comparisons of budgetary data to
actual results of operations for the Debt Service Fund and 4B—Transit Fund (Special
Revenue Fund) are presented as supplementary information.
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COMBINING AND INDIVIDUAL
STATEMENTS AND SCHEDULES
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NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Special Revenue Funds are used to account for revenues that are restricted in nature for a special
purpose limited by state law and management intentions for expenditures.
4B Transit Fund—accounts for the accumulation and expenditure of resources used to fund the City of
Grapevine's participation in the commuter rail development project with the Fort Worth Transit
Authority (the "T").
Special Revenue Fund—to account for revenues that are restricted in name for a special purpose limited
by state law and management intentions for expenditures. These funds include monies for state and
federal forfeitures, copier service and replacement, library and parks programs and policy in-service
training.
Storm Drainage Fund — to account for the services in the management and acquisition of capital for
storm water drainage utility projects in the City.
Lake Parks Fund— to account for revenues from the campgrounds at Lake Grapevine. Revenues are
restricted in accordance with Army Corp. of Engineer requirements and for debt covenant requirements
for bonds issued for campground construction.
4B Economic Development Fund—to account for the accumulation and expenditure of resources used
to stimulate the local economy, development, and redevelopment.
DEBT SERVICE FUND
The Tax Increment Financing (TIF) Number Two Debt Service Fund — established by ordinances
authorizing the issuance of Combination Tax and Tax Increment Reinvestment Zone Certificate of
Obligation Series 2000. A property tax is levied for the payment of the debt as it becomes due and is
currently payable in annual installments as it becomes due.
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CAPITAL PROJECTS FUNDS
Capital Projects Funds —used to account for the acquisition and construction of major capital facilities
other than those financed by proprietary funds and trust funds.
The Tax Increment Financing (TIF) Number One Capital Projects Fund — established for the
financing, acquisition and construction of the infrastructure surrounding the Grapevine Mills Mall.
The Tax Increment Financing (TIF) Number Two Capital Projects Fund — established for the
financing, acquisition and construction of the infrastructure surrounding Gaylord Texas Resort and
Convention Center.
Parks Open Space and Recreation Fund— to account for the financing, acquisition, construction and
improvement of parks and public recreation facilities.
The Streets Fund—is used to account for the construction of improvements to various streets, drainage
and sidewalk projects.
Street Maintenance and Capital Replacement Fund—to account for resources provided and expended
on street maintenance and capital replacements.
General Facilities and Equipment Fund — to account for general financing acquisitions and
construction and improvements of buildings and capital equipment.
Capital Acquisition Fund — to account for financial resources for the replacement and acquisition of
capital assets.
Quality of Life Fund—to account for capital projects as designated by the City Council.
L..EM # I
CITY OF GRAPEVINE, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30,2012
Special Revenue
413-Transit Special Storm
Fund Revenue Drainage
ASSETS
Cash $ 302,374 $ 2,720,811 $ 2,697,326
Receivables:
Accounts,net - 22,968 520,672
Taxes 1,344,954 - -
Accrued interest 152 1,294 1,123
Inventory - - -
Due from other governments - - -
Total assets $ 1,647,480 $ 2,745,073 $ 3,219,121
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 1,278,649 $ 45,877 $ 30,194
Accrued and other liabilities - 892 9,521
Due to other funds - - -
Deferred revenue - - -
Developer deposits - - -
Contracts and retainage payable - - -
Total liabilities 1,278,649 46,769 39,715
Fund balances:
Nonspendable:
Inventory - - -
Restricted:
Debt service - - -
Capital projects - - -
Public safety - 662,159 -
Economic development - - -
Transportation 368,831 - -
Culture and recreation - 152,167 -
Committed for:
Stormwater drainage operations - - 3,179,406
Public arts - 600,258 -
Assigned for:
Capital projects - 648,775 -
Culture and recreation - 634,945 -
Unassigned - - -
Total fund balances 368,831 2,698,304 3,179,406
Total liabilities and fund balances $ 1,647,480 $ 2,745,073 $ 3,219,121
72
L..ENA # I
Special Revenue Debt Service Capital Projects
Parks Open
Lake 4B-Economic Space and
Parks Development TIF#2 TIF#1 TIF#2 Recreation
$ - $ 12,707,725 $ 5,937,030 $ 1,856,068 $ 2,149,435 $ 30,142
3,323 - - - - -
- 564,922 1,136,830 - - -
- 6,122 2,843 883 - 15
17,022 - - - - -
66,662 - - - - -
$ 87,007 $ 13,278,769 $ 7,076,703 $ 1,856,951 $ 2,149,435 $ 30,157
$ 64,943 $ 750,646 -
1,859 - - - - -
759,546 - - - - -
219,396 - - - - 31,604
1,045,744 750,646 - - - 31,604
17,022 - - - - -
- - 7,076,703 - - -
- - - 1,856,951 2,149,435 -
- 12,528,123 - - - -
( 975,759) - - - - ( 1,447)
( 958,737) 12,528,123 7,076,703 1,856,951 2,149,435 ( 1,447)
$ 87,007 $ 13,278,769 $ 7,076,703 $ 1,856,951 $ 2,149,435 $ 30,157
(continued)
73
L..EM # I
CITY OF GRAPEVINE, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
(Continued)
SEPTEMBER 30,2012
Capital Projects
Street
Maintenance General
and Capital Facilities and
Streets Replacement Equipment
ASSETS
Cash $ 9,976,735 $ 1,740,090 $ 1,036,485
Receivables:
Accounts,net 31,649 - -
Taxes - - -
Accrued interest 2,559 827 162
Inventory - - -
Due from other governments 68,377 - -
Total assets $ 10,079,320 $ 1,740,917 $ 1,036,647
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 103,385 $ 57,189 $ 100,566
Accrued and other liabilities - - -
Due to other funds - - 479,158
Deferred revenue 43,265 - -
Developer deposits 1,529,613 - -
Contracts and retainage payable - - 7,298
Total liabilities 1,676,263 57,189 587,022
Fund balances:
Nonspendable:
Inventory - - -
Restricted:
Debt service - - -
Capital projects 8,403,057 1,683,728 449,625
Public safety - - -
Economic development - - -
Transportation - - -
Culture and recreation - - -
Committed for:
Stormwater drainage operations - - -
Public arts - - -
Assigned for:
Capital projects - - -
Culture and recreation - - -
Unassigned - - -
Total fund balances 8,403,057 1,683,728 449,625
Total liabilities and fund balances $ 10,079,320 $ 1,740,917 $ 1,036,647
74
L..ENA # I
Capital Projects
Total Other
Capital Quality Governmental
Acquisition of Life Funds
$ 3,487,891 $ 10,034,143 $ 54,676,255
- - 578,612
- - 3,046,706
954 4,790 21,724
- - 17,022
- - 135,039
$ 3,488,845 $ 10,038,933 $ 58,475,358
$ 375,416 $ 27,889 $ 2,834,754
1,742 - 14,014
- - 1,238,704
- - 294,265
- - 1,529,613
- 33,035 40,333
377,158 60,924 5,951,683
- - 17,022
- - 7,076,703
3,111,687 - 17,654,483
- - 662,159
- - 12,528,123
- - 368,831
- - 152,167
- - 3,179,406
- - 600,258
- 9,978,009 10,626,784
- - 634,945
- - ( 977,206)
3,111,687 9,978,009 52,523,675
$ 3,488,845 $ 10,038,933 $ 58,475,358
75
L..EM # I
CITY OF GRAPEVINE, TEXAS
COMBINING STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30,2012
Special Revenue
413-Transit Special Storm
Fund Revenue Drainage
REVENUES
Property taxes -
Sales taxes 8,160,456 - -
Charges for services - 262,373 1,750,558
Fines and forfeitures - 46,812 -
Intergovernmental - 8,404 -
Contributions - 194,064 -
Investment income 3,477 11,488 5,826
Miscellaneous - - 18
Total revenues 8,163,933 523,141 1,756,402
EXPENDITURES
Current:
General government - 240,727 -
Public safety - - -
Culture and recreation - 224,815 -
Public works - - 960,417
Transportation 7,772,824 - -
Economic development - - -
Intergovernmental - - -
Capital outlay - - 78,248
Debt service:
Principal - - -
Interest - - -
Other - - 175
Total expenditures 7,772,824 465,542 1,038,840
EXCESS(DEFICIENCY)OF REVENUE
OVER(UNDER)EXPENDITURES 391,109 57,599 717,562
OTHER FINANCING SOURCES(USES)
Transfers in - - -
Transfers out ( 366,970) ( 22,446) ( 543,088)
Sale of capital assets - - -
Total other financing sources(uses) ( 366,970) ( 22,446) ( 543,088)
NET CHANGE IN FUND BALANCES 24,139 35,153 174,474
FUND BALANCES,BEGINNING 344,692 2,663,151 3,004,932
FUND BALANCES,ENDING $ 368,831 $ 2,698,304 $ 3,179,406
76
L..ENA # I
Special Revenue Debt Service Capital Projects
Parks Open
Lake 4B-Economic Space and
Parks Development TIF#2 TIF#1 TIF#2 Recreation
5,736,208 -
- 3,476,988 - - - -
1,914,839 - - - - -
- 27,001 12,578 6,980 2,474 130
13,524 - - - - -
1,928,363 3,503,989 5,748,786 6,980 2,474 130
1,426,507 - - - - -
- 2,661 - - - -
- 1,050,000 1,548,060 - - -
- 1,660 - 183,005 47,495 -
- - 1,255,000 - - -
- - 1,417,011 - - -
2,190 - - - 2,400 -
1,428,697 1,054,321 4,220,071 183,005 49,895 -
499,666 2,449,668 1,528,715 ( 176,025) ( 47,421) 130
- - - 497,582 - -
( 336,566) ( 264,575) - - - -
( 336,566) ( 264,575) - 497,582 - -
163,100 2,185,093 1,528,715 321,557 ( 47,421) 130
( 1,121,837) 10,343,030 5,547,988 1,535,394 2,196,856 ( 1,577)
$L____258,737) $ 12,528,123 $ 7,076,703 $ 1,856,951 $ 2,149,435 $( 1,447)
(continued)
77
L..EM # I
CITY OF GRAPEVINE, TEXAS
COMBINING STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCE
NONMAJOR GOVERNMENTAL FUNDS
(Uontinued)
FOR THE YEAR ENDED SEPTEMBER 30,2012
Capital Projects
Street
Maintenance General
and Capital Facilities and
Streets Replacement Equipment
REVENUES
Property taxes -
Sales taxes - - -
Charges for services - - -
Fines and forfeitures - - -
Intergovernmental 91,929 - -
Contributions - - -
Investment income 17,756 4,821 5,126
Miscellaneous 84,745 118,309 187
Total revenues 194,430 123,130 5,313
EXPENDITURES
Current:
General government - - -
Public safety - - -
Culture and recreation - - -
Public works - 192 -
Transportation - - -
Economic development - - -
Intergovernmental - - -
Capital outlay 454,510 2,084,384 1,558,145
Debt service:
Principal - - -
Interest - - -
Other 1,775 - 2,804
Total expenditures 456,285 2,084,576 1,560,949
EXCESS(DEFICIENCY)OF REVENUE
OVER(UNDER)EXPENDITURES ( 261,855) ( 1,961,446) ( 1,555,636)
OTHER FINANCING SOURCES(USES)
Transfers in 141,750 2,571,500 45,000
Transfers out - - -
Sale of capital assets - - -
Total other financing sources(uses) 141,750 2,571,500 45,000
NET CHANGE IN FUND BALANCES ( 120,105) 610,054 ( 1,510,636)
FUND BALANCES,BEGINNING 8,523,162 1,073,674 1,960,261
FUND BALANCES,ENDING $ 8,403,057 $ 1,683,728 $ 449,625
78
L..ENA # I
Capital Projects
Total Other
Capital Quality Governmental
Acquisition of Life Funds
5,736,208
- - 11,637,444
- - 3,927,770
- - 46,812
- - 100,333
- - 194,064
6,023 21,375 125,055
- 4,611 221,394
6,023 25,986 21,989,080
- - 240,727
520,584 288,187 808,771
- 214 1,651,536
- - 960,609
- - 7,772,824
- - 2,661
- - 2,598,060
2,573,313 1,290,825 8,271,585
- - 1,255,000
- - 1,417,011
4,317 - 13,661
3,098,214 1,579,226 24,992,445
( 3,092,191) ( 1,553,240) ( 3,003,365)
1,565,301 3,000,000 7,821,133
( 47,166) ( 141,750) ( 1,722,561)
112,025 - 112,025
1,630,160 2,858,250 6,210,597
( 1,462,031) 1,305,010 3,207,232
4,573,718 8,672,999 49,316,443
$ 3,111,687 $ 9,978,009 $ 52,523,675
79
L..EM # I
CITY OF GRAPEVINE, TEXAS
4B-TRANSIT
BUDGETARY COMPARISON SCHEDULE
FOR THE YEAR ENDED SEPTEMBER 30,2012
Budgeted Amounts
Variance with
Final Budget-
Positive
Original Final Actual (Negative)
REVENUES
Sales taxes $ 8,512,500 $ 8,512,500 $ 8,160,456 $( 352,044)
Investment income - - 3,477 3,477
Total revenues 8,512,500 8,512,500 8,163,933 ( 348,567)
EXPENDITURES
Current:
Transportation 7,372,818 7,372,818 7,772,824 ( 400,006)
Total expenditures 7,372,818 7,372,818 7,772,824 ( 400,006)
EXCESS(DEFICIENCY)OF REVENUE
OVER(UNDER)EXPENDITURES 1,139,682 1,139,682 391,109 ( 748,573)
OTHER FINANCING SOURCES(USES)
Transfers out ( 359,453) ( 359,453) ( 366,970) ( 7,517)
Total other financing sources(uses) ( 359,453) ( 359,453) ( 366,970) ( 7,517)
NET CHANGE IN FUND BALANCE 780,229 780,229 24,139 ( 756,090)
FUND BALANCE,BEGINNING 344,692 344,692 344,692 -
FUND BALANCE,ENDING $ 1,124,921 $ 1,124,921 $ 368,831 $( 756,090)
80
L..EM # I
CITY OF GRAPEVINE, TEXAS
DEBT SERVICE FUND
BUDGETARY COMPARISON SCHEDULE
FOR THE YEAR ENDED SEPTEMBER 30,2012
Budgeted Amounts
Variance with
Final Budget-
Positive
Original Final Actual (Negative)
REVENUES
Taxes $ 10,742,976 $ 10,742,976 $ 10,950,313 $ 207,337
Investment income 100,000 100,000 36,694 ( 63,306)
Total revenues 10,842,976 10,842,976 10,987,007 144,031
EXPENDITURES
Debt service:
Principal 7,710,862 7,710,862 7,710,859 3
Interest and fiscal charges 2,750,386 2,750,386 2,754,810 ( 4,424)
Total expenditures 10,461,248 10,461,248 10,465,669 ( 4,421)
EXCESS(DEFICIENCY)OF REVENUE
OVER(UNDER)EXPENDITURES 381,728 381,728 521,338 139,610
OTHER FINANCING SOURCES(USES)
Transfers in 2,359,510 2,359,510 2,438,945 79,435
Total other financing sources(uses) 2,359,510 2,359,510 2,438,945 79,435
NET CHANGE IN FUND BALANCE 2,741,238 2,741,238 2,960,283 219,045
FUND BALANCE,BEGINNING 9,292,113 9,292,113 9,292,113 -
FUND BALANCE,ENDING $ 12,033,351 $ 12,033,351 $ 12,252,396 $ 219,045
81
L..EM # I
CITY OF GRAPEVINE, TEXAS
COMBINING STATEMENT OF CHANGES IN
ASSETS AND LIABILITIES
AGENCY FUNDS
YEAR ENDED SEPTEMBER 30,2012
Police Department Case Settlement
Balance Balance
10/01/11 Additions Deletions 09/30/12
Cash and cash equivalents $ 6,450 S 2,065 S - $ 8,515
Total assets S 6,450 S 2,065 S - S 8,515
Due to beneficiary S 6,450 S 2,065 S - S 8,515
Total liabilities S 6,450 S 2,065 S - S 8,515
Industrial Development Corporation
Balance Balance
10/01/11 Additions Deletions 09/30/12
Cash and cash equivalents S 129,864 S 224 S - S 130,088
Total assets S 129,864 S 224 S - S 130,088
Due to beneficiary S 129,864 S 224 S - S 130,088
Total liabilities S 129,864 S 224 S - S 130,088
W.D. Tate Scholarship
Balance Balance
10/01/11 Additions Deletions 09/30/12
Cash and cash equivalents S 4,123 S 2,960 S - S 7,083
Total assets S 4,123 S 2,960 S - S 7,083
Due to beneficiary S 4,123 S 2,960 S - S 7,083
Total liabilities S 4,123 S 2,960 S - S 7,083
(continued)
82
L..EM # I
CITY OF GRAPEVINE, TEXAS
COMBINING STATEMENT OF CHANGES IN
ASSETS AND LIABILITIES
AGENCY FUNDS
YEAR ENDED SEPTEMBER 30,2012
Total Agency Funds
Balance Balance
10/01/11 Additions Deletions 09/30/12
Cash and cash equivalents S 140,437 $ 5,249 S - S 145,686
Total assets S 140,437 S 5,249 S - S 145,686
Due to beneficiary S 140,437 S 5,249 S - S 145,686
Total liabilities S 140,437 S 5,249 S - S 145,686
83
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L..ENA # I
STATISTICAL SECTION
L..ENA # I
THIS PAGE LEFT BLANK INTENTIONALLY
L..ENA # I
STATISTICAL SECTION
This part of the City of Grapevine, Texas' comprehensive annual financial report presents
detailed information as a context for understanding what the information in the financial
statements, note disclosures, and required supplementary information says about the
City's overall financial health.
Contents
Page
Financial Trends 84 -95
These schedules contain trend information to help the reader
understand how the City's financial performance and well-being have
changed over time.
Revenue Capacity 96- 101
These schedules contain information to help the reader assess the
City's most significant local revenue sources. Sales tax became the
most significant revenue source in FY 2007. Beginning in FY 2010,
sales tax revenue information became available to the City and is in
Tables 5 and 6. Information about principal sales tax revenue payers
is confidential under Texas statutes and is not provided. Additionally,
information about the City's second most significant local revenue
source, the property tax, is provided.
Debt Capacity 102 - 109
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 110- 111
These schedules offer demographic and economic indicators to help
the reader understand the environment within which the City's
financial activities take place.
Operating Information 112 - 114
These schedules contain service and infrastructure data to help the reader
understand how the information in the City's financial report relates to
the services the City provides and the activities it performs.
Sources: Unless otherwise noted, the information in these schedules is derived from the
comprehensive annual financial reports for the relevant year.
L..EM # I
CITY OF GRAPEVINE, TEXAS
NET ASSETS BY COMPONENT
LAST TEN FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands)
Fiscal Year
2003 2004 2005 2006
Governmental activities:
Invested in capital assets,net of related debt $ 10,004 $ 8,757 $ 16,729 $ 21,862
Restricted 8,387 14,106 14,625 21,049
Unrestricted 9,465 9,607 12,957 16,653
Total governmental activities net assets $ 27,856 $ 32,470 $ 44,311 $ 59,564
Business-type activities:
Invested in capital assets,net of related debt $ 57,118 $ 57,643 $ 60,931 $ 63,936
Restricted 5,016 5,312 6,421 6,784
Unrestricted 8,727 11,374 10,407 13,012
Total business-type activities net assets $ 70,861 $ 74,329 $ 77,759 $ 83,732
Primary government:
Invested in capital assets,net of related debt $ 67,122 $ 66,400 $ 77,660 $ 85,798
Restricted 13,403 19,418 21,046 27,833
Unrestricted 18,192 20,981 23,364 29,665
Total primary government net assets $ 98,717 $ 106,799 $ 122,070 $ 143,296
Source: Comprehensive Annual Financial Reports
84
L..ENA # I
TABLE 1
Fiscal Year
2007 2008 2009 2010 2011 2012
$ 28,660 $ 39,332 $ 57,264 $ 73,702 $ 84,069 $ 88,342
32,626 34,200 40,419 55,622 61,712 71,909
18,198 29,360 25,626 13,109 10,421 14,469
$ 79,484 $ 102,892 $ 123,309 $ 142,433 $ 156,202 $ 174,720
$ 65,750 $ 68,641 $ 68,785 $ 70,055 $ 70,771 $ 70,171
7,228 7,365 7,097 6,732 7,133 8,969
14,382 13,790 14,238 11,924 11,240 10,530
$ 87,360 $ 89,796 $ 90,120 $ 88,711 $ 89,144 $ 89,670
$ 94,410 $ 107,973 $ 126,049 $ 143,757 $ 154,840 $ 158,513
39,854 41,565 47,516 62,354 68,845 80,878
32,580 43,150 39,864 25,033 21,661 24,999
$ 166,844 $ 192,688 $ 213,429 $ 231,144 $ 245,346 $ 264,390
85
L..EM # I
CITY OF GRAPEVINE, TEXAS
CHANGES IN NET ASSETS
LAST TEN FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands)
Fiscal Year
2003 2004 2005 2006
EXPENSES
Governmental activities:
General government $ 13,062 $ 12,382 $ 14,564 $ 13,964
Public safety 16,366 17,598 19,094 19,174
Culture and recreation 14,070 16,090 17,055 19,978
Public works 14,342 10,363 9,077 9,502
Transportation - - - -
Intergovernmental - - - -
Interest on long-term debt 7,603 7,683 5,993 6,579
Total governmental activities expenses 65,443 64,116 65,783 69,197
Business-type activities:
Water and sewer 15,231 15,049 14,975 15,944
Lake Enterprise 2,648 2,842 2,673 2,664
Total business-type activities expenses 17,879 17,891 17,648 18,608
Total primary government expenses $ 83,322 $ 82,007 $ 83,431 $ 87,805
PROGRAM REVENUES
Governmental activities:
Fees,fines,and charges for services:
General government $ 3,843 $ 4,298 $ 1,362 $ 1,148
Public safety 2,123 2,260 2,029 3,282
Culture and recreation 4,842 5,362 5,369 6,306
Public works 2,710 1,346 2,877 2,782
Operating grants and contributions 1,893 1,813 1,944 805
Capital grants and contributions 1,108 597 2,732 3,759
Total governmental activities program revenues 16,519 15,676 16,313 18,082
Business-type activities:
Charges for services:
Water and sewer 16,308 16,595 17,929 20,348
Lake Enterprise 2,159 2,500 2,630 2,890
Capital grants and contributions 2,987 1,172 1,049 1,690
Total business-type activities program revenues 21,454 20,267 21,608 24,928
Total primary government program revenues $ 37,973 $ 35,943 $ 37,921 $ 43,010
86
L..ENA # I
TABLE 2
Fiscal Year
2007 2008 2009 2010 2011 2012
$ 19,150 $ 17,898 $ 19,245 $ 19,048 $ 22,526 $ 18,370
20,732 23,701 26,031 27,095 27,588 28,264
21,914 26,753 25,657 27,175 26,673 27,954
12,777 18,573 18,670 19,136 10,563 11,056
- - - - 7,901 7,789
- - - - 3,394 4,040
6,634 6,403 5,093 5,432 5,140 4,590
81,207 93,328 94,696 97,886 103,785 102,063
15,494 17,415 17,160 17,647 18,972 18,372
2,668 2,786 2,885 2,955 3,062 3,053
18,162 20,201 20,045 20,602 22,034 21,425
$ 99,369 $ 113,529 $ 114,741 $ 118,488 $ 125,819 $ 123,488
$ 3,535 $ 4,071 $ 3,771 $ 4,039 $ 4,250 $ 2,547
3,280 3,597 3,759 3,660 3,346 3,736
6,908 7,479 7,829 8,530 9,198 10,099
3,085 1,372 1,344 1,467 1,378 1,418
2,310 1,629 957 1,060 1,212 1,124
785 1,891 5,204 3,819 1,302 810
19,903 20,039 22,864 22,575 20,686 19,734
17,689 18,893 17,950 18,523 21,168 20,481
2,712 2,862 2,649 2,377 2,862 3,079
833 1,331 674 274 - -
21,234 23,086 21,273 21,174 24,030 23,560
$ 41,137 $ 43,125 $ 44,137 $ 43,749 $ 44,716 $ 43,294
(continued)
87
L..EM # I
CITY OF GRAPEVINE, TEXAS
CHANGES IN NET ASSETS
(Continued)
LAST NINE FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands)
Fiscal Year
2003 2004 2005 2006
NET(EXPENSE)REVENUES
Governmental activities $( 48,924) $( 48,440) $( 49,470) $( 51,115)
Business-type activities 3,575 2,376 3,960 6,320
Total primary government net expense ( 45,349) ( 46,064) ( 45,510) ( 44,795)
GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS
Governmental activities:
Taxes
Property 22,769 23,600 26,066 26,046
Franchise 4,945 5,211 5,369 5,945
Hotel occupancy 3,380 4,931 7,566 9,194
Sales 16,040 17,976 18,746 19,993
Mixed beverage 578 686 863 952
Investment earnings 1,107 620 1,099 2,187
Miscellaneous 97 29 101 310
Gain on sale of capital assets - - - -
Transfers - - 1,501 1,741
Total governmental activities 48,916 53,053 61,311 66,368
Business-type activities:
Investment earnings 541 397 648 1,035
Miscellaneous 103 696 323 359
Transfers - - ( 1,501) ( 1,741)
Total business-type activities 644 1,093 ( 530) ( 347)
Total primary government 49,560 54,146 60,781 66,021
CHANGE IN NET ASSETS
Governmental activities ( 8) 4,613 11,841 15,253
Business-type activities 4,219 3,469 3,430 5,973
Total primary government $ 4,211 $ 8,082 $ 15,271 $ 21,226
Notes:
In April 2007,the City increased sales tax local option from 1%to 2%resulting in additional sales tax revenues of
$10,614 in FY 2007.
For FY 2008,the City had$11,561 in additional sales tax revenues due to the increase in the sales tax local option
from 1%to 2%. This was the first year to have 12 months(annual)with this increase.
Source: Comprehensive Annual Financial Reports
88
L..ENA # I
TABLE 2
Fiscal Year
2007 2008 2009 2010 2011 2012
$( 61,304) $( 73,289) $( 71,832) $( 75,311) $( 83,099) $( 82,329)
3,072 2,885 1,228 572 1,996 2,135
( 58,232) ( 70,404) ( 70,604) ( 74,739) ( 81,103) ( 80,194)
27,066 27,974 30,385 33,092 29,559 32,048
6,191 6,295 6,319 6,133 6,401 6,356
10,126 11,842 10,498 10,725 12,105 12,327
31,827 45,098 40,712 42,000 45,572 46,932
1,128 1,295 1,188 1,226 1,223 1,051
3,257 2,520 1,213 426 338 286
124 - 36 - - 170
- - 31 119 33 -
1,505 1,673 1,867 2,064 1,638 1,677
81,224 96,697 92,249 95,785 96,869 100,847
1,437 1,046 401 83 75 68
624 178 562 - 170 -
( 1,505) ( 1,673) ( 1,867) ( 2,064) ( 1,638) ( 1,677)
556 ( 449) ( 904) ( 1,981) ( 1,393) ( 1,609)
81,780 96,248 91,345 93,804 95,476 99,238
19,920 23,408 20,417 20,474 13,770 18,518
3,628 2,436 324 ( 1,409) 432 526
$ 23,548 $ 25,844 $ 20,741 $ 19,065 $ 14,202 $ 19,044
89
L..EM # I
CITY OF GRAPEVINE, TEXAS
FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands)
Fiscal Year
2003 2004 2005 2006
General fund
Reserved* $ 678 $ 1,543 $ 1,290 $ 691
Unreserved 5,427 3,018 3,981 5,904
Nonspendable* - - - -
Unassigned - - - -
Total general fund $ 6,105 $ 4,561 $ 5,271 $ 6,595
All other governmental funds
Reserved for:
Prepayments $ - $ 402 $ 392 $ 64
Inventory 394 - - -
Debt service 9,355 11,716 15,478 21,906
Capital projects 33,151 19,763 14,810 20,983
Unreserved,reported in:
Special revenue 728 482 1,724 4,071
Capital projects 2,134 4,509 4,391 4,484
Nonspendable:
Inventories - - - -
Prepaid items - - - -
Restricted for:
Debt service - - - -
Capital projects - - - -
Public safety - - - -
Economic development - - - -
Transportation - - - -
Culture and recreation - - - -
Tourism - - - -
Committed for:
Stormwater drainage operations - - - -
Public arts - - - -
Assigned for:
Capital projects - - - -
Culture and recreation - - - -
Unassigned - - - -
Total all other governmental funds $ 45,762 $ 36,872 $ 36,795 $ 51,508
Note:
*Includes inventory,advances to other funds,and prepaid items.
The City implemented GASB Statement No. 54"Fund Balance Reporting and Governmental Fund Type Definitions"
in fiscal year 2011.
Source: Comprehensive Annual Financial Reports
90
L..ENA # I
TABLE 3
Fiscal Year
2007 2008 2009 2010 2011 2012
$ 667 $ 727 $ 632 $ 714 -
7,562 8,190 8,105 7,468 - -
- - - - 657 653
- - - - 8,938 11,742
$ 8,229 $ 8,917 $ 8,737 $ 8,182 $ 9,595 $ 12,395
$ 76 $ 91 $ 583 $ 118 -
2 - - - - -
26,778 29,863 31,784 40,700 - -
284 6,249 20,566 16,861 - -
7,289 10,002 9,238 11,347 - -
28,753 24,982 18,631 20,426 - -
- - - - 15 18
- - 42 14
- - - 26,713 28,858
- - - - 19,863 17,655
- - - - 836 1,078
- - - - 28,985 35,493
- - - - 345 369
- - - - 264 152
- - - - 4,605 5,954
- - - - 3,005 3,179
- - - - 453 600
- - - - 9,322 10,627
- - - - 841 635
- - - - ( 1,822) ( 1,777)
$ 63,182 $ 71,187 $ 80,802 $ 89,452 $ 93,467 $ 102,855
91
L..EM # I
CITY OF GRAPEVINE, TEXAS
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands)
Fiscal Year
2003 2004 2005
REVENUES
Taxes:
Property $ 22,563 $ 23,584 $ 25,607
Hotel occupancy 3,381 4,931 7,566
Sales 16,040 17,976 18,746
Mixed beverage 578 686 863
Franchise 4,945 5,211 5,369
Licenses and permits 1,482 1,264 1,530
Intergovernmental 875 951 1,945
Charges for services 10,637 11,019 9,839
Fines and forfeitures 2,047 1,961 1,713
Contributions 49 488 418
Interest and miscellaneous 3,544 1,853 2,156
Total revenues 66,141 69,924 75,752
EXPENDITURES
General government 12,168 12,897 14,379
Public safety 15,846 16,168 17,187
Culture and recreation 12,818 14,541 15,071
Public works 4,771 5,101 4,945
Operations 7,263 3,677 2,954
Transportation - - -
Economic development - - -
Intergovernmental - - -
Capital outlay 9,545 10,612 8,425
Debt service:
Principal 8,115 9,011 8,698
Interest and fiscal charges 8,098 7,532 6,053
Other 1,203 819 2,918
Total expenditures 79,827 80,358 80,630
92
L..ENA # I
TABLE 4
Fiscal Year
2006 2007 2008 2009 2010 2011 2012
$ 26,296 $ 26,913 $ 27,945 $ 29,454 $ 34,225 $ 29,930 $ 32,147
9,194 10,126 11,842 10,498 10,725 12,105 12,326
19,993 31,826 45,098 40,712 42,000 45,572 46,932
952 1,128 1,295 1,188 1,226 1,223 1,051
5,945 6,191 6,295 6,319 6,133 6,401 6,356
1,550 1,776 1,227 1,087 1,117 1,044 1,542
1,042 931 673 3,000 4,525 1,505 1,012
11,209 12,987 12,489 12,893 13,296 14,582 13,572
1,860 1,607 2,197 2,208 2,126 1,712 2,017
423 393 391 556 8 73 194
4,895 4,354 4,354 2,108 2,407 1,741 1,192
83,359 98,232 113,806 110,023 117,788 115,888 118,341
14,355 15,345 15,024 15,435 16,367 17,681 13,979
17,527 19,047 20,589 21,582 22,275 24,297 25,539
17,015 19,470 21,982 21,714 22,677 23,495 24,832
4,840 4,514 4,674 4,922 5,049 5,821 6,061
2,262 6,552 14,168 13,485 13,819 - -
- - - - - 7,901 7,789
11 503
- - - - - 3,394 4,040
8,235 8,290 10,295 18,695 15,051 13,075 9,446
8,165 9,667 11,492 11,880 12,096 12,328 11,164
6,575 6,599 6,370 5,304 5,547 5,029 4,564
1,451 2,557 2,527 2,535 1,050 30 25
80,425 92,041 107,121 115,552 113,931 113,063 107,942
(continued)
93
L..EM # I
CITY OF GRAPEVINE, TEXAS
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
(Continued)
LAST TEN FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands)
Fiscal Year
2003 2004 2005
EXCESS (DEFICIENCY) OF REVENUES
OVER(UNDER)EXPENDITURES $( 13,686) $( 10,434) $( 4,878)
OTHER FINANCING SOURCES (USES)
Bonds issued 30,025 - 46,245
Notes payable issued - - -
Premium on issuance of debt - - 2,114
Bond discount - - -
Payments to escrow agent - - -
Sale of capital assets - - ( 44,349)
Transfers in 4,301 2,248 7,037
Transfers out ( 3,951) ( 2,248) ( 5,536)
Total other financing sources(uses) 30,375 - 5,511
NET CHANGE IN FUND BALANCES $ 16,689 $( 10,434) $ 633
DEBT SERVICE AS A PERCENTAGE OF
NONCAPITAL EXPENDITURES 23.1% 23.7% 20.4%
Source: Comprehensive Annual Financial Reports
94
L..ENA # I
TABLE 4
Fiscal Year
2006 2007 2008 2009 2010 2011 2012
$ 2,934 $ 6,191 $ 6,685 $( 5,529) $ 3,857 $ 2,825 $ 10,399
- 5,610 260 45,825 8,565 500 -
11,385 - - - - 309 -
6 2 - 2,184 344 - -
( 29) - - - - - -
- - 76 ( 34,944) ( 6,954) - -
- - - 32 219 155 112
4,084 7,757 16,531 17,415 14,510 17,593 15,244
( 2,343) ( 6,252) ( 14,859) ( 15,548) ( 12,446) ( 15,955) ( 13,568)
13,103 7,117 2,008 14,964 4,238 2,602 1,788
$ 16,037 $ 13,308 $ 8,693 $ 9,435 $ 8,095 $ 5,427 $ 12,187
20.4% 19.4% 18.4% 20.4% 17.8% 16.8% 15.7%
95
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L..EM # I
TABLE 6
CITY OF GRAPEVINE, TEXAS
DIRECT AND OVERLAPPING SALES TAX RATES
LAST TEN FISCAL YEARS
City State
Fiscal Year Direct Rate of Texas
2003 1.00% 6.25%
2004 1.00% 6.25%
2005 1.00% 6.25%
2006 1.00% 6.25%
10/01/06 - 03/31/07 1.00% 6.25%
04/01/07-9/30/07 2.00% 6.25%
2008 2.00% 6.25%
2009 2.00% 6.25%
2010 2.00% 6.25%
2011 2.00% 6.25%
2012 2.00% 6.25%
Source: City Budget Office and Texas Comptroller
97
L..EM # I
TABLE 7
CITY OF GRAPEVINE, TEXAS
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands)
Estimated Market Value Less: Total Taxable Total
Fiscal Real Property Personal Tax-Exempt Assessed Direct
Year Property Property Property Value Tax Rate
2003 $ 5,973,000 $ 2,324,000 $ 3,531,000 $ 4,766,000 $ 0.3660
2004 6,204,000 2,248,000 3,572,000 4,880,000 0.3660
2005 6,461,000 2,391,000 3,625,000 5,227,000 0.3635
2006 6,647,000 2,224,000 3,514,000 5,357,000 0.3625
2007 7,026,000 2,068,000 3,684,740 5,409,260 0.3625
2008 7,316,619 2,294,141 3,753,870 5,856,890 0.3625
2009 7,011,568 2,257,318 3,314,798 5,954,088 0.3500
2010 7,339,403 2,446,105 3,588,781 6,196,727 0.3500
2011 7,320,478 2,309,223 3,765,059 5,864,642 0.3500
2012 7,111,827 2,005,549 3,205,119 5,912,257 0.3480
Source: Tarrant County Appraisal District,Dallas and Denton County Appraisal Districts
98
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L..EM # I
TABLE 9
CITY OF GRAPEVINE, TEXAS
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
(Unaudited)(Amounts Expressed in Thousands)
2012 2003
Percentage Percentage
of Total City of Total City
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Taxpayer Value Value Taxpayer Value Value
American Airlines,Inc. $ 286,037 4.84% American Airlines,Inc. $ 404,890 8.50%
Gaylord Texan Resort Grapevine Mills,Ltd.Partnership 190,775 4.00%
and Convention Center 273,332 4.62% Delta Airlines 121,440 2.55%
Grapevine Mills,Ltd.Partnership 191,333 3.24% GB Directories 108,534 2.28%
CAL S imuflite/S imuflite Training Unit 100,625 2.12% GB Capital Services 107,613 2.26%
Great Wolf Lodge 125,279 1.70% Opryland Hotel 66,861 1.40%
Fund Riverwalk LLC 62,000 1.05% Atlantic Southeast Airlines 48,504 1.02%
A&B Properties,Inc.,etal 51,552 0.87% United Parcel Services 44,074 0.92%
Oncor Electric Delivery Co.,LLC. 49,569 0.84% Quest Communications Corp. 42,721 0.90%
Silver Oaks,LP 40,411 0.68% Industrial Development
I&G Grapevine LLC 40,000 0.68% International,Inc 37,259 0.78%
Total $ 1,220,138 20.64% Total $ 1,172,671 24.60%
Source: Tarrant County Appraisal District(2012)
Grapevine CAFR(2003)
100
L..EM # I
TABLE 10
CITY OF GRAPEVINE, TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands)
Collected Within the
Fiscal Year of the Levy Delinquent Taxes Total Collections to Date
Taxes Levied Percentage Collections
Fiscal for the of Levy in Subsequent Percentage Percentage
Year Ended Fiscal Year Amount Collected Years Amount of Levy Amount of Levy
2003 $ 17,663 $ 17,423 98.64% $ 126 $ 967 5.5% $ 17,549 99.4%
2004 18,044 17,859 98.97% 124 1,020 5.7% 17,983 99.7%
2005 19,223 18,764 97.61% 176 808 4.2% 18,940 98.5%
2006 19,182 18,945 98.76% 109 829 4.3% 19,054 99.3%
2007 19,572 19,368 98.96% 200 876 4.5% 19,568 99.9%
2008 21,113 20,964 99.29% 153 891 4.2% 21,117 99.9%
2009 22,250 21,936 98.59% 112 925 4.2% 22,048 99.1%
2010 22,208 21,958 98.87% 269 973 4.4% 22,227 100.1%
2011 21,114 20,954 99.24% 78 160 0.8% 21,032 99.6%
2012 21,321 21,211 99.48% - 110 0.5% 21,211 99.5%
Source: Grapevine/Colleyville ISD Tax Assessor
101
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L..EM # I
TABLE 12
CITY OF GRAPEVINE, TEXAS
RATIOS OF NET GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands except
Percentage of Actual Taxable Value of Property and Per Capita)
Business-type
Governmental Activities Activities
(a) Less: Percentage of
General Certificates General Gross Amounts Net Actual
Fiscal Obligation of Obligation Bonded Available for Bonded Taxable Value Per
Year Bonds Obligation Total Bonds Debt Debt Service Debt of Property a Capita.b
2003 $ 77,630 $ 73,040 $ 150,670 $ - $ 150,670 $ 9,355 $ 141,315 2.97% $ 3,072
2004 72,140 69,735 141,875 - 141,875 11,716 130,159 2.67% 2,769
2005 71,775 67,055 138,830 - 138,830 15,478 123,352 2.36% 2,570
2006 71,755 70,600 142,355 - 142,355 21,906 120,449 2.25% 2,458
2007 66,275 68,905 135,180 6,820 142,000 26,778 115,222 2.13% 2,351
2008 60,690 63,675 124,365 6,685 131,050 29,863 101,187 1.73% 2,024
2009 54,315 65,960 120,275 12,540 132,815 31,784 101,031 1.70% 2,021
2010 51,290 59,870 111,160 15,305 126,465 40,700 85,765 1.38% 1,715
2011 45,335 55,473 100,808 15,135 115,943 26,713 89,230 1.52% 1,899
2012 40,355 50,794 91,149 12,510 103,659 29,963 73,696 1.25% 1,535
Note: Details regarding the City's outstanding debt can be found in notes to the financial statements.
a See Table 5 for property value data.
b See Table 19 for population data.
103
L..EM # I
TABLE 13
CITY OF GRAPEVINE, TEXAS
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF SEPTEMBER 30,2012
(Unaudited) (Amounts Expressed in Whole Numbers)
Estimated
Share of
Estimated Direct and
Debt Percentage Overlapping
Government Unit Outstanding Applicable Debt
Debt Repaid with Property Taxes:
Carroll Independent School District $ 241,860,039 6.07% $ 14,680,904
Coppell Independent School District 146,969,595 2.09% 3,071,665
Dallas County 121,605,000 0.09% 109,445
Dallas County Community College District 374,265,000 0.09% 336,839
Dallas County Hospital District 705,000,000 0.09% 634,500
Dallas County Schools 45,300,000 0.09% 40,770
Denton County 553,915,000 - % * -
Grapevine-Colleyville Independent School District 354,381,492 56.07% 198,701,703
Tarrant County 317,725,000 6.15% 19,540,088
Tarrant County Hospital District 26,285,000 6.15% 1,616,528
Tarrant County Junior College District 22,705,000 6.15% 1,396,358
Subtotal overlapping debt 240,128,797
Total direct- City of Grapevine 91,149,060 100.00% 91,149,060
Direct and Overlapping Debt $ 331,277,857
* Less than.01%
The percentage of overlapping debt applicable is estimated using taxable assessed property values.
Source: Municipal Advisory Council of Texas
104
L..EM # I
TABLE 14
CITY OF GRAPEVINE, TEXAS
LEGAL DEBT MARGIN INFORMATION
LAST TEN FISCAL YEARS
(Unaudited)
Tax rate limitations imposed by the Home Rules Section of the Texas Constitution, Article II, Section 5,
provide that a maximum tax rate of$2.50 per $100 valuation may be imposed in any one year.
105
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TABLE 15
CITY OF GRAPEVINE, TEXAS
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands,except for Coverage)
Proprietary Fund-Waterworks and Sewer System Revenue Bonds
Less: Net Principal
Fiscal Total Operating Available and Interest
Year Revenues a Expenses b Revenue Payments Coverage
2003 $ 16,821 $ 11,271 $ 5,550 $ 4,746 $ 1.17
2004 16,988 10,854 6,134 4,235 1.45
2005 17,929 10,693 7,236 4,235 1.71
2006 20,348 11,636 8,712 4,232 2.06
2007 17,689 13,722 3,967 2,835 1.40
2008 18,893 15,807 3,086 2,315 1.33
2009 17,950 15,847 2,103 1,989 1.06
2010 18,523 16,620 1,903 2,710 0.70
2011 21,168 17,527 3,641 610 5.97
2012 20,481 16,804 3,677 286 12.86
Notes: a Includes operating revenues only
b Includes operating expenses minus depreciation plus transfers out.
Source: Comprehensive Annual Financial Report
106
L..EM # I
TABLE 16
CITY OF GRAPEVINE, TEXAS
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands,except for Coverage)
Proprietary Fund- Golf
Less: Net Principal
Fiscal Total Operating Available and Interest
Year Revenues a Expenses b Revenue Payments Coverage
2003 $ 2,159 $ 1,854 $ 305 $ 594 $ 0.51
2004 2,500 2,081 419 590 0.71
2005 2,630 2,105 525 596 0.88
2006 2,890 2,135 755 594 1.27
2007 2,712 2,758 ( 46) 595 - c
2008 2,862 2,399 463 598 0.77
2009 2,649 2,555 94 395 0.24
2010 2,377 2,620 ( 243) 413 - c
2011 2,862 2,734 128 411 0.31
2012 3,079 2,771 308 427 0.72
Notes: a Includes operating revenues only
b Includes operating expenses minus depreciation plus transfers out.
Percentages are excluded when not meaningful
Source: Comprehensive Annual Financial Report
107
L..EM # I
TABLE 17
CITY OF GRAPEVINE, TEXAS
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands,except for Coverage)
Tax Increment Financing District Reinvestment Zone Number One
Less: Net Principal
Fiscal Total Operating Available and Interest
Year Revenues' Expenses b Revenue Payments Coverage
2003 $ 4,825 $ 200 $ 4,625 $ 2,493 $ 1.86
2004 4,766 200 4,566 2,478 1.84
2005 4,788 1 4,787 2,470 1.94
2006 4,960 1 4,959 2,470 2.01
2007 5,350 5 5,345 2,482 2.15
2008 5,076 1 5,075 2,498 2.03
2009 5,274 3,087 2,187 2,240 0.98
2010 7,991 1 7,990 2,313 3.45
2011 5,955 1,671 4,284 2,328 1.84
2012 6,696 2,440 4,256 2,344 1.82
Notes: a Includes tax revenues only
b Includes transfers out.
Source: Grapevine Tax Increment Financing District Reinvestment Zone Number One Basic Financial Statement
108
L..EM # I
TABLE 18
CITY OF GRAPEVINE, TEXAS
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands,except for Coverage)
Tax Increment Financing District Reinvestment Zone Number Two
Less: Net Principal
Fiscal Total Operating Available and Interest
Year Revenues' Expenses b Revenue Payments Coverage
2003 $ 1,107 $ 1 $ 1,106 $ 1,884 $ 0.59
2004 1,953 - 1,953 1,883 1.04
2005 3,401 1,560 1,841 1,719 1.07
2006 4,056 - 4,056 1,686 2.41
2007 3,574 1,539 2,035 1,686 1.21
2008 3,392 1,536 1,856 2,691 0.69
2009 3,638 1,591 2,047 2,686 0.76
2010 5,749 726 5,023 2,677 1.88
2011 4,291 731 3,560 2,664 1.34
2012 5,736 1,548 4,188 2,672 1.57
Notes: a Includes tax revenues only
b Includes transfers out.
Source: Grapevine Tax Increment Financing District Reinvestment Zone Number Two Basic Financial Statements
109
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TABLE 19
CITY OF GRAPEVINE, TEXAS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
(Unaudited)(Amounts Expressed in Thousands except for
Median Age and Unemployment Rate)
(1)
(1) Personal (1) (2) (3)
Calendar Estimated Personal Income Median School Unemployment
Year Population Income Per Capita Age Enrollment Rate
2003 46 S 1,656 $ 36 34 14 3.4%
2004 47 1,692 36 34 14 2.8%
2005 48 1,776 37 34 14 3.5%
2006 49 1,813 37 34 13 3.5%
2007 49 1,764 36 34 14 3.5%
2008 50 1,800 36 36 14 4.2%
2009 50 1,800 36 36 14 6.6%
2010 50 1,900 38 36 14 6.0%
2011 47 1,692 36 35 14 6.3%
2012 48 1,711 36 35 14 5.6%
Sources: (1) CLARITAS Report
(2) Grapevine/Colleyville ISD
(3) Texas Workforce Commission Website
(4) 2011 Estimate adjusted downward based on 2010 Census data combined with City permit data
110
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TABLE 20
CITY OF GRAPEVINE, TEXAS
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
(Unaudited)(Amounts Expressed in Thousands except for
Percentage of Total City Employment)
2012 2003
Percentage of Percentage of
of Total City of Total City
Employer Employees Employment (1) Employer Employees Employment
DFW International Airport 60.0 53.57% DFW International Airport 16.0 33.00%
Gaylord Texan Resort and o 0
Convention Center 1.8 1.61/o Grapevine/Colleyville ISD 2.0 4.00/o
Grapevine/Colleyville ISD 1.6 1.46% United Parcel Service 2.0 4.00%
United Parcel Service 1.2 1.07% GTE Directory Corporation 1.0 2.00%
Baylor Medical Center 1.0 0.89% Baylor Medical Center 1.0 2.00%
GameStop 0.6 0.54% Gamestop 1.0 2.00%
City of Grapevine 0.5 0.49% City of Grapevine 0.5 0.50%
Hilton DFW 0.4 0.36% DFW Hilton Hotel 0.5 0.50%
Pavestone Mfg 0.4 0.36% SimuFlite Training Intl. 0.5 0.50%
Wal-Mart/Sam's(250-500) 0.3 0.27% Apollo Paper 0.5 0.50%
67.8 60.62% 25.0 49.00%
Sources: City of Grapevine,Neilsen/Claritas Business Facts,Info.USA
(1) Per Neilsen/Claritas there are$112,000 total employees in the City(including 60,000 at DFW Airport)as of 2012.
111
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L..ENA # I
SINGLE AUDIT SECTION
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PATTILLO, BROWN & HILL, I—L.P.
CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS
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 A UDITING STANDARDS
To the Honorable Mayor and
Members of the City Council
City of Grapevine, Texas
We have audited the financial statements of the governmental activities, the discretely presented
component unit, each major fund, and the aggregate remaining fund information of the City of
Grapevine, Texas (the "City") as of and for the year ended September 30, 2012, which collectively
comprise the City's basic financial statements and have issued our report thereon dated January 25,
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
In planning and performing our audit, we considered the City's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on
the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the
City's internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the City'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 and correct 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 entity'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 deficiencies, 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.
115
401 WEST HIGHWAY 6■P.O.BOX 20725■WACO,TX 76702-0725■(254)772-4901■FAX:(254)772-4920■www.pbhcpa.com
AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■HILLSBORO,TX(254)582-2583
TEMPLE,TX(254)791-3460■ALBUQUERQUE,NM(505)266-5904
L..ENA # I
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free
of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and material
effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that
are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of the audit committee, management,
others within the City, and appropriate federal and state awarding agencies and pass-through entities and
is not intended to be and should not be used by anyone other than these specified parties.
PO"4 ao koorvl
Rat L L-?.
January 25, 2013
116
PATTILLO, BROWN & HILL, I,_L.P.
CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS
REPORT ON COMPLIANCE WITH REQUIREMENTS
THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON
EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
To the Honorable Mayor and
Members of the City of Council
City of Grapevine, Texas
Compliance
We have audited the compliance of the City of Grapevine, Texas (the "City") with the types of
compliance requirements described in the U. S. Office of Management and Budget ("OMB")
Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major
federal programs for the year ended September 30, 2012. The City's major federal programs are
identified in the summary of auditors' results section of the accompanying Schedule of Findings and
Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants
applicable to each of its major federal programs is the responsibility of the City's management. Our
responsibility is to express an opinion on the City's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in
the United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133,
Audits of States, Local Governments, and Nonprofit Organizations. Those standards and OMB
Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether
noncompliance with the types of compliance requirements referred to above that could have a direct and
material effect on a major federal program occurred. An audit includes examining, on a test basis,
evidence about the City's compliance with those requirements and performing such other procedures as
we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for
our opinion. Our audit does not provide a legal determination on the City's compliance with those
requirements.
In our opinion, the City complied, in all material respects, with the compliance requirements
referred to above that could have a direct and material effect on each of its major federal programs for the
year ended September 30, 2012.
117
401 WEST HIGHWAY 6■P.O.BOX 20725■WACO,TX 76702-0725■(254)772-4901■FAX:(254)772-4920■www.pbhcpa.com
AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■HILLSBORO,TX(254)582-2583
TEMPLE,TX(254)791-3460■ALBUQUERQUE,NM(505)266-5904
L..ENA # I
Internal Control Over Compliance
The management of the City of Grapevine, Texas, is responsible for establishing and maintaining
effective internal control over compliance with the requirements of laws, regulations, contracts, and grants
applicable to federal programs. In planning and performing our audit, we considered the City of
Grapevine, Texas' internal control over compliance with the requirements that could have a direct and
material effect on a major federal program to determine the auditing procedures for the purpose of
expressing our opinion on compliance and to test and report on internal control over compliance in
accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the
effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the
effectiveness of the City of Grapevine, Texas' internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control
does not allow management or employees, in the normal course of performing their assigned functions, to
prevent or detect and correct, noncompliance with a type of compliance requirement of a federal program
on a timely basis. A material weakness in internal control over compliance is a deficiency, or
combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility
that material noncompliance with a type of compliance requirement of a federal program will not be
prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not
identify any deficiencies in internal control over compliance that we consider to be material weaknesses,
as defined above.
The purpose of this report is solely to describe the scope of our testing of compliance with the
types of compliance requirements applicable to each of the City's major programs and our testing of
internal control over compliance and the results of our testing, and to provide an opinion on the City's
compliance but not to provide an opinion on the effectiveness of the City's internal control over
compliance. This report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering the City's compliance with requirements applicable to each major
program and its internal control over compliance. Accordingly, this report is not suitable for any other
purpose.
P6U4&0
January 25, 2013
118
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CITY OF GRAPEVINE, TEXAS
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30,2012
Federal Pass-through
Federal Grantor/Pass-through Grantor/ CFDA Grantor's
Program Title Number Number Expenditures
FEDERAL AWARDS
U.S.Department of the Interior
Passed through the Texas Parks and Wildlife
Sport Fish Restoration Program-Meadowmere Park Boat Ramp 15.605 F-214-13-1 $ 237,898
Total Passed through the Texas Parks and Wildlife 237,898
Total U.S.Department of the Interior 237,898
U.S.Department of Justice
Direct Program
Bullet Proof Vest Partnership 16.607 N/A 7,369
Total Direct Program 7,369
Passed through the City of Fort Worth,Texas
Justice Assistance Grant-ARRA 16.804 2009-SB-B9-1479 1,542
Total Passed through the City of Fort Worth,Texas 1,542
Total U.S.Department of Justice 8,911
U.S.Department of Transportation
Passed through the Texas Department of Transportation
Highway Planning and Construction-Euless-Grapevine Rd 20.205 0902-48-537 173,015
Highway Planning and Construction-Traffic Signals 20.205 0902-48-741 720
Total Passed through the Texas Department of Transportation 173,735
U.S.Department of Energy
Passed through the Texas State Energy Conservation Office
ARRA State Energy Program 81.041 CS0014 3,016
ARRA Energy Efficiency and Conservation Block Grant (EECBG) 81.128 DE-SC0002913 182,333
Total Passed through the Texas State Energy Conservation Office 185,349
Total U.S.Department of Energy 185,349
U.S.Department of Homeland Security
Direct Program
Assistance to Firefighters Grant Program 97.044 EMW-2009-FO-10824 1,869
Assistance to Firefighters Grant Program 97.044 EMW-2011-FO-02932 406,751
Total Direct Program 408,620
Passed through the Texas Department of Public Safety
Urban Areas Security Initiative 97.008 2009-SS-T9-0064 278
Urban Areas Security Initiative 97.008 2010-SS-TO-0008 91,694
Total Passed through the Texas Department of Public Safety 91,972
Total U.S.Department of Homeland Security 500,592
Total Expenditures of Federal Awards $ 1,106,485
119
L..EM # I
CITY OF GRAPEVINE, TEXAS
NOTES TO
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
YEAR ENDED SEPTEMBER 30,2012
1. BASIS OF ACCOUNTING
The Schedule of Expenditures of Federal Awards (the "Schedule") is prepared on the modified
accrual basis of accounting. The information in this schedule is presented in accordance with the
requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations. Therefore, some amounts presented in this schedule may differ from amounts
presented in, or used in the preparation of, the basic financial statements.
2. REPORTING ENTITY
The City of Grapevine, Texas (the City), for purposes of the Schedule of Expenditures of Federal
Awards, includes all the funds of the primary government.
3. RELATIONSHIP TO FEDERAL FINANCIAL REPORTS
The information included in the Schedule may not fully agree with other federal award reports
that the City submits to granting agencies because, among other reasons, the award reports may
be prepared for a different fiscal period and may include cumulative (from prior years) data
rather than data for the current year only.
120
L..EM # I
CITY OF GRAPEVINE, TEXAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED SEPTEMBER 30,2012
Summary of Auditors' Results
Financial Statements:
Type of auditors'report issued Unqualified
Internal control over financial reporting:
Material weakness(es)identified? No
Significant deficiency(ies)identified? None reported
Noncompliance material to financial statements
noted? None
Federal Awards:
Internal control over major programs:
Material weakness(es)identified? No
Significant deficiency(ies)identified? None reported
Type of auditors'report issued on compliance
for major programs Unqualified
Any audit findings disclosed that are required
to be reported in accordance with Section
510(a) of OMB Circular A-133? None
Identification of major programs:
CFDA Number(s) Name of Federal Program or Cluster:
997.044 Assistance to Firefighters Grant
Dollar threshold used to distinguish between type A
and type B programs $300,000
Auditee qualified as low-risk auditee? Yes
Findines Relatine to the Financial Statements Which are
Required to be Reported in Accordance With Generally
Accepted Government Auditing Standards
None
Findings and Questioned Costs for Federal Awards
None
121
L..EM # I
CITY OF GRAPEVINE, TEXAS
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
FOR THE YEAR ENDED SEPTEMBER 30,2012
None
122
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GRAPEVINE TAX INCREMENT
FINANCING DISTRICT REINVESTMENT
ZONE NUMBER ONE
(A Blended Component Unit of
The City of Grapevine, Texas)
BASIC FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED
SEPTEMBER 30, 2012
(With Independent Auditors' Report)
L..EM # I
GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER ONE
(A Blended Component Unit of the City of Grapevine, Texas)
BASIC FINANCIAL STATEMENTS
TABLE OF CONTENTS
SEPTEMBER 30,2012
Page
Number
Independent Auditors' Report....................................................................................... 1
Management's Discussion and Analysis ...................................................................... 2 -5
Basic Financial Statements
Government-wide Financial Statements
Statementof Net Assets.......................................................................................... 6
Statement of Activities............................................................................................ 7
Fund Financial Statements
Balance Sheet—Governmental Funds..................................................................... 8
Statement of Revenues, Expenditures and Changes in
Fund Balances —Governmental Funds ................................................................ 9
Notes to Financial Statements.................................................................................... 10 - 15
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MKI II...IL.. III „# I
PATTILLO, BROWN & HILL, L_L_P.
CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and
Members of the City of Council
City of Grapevine, Texas
We have audited the accompanying financial statements of the governmental activities and each
major fund of the Grapevine Tax Increment Financing District Reinvestment Zone Number One (the
"TIF #l," a component unit of the City of Grapevine, Texas) as of and for the year ended September 30,
2012, which comprise the TIF 41's basic financial statements as listed in the table of contents. These
financial statements are the responsibility of the TIF 41's 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. 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 and each major fund of the Grapevine
Tax Increment Financing District Reinvestment Zone Number One as of September 30, 2012, and the
respective changes in financial position for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis on pages 2 through 5 be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is required
by the Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which consisted
of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We do
not express an opinion or provide any assurance on the information because the limited procedures do
not provide us with sufficient evidence to express an opinion or provide any assurance.
January 25, 2013
1
401 WEST HIGHWAY 6■P.O.BOX 20725■WACO,TX 76702-0725■(254)772-4901■FAX:(254)772-4920■www.pbhcpa.com
AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■HILLSBORO,TX(254)582-2583
TEMPLE,TX(254)791-3460■ALBUQUERQUE,NM(505)266-5904
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MANAGEMENT'S
DISCUSSION AND ANALYSIS
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MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the City of Grapevine, Texas (the "City"), we offer readers of the Grapevine Tax
Increment Financing District Reinvestment Zone Number One's (the "TIF") financial statements this
narrative overview and analysis of the financial activities of the TIF for the fiscal year ended September
30, 2012. The TIF was formed to finance and make public improvements in the area surrounding the
Grapevine Mills Mall, under the Tax Increment Financing Act.
FINANCIAL HIGHLIGHTS
• The assets of the TIF exceeded its liabilities at the close of the fiscal year ended
September 30, 2012, by $20,908,531 (net assets).
• At the end of the current fiscal year, the governmental funds reported an ending fund
balance of$32,050,514, an increase of 0%in comparison with the prior year.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis serves as an introduction to the TIF's basic financial statements. The TIF's
basic financial statements are comprised of three components: government-wide financial statements,
fund financial statements, and notes to the financial statements.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the
TIF's finances in a manner similar to private-sector business.
The Statement of Net Assets presents information on all of the TIF'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 TIF is improving or deteriorating.
The Statement of Activities presents information showing how the TIF's net assets changed during the fiscal
year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs,
regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement
for some items that will only result in cash flows in future fiscal periods (e.g.,uncollected taxes).
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 TIF uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements. The fund financial statements include two funds: (1)
the General Fund, which is used to account for principal and interest payments and economic development
activities, and(2)the Capital Projects Fund,which is used to account for the cost of public improvements.
2
I L..EM # I
• 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 current sources and uses of spendable resources, as
well as on balances of spendable resources available at the end of the fiscal year. Such
information may be useful in evaluating a government's near-term financing
requirements.
Because the focus of governmental funds is narrower than that of the government-wide
financial statements, it is useful to compare the information presented for governmental
funds with similar information presented for governmental activities in the government-
wide financial statements. By doing so, readers may better understand the long-term
impact of the government's near-term financing decisions. Both the governmental
funds balance sheet and the governmental fund statements of revenues, expenditures,
and changes in fund balances provide a reconciliation to facilitate this comparison
between governmental funds and governmental activities.
The TIF does not have any proprietary or fiduciary funds.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in
the government-wide and fund financial statements. The notes to the financial statements can be found
beginning on page 10 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net assets may serve over time as a useful indicator of a government's financial
position. As of September 30, 2012, the TIF's net assets were $20,908,531.
The following table reflects the condensed Statement of Net Assets:
CITY OF GRAPEVINE TAX INCREMENT FINANCING
DISTRICT REINVESTMENT ZONE NUMBER ONE'S NET ASSETS
Governmental Activities
2012 2011
Current and other assets $ 77,949 $ 32,803,459
Total assets 77,949 32,803,459
Long-term liabilities 11,177,605 11,243,883
Other liabilities #REF! 596,365
Total liabilities #REF! 11,840,248
Net assets:
Restricted 20,908,531 20,963,211
Total net assets $ 20,908,531 $ 20,963,211
3
L..EM # I
Analysis of the TIF's Operations
Government activities increased the TIF's net assets by -$54,680. Property tax revenues increased and
though interest rates have remained relatively flat over the past few years' interest earnings did decrease
from the previous year. There were economic and community distributions from the TIF41 fund which
were used for development and distributions. Capital expenses were incurred for continued
development and construction of the Hike & Bike Trail around the Grapevine Mall as well as the
implementation of the Automated License Plate Readers (ALPR) project. This project is intended to
capture the license plate of vehicles that pass by and automatically check the vehicle in various federal
and state law enforcement data bases for stolen vehicles, amber alerts, persons of interest, etc. and is
intended to alert the Grapevine Police Department within seconds that a listed vehicle is in the area of
the mall.
CITY OF GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER ONE'S CHANGE IN NET ASSETS
Governmental Activities
2012 2011
Revenues:
General revenues:
Property taxes $ 6,644,952 $ 5,987,972
Unrestricted investment earnings 73,241 93,503
Total revenues 6,718,193 6,081,475
Expenses:
Economic development 500,000 -
Intergovernmental 1,624,985 2,807,599
Interest and fiscal charges 347,514 456,608
Total expenses 1,972,499 3,264,207
Change in net assets 4,745,694 2,817,268
Net assets,beginning 20,963,211 18,145,943
Net assets,ending $ 25,708,905 $ 20,963,211
FINANCIAL ANALYSIS OF THE TIF'S FUNDS
Governmental Funds
The focus on the TIF's governmental funds is to provide information on near-term inflows, outflows,
and balances of spendable resources. Such information is useful in assessing the TIF's financing
requirements.
At the end of the current fiscal year, the TIF's governmental funds reported ending fund balances of
$32,050,514, an increase of-$1 in comparison with the prior year.
4
L..EM # I
DEBT ADMINISTRATION
Long-term Debt. At year-end, the TIF had total bonded debt outstanding of $10,645,000, which is
backed by the full faith and credit of the TIF. The debt is paid from real property taxes captured by the
TIF District.
CITY OF GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER ONE'S OUTSTANDING DEBT
2012 2011
Certificates of obligation S 10,645,000 S 10,645,000
REQUESTS FOR INFORMATION
This financial report is designed to provide our citizens, investors and creditors with a general overview of
the City's finances. If you have questions about this report or need additional financial information,
contact the Finance Department, City of Grapevine, 200 S. Main Street, Grapevine, Texas 76051.
5
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BASIC
FINANCIAL STATEMENTS
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GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER ONE
(A Blended Component Unit of the City of Grapevine,Texas)
STATEMENT OF NET ASSETS
SEPTEMBER 30,2012
ASSETS
Cash and investments $ 33,338,346
Taxes receivable,net 1,056,548
Accrued interest 15,994
Deferred charges 77,949
Total assets 34,488,837
LIABILITIES
Accrued interest payable 42,327
Bonds payable - due in less than one year 2,030,000
Bonds payable - due in more than one year 7,207,605
Total liabilities 9,279,932
NET ASSETS
Restricted for debt service 326,992
Restricted for economic development 23,024,962
Restricted for capital projects 1,856,951
Total net assets $ 25,208,905
The accompanying notes are an integral part of these financial statements.
6
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GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER ONE
(A Blended Component Unit of the City of Grapevine,Texas)
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30,2012
Net(Expense)
Revenues and
Changes in
Net Assets
Program Governmental
Functions/Programs Expenses Revenue Activities
Governmental activities:
Economic development $ 500,000 $ - $( 500,000)
Intergovernmental 1,624,985 - ( 1,624,985)
Interest and fiscal charges 347,514 - ( 347,514)
Total governmental activities $ 2,472,499 $ - $( 2,472,499)
General revenues:
Property taxes 6,644,952
Investment earnings 73,241
Total general revenues 6,718,193
Change in net assets 4,245,694
Net assets-beginning 20,963,211
Net assets-ending $ 25,208,905
The accompanying notes are an integral part of these financial statements.
7
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GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER ONE
(A Blended Component Unit of the City of Grapevine,Texas)
BALANCESHEET
GOVERNMENTAL FUNDS
AS OF SEPTEMBER 30,2012
Capital
General Projects Total
ASSETS
Cash and investments $ 31,482,278 $ 1,856,068 $ 33,338,346
Taxes receivable,net 1,056,548 - 1,056,548
Accrued interest 15,111 883 15,994
Total assets $ 32,553,937 $ 1,856,951 $ 34,410,888
LIABILITIES
Deferred revenue $ 60,252 $ - $ 60,252
Total liabilities 60,252 - 60,252
FUND BALANCES
Restricted for debt service 9,528,975 - 9,528,975
Restricted for economic development 22,964,710 - 22,964,710
Restricted for capital projects - 1,856,951 1,856,951
Total fund balances 32,493,685 1,856,951 34,350,636
Total liabilities and fund balances $ 32,553,937 $ 1,856,951
Amounts reported for governmental activities in the statement of net
assets are different because:
Taxes receivable are not available soon enough to pay for the current
period's expenditures and are,therefore,deferred in the funds. 60,252
Bond interest is not payable with available financial resources and is
therefore not accrued at the fund level. ( 42,327)
Bonds payable are not due and payable in the current period and
therefore are not reported in the funds:
Deferred charges 77,949
Loss on refunding 139,053
Bonds payable ( 8,705,000)
Premium on issuance ( 671,658)
Net assets of governmental activities $ 25,208,905
The accompanying notes are an integral part of these financial statements.
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GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER ONE
(A Blended Component Unit of the City of Grapevine,Texas)
STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCE
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30,2012
Capital
General Projects Total
REVENUES
Property taxes $ 6,695,890 - $ 6,695,890
Investment income 66,261 $ 6,980 73,241
Total revenues 6,762,151 6,980 6,769,131
EXPENDITURES
Economic development 500,000 - 500,000
Intergovernmental 1,441,980 - 1,441,980
Capital outlay - 183,005 183,005
Debt service:
Principal 1,940,000 - 1,940,000
Interest and fiscal charges 404,025 - 404,025
Total expenditures 4,286,005 183,005 3,969,010
EXCESS(DEFICIENCY)OF REVENUE
OVER(UNDER)EXPENDITURES 2,476,146 ( 176,025) 2,300,121
OTHER FINANCING SOURCES(USES)
Transfers in - 497,582 497,582
Transfers out ( 497,582) - ( 497,582)
Total other financing sources and uses ( 497,582) 497,582 -
NET CHANGE IN FUND BALANCE 1,978,564 321,557 2,300,121
FUND BALANCE,BEGINNING 30,515,121 1,535,394 32,050,515
FUND BALANCE,ENDING $ 32,493,685 $ 1,856,951 $ 34,350,636
Net change in fund balance 2,300,121
Amounts reported for governmental activities in the statement of
activities are different because:
Revenues in the statement of activities that do not provide current financial resources
are not reported as revenues in the funds. ( 50,938)
Interest expense is accrued in the government-wide financial statements,but not at the fund level. 13,329
The repayment of principal of long-term debt consumes the current financial resources of
governmental funds,but reduces bond principal at the government-wide level. 1,940,000
Deferred charges-amortization of premium,loss,etc.are reported in the statement of activities
but do not require the use of current financial resources and,therefore,are not reported
as expenditures in the funds. 43,182
Change in net assets of governmental funds $ 4,245,694
The accompanying notes are an integral part of these financial statements.
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GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER ONE
(A Blended Component Unit of the City of Grapevine, Texas)
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30,2012
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Grapevine Tax Increment Financing District Reinvestment Zone Number One (the "TIF")
was created on February 20, 1996. The TIF was formed to finance and make public
improvements in the area surrounding the Grapevine Mills mall, under the authority of the Tax
Increment Financing Act. The TIF is governed by a nine-member board of directors; five
members are appointed by the Grapevine City Council, and the governing bodies of Tarrant
County, Grapevine/Colleyville Independent School District, Tarrant County Junior College
District and Tarrant County Hospital District appoint one member each. The termination of the
TIF is set as either December 31, 2017, or the date when all project costs are paid and all debt is
retired, whichever comes first. The boundaries of the TIF were reduced in accordance with Texas
Code Section 311.007 by ordinance 497-132 on December 3, 1998. The reduction in the size of
the zone was not material and was done for legal clarification. The TIF is a blended component
unit of the City of Grapevine, Texas.
The accounting and reporting policies of the TIF conform to accounting principles generally
accepted in the United States of America as applicable to governmental entities. The following
is a summary of the more significant accounting and reporting policies.
The General Fund is used to account for the principal and interest payments of the debt and
economic development activities. The Capital Projects Fund is used to account for the
expenditures related to construction. All construction in progress and completed capital assets
are transferred to the City.
A. Government-wide and Fund Financial Statements
The basic financial statements include both 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 TIF.
The government-wide statement of activities demonstrates the degree to which the direct
expenses of a functional category or segment are offset by program revenues. Direct
expenses are those that are clearly identifiable with specific function or segment. Program
revenues include (1) charges to customers or applicants who purchase, use or directly benefit
from goods, services, or privileges provided by a given function or segment, and (2) grants
and contributions that are restricted to meeting the operational or capital requirements of a
particular function or segment. Taxes and other items not properly included among program
revenues are reported instead as general revenues. The TIF does not report any program
revenues.
(continued)
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L SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
A. Government-wide and Fund Financial Statements (Continued)
Separate fund-based financial statements are provided for governmental funds. Major
individual governmental funds are reported as separate columns in the fund financial
statements.
B. 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. 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 earned.
Government fund-level financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be available when
they are collectible within the current period or soon enough thereafter to pay liabilities of the
current period. For this purpose, the TIF considers revenues to be available if they are
collected within 60 days of the end of the current fiscal period. Property taxes are recognized
in the year in which they are levied. Investment earnings are recorded as earned since they are
measurable and available.
C. Assets, Liabilities and Net Assets or Eguity
1. Cash and Investments
Cash consists of demand deposits (principally interest-bearing accounts) that are carried
at cost. Investments are stated at fair value.
2. Long-term Debt
In the government-wide financial statements, long-term debt and other long-term
obligations are reported as liabilities in the statement of net assets.
3. Fund Balance Classification
The governmental fund financial statements present fund balances based on classifications
that comprise a hierarchy that is based primarily on the extent to which the TIF is bound to
honor constraints on the specific purposes for which amounts in the respective
governmental funds can be spent. The classifications used in the governmental fund
financial statements are as follows:
(continued)
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L SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities and Net Assets or Equity (Continued)
3. Fund Balance Classification (Continued)
• Nonspendable: This classification includes amounts that cannot be spent
because they are either (a) not in spendable form or (b) are legally or
contractually required to be maintained intact. Nonspendable items are
not expected to be converted to cash or are not expected to be converted to
cash within the next year.
• Restricted: This classification includes amounts for which constraints
have been placed on the use of the resources either (a) externally imposed
by creditors, grantors, contributors, or laws or regulations of other
governments, or (b) imposed by law through constitutional provisions or
enabling legislation.
• Committed: This classification includes amounts that can be used only for
specific purposes pursuant to constraints imposed by formal action of the
Board. These amounts cannot be used for any other purpose unless the
Board removes or changes the specified use by taking the same type of
action that was employed when the funds were initially committed. This
classification also includes contractual obligations to the extent that
existing resources have been specifically committed for use in satisfying
those contractual requirements.
• Assigned: This classification includes amounts that are constrained by the
TIF's intent to be used for a specific purpose but are neither restricted nor
committed. This intent can be expressed by the Board.
• Unassigned: This classification includes the residual fund balance for the
General Fund. The unassigned classification also includes negative
residual fund balance of any other governmental fund that cannot be
eliminated by offsetting of assigned fund balance amounts.
When an expenditure is incurred for purposes for which both restricted and unrestricted
fund balance is available, the TIF considers restricted funds to have been spent first.
When an expenditure is incurred for which committed, assigned, or unassigned fund
balances are available, the TIF considers amounts to have been spent first out of
committed funds, then assigned funds, and finally unassigned funds.
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II. CASH AND INVESTMENTS
The cash and investment policies of the TIF mirror the City of Grapevine's policies. City policies
governing bank deposits require depositories to be FDIC-insured institutions, and depositories
must fully collateralize all deposits in excess of FDIC insurance limits.
Investment in City investment pool $ -
Interest Rate Risk. In accordance with its investment policy, the City minimizes the risk that the
interest earnings and the market value of investments in the portfolio will fall due to changes in
general interest rates, by:
a. Structuring the investment portfolio so that investments mature to meet cash
requirements for ongoing operations, thereby avoiding the need to liquidate
investments prior to maturity.
b. Investing operating funds primarily in certificates of deposit, shorter-term
securities, money market mutual funds, or local government investment pools
functioning as money market mutual funds.
c. Diversifying maturities and staggering purchase dates to minimize the impact
of market movements over time.
Credit Risk. In accordance with its investment policy, the City minimizes credit risk, the risk of
loss due to the failure of the issuer or backer of the investment by:
a. Limiting investments to the safest types of investments.
b. Pre-qualifying the financial institutions and broker/dealers with which the
City will do business.
c. Diversifying the investment portfolio so that potential losses on individual
issuers will be minimized.
Concentration of Credit Risk. The City's investment policy allows up to 100% to be invested in
U. S. Treasury Bills/Notes/Bonds and U. S. agencies and instrumentalities. The City's
investment in the securities of U. S. agencies are rated AAA by Standard &Poor's. TexPool and
LOGIC are public funds investment pools operating as a 2a-7 like pool and in full compliance
with the Public Funds Investment Act. As of September 30, 2012, the City's investments in
TexPool were rated AAAm and its investments in LOGIC were rated AAA.
Custodial Credit Risk. State statutes require that all City deposits in financial institutions be fully
collateralized by U. S. Government obligations or obligations of the State of Texas or its agencies.
The City's deposits were fully collateralized, or have a letter of credit issued by the Federal Home
Loan Bank as required by State statutes at September 30, 2012. The bank balances were fully
collateralized by government securities.
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III. LONG-TERM LIABILITIES
Long-term liabilities consist of Combination Tax and Tax Increment Reinvestment Zone
Revenue Certificates of Obligation, Series 2009A, due in annual installments from August 15,
2009 through February 15, 2016, at interest rates from 2.5% to 5%, issued in the amount of
$14,290,000, with a remaining balance at September 30, 2012, of$10,645,000.
Balance Balance Due Within
09/30/11 Additions Retirements 09/30/12 One Year
Bonds payable:
Combination Tax and Tax
Increment Reinvestment
Zone Revenue Refunding
Bonds, Series 2009A $ 10,645,000 $ - $ - $ 10,645,000 $ 2,030,000
Less deferred amounts:
Loss on refunding ( 180,254) - 41,201 ( 139,053) -
Issuance premiums 779,137 - ( 107,479) 671,658 -
$ 11,243,883 $ - $( 66,278) $ 11,177,605 $ 2,030,000
The annual requirements to amortize the long-term debt as of September 30, 2012, are as follows:
Year Ending
September 30, Principal Interest
2013 $ 2,030,000 $ 329,812
2014 2,110,000 262,537
2015 2,215,000 172,875
2016 2,350,000 58,751
Total $ 8,705,000 $ 823,975
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IV. APPRAISED VALUES
A summary of appraised values for the TIF is as follows:
Tax Year 1996 Captured
2011 Appraised Base Year Appraised
Value Appraised Value Value
City of Grapevine $ 238,790,544 $ 7,647,325 $ 231,143,219
County Hospital District 238,790,544 7,631,345 231,159,199
County Junior College District 238,790,544 7,631,345 231,159,199
Tarant County 238,790,544 7,631,345 231,159,199
Grapevine-Colleyville Independent
School District 238,790,544 7,631,345 231,159,199
The captured appraised value of the TIF is the total appraised value of all real property taxable
by the unit and located in the reinvestment zone less the base year appraised value of all real
property taxable by the unit and located in the reinvestment zone at the time the TIF was
established (1996).
V. PLEDGED REVENUES
The Board of Directors for the TIF approved amending the Financing and Project Plan to allow
the creation of a 380 category within the Financing and Project Plan whereas all City funds
contributed to date and additional funds contributed up to 2016-2017 be placed in a 380 account
in the TIF zone to incentivize further economic development in the zone. The action was passed
by the Board on September 8, 2009.
The City Council and the Tax Increment Financing District Reinvestment Zone Number One
(TIF 41) Board of Directors of the City of Grapevine, Texas officially met on June 19, 2012. The
board discussed an Economic Development Agreement for the Grapevine Mills Mall for a
planned $40 million renovation with the focus on attracting a more upscale mix of retail. During
the meeting, City Manager Rumbelow recommended approval and authorization to execute an
Economic Development Agreement with Grapevine Mills LTD Partnership in an amount not to
exceed $14,000,000.00 for interior renovations ($10,000,000) and future exterior improvements
($4,000,000) at Grapevine Mills Mall. The Board unanimously approved the development
agreement.
VI. BOARD OF DIRECTORS
Members of the Board of Directors can be obtained from the City Secretary's office — City of
Grapevine, Texas.
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GRAPEVINE TAX INCREMENT
FINANCING DISTRICT REINVESTMENT
ZONE NUMBER TWO
(A Blended Component Unit of
The City of Grapevine, Texas)
BASIC FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED
SEPTEMBER 30, 2012
(With Independent Auditors' Report)
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GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER TWO
(A Blended Component Unit of the City of Grapevine, Texas)
BASIC FINANCIAL STATEMENTS
TABLE OF CONTENTS
SEPTEMBER 30,2012
Page
Number
Independent Auditors' Report....................................................................................... 1
Management's Discussion and Analysis ...................................................................... 2 -6
Basic Financial Statements
Government-wide Financial Statements
Statementof Net Assets.......................................................................................... 7
Statement of Activities............................................................................................ 8
Fund Financial Statements
Balance Sheet—Governmental Funds..................................................................... 9
Statement of Revenues, Expenditures and Changes in
Fund Balances —Governmental Funds ................................................................ 10
Notes to Financial Statements.................................................................................... 11 - 17
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FINANCIAL SECTION
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YMKIFEW# I
PATTILLO, BROWN & HILL, I—L.P.
CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and
Members of the City of Council
City of Grapevine, Texas
We have audited the accompanying financial statements of the governmental activities and each
major fund of the Grapevine Tax Increment Financing District Reinvestment Zone Number Two (the
"TIF 42," a component unit of the City of Grapevine, Texas) as of and for the year ended September 30,
2012, which comprise the TIF 42's basic financial statements as listed in the table of contents. These
financial statements are the responsibility of the TIF 42's 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. 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 and each major fund of the Grapevine
Tax Increment Financing District Reinvestment Zone Number Two as of September 30, 2012, and the
respective changes in financial position for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis on pages 2 through 6 be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is required
by the Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which consisted
of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We do
not express an opinion or provide any assurance on the information because the limited procedures do
not provide us with sufficient evidence to express an opinion or provide any assurance.
January 25, 2013
1
401 WEST HIGHWAY 6■P.O.BOX 20725■WACO,TX 76702-0725■(25 4)772-4901■FAX:(25 4)772-4920■www.pbhcpa.com
AFFILIATE OFFICES:BROWNSVILLE,TX(956)544-7778■HILLSBORO,TX(254)582-2583
TEMPLE,TX(254)791-3460■ALBUQUERQUE,NM(505)266-5904
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MANAGEMENT'S
DISCUSSION AND ANALYSIS
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MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the City of Grapevine, Texas (the "City"), we offer readers of the Grapevine Tax
Increment Financing District Reinvestment Zone Number Two's (the "TIF") financial statements this
narrative overview and analysis of the financial activities of the TIF for the fiscal year ended September
30, 2012. The TIF was formed to finance and make public improvements in the area surrounding the
Gaylord Texan Resort and Convention Center, under the Tax Increment Financing Act.
FINANCIAL HIGHLIGHTS
• The liabilities of the TIF exceeded its assets at the close of the most recent fiscal year
by $(19,928,717) (net liabilities). This is primarily due to the debt that was previously
issued in connection with the public improvement project in the Gaylord Texan
Resort and Convention Center area.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis serves as an introduction to the TIF's basic financial statements. The TIF's
basic financial statements are comprised of three components: government-wide financial statements,
fund financial statements, and notes to the financial statements.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview of the
TIF's finances in a manner similar to private-sector business.
The Statement of Net Assets presents information on all of the TIF'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 TIF is improving or deteriorating.
The Statement of Activities presents information showing how the TIF's net assets changed during the fiscal
year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs,
regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement
for some items that will only result in cash flows in future fiscal periods (e.g.,uncollected taxes).
The government-wide financial statements include two funds: (1) the General Fund, which is used to
account for principal and interest payments, and(2)the Capital Projects Fund, which is used to account for
the cost of public improvements. The government-wide financial statements can be found within this
report.
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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 TIF uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements.
• 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 current sources and uses of spendable resources, as
well as on balances of spendable resources available at the end of the fiscal year. Such
information may be useful in evaluating a government's near-term financing
requirements.
Because the focus of governmental funds is narrower than that of the government-wide
financial statements, it is useful to compare the information presented for governmental
funds with similar information presented for governmental activities in the government-
wide financial statements. By doing so, readers may better understand the long-term
impact of the government's near-term financing decisions. Both the governmental
funds balance sheet and the governmental fund statements of revenues, expenditures,
and changes in fund balances provide a reconciliation to facilitate this comparison
between governmental funds and governmental activities.
The TIF does not have any proprietary or fiduciary funds.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in
the government-wide and fund financial statements. The notes to the financial statements can be found
beginning on page 11 of this report.
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GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net assets may serve over time as a useful indicator of a government's financial
position. As of September 30, 2012, the TIF's liabilities exceeded assets by $(19,928,717).
The following table reflects the condensed Statement of Net Assets:
CITY OF GRAPEVINE TAX INCREMENT FINANCING
DISTRICT REINVESTMENT ZONE NUMBER TWO'S NET ASSETS
Governmental Activities
2012 2011
Current and other assets $ 230,034 $ 7,991,300
Total assets 230,034 7,991,300
Long-term liabilities outstanding 27,733,946 27,661,723
Other liabilities 169,648 177,126
Total liabilities 27,903,594 27,838,849
Net assets:
Restricted for capital projects 2,196,855 2,196,856
Unrestricted (22,125,572) (22,044,405)
Total net assets $(19,928,717) $(19,847,549)
Analysis of the TIF's Operations
Government activities increased the TIF's net assets by $2,655,127 with the TIF's liabilities to asset ratio
decreasing from 3.48 in FY 2011 to 2.81 in FY 2012. This increase was mainly due to an increase in
property tax revenues. The property tax revenue and interest income from investments for TIF 42 was
offset by the expenses for an economic development program ("Unwind the Vine"), arbitrage
calculation, and legal expenses.
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The following table provides a summary of the TIF's operations for the year ended September 30, 2012.
CITY OF GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER TWO'S CHANGE IN NET ASSETS
2012 2011
Combination Tax and Tax Increment
Reinvestment Zone Revenue
Certificates of Obligation, Series 2000
due in annual installments of$730,000
to $2,475,000 through August 15, 2026;
interest at 5.5% to 7%. $ 3,695,000 $ 4,790,000
Combination Tax Increment Reinvestment
Zone Revenue Refunding Bonds,
Series 2005A due in annual installments
of$140,000 to $2,595,000 through
August 2026. 23,005,000 23,165,000
$ 26,700,000 $ 27,955,000
FINANCIAL ANALYSIS OF THE TIF'S FUNDS
Governmental Funds
The focus on the TIF's governmental funds is to provide information on near-term inflows, outflows,
and balances of spendable resources. Such information is useful in assessing the TIF's financing
requirements.
At the end of the current fiscal year, the TIF governmental funds reported combined ending fund
balances of $7,744,843, an increase of -$1 in comparison with the prior year. The fund balance is
restricted to indicate that it is not available for new spending. The restricted fund balance consists of the
following: (1) debt service $5,547,988 and (2) capital projects $2,196,855.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. Capital assets of the TIF are recorded as expenditures in the Capital Projects Fund
when constructed. Construction in progress and completed assets are transferred to the City.
Long-term Debt. At the end of the current fiscal year, the TIF had total bonded debt outstanding of
$26,700,000, which is backed by the full faith and credit of the City government.
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CITY OF GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER TWO'S OUTSTANDING DEBT
2012 2011
Combination Tax and Tax Increment
Reinvestment Zone Revenue
Certificates of Obligation, Series 2000
due in annual installments of$730,000
to $2,475,000 through August 15, 2026;
interest at 5.5% to 7%. S 3,695,000 S 4,790,000
Combination Tax Increment Reinvestment
Zone Revenue Refunding Bonds,
Series 2005A due in annual installments
of$140,000 to $2,595,000 through
August 2026. 23,005,000 23,165,000
S 26,700,000 S 27,955,000
ECONOMIC FACTORS
The City Council and TIF 42 Board of Directors entered into an agreement in November 2007 with the
Gaylord Texas Resort and Convention Center to construct an expansion to the existing resort having a
minimum of 2,000 rooms, an expansion of the convention center so the resort will have at least 600,000
square feet of meeting and pre-function space, approximately 750 — 1,100 additional parking spaces,
additional swimming pool and other additional amenities.
In May 2009, the City and Gaylord entered into an agreement to extend the required commencement date
of the expansion from September 12, 2009 until September 12, 2012 for parcels 5 and 7, as defined in the
agreement. In September 2012, the City and the Gaylord Texan Resort and Convention Center entered
into a fourth agreement and have agreed to extend the required commencement date of the expansion
until March 12, 2013.
REQUESTS FOR INFORMATION
This financial report is designed to provide our citizens, investors and creditors with a general overview of
the TIF's finances. If you have questions about this report or need additional financial information,
contact the Finance Department, City of Grapevine, 200 S. Main Street, Grapevine, Texas 76051.
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BASIC
FINANCIAL STATEMENTS
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GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER TWO
(A Blended Component Unit of the City of Grapevine,Texas)
STATEMENT OF NET ASSETS
SEPTEMBER 30,2012
ASSETS
Cash and investments $ 8,086,465
Taxes receivable,net 1,136,830
Accrued interest 2,843
Deferred charges 230,034
Total assets 9,456,172
LIABILITIES
Accrued interest payable 169,648
Bonds payable - due in one year 1,325,000
Bonds payable - due in more than one year 25,153,946
Total liabilities 26,648,594
NET ASSETS
Restricted for capital projects 2,149,435
Unrestricted ( 19,341,857)
Total net assets $( 17,192,422)
The accompanying notes are an integral part of these financial statements.
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GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER TWO
(A Blended Component Unit of the City of Grapevine,Texas)
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30,2012
Net(Expense)
Revenues and
Changes in
Net Assets
Program Governmental
Functions/Programs Expenses Revenue Activities
Governmental activities:
Intergovernmental S 1,595,555 - $( 1,595,555)
Interest 1,500,578 - ( 1,500,578)
Total governmental activities S 3,096,133 S - S( 3,096,133)
General revenues:
Property taxes 5,736,208
Unrestricted investment earnings 15,052
Total general revenues 5,751,260
Change in net assets 2,655,127
Net assets -beginning ( 19,847,549)
Net assets - ending S( 17,192,422)
The accompanying notes are an integral part of these financial statements.
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GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER TWO
(A Blended Component Unit of the City of Grapevine,Texas)
BALANCESHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30,2012
Capital
General Projects Total
ASSETS
Cash and investments $ 5,937,030 $ 2,149,435 $ 8,086,465
Taxes receivable,net 1,136,830 - 1,136,830
Accrued interest 2,843 - 2,843
Total assets $ 7,076,703 $ 2,149,435 $ 9,226,138
LIABILITIES AND FUND BALANCES
Liabilities: - - -
Fund balances:
Restricted for debt service 7,076,703 - 7,076,703
Restricted for capital projects - 2,149,435 2,149,435
Total fund balances 7,076,703 2,149,435 9,226,138
Total liabilities and fund balances $ 7,076,703 $ 2,149,435
Amounts reported for governmental activities in the statement of net
assets are different because:
Bond interest is not payable with available financial resources and is
therefore not accrued at the fund level ( 169,648)
Deferred charges 230,034
Loss on refunding 1,488,189
Bonds payable ( 26,700,000)
Premium on issuance ( 1,267,135)
Net assets of governmental activities $( 17,192,422)
The accompanying notes are an integral part of these financial statements.
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GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER TWO
(A Blended Component Unit of the City of Grapevine,Texas)
STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCE
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30,2012
Capital
General Projects Total
REVENUES
Taxes
Property taxes $ 5,736,208 - $ 5,736,208
Investment income 12,578 $ 2,474 15,052
Total revenues 5,748,786 2,474 5,751,260
EXPENDITURES
Intergovernmental 1,548,060 - 1,548,060
Capital outlay - 47,495 47,495
Debt service:
Principal 1,255,000 - 1,255,000
Interest and fiscal charges 1,417,011 2,400 1,419,411
Total expenditures 4,220,071 49,895 4,269,966
NET CHANGE IN FUND BALANCES 1,528,715 ( 47,421) 1,481,294
FUND BALANCE,BEGINNING 5,547,988 2,196,856 7,744,844
FUND BALANCE,ENDING $ 7,076,703 $ 2,149,435 $ 9,226,138
Net change in fund balances $ 1,481,294
Amounts reported for governmental activities in the statement of
activities are different because:
The repayment of principal of long-term debt consumes the current financial
resources of governmental funds,but reduces bond principal at the
government-wide level. 1,255,000
Interest expense is accrued in the government-wide financial statements,but not at the fund level. 7,478
Deferred charges- amortization of premium,loss,etc. are reported in the statement of activities
but do not require the use of current financial resources and,therefore,are not reported
as expenditures in the funds. ( 88,645)
Change in net assets of governmental activities $ 2,655,127
The accompanying notes are an integral part of these financial statements.
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GRAPEVINE TAX INCREMENT FINANCING DISTRICT
REINVESTMENT ZONE NUMBER TWO
(A Blended Component Unit of the City of Grapevine, Texas)
NOTES TO BASIC FINANCIAL STATEMENTS
SEPTEMBER 30,2012
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Grapevine Tax Increment Financing District Reinvestment Zone Number Two (the "TIF")
was created on December 28, 1998. The TIF was formed to finance and make public
improvements in the area surrounding the Gaylord Texan Resort and Convention Center, under
the authority of the Tax Increment Financing Act. The TIF is governed by a six-member board
of directors; five members are appointed by the Grapevine City Council, and the governing body
of Grapevine/Colleyville Independent School District appoints one member. The termination of
the TIF is set as either December 31, 2030, or the date when all project costs are paid and all debt
is retired, whichever comes first. The TIF is a blended component unit of the City of Grapevine,
Texas.
The accounting and reporting policies of the TIF conform to accounting principles generally
accepted in the United States of America, as applicable to governmental units. The following is a
summary of the more significant accounting and reporting policies:
A. Government-wide and Fund Financial Statements
The basic financial statements include both 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 TIF.
The government-wide statement of activities demonstrates the degree to which the direct
expenses of a functional category or segment are offset by program revenues. Direct
expenses are those that are clearly identifiable with specific function or segment. Program
revenues include (1) charges to customers or applicants who purchase, use or directly benefit
from goods, services, or privileges provided by a given function or segment, and (2) grants
and contributions that are restricted to meeting the operational or capital requirements of a
particular function or segment. Taxes and other items not properly included among program
revenues are reported instead as general revenues. The TIF does not report any program
revenues.
(continued)
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L SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
A. Government-wide and Fund Financial Statements (Continued)
Separate fund-based financial statements are provided for governmental funds. Major
individual governmental funds are reported as separate columns in the fund financial
statements. The major governmental funds are the General Fund, which is used to account for
principal and interest payments, and the Capital Projects Fund, which is used to account for
financial resources to be used for the acquisition or construction of major capital facilities.
The government-wide focus is more on the sustainability of the TIF as an entity and the
change in aggregate financial position resulting from the activities of the fiscal period. The
focus of the fund financial statements is on the major individual funds. Each presentation
provides valuable information that can be analyzed and compared to enhance the usefulness
of the information.
B. 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. 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 earned.
Government fund-level financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized
as soon as they are both measurable and available. Revenues are considered to be available
when they are collectible within the current period or soon enough thereafter to pay liabilities
of the current period. For this purpose, the government considers revenues to be available if
they are collected within 60 days of the end of the current fiscal period. Property taxes are
recognized in the year in which they are levied. Investment earnings are recorded as earned
since they are measurable and available.
C. Budgets and Budgetary Accounting
An overall project budget was included in the plan to create the TIF and approved by all
parties involved. Annual budgets are not adopted.
D. Assets, Liabilities and Net Assets or Eguity
1. Cash and Investments
Cash consists of demand deposits (principally interest-bearing accounts) that are carried
at cost. Investments are stated at fair value.
(continued)
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L SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities and Net Assets or Equity (Continued)
2. Long-term Debt
In the government-wide financial statements, long-term debt and other long-term
obligations are reported as liabilities in the applicable governmental activities statement
of net assets. Bond premiums and discounts are deferred and amortized over the life of
the bonds using the effective interest method. Bonds payable are reported net of the
applicable bond premium or discount. Bond issuance costs and losses on refundings are
reported as deferred charges and amortized on a straight line basis over the life of the
related debt.
In the fund financial statements, governmental funds 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, are reported as debt service expenditures.
3. Fund Balance Classification
The governmental fund financial statements present fund balances based on classifications
that comprise a hierarchy that is based primarily on the extent to which the TIF is bound to
honor constraints on the specific purposes for which amounts in the respective
governmental funds can be spent. The classifications used in the governmental fund
financial statements are as follows:
• Nonspendable: This classification includes amounts that cannot be spent
because they are either (a) not in spendable form or (b) are legally or
contractually required to be maintained intact. Nonspendable items are
not expected to be converted to cash or are not expected to be converted to
cash within the next year.
• Restricted: This classification includes amounts for which constraints
have been placed on the use of the resources either (a) externally imposed
by creditors, grantors, contributors, or laws or regulations of other
governments, or (b) imposed by law through constitutional provisions or
enabling legislation.
(continued)
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L SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities and Net Assets or Equity (Continued)
3. Fund Balance Classification (Continued)
• Committed: This classification includes amounts that can be used only for
specific purposes pursuant to constraints imposed by formal action of the
Board. These amounts cannot be used for any other purpose unless the
Board removes or changes the specified use by taking the same type of
action that was employed when the funds were initially committed. This
classification also includes contractual obligations to the extent that
existing resources have been specifically committed for use in satisfying
those contractual requirements.
• Assigned: This classification includes amounts that are constrained by the
TIF's intent to be used for a specific purpose but are neither restricted nor
committed. This intent can be expressed by the Board.
• Unassigned: This classification includes the residual fund balance for the
General Fund. The unassigned classification also includes negative
residual fund balance of any other governmental fund that cannot be
eliminated by offsetting of assigned fund balance amounts.
When an expenditure is incurred for purposes for which both restricted and unrestricted
fund balance is available, the TIF considers restricted funds to have been spent first.
When an expenditure is incurred for which committed, assigned, or unassigned fund
balances are available, the TIF considers amounts to have been spent first out of
committed funds, then assigned funds, and finally unassigned funds.
II. CASH AND INVESTMENTS
The cash and investment policies of the TIF mirror the City of Grapevine's policies. City policies
governing bank deposits require depositories to be FDIC-insured institutions, and depositories
must fully collateralize all time deposits in excess of FDIC insurance limits.
The City invests in State investment pools (TexPool and LOGIC). These approved pooled
investments are carried at fair value and may be liquidated as needed. TexPool and LOGIC are
public funds investment pools operating as a 2a-7 like pool and in full compliance with the
Public Funds Investment Act.
The components of the TIF's cash and investments (at fair value) at September 30, 2012, were as
follows:
Investment in City investment pool $ -
(continued)
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IL CASH AND INVESTMENTS (Continued)
Interest Rate Risk. In accordance with its investment policy, the City minimizes the risk that the
interest earnings and the market value of investments in the portfolio will fall due to changes in
general interest rates, by:
a. Structuring the investment portfolio so that investments mature to meet cash
requirements for ongoing operations, thereby avoiding the need to liquidate
investments prior to maturity.
b. Investing operating funds primarily in certificates of deposit, shorter-term
securities, money market mutual funds, or local government investment pools
functioning as money market mutual funds.
c. Diversifying maturities and staggering purchase dates to minimize the impact
of market movements over time.
Credit Risk. In accordance with its investment policy, the City minimizes credit risk, the risk of
loss due to the failure of the issuer or backer of the investment by:
a. Limiting investments to the safest types of investments.
b. Pre-qualifying the financial institutions and broker/dealers with which the
City will do business.
c. Diversifying the investment portfolio so that potential losses on individual
issuers will be minimized.
Concentration of Credit Risk. The City's investment policy allows up to 100% to be invested in
U. S. Treasury Bills/Notes/Bonds, and U. S. Agencies and Instrumentalities. The City's
investment in the securities of U. S. agencies are rated AAA by Standard &Poor's. TexPool and
LOGIC are public funds investment pools operating as a 2a-7 like pool and in full compliance
with the Public Funds Investment Act. As of September 30, 2012, the City's investments in
TexPool were rated AAAm and its investments in LOGIC were rated AAA.
Custodial Credit Risk. State statutes require that all City deposits in financial institutions be fully
collateralized by U. S. Government obligations or obligations of the State of Texas or its agencies.
The City's deposits were fully collateralized, or have a letter of credit issued by the Federal Home
Loan Bank as required by State statutes at September 30, 2012. The bank balances were fully
collateralized by government securities.
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III. LONG-TERM LIABILITIES
Long-term liabilities are as follows:
Balance Balance Due Within
09/30/11 Additions Retirements 09/30/12 One Year
Combination Tax and Tax
Increment Reinvestment
Zone Revenue Certificates
of Obligation, Series 2000
due in annual installments
of$730,000 to$2,475,000
through August 15,2026;
interest at 5.5%to 7% $ 4,790,000 - $ 1,095,000 $ 3,695,000 $ 1,160,000
Combination Tax Increment
Reinvestment Zone Revenue
Refunding Bonds, Series
2005A due in annual
installments of$140,000 to
$2,595,000 through
August 2026;3.25%to 5% 23,165,000 - 160,000 23,005,000 165,000
Total debt outstanding $ 27,955,000 - $ 1,255,000 26,700,000 $ 1,325,000
Unamortized premium 1,267,135
Deferred loss on refunding ( 1,488,189)
Total debt outstanding $ 26,478,946
The annual requirements to amortize the long-term debt as of September 30, 2012, are as follows:
Year Ending
September 30, Principal Interest
2013 $ 1,325,000 $ 1,351,186
2014 1,400,000 1,280,786
2015 1,485,000 1,205,106
2016 1,565,000 1,124,500
2017 1,650,000 1,046,250
2017-2021 9,635,000 3,904,250
2022-2026 9,640,000 1,235,500
Total $ 26,700,000 $ 11,147,578
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IV. APPRAISED VALUES AND TAX RATES
A summary of appraised values for the TIF is as follows:
Tax Year 1998 Base Captured
2011 Appraised Year Appraised Appraised
Value Value Value
City of Grapevine $ 264,510,413 $ 744,886 $ 263,765,527
Grapevine-Colleyville Independent
School District 264,510,413 744,886 263,765,527
The captured appraised value of the TIF is the total appraised value of all real property taxable
by the unit and located in the reinvestment zone less the base year appraised value of all real
property taxable by the unit and located in the reinvestment zone at the time the TIF was
established (1999).
Tax rates for the TIF are as follows (per $100 valuation):
Rate
City of Grapevine 0.35
Grapevine-Colleyville Independent 1.00
School District
V. PLEDGED REVENUES
The TIF has entered into a local agreement with the Grapevine-Colleyville Independent School
District where future ad valorem taxes collected for the zone are pledged to contribute towards
the School's middle school debt. The total amount that the TIF has pledged to pay is
$45,016,222 as of September 30, 2012. The amount of the annual payment is negotiated each
year with the school and the school bills the City. The City does not have title to the middle
school improvements.
VI. BOARD OF DIRECTORS
Members of the Board of Directors can be obtained from the City Secretary's office — City of
Grapevine.
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