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HomeMy WebLinkAboutComprehensive Annual Financial Report 09.30.10 City of Port Arthur, Texas Comprehensive Annual Financial Report For the Year Ended September 30, 2010 Prepared by the Finance Department Rebecca Underhill, CPA Assistant City Manager-Administration Deborah Echols, CPA Director of Finance Tammy Jacobs, CPA Comptroller Julie Saunders Accounting Manager CITY OF PORT ARTHUR, TEXAS Comprehensive Annual Financial Report For the Year Ended September 30, 2010 Table of Contents Page INTRODUCTORY SECTION Title Page Table of Contents Letter of Transmittal v Government Finance Officer's Association Certificate of Achievement ix List of City Officials x Organization Chart xi FINANCIAL SECTION Independent Auditors Report 1 Management's Discussion and Analysis 5 Basic Financial Statements Government Wide Financial Statements Statement of Net Assets Exhibit 1 13 Statement of Activities Exhibit 2 15 Major Fund Financial Statements Governmental Funds Balance Sheet Exhibit 3 19 Statement of Revenues, Expenditures and Changes in Fund Balances Exhibit 4 20 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Government-Wide Statement of Activities Exhibit 5 21 Statement of Revenues, Expenditures and Changes in Fund Balance Budget (Budget Basis) and Actual General Fund Exhibit 6 23 Proprietary Funds Statement of Net Assets Exhibit 7 27 Statement of Revenues, Expenses and Changes in Net Assets Exhibit 8 28 Statement of Cash Flows Exhibit 9 29 Notes to the Basic Financial Statements 31 CITY OF PORT ARTHUR, TEXAS Comprehensive Annual Financial Report For the Year Ended September 30, 2010 Table of Contents Page Required Supplementary Information Texas Municipal Retirement System, Schedule of Funding Progress Exhibit 10 55 Port Arthur Firemen's Relief and Retirement Fund Schedule of Funding Progress Exhibit 11 56 Schedule of Employer Contributions Exhibit 12 57 Notes to Required Supplementary Information Exhibit 13 58 Retiree Health Insurance Program Schedule of Funding Progress Exhibit 14 59 Combining and Individual Fund Statements and Schedules Combining Financial Statements-Non-Major Governmental Funds Combining Balance Sheet A-1 64 Combining Statement of Revenues, Expenditures and Changes in Fund Balances A-2 68 Schedules of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual Debt Service Fund A-3 73 Library Special Fund A-4 74 Golf Course Fund A-5 75 Municipal Court Technology Fund A-6 76 Hotel Occupancy Tax Fund A-7 77 Police Special Fund A-8 78 Transit System Fund A-A-9 79 Combining Financial Statements -Internal Service Funds Combining Statement of Net Assets B-1 83 Combining Statement of Revenues, Expenditures and Changes in Fund Net Assets B-2 84 Combining Statement of Cash Flows B-3 85 Individual Fund Statements -Port Arthur Economic Development Corporation Balance Sheet C-1 89 Statement of Revenues, Expenditures and Changes in Fund Balances C-2 90 General Operating Fund Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual C-3 91 CITY OF PORT ARTHUR, TEXAS Comprehensive Annual Financial Report For the Year Ended September 30, 2010 Table of Contents Page Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual C-4 92 STATISTICAL SECTION Financial Trends Net Assets by Component Schedule 1 96 Changes in Net Assets Schedule 2 98 Governmental Activities Tax Revenue by Source Schedule 3 102 Fund Balances of Governmental Funds Schedule 4 104 Changes in Fund Balances of Governmental Funds Schedule 5 106 General Governmental Tax Revenues by Source Schedule 6 108 Revenue Capacity Assessed Value and Estimated Actual Value of Taxable Property Schedule 7 109 Property Tax Rates -Direct and Overlapping Governments Schedule 8 110 Principal Property Taxpayers Schedule 9 112 Principal Industrial Districts Schedule 10 113 Property Tax Levies and Collections Schedule 11 114 Industrial District Payments Schedule 12 115 Debt Capacity Ratios of Outstanding Debt by Type Schedule 13 116 Ratios of General Bonded Debt Outstanding Schedule 14 117 Direct and Overlapping Governmental Activities Debt Schedule 15 118 Legal Debt Margin Information Schedule 16 120 Demographic and Economic Information Demographic and Economic Statistics Schedule 17 122 Principal Employers Schedule 18 123 Operating Information Full Time Equivalent City Employees by Function Schedule 19 124 Operating Indicators by Function Schedule 20 125 Capital Asset Statistics by Function Schedule 21 128 X City of Port Arthur, Texas City Officials City Council Deloris Prince Mayor Jack Chatman District 1 Elizabeth Segler District 2 Morris Albright III Mayor Pro Tem Martin Flood District 4 John Beard, Jr. District 5 Robert E. Williamson District 6 D. Kay Wise District 7 Thomas J. Henderson District 8 Appointed Officials Stephen Fitzgibbons City Manager Sherri Bellard Acting City Secretary Valecia Tizeno City Attorney Municipal Court City Secretary Solid Waste Water Utilities Housing and Neighborhood Services Planning and Transit Library Health Public Works Fire Police Parks and Recreation Human Resources Finance City Manager City Attorney City Council CITY OF PORT ARTHUR xi CITY OF PORT ARTHUR, TEXAS Management’s Discussion and Analysis -5 -As management of the City of Port Arthur, Texas (City), we offer readers of the City’s financial statement this narrative overview and analysis of the financial activities of the City for the year ended September 30, 2010. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on page -v-of this report. The assets of the City of Port Arthur exceeded its liabilities at the close of the fiscal year by $77.4 million (net assets). FINANCIAL HIGHLIGHTS • The City’s total net assets increased by $3.6 million. In part, this increase was driven by capital improvements. These improvements were funded by a General Obligation Bond Issue and by Federal American Relief and Recovery Act (ARRA) grant awards. • As of the close of the fiscal year, the City of Port Arthur’s governmental funds reported combined ending fund balances of $30 million. Over 59.1% of this total amount, $17.79 million is unreserved and available for use within the City’s designation and policies. • At the end of the current fiscal year, unreserved balance in the General Fund was $16.1 million, or 31.2% of the total General Fund expenditures, within the City’s General Fund balance policy requirement. This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the financial statements themselves. OVERVIEW OF THE FINANCIAL STATEMENTS 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 private-sector business. The Statement of Net Assets 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. That being said, the net assets of the City increased $3.6 million in this fiscal year. 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 when the underlying event giving rise to the change occurs, regardless of the timing of the 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 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, community development, public works, health and welfare, economic development, public transportation and culture and recreation. The business-type activities include the water and sewer utility and solid waste operations. The government-wide financial statements are found on pages 13 and 15 of this report. CITY OF PORT ARTHUR, TEXAS Management’s Discussion and Analysis -6 -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 and 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 two categories – governmental funds and proprietary funds. Governmental Funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, the 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. 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 on 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 City maintains 34 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, Debt Service, Community Development Block Grant, FEMA, and Capital Projects Funds which are considered to be major funds. Data from from the other 29 funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in the report. Proprietary Funds – The City maintains two types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for the water and sewer utility and solid waste operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for fleet maintenance, liability insurance, employee benefits, and equipment replacement activities. All internal service funds are combined into a single aggregated presentation on the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements are found on pages 27-29 of this report. 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. Other Information – In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s progress in funding its obligation to provide pension and other post employment benefits to its employees. Required supplementary information can be found on pages 55-59 of this report. See section V.C. and V.D. in the notes to the financial statements, on pages 46-51 of this report for additional information concerning the City’s retirement systems and other post employment benefits. As noted earlier, net assets may serve, over time, as a useful indicator of the government’s financial position. In the case of the City of Port Arthur, Texas, assets exceeded liabilities by $77.4 million GOVERNMENT-WIDE FINANCIAL ANALYSIS CITY OF PORT ARTHUR, TEXAS Management’s Discussion and Analysis -7 -as of September 30, 2010. The largest portion of the City’s net assets reflects investment in capital assets (e.g. land, building, equipment, improvements, and construction in progress), less any debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide service 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. City of Port Arthur’s Net Assets Governmental Activities Business-Type Activities Total 2010 2009 2010 2009 2010 2009 Current and other assets $ 64,270,739 $ 61,438,332 $ (6,299,694) $ (1,624,438) $ 57,971,045 $ 59,813,894 Capital assets 68,383,700 66,879,351 86,587,387 82,251,758 154,971,087 149,131,109 Total assets $ 132,654,439 $ 128,317,683 $ 80,287,693 $ 80,627,320 $ 212,942,132 $ 208,945,003 Long term liabilities $ 98,979,912 $ 97,001,310 $ 5,171,798 $ 7,742,580 $ 104,151,710 $ 104,743,890 Other liabilities 25,742,847 29,239,817 5,371,904 1,146,602 31,114,751 30,386,419 Total liabilities $ 124,722,759 $ 126,241,127 $ 10,543,702 $ 8,889,182 $ 135,266,461 $ 135,130,309 Net Assets Invested in capital assets, net of related debt $ 52,886,404 $ 57,871,638 $ 86,587,387 $ 82,251,758 $ 80,289,627 $ 66,200,896 Restricted 12,159,977 10,073,955 10,896,172 12,748,482 23,056,149 22,822,437 Unrestricted (57,114,701) (65,869,037) (27,739,568) (23,262,102) (25,670,105) (15,208,639) Total net assets $ 7,931,680 $ 2,076,556 $ 69,743,991 $ 71,738,138 $ 77,675,671 $ 73,814,694 Analysis of City’s Operations – The following table provides a summary of the City’s operations for the year ended September 30, 2010. Governmental activities increased the City of Port Arthur’s net assets by $5.6 million. The infusion of grant funded projects and increased industrial revenue resulted in this increase in assets. Business-type activities decreased the City’s net assets by $1.99 million. The solid waste fund saw a significant drop in landfill revenues which drove this decline in net assets. CITY OF PORT ARTHUR, TEXAS Management’s Discussion and Analysis -8 -City of Port Arthur’s Changes in Net Assets Governmental Activities Business-Type Activities Total 2010 2009 2010 2009 2010 2009 Revenues Program revenues Charges for services $ 3,141,147 $ 3,276,308 $ 24,584,884 $ 26,210,406 $ 27,726,031 $ 29,486,714 Operating grants 9,980,518 19,279,958 --9,980,518 19,279,958 Capital grants and contributions 1,172,641 34,800 6,850,178 -8,022,819 34,800 General revenues Ad valorem taxes 16,082,423 15,329,768 --16,082,423 15,329,768 Industrial revenue 26,520,879 14,605,507 --26,520,879 14,605,507 Gross receipts taxes 4,414,729 4,439,957 --4,414,729 4,439,957 Sales tax 8,108,987 9,801,361 --8,108,987 9,801,361 Other taxes 985,368 1,115,410 --985,368 1,115,410 Investment earnings 379,046 240,344 53,355 108,582 432,401 348,926 Miscellaneous 1,940,243 1,999,733 6,555 -1,946,798 1,999,733 Total revenues $ 72,725,981 $ 70,123,146 $ 31,494,972 $ 26,318,988 $ 104,220,953 $ 96,442,134 Expenses General government $ 13,639,715 $ 21,411,497 $ -$ -$ 13,639,715 $ 21,411,497 Public safety 29,371,645 32,421,145 --29,371,645 32,421,145 Public works 14,006,598 14,588,581 --14,006,598 14,588,581 Community development 3,201,371 1,490,108 --3,201,371 1,490,108 Culture and recreation 4,968,703 5,361,406 --4,968,703 5,361,406 Health and welfare 2,905,668 2,723,071 --2,905,668 2,723,071 Public transportation 3,061,791 2,563,463 --3,061,791 2,563,463 Interest on long-term debt 3,294,557 3,421,325 --3,294,557 3,421,325 Water and sewer --17,579,403 16,965,508 17,579,403 16,965,508 Solid waste --8,422,715 9,685,522 8,422,715 9,685,522 Total expenses $ 74,450,048 $ 83,980,596 $ 26,002,118 $ 26,651,030 $ 100,452,166 $ 110,631,626 Increases (decreases) in net assets before transfers (1,724,067) (13,857,450) 5,492,854 (332,042) 3,768,787 (14,189,492) Transfers 7,487,001 6,651,553 (7,487,001) (6,651,553) --Increases (decreases) in net assets 5,762,934 (7,205,897) (1,994,147) (6,983,595) 3,768,787 (14,189,492) Net assets -beginning of year 2,168,746 16,067,342 71,738,138 80,542,220 73,906,884 96,609,562 Adjustment to beginning net assets -(6,692,699) -(1,820,487) -(8,513,186) Net assets -end of year $ 7,931,680 $ 2,168,746 $ 69,743,991 $ 71,738,138 $ 77,675,671 $ 73,906,884 FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS Governmental Funds – The focus of the City of Port Arthur’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of the government’s net resources available for spending at the end of the fiscal year. At the end of the 2010 fiscal year, the City of Port Arthur’s governmental funds reported combined ending fund balances of $30 million. Approximately 59% of this total amount ($17.79 million) consists of CITY OF PORT ARTHUR, TEXAS Management’s Discussion and Analysis -9 -unreserved fund balances. The remainder of the balance is reserved to indicate that it is not available for new spending because it has been committed to 1) provide for prepaid items ($128,709), 2) pay for debt service ($3.2 million) and 3) capital projects ($8.95 million). In the General Fund, the City budgeted for a decrease in fund balance of $874,000. This was a planned reduction. Due to revenues and transfers lagging budgeted projections by $1.6 million and actual expenses being less than budgeted by $2.9 million, the fund balance increased $1.3 million. The primary revenue variances were provided in Sales Tax which declined sharply in 2010 ($491,000 less than budget) due in large part to the sluggish economy, and the completion of Hurricane Ike recovery spending by retail customers. Industrial revenue finished the year $959,000 less than budget due to declines in the values in the industrial districts that were not anticipated at the budget preparation, and the refund to one payer after a successful litigation of value with the Jefferson County Appraisal District. Expenses were under budget in every department, except for City Secretary, Police and Fire, for a net savings of $2.9 million. Debt service fund balance decreased $845,000, as was budgeted. The FEMA fund carries a significant receivable from the federal government. This is due to outstanding project reimbursements from Hurricanes Rita (2005) and Ike (2008). In 2010, the City issued $8 million in General Obligation Debt that will fund various new Capital Projects in that fund. General Fund Budgetary Highlights – The City Council approved ten budget amendments to the original appropriations. This change resulted in an increase of 6% of the original operating appropriation, or $3.33 million. These amendments were to fund additional capital projects, a litigation settlement and unanticipated equipment and maintenance needs in various departments. Proprietary funds – The City’s proprietary fund statements provide the same type of information found on the government-wide statements, but in more detail. Net assets in the proprietary funds decreased $1.4 million. The water utility fund does not generate sufficient revenue to fund the entire cost of capital. CAPITAL ASSETS The City of Port Arthur’s investment in capital assets for its governmental and business-type activities as of September 30, 2010, amounts to $154.97 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, equipment, improvements, infrastructure and construction in progress. Major capital assets during the current year included the following: Capital Assets at Year-End Governmental Activities Business-type Activities Total 2010 2009 2010 2009 2010 2009 Land $ 2,474,132 $ 2,474,132 $ 362,843 $ 362,843 $ 2,836,975 $ 2,836,975 Buildings 20,464,102 18,968,558 35,348,650 35,348,650 55,812,752 54,317,208 Improvements 8,526,264 8,526,264 106,776,168 106,177,491 115,302,432 114,703,755 Infrastructure 249,663,476 248,492,305 --249,663,476 248,492,305 Equipment 41,181,159 39,087,569 4,318,666 4,239,644 45,499,825 43,327,213 Construction in progress 13,113,198 7,763,919 8,848,584 1,080,262 21,961,782 8,844,181 Accumulated depreciation (267,038,631) (258,433,396) (69,067,524) (64,957,132) (336,106,155) (323,390,528) Total $ 68,383,700 $ 66,879,351 $ 86,587,387 $ 82,251,758 $ 154,971,087 $ 149,131,109 CITY OF PORT ARTHUR, TEXAS Management’s Discussion and Analysis -10 -Detailed information on capital asset activity can be found on pages 39-41 in the Notes to the Financial Statements, Note IV. C. DEBT ADMINISTRATION The City of Port Arthur General Obligation Bond Series 2010 (the last issue for the City) was rated ‘A’ by Standard and Poor’s and A2 by Moody’s Investors Service. At the end of the current fiscal year, the City of Port Arthur had a total bonded debt of $80,310,000. More detailed information on long-term debt activity can be found on pages 43-45 in the Notes to the Financial Statements, Note IV.F. Governmental Activities 2010 2009 General obligation bonds $ 50,750,000 $ 45,980,000 Certificates of obligation 29,560,000 31,745,000 Total $ 80,310,000 $ 77,725,000 The City of Port Arthur’s budget for fiscal year 2011 included increased property tax revenue due to a 3.9% increase in assessed valuation. However, industrial district revenues declined a sharp 10% due to significant decreased values in in those values. The decrease was limited however by a 10% floor in the industrial contracts. The property tax rate remained the same as the prior year, $0.792 per $100 valuation. ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES This financial report is designed to provide a general overview of the City of Port Arthur’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report, or requests for additional financial information should be addressed to the Office of the Assistant City Manager for Administration, P.O. Box 1089, Port Arthur, Texas 77641-1089. REQUESTS FOR INFORMATION CITY OF PORT ARTHUR, TEXAS Exhibit 1 Statement of Net Assets September 30, 2010 Primary Government Component Units Economic Pleasure Governmental Business-type Development Island Activities Activities Total Corporation Commission Assets Cash $ 2,442,500 $ -$ 2,442,500 $ 1,241,666 $ 113,501 Investments 23,371,785 10,246,925 33,618,710 6,976,456 1,193,264 Due from other funds 23,418,973 (23,418,973) ---Receivables (net of allowances for doubtful accounts) Property taxes 2,819,849 -2,819,849 --Accounts 2,276,178 3,414,471 5,690,649 428,127 11,456 Federal and state grants 8,779,386 3,048,958 11,828,344 --Notes 732,246 -732,246 --Inventories 170,113 408,925 579,038 --Prepaid items 259,709 -259,709 -11,872 Capital assets: Land 2,474,132 362,843 2,836,975 5,757,631 -Buildings 20,464,102 35,348,650 55,812,752 315,480 -Improvements 8,526,264 106,776,168 115,302,432 -8,893,480 Infrastructure 249,663,476 -249,663,476 --Equipment 41,181,159 4,318,666 45,499,825 35,826 243,659 Construction in progress 13,113,198 8,848,584 21,961,782 --Accumulated depreciation (267,038,631) (69,067,524) (336,106,155) (53,704) (3,878,752) Total Assets 132,654,439 80,287,693 212,942,132 14,701,482 6,588,480 Liabilities Wages payable 1,645,393 333,661 1,979,054 15,311 2,973 Accounts payable 2,625,148 1,767,890 4,393,038 55,403 81,743 Other liabilities 89,483 74,449 163,932 --Deferred revenue 13,920,000 -13,920,000 -642,147 Noncurrent liabilities: Due within one year: Bonded debt 6,085,000 -6,085,000 330,000 -Capital leases 399,466 -399,466 --Notes payable ----30,000 Compensated absences -192,954 192,954 -10,364 Due in more than one year: Bonded debt 74,225,000 -74,225,000 5,780,000 -Capital leases 401,994 -401,994 --Notes payable ----52,447 Compensated absences 8,030,920 913,191 8,944,111 9,739 -Net pension obligation 505,348 126,337 631,685 --Other post employment benefits 14,488,950 3,639,325 18,128,275 --Refundable deposits -1,368,099 1,368,099 --Accrued landfill closure costs -2,127,796 2,127,796 --Long-term risk liability 2,306,057 -2,306,057 --Total Liabilities 124,722,759 10,543,702 135,266,461 6,190,453 819,674 Net Assets Invested in capital assets, net of related debt 52,886,404 86,587,387 80,289,627 6,055,233 5,258,435 Restricted for: Debt service 3,208,527 -3,208,527 705,275 -Capital projects 8,951,450 10,896,172 19,847,622 1,000,000 (49) Unrestricted (57,114,701) (27,739,568) (25,670,105) 750,521 510,469 Total Net Assets $ 7,931,680 $ 69,743,991 $ 77,675,671 $ 8,511,029 $ 5,768,855 See accompanying notes to the basic financial statements 13 CITY OF PORT ARTHUR, TEXAS Exhibit 2 Statement of Activities For the Year Ended September 30, 2010 Program Revenues Primary Government Component Units Fees, Fines and Operating Capital Grants Economic Pleasure Charges for Grants and and Governmental Business-type Development Island Program Activities Expenses Services Contributions Contributions Activities Activities Total Corporation Commission Governmental activities General government $ 13,639,715 $ 728,594 $ 1,706,269 $ -$ (11,204,852) $ -$ (11,204,852) $ -$ -Culture and recreation 4,968,703 338,417 18,921 -(4,611,365) -(4,611,365) --Public safety 29,371,645 1,793,753 491,539 1,172,641 (25,913,712) -(25,913,712) --Community development 3,201,371 155,726 3,819,590 -773,945 -773,945 --Health and welfare 2,905,668 -1,693,855 -(1,211,813) -(1,211,813) --Public transportation 3,061,791 124,657 2,250,344 -(686,790) -(686,790) --Public works 14,006,598 ---(14,006,598) -(14,006,598) --Interest on long term debt 3,294,557 ---(3,294,557) -(3,294,557) --Total governmental activities 74,450,048 3,141,147 9,980,518 1,172,641 (60,155,742) -(60,155,742) --Business-type activities: Water and sewer 17,579,403 16,931,852 -6,850,178 -6,202,627 6,202,627 --Solid waste 8,422,715 7,653,032 ---(769,683) (769,683) --Total business-type activities 26,002,118 24,584,884 -6,850,178 -5,432,944 5,432,944 --Total Primary Government $ 100,452,166 $ 27,726,031 $ 9,980,518 $ 8,022,819 (60,155,742) 5,432,944 (54,722,798) --Component Units Economic Development Corp. (2,505,539) -Pleasure Island Commission -262,190 Total Component Units (2,505,539) 262,190 General Revenues Property taxes 16,082,423 -16,082,423 --Industrial district payments 26,520,879 -26,520,879 --Gross receipts taxes 4,414,729 -4,414,729 --Sales 8,108,987 -8,108,987 4,054,494 -Other taxes 985,368 -985,368 --Interest 379,046 53,355 432,401 43,367 3,265 Miscellaneous 1,940,243 6,555 1,946,798 --Transfers 7,487,001 (7,487,001) -112,940 -Total general revenues and transfers 65,918,676 (7,427,091) 58,491,585 4,210,801 3,265 Change in net assets 5,762,934 (1,994,147) 3,768,787 1,705,262 265,455 Net assets, beginning of year 2,168,746 71,738,138 73,906,884 6,544,998 5,503,400 Adjustment to beginning net assets, Note V. G. ---260,769 -Net assets, end of year $ 7,931,680 $ 69,743,991 $ 77,675,671 $ 8,511,029 $ 5,768,855 See accompanying notes to the basic financial statements 15 CITY OF PORT ARTHUR, TEXAS Exhibit 3 Balance Sheet Governmental Funds September 30, 2010 Community Development Non Major Total Debt Block Capital Governmental Governmental General Service Grant FEMA Projects Funds Funds Assets Cash $ 368,281 $ 156,568 $ -$ -$ 597,754 $ 316,187 $ 1,438,790 Investments 5,000,000 3,000,000 --7,000,000 1,811,515 16,811,515 Due from other funds 26,550,162 ---981,321 198,632 27,730,115 Receivables (net of allowance for doubtful accounts): Property taxes 1,516,914 1,302,935 ----2,819,849 Accounts 93,308 -1,190,969 --958,385 2,242,662 Federal and state grants 121,115 -498,464 4,354,433 700,000 3,105,374 8,779,386 Notes 732,246 -----732,246 Inventories -----116,515 116,515 Prepaid items 128,709 -----128,709 Total Assets $ 34,510,735 $ 4,459,503 $ 1,689,433 $ 4,354,433 $ 9,279,075 $ 6,506,608 $ 60,799,787 Liabilities and Fund Balances Liabilities Wages payable $ 1,455,572 $ -$ 18,090 $ -$ -$ 150,778 $ 1,624,440 Accounts payable 1,430,602 -71,248 14,638 327,625 704,193 2,548,306 Due to other funds --571,889 4,339,795 -3,512,244 8,423,928 Other liabilities -----89,483 89,483 Deferred revenue 15,388,001 1,250,976 1,028,206 --371,054 18,038,237 Total Liabilities 18,274,175 1,250,976 1,689,433 4,354,433 327,625 4,827,752 30,724,394 Fund Balances: Reserved for: Prepaid items 128,709 -----128,709 Debt service -3,208,527 ----3,208,527 Capital projects ----8,951,450 -8,951,450 Unreserved, reported in: General fund 16,107,851 -----16,107,851 Special revenue -----1,678,856 1,678,856 Total fund balances 16,236,560 3,208,527 --8,951,450 1,678,856 30,075,393 Total liabilities and fund balances $ 34,510,735 $ 4,459,503 $ 1,689,433 $ 4,354,433 $ 9,279,075 $ 6,506,608 -Reconciliation to government-wide statement of net assets Capital assets used in governmental activities are not financial resources, and therefore, are not reported in these funds. 61,994,881 Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in these funds. 4,118,237 Internal service funds are used by management to charge the costs of certain capital assets, employee benefits and risk management activities to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net assets. 15,049,769 Long term liabilities are not due and payable in the current period, and therefore are not reported in these funds (103,306,600) Net assets of governmental activities $ 7,931,680 See accompanying notes to the basic financial statements 19 CITY OF PORT ARTHUR, TEXAS Exhibit 4 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2010 Community Development Non major Total Debt Block Capital Governmental Governmental General Service Grant FEMA Projects Funds Funds Revenues Taxes: Property $ 7,944,360 $ 7,659,925 $ -$ -$ -$ -$ 15,604,285 Penalty and interest 335,569 -----335,569 Industrial district payments 26,520,879 -----26,520,879 Gross receipts taxes 4,414,729 -----4,414,729 Sales 8,108,987 -----8,108,987 Other taxes 127,176 ----858,192 985,368 Licenses and permits 702,347 -----702,347 User fees 354,501 ----134,820 489,321 Fines and forfeitures 1,637,040 ----156,713 1,793,753 Intergovernmental 487,639 -1,324,477 (1,030,152) 950,000 9,328,302 11,060,266 Donations ----25,000 7,665 32,665 Program revenue --35,513 --107,208 142,721 Interest revenue 217,333 30,369 --56,802 9,981 314,485 Miscellaneous 309,420 609,635 -758,992 33,725 198,505 1,910,277 Total revenues 51,159,980 8,299,929 8,299,929 1,359,990 (271,160) 1,065,527 10,801,386 72,415,652 Expenditures Current: General government 10,988,142 --436,247 -1,818,668 13,243,057 Culture and recreation 3,766,181 ----813,433 4,579,614 Public safety 27,544,653 ---1,370,189 28,914,842 Community development --758,501 --2,249,701 3,008,202 Health and welfare 1,077,345 ----1,784,925 2,862,270 Public transportation -----3,242,534 3,242,534 Public works 8,224,026 -----8,224,026 Capital outlay ----7,553,541 -7,553,541 Debt service: Principal retirement -5,414,884 ----5,414,884 Interest and fiscal charges -3,252,051 ----3,252,051 Total Expenditures 51,600,347 8,666,935 758,501 436,247 7,553,541 11,279,450 80,295,021 Excess (deficiency) of revenues over expenditures (440,367) (367,006) 601,489 (707,407) (6,488,014) (478,064) (7,879,369) Other financing sources (uses) Proceeds from bond issuance ----8,092,240 -8,092,240 Transfers in 7,969,327 ---1,326,679 895,951 10,191,957 Transfers out (3,552,051) (477,876) (601,489) --(311,966) (4,943,382) Total other financing sources (uses) 4,417,276 (477,876) (601,489) -9,418,919 583,985 13,340,815 Net changes in fund balances 3,976,909 (844,882) -(707,407) 2,930,905 105,921 5,461,446 Fund balances, beginning of year as originally reported 11,416,518 4,053,409 -707,407 6,020,545 1,503,957 23,701,836 Prior period adjustment, Note V.F. 843,133 ----68,978 912,111 Fund balances, beginning of year as restated 12,259,651 4,053,409 -707,407 6,020,545 1,572,935 24,613,947 Fund balances, end of year $ 16,236,560 $ 3,208,527 $ -$ -$ 8,951,450 $ 1,678,856 $ 30,075,393 See accompanying notes to the basic financial statements 20 CITY OF PORT ARTHUR, TEXAS Exhibit 5 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of the Governmental Funds to the Statement of Activities For the year ended September 30, 2010 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances -total governmental funds $ 5,461,446 Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. 2,515,535 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. 155,574 The issuance of long-term debt 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 cost, 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. Bond principal retired 5,414,884 Procceds of Bond Issuance (8,092,240) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Increase in long term accrued compensated absences (479,693) Increase in net pension obligation (310,064) Decrease in other post employment benefits 68,348 Internal service funds are used by management to charge the costs of certain capital assets and employee benefits to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities. Change in net assets 461,700 Net amount allocated to business activities 567,445 Change in net assets of governmental activities $ 5,762,935 21 CITY OF PORT ARTHUR, TEXAS Exhibit 6 General Fund Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual (Budget Basis) For the Year Ended September 30, 2010 Variance with Budgeted Amounts Actual Final Budget Amounts Positive Original Final Budget Basis (Negative) Revenues Taxes: Property taxes $ 7,767,000 $ 7,767,000 $ 7,944,360 $ 177,360 Penalty and interest 314,000 314,000 335,569 21,569 Industrial district payments 24,000,000 24,000,000 23,040,879 (959,121) Gross receipts taxes 4,340,000 4,340,000 4,414,729 74,729 Sales tax 8,600,000 8,600,000 8,108,987 (491,013) Other taxes 93,000 93,000 127,176 34,176 Licenses and permits 652,700 652,700 702,347 49,647 User fees 356,200 356,200 354,501 (1,699) Fines and forfeitures 1,536,000 1,536,000 1,637,040 101,040 Intergovernmental 668,743 668,743 487,639 (181,104) Interest revenue 240,000 240,000 217,333 (22,667) Miscellaneous 90,000 90,000 309,420 219,420 Total revenues 48,657,643 48,657,643 47,679,980 (977,663) Expenditures Current: Current: General government: Administration 2,024,143 3,020,142 2,392,120 628,022 City secretary 971,522 1,003,522 1,015,287 (11,765) City attorney 594,511 594,511 478,977 115,534 Finance 3,434,394 3,669,794 3,608,455 61,339 Human resources 648,878 648,878 529,142 119,736 One Block at at Time 238,848 721,131 487,350 233,781 Grants Management 606,683 ---Planning 433,414 433,414 419,757 13,657 Community services 2,137,745 2,202,745 2,057,054 145,691 Culture and recreation: Civic center 525,969 541,969 520,409 21,560 Parks and recreation 2,357,696 2,357,696 2,052,103 305,593 Library 1,359,257 1,359,257 1,193,669 165,588 Public safety: Police 16,269,329 16,300,329 16,597,719 (297,390) Fire 10,600,423 10,918,423 10,946,934 (28,511) Health and welfare 1,230,661 1,356,171 1,077,345 278,826 Public works 8,455,200 9,455,200 8,224,026 1,231,174 Total expenditures 51,888,673 54,583,182 51,600,347 2,982,835 Excess (deficiency) of revenues over expenditures (3,231,030) (5,925,539) (3,920,367) 2,005,172 Other financing sources (uses): Transfers in 7,996,934 8,603,617 7,969,327 (634,290) Transfers out (2,916,100) (3,552,051) (3,552,051) -Total other financing sources (uses) 5,080,834 5,051,566 4,417,276 (634,290) Excess (deficiency) of revenues and other sources over expenditures and other uses 1,849,804 (873,973) 496,909 1,370,882 Fund balance, beginning of year -budget basis, as previously reported 28,416,518 28,416,518 28,416,518 -Prior period adjustment, note V.F. 843,133 843,133 843,133 -Fund balance, beginning of year -budget basis, as restated 29,259,651 29,259,651 29,259,651 -Fund balance, end of year -budget basis $ 31,109,455 $ 28,385,678 $ 29,756,560 $ 1,370,882 See accompanying notes to the basic financial statements 23 CITY OF PORT ARTHUR, TEXAS Exhibit 7 Statement of Net Assets Proprietary Funds September 30, 2010 Governmental Activities-Water and Solid Internal Sewer Waste Totals Service Funds Current assets: Cash $ -$ -$ -$ 1,003,710 Investments 10,246,925 -10,246,925 6,560,270 Due from other funds 112,806 -112,806 2,926,418 Receivables (net, where applicable, of allowance for doubtful accounts) Accounts 1,887,472 1,526,999 3,414,471 33,516 Federal and state grants 3,048,958 -3,048,958 -Inventories 408,925 -408,925 53,598 Prepaid expense ---131,000 Total current assets 15,705,086 1,526,999 17,232,085 10,708,512 Noncurrent assets: Capital assets: Land 362,844 -362,844 -Buildings 35,348,650 -35,348,650 878,663 Improvements 106,776,168 -106,776,168 -Equipment 3,392,011 926,655 4,318,666 22,855,783 Construction in progress 8,848,583 -8,848,583 -Total capital assets 154,728,256 926,655 155,654,911 23,734,446 Accumulated depreciation (68,642,404) (425,120) (69,067,524) (17,345,627) Capital assets, net of accumulated depreciation 86,085,852 501,535 86,587,387 6,388,819 Total assets $ 101,790,938 $ 2,028,534 $ 103,819,472 $ 17,097,331 Liabilities Current liabilities: Wages payable $ 229,229 $ 104,432 $ 333,661 $ 20,953 Accounts payable 1,460,319 307,571 1,767,890 76,842 Due to other funds 19,418,993 1,524,079 20,943,072 1,402,339 Capital leases payable -current portion ---399,466 Compensated absences 137,812 55,142 192,954 14,377 Total current liabilities 21,246,353 1,991,224 23,237,577 1,913,977 Noncurrent liabilities: Refundable deposits 1,368,099 -1,368,099 -Other liabilities 74,449 -74,449 -Capital leases payable ---401,994 Accrued landfill closure costs -2,127,796 2,127,796 -Compensated absences 683,811 229,380 913,191 14,241 Net pension benefit obligation 79,592 46,745 126,337 -Other post employment benefits 2,292,775 1,346,550 3,639,325 -Long-term risk liability ---2,306,057 Total non current liabilities 4,498,726 3,750,471 8,249,197 2,722,292 Total liabilities 25,745,079 5,741,695 31,486,774 4,636,269 Net Assets Invested in capital assets 86,085,852 501,535 86,587,387 5,587,359 Restricted for construction 10,246,925 -10,246,925 -Unrestricted (20,286,918) (4,214,696) (24,501,614) 6,873,703 Total net assets $ 76,045,859 $ (3,713,161) 72,332,698 $ 12,461,062 Reconciliation to government-wide statement of net assets: Adjustment to reflect the consolidation of internal service funds activities related to enterprise funds (2,588,707) Net assets of business-type activities $ 69,743,991 See accompanying notes to the basic financial statements 27 Business Type Activities-Enterprise Funds Assets CITY OF PORT ARTHUR, TEXAS Exhibit 8 Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds For the Year Ended September 30, 2010 Governmental Activities-Water and Solid Internal Sewer Waste Total Service Funds Operating Revenues Charges for services $ 16,931,852 $ 7,653,032 $ 24,584,884 $ 13,729,660 Operating Expenses Personnel services 6,134,447 3,083,972 9,218,419 646,702 Other operating expenses 6,043,388 4,858,866 10,902,254 2,538,015 Depreciation 4,109,577 815 4,110,392 2,121,113 Health and life insurance ---7,876,708 Employee injury claims ---680,820 Other employee benefits ---402,841 Damage claims ---1,352,435 Landfill closure costs -234,913 234,913 -Loss on uncollectable accounts 962,025 6,670 968,695 -Total operating expenses 17,249,437 8,185,236 25,434,673 15,618,634 Income from operations (317,585) (532,204) (849,789) (1,888,974) Nonoperating revenues (expenses) Interest revenue 53,355 -53,355 64,561 Interest expense ---(42,506) Federal and state grants 6,850,178 -6,850,178 60,228 Gain (loss) on sale of capital assets -6,555 6,555 29,965 Total nonoperating revenues (expenses) 6,903,533 6,555 6,910,088 112,248 Income before transfers 6,585,948 (525,649) 6,060,299 (1,776,726) Transfers in ---2,517,676 Transfers out (6,669,497) (817,504) (7,487,001) (279,250) Net transfers (6,669,497) (817,504) (7,487,001) 2,238,426 Change in net assets (83,549) (1,343,153) (1,426,702) 461,700 Net assets, beginning of year 76,129,408 (2,370,008) 11,999,362 Net assets, end of year $ 76,045,859 $ (3,713,161) $ 12,461,062 Reconciliation to government-wide statement of net assets: Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (567,445) Increase in net assets of business-type activities $ (1,994,147) See accompanying notes to the basic financial statements 28 Business-Type Activities-Enterprise Funds CITY OF PORT ARTHUR, TEXAS Exhibit 9 Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2010 Governmental Activities-Water and Solid Internal Sewer Waste Total Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 13,025,386 $ 7,923,077 $ 20,948,463 $ 13,724,696 Payments to employees (5,975,878) (3,042,445) (9,018,323) (639,795) Payments to vendors (5,199,627) (4,710,831) (9,910,458) (13,146,284) Net cash provided by operating activities 1,849,881 169,801 2,019,682 (61,383) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Advances from other funds 3,860,547 641,148 4,501,695 (1,524,079) Transfers from other funds ---2,517,676 Transfers to other funds (6,669,497) (817,504) (7,487,001) (279,250) Net cash provided (used) by noncapital financing activities (2,808,950) (176,356) (2,985,306) 714,347 CASH FLOWS FROM CAPITAL AND RELATED ACTIVITIES Acquisition and construction of capital assets (8,446,021) -(8,446,021) (1,154,127) Principal paid on capital debt debt ---(435,370) Interest paid on capital debt ---(42,506) Federal and state capital grants 6,850,178 -6,850,178 60,228 Proceeds from sale of assets -6,555 6,555 83,167 Net cash (used) by capital and related financing activities (1,595,843) 6,555 (1,589,288) (1,488,608) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of investments 1,977,305 -1,977,305 6,500,000 Purchase of investments ---(6,560,270) Interest on cash and investments 53,355 -53,355 64,561 Net cash provided by investing activities 2,030,660 -2,030,660 4,291 Net (decrease) in cash (524,252) -(524,252) (831,353) Cash, beginning of year 524,252 -524,252 1,835,063 Cash, end of year $ -$ -$ -$ 1,003,710 Reconciliation of income from operations to net cash provided by operating activities: Income from operations $ (317,585) $ (532,204) $ (849,789) $ (1,888,974) Adjustments to reconcile income from operations to net cash provided (used) by operating activities: Depreciation 4,109,577 815 4,110,392 2,112,112 Provision for doubtful accounts 962,025 6,670 968,695 -Change in assets and liabilities: (Increase) decrease in accounts receivable (936,144) 270,045 (666,099) 41,513 (Increase) in grants receivable (3,048,958) -(3,048,958) -(Increase) decrease in inventory (149,079) -(149,079) 82,838 (Increase) decrease in prepaid expense ---24,924 Increase in wages payable 52,569 19,626 72,195 1,735 Increase (decrease) in accounts payable 1,006,569 148,035 1,154,604 (223,635) Increase in deposits 78,636 -78,636 -Increase in other liabilities (13,729) -(13,729) -Increase in landfill closure costs -234,913 234,913 -Increase (decrease) in compensated absences 57,165 (6,780) 50,385 4,841 Increase in net pension benefit obligation 48,835 28,681 77,516 -Increase in long-term risk liability ---(216,737) Net cash provided by operating activities $ 1,849,881 $ 169,801 $ 2,019,682 $ (61,383) See accompanying notes to the basic financial statements 29 Business-Type Activities-Enterprise Funds CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 31 I. Summary of Significant Accounting Policies The financial statements of the City of Port Arthur, Texas (the “City”) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following represents the significant accounting policies used by the City. A. REPORTING ENTITY The City of Port Arthur, Texas (City) was incorporated under the laws of the State of Texas, May 30, 1898 and has operated under a Council-Manager form of government since March 8, 1932. As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Port Arthur (the primary government) and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operational or financial relationships with the City. Each discretely presented component unit is reported in a separate column in the government-wide financial statements (see note below for description) to emphasize that each is legally separate from the government. Discretely presented component units The Port Arthur Section 4A Economic Development Corporation (EDC), an entity legally separate from the City, is governed by a nine member board of directors appointed by the City Council. The EDC is funded by a one half cent additional sales tax dedicated to economic development activities, which was approved by voters November 7, 1995 and implemented April 1, 1996. The budget, financial reports, and bonds of the EDC must be approved by the City Council. The Pleasure Island Commission (Commission) was created by the City’s Charter and an Act of the State of Texas to manage, control, maintain, operate, and develop lands owned by the City in and under Sabine Lake. The Commission is governed by a nine-member commission appointed by the City Council. Although it is a legally separate entity, the Commission’s operations are limited solely to property owned by the City and the City Council must approve many of the Commissions transactions, such as the issuance of bonds. The notes to the financial statements include disclosures pertaining to the City as the primary government and also the Port Arthur Section 4A Economic Development Corporation as a component unit. There is not a separately issued financial statement. Disclosures related to the Pleasure Island Commission are not included in these disclosures unless otherwise noted. The complete financial report of the Pleasure Island Commission can be obtained directly from their administrative offices: Pleasure Island Commission, 520 Pleasure Pier Blvd., Port Arthur, Texas 77640. B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e. the statement of net assets and the statement of changes in net assets) report information on all of the activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given structure or segment, are offset by program revenues. Direct expenses are those that are clearly identifiable with a CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 32 specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND BASIS OF PRESENTATION The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenue to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures as well as expenditures related to compensated absences and claims and judgments are recorded only when payment is due. Property taxes, franchise taxes, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. The City reports the following major governmental funds: • The general fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. • The debt service fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds. • The community development block grant and the Federal Emergency Management Agency -fema funds each account for the activities under these respective grant programs. The fema fund accounts for costs and reimbursements related to hurricanes that affected the City from 2005 – 2008. • The capital projects fund accounts for the City’s capital improvement plan. The City reports the following major proprietary funds: • The water and sewer fund accounts for the activities of the water and sewer utility of the City. This fund operates the water treatment and distribution functions, along with the wastewater collection and treatment. CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 33 • The solid waste fund accounts for the activities of the solid waste function of the City. The fund operates the municipal landfill, along with the collection of residential and commercial garbage, trash and green waste. Additionally, the City reports the following fund type: • Internal service funds account for fleet management, equipment replacement, and employee benefit costs. These costs are reimbursed, on a user cost basis, by departments. The internal service funds predominantly serve the governmental funds and are reported accordingly. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent private-sector guidance. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges for administrative services between funds. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and 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 solid waste funds are from charges to customers for sales and services. Operating expenses from the enterprise funds and internal service 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. When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first, and then unrestricted resources as they are needed. D. ASSETS, LIABILITIES AND EQUITY 1. Deposits and Investments The City’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with maturities of three months or less. Statutes of the State of Texas and policies adopted by City Council authorize the City to invest in obligations of the U.S. Treasury, securities issued by U.S. government agencies, bankers acceptances, repurchase agreements, certificates of deposit, and local government investment pools. Investments are stated at fair value in all funds. 2. Property Taxes Receivable The City’s property taxes are levied annually, October 1, on the basis of assessed values as of January 1 of that calendar year, which are certified by the Jefferson County Appraisal District. Taxes are applicable to the fiscal year in which they are levied. They become delinquent on February 1 of the subsequent calendar year at which time the applicable property is subject to lien, and penalties and interest are assessed. CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 34 3. Receivables All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. 4. Interfund Receivables and Payables Interfund receivables and payables arise from interfund transactions and are recorded by all funds affected in the period in which transactions are executed. 5. Inventories and Prepaid Items Inventories are valued at cost using the weighted average cost method. Payments made to vendors for services that will benefit future accounting periods are recorded as prepaid items. 6. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g. roads, bridges, sidewalks and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The government defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the assets’ lives are not capitalized. Property, plant and equipment of the primary government are depreciated using the straight line method over the following estimated useful lives: Type of Asset Buildings Life 20 -55 years Improvements 20 -60 years Equipment 2 -10 years 7. Compensated Absences The City’s employees earn vacation and sick leave, which may be accumulated, subject to certain restrictions, until paid on termination. Employees may accumulate vacation, in excess of that earned in the current year, only with the approval of the City Manager. Upon termination, employees are paid for all unused vacation that has been accumulated. Accumulated vacation is expected to be liquidated with expendable available financial resources, and is reported as expenditure and a liability in the governmental or proprietary fund that will pay for it. The limits for sick leave accumulation vary by hire date and position classification. Civil service employees (police officers and firefighters) may accumulate sick leave without limit. Upon termination, they are paid for a maximum of 140 days. Non-civil service employees accumulate sick leave up to their limit, which is based upon their hire date. For employees hired before May 31, 1989, the limit is 140 days. For employees hired after that date the limit is 90 days. This accumulated sick leave is not payable upon termination, for non-civil service employees, until they have completed five (5) years of service. For non-civil service employees hired after January 1, 1996, the accumulated sick leave will be paid at 50% of their unused, accumulated balance. After ten (10) years of service, these employees will be paid for 100% of their unused, accumulated balance, up to a maximum of 60 days. Accumulated sick leave, attributable to governmental funds, that is not expected to be liquidated with available financial resources are reported as long term liabilities on the statement of net assets. No expenditure is reported in the fund financial statements for these amounts. Those amounts attributable to proprietary funds are recorded as expenses and liabilities in those funds as the benefits accrue to the employee. CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 35 8. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financial sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 9. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. II. Reconciliation of Government-wide Financial Statements Explanation of Reclassification Required on the Government-Wide Statement of Net Assets When governmental activities report debt that financed the acquisition of capital assets that business-type activities report, that debt is not considered to be capital-related debt of the governmental activities. Such debt should not be part of the calculation of net assets invested in capital assets, net of related debt within that reporting unit. However, when the total reporting entity is presented as the reporting unit, the debt is related to the capital assets within that reporting unit. Thus reconciliation is necessary as follows: Governmental Business-type Net Assets Activities Activities Reclassification Total Invested in capital, net of related debt $ 52,886,404 $ 86,587,387 $ (59,184,164) $ 80,289,627 Restricted for: Debt Service 3,208,527 -3,208,527 Capital Projects 8,951,450 10,896,172 19,847,622 Unrestricted (57,114,701) (27,739,568) 59,184,164 (25,670,105) Total Net Assets $ 7,931,680 $ 69,743,991 $ -$ 77,675,671 Primary Government Explanation of Certain Differences Between the Governmental Funds Balance Sheet and the Government-wide Statement of Net Assets The governmental fund balance sheet includes reconciliation between fund balance – total governmental funds and net assets-governmental activities as reported in the government-wide financial statement of net assets. One element of that reconciliation explains, “long-term liabilities, including bonds payable are not due and payable in the current period and therefore are not reported in the funds.” The details of this $102,410,966 difference are as follows: CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 36 Bonds payable $ 80,310,000 Compensated absences 7,933,954 Net pension obligation -TMRS 505,348 Other post employment benefits 14,557,298 Net adjustment to reduce fund balances-total governmental funds to arrive at net assets -governmental activities $ 103,306,600 Explanation of Certain Differences Between the Governmental Funds Statement of Revenue, Expenditures and Changes in Fund Balance and the Government-wide Statement of Activities The governmental fund statement of revenue, expenditures and changes in fund balances includes reconciliation between net changes in fund balances – total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of the reconciliation explains, “Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.” The details of this $2,515,535 difference are as follows: Capital outlay $ 9,858,091 Depreciation expense (7,342,556) Net adjustment to increase fund balances-total governmental funds to arrive at net assets -governmental activities $ 2,515,535 III. Stewardship, Compliance and Accountability A. BUDGETARY INFORMATION Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) for the following governmental fund types of the primary government: the General Fund, the Debt Service Fund, the Library Special Fund, the Golf Course Fund, the Police Special Fund, Municipal Court Technology Fund, the Hotel Occupancy Tax Fund, and the Transit System Fund. The Capital Projects fund is budgeted on a project basis, rather than an annual basis. The remaining governmental type funds are not budgeted. Budgets for the Enterprise Funds and the Internal Service Funds are adopted on a basis not consistent with generally accepted accounting principles because the budget presents capital outlays as expenditures and there is no provision for depreciation expense. All operating funds of the Port Arthur Section 4A Economic Development Corporation have annual budgets adopted on a basis consistent with GAAP. On or before August 31 of each year the City Manager presents the City Council with a proposed budget for the ensuing fiscal year. The Council holds public hearings and a final budget must be prepared and adopted by September 30. Budgets are appropriated by fund and department. The legal level of control is the department level. The City Council made eleven supplementary budgetary appropriations during the year. These ordinances added $7.3 million in funding for various capital projects, development projects, equipment purchases, additional personnel, and unanticipated operating cost increases. The City’s department heads may make transfers of appropriations within department line items with the City Manager’s approval. Transfers between departments departments require the approval of the City Council. General Fund Statement of Revenues, Expenditures and Changes in Fund Balances, Budget and Actual (Budget Basis) is presented as Exhibit 6, on Page 23, of this report. The following is a reconciliation of the differences between budget and GAAP basis: CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 37 Actual amount (budgetary basis) of industrial revenue received in fiscal 2010 as reported on Exhibit 6 $ 23,040,879 Year one of the five year amortization of prepaid industrial payments received in fiscal 2009 recorded as deferred revenue 3,480,000 GAAP Basis industrial revenue as reported on Exhibit 4 $ 26,520,879 Actual fund balance (budget basis) as reported on Exhibit 6 $ 29,756,560 Balance of advance industrial payments, recorded as deferred revenue for GAAP purposes (13,520,000) GAAP Basis fund balance as reported on Exhibit 4 $ 16,236,560 The City uses encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriation. Encumbrances outstanding at year end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be honored in the subsequent year. Appropriations lapse at September 30. B. EXCESS OF EXPENDITURES OVER APPROPRIATIONS For the year ended September 30, 2010, expenditures exceeded appropriations in the following departments of the City of Port Arthur: Department Budget Actual Variance City Secretary $ 1,003,522 $ 1,015,287 $ (11,765) Police 16,300,329 16,597,719 (297,390) Fire 10,918,423 10,946,934 (28,511) These expenditures were funded through savings in other General Fund departments. In the General Fund total expenditures were $2,982,835 less than the budget, as amended. C. DEFICIT FUND EQUITY The following funds had deficit fund equity, or net assets, as of September 30, 2010: Fund Amount Health Grants Fund $ 491,499 Neighborhood Stabilization Grant 2,027 Transit System Fund 3,787 Solid Waste Fund 2,370,008 Equipment Services Fund 1,369,474 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 38 IV. Detailed Notes on all Funds A. CASH AND INVESTMENTS For the purposes of managing cash and investments, the funds of the Port Arthur Section 4A Economic Development Corporation (EDC) are pooled with those of the City. At year end, the carrying amount of these deposits was $3,658,740 and the bank balance was $5,552,354. Of the bank balance, 100% was covered by federal depository insurance or by collateral held by the City’s agent in the City’s name. The carrying amount of deposits for the Pleasure Island Commission, a discretely presented component unit, was $1,306,765. All balances are entirely insured or collateralized with securities held by a financial institution in the Commission’s name. At year end, the City’s investment balances, including funds of the Port Arthur Section 4A Economic Development Corporation, were as follows: Weighted Average Fair Maturity Investment Type Value (days) High yield deposits $ 4,687,582 1 Certificates of Deposit 500,000 248 Federal agency coupon secrurities 24,606,668 721 Texas Local Government Investment Pool (Tex Pool) 10,800,916 1 Total fair value $ 40,595,166 Portfolio weighted average maturity 440 Interest rate risk. In accordance with its investment policy, the City manages its exposure to declines in fair values by limiting the weighted average maturity of its investment portfolio to less than 366 days for operating funds. Credit risk. The State of Texas authorizes investment instruments allowed for local government funds. The City’s investment policy further restricts those authorized investments, maintaining safety and preservation of principal as the primary goal of the policy. The City’s investments include deposits in the Texas Local Government Investment Pool (TexPool). Under the TexPool Participation Agreement, administrative and investment services to TexPool are provided by Federated Investors Inc. through an agreement with the State of Texas Comptroller of Public Accounts. The State of Texas Comptroller of Public Accounts is the sole officer, director and shareholder of the Texas Treasury Safekeeping Trust Company authorized to operated TexPool. TexPool operates on a $1 net asset value basis. In order to maintain a stable $1 price of the fund, the pool will sell portfolio holdings if the ratio of market value of the portfolio divided by the book value of the portfolio is less that .995 or greater than 1.005. Tex Pool is rated AAA by Standard and Poor’s. Concentration of credit risk. The City’s investment policy limits investments from a specific issuer, and by investing in instruments of varying maturities. Custodial credit risk. In the case of deposits, this is the risk that in the event of a bank failure, the government’s deposits may not be returned to it. The City does not have a deposit policy for custodial risk. As of September 30, 2010, none of the City’s deposits were subject to custodial credit risk. For an investment, this is the risk that, in the event of the failure of counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City limits this risk by contracting with a third party custodian for securities. This bank holds the securities in the City’s name which are evidenced by safekeeping receipts of the institution. CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 39 B. RECEIVABLES Receivables as of September 30, 2010 for the City’s individual major funds and non-major and internal service funds in the aggregate, including applicable allowances for uncollectible amounts, are as follows: General Debt Service Proprietary Funds Nonmajor Governmental and Other Funds Total Receivables: Taxes $ 1,784,605 $ 1,532,865 $ -$ -$ 3,317,470 Accounts 4,693,680 11,888,437 2,182,870 18,764,987 Intergovernmental 121,115 3,048,958 8,537,196 11,707,269 Other 952,247 ---952,247 Gross receivables 7,551,647 1,532,865 14,937,395 10,720,066 34,741,973 Less: allowance for uncollectibles (5,088,064) (229,930) (8,473,966) -(13,791,960) Net total receivables $ 2,463,583 $ 1,302,935 $ 6,463,429 $ 10,720,066 $ 20,950,013 Governmental funds report deferred revenues in connection with receivables for revenues that are 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: Delinquent property taxes receivable (general and debt service funds) $ 2,718,977 Advance industrial district payments (general fund) 13,920,000 Grant activity (special revenue funds) 1,389,206 Total deferred revenue $ 18,028,183 C. CAPITAL ASSETS Capital asset activity of the primary government for the year ended September 30, 2010 was as follows: Beginning Ending Balance Increase Decrease Balance Governmental activities Capital assets, not being depreciated Land $ 2,474,132 $ -$ -$ 2,474,132 Construction in process 7,763,919 8,015,994 (2,666,715) 13,113,198 Total capital assets, not being depreciated 10,238,051 8,015,994 (2,666,715) 15,587,330 Capital assets, being depreciated Buildings 18,968,558 1,495,544 -20,464,102 Improvements 8,526,264 --8,526,264 Infrastructure 248,492,305 1,171,171 -249,663,476 Equipment 39,087,569 2,996,225 (902,635) 41,181,159 Total capital asssets, being depreciateed 315,074,696 5,662,940 (902,635) 319,835,001 Less: accumulated depreciation for: Buildings (12,313,807) (490,926) -(12,804,733) Improvements (4,151,622) (868,051) -(5,019,673) Infrastructure (216,226,766) (5,073,349) -(221,300,115) Equipment (25,741,201) (3,022,343) 849,434 (27,914,110) Total accumulated depreciation (258,433,396) (9,454,669) 849,434 (267,038,631) Total capital assets, being depreciated, net 56,641,300 (3,791,729) (53,201) 52,796,370 Governmental activities, capital assets, net $ 66,879,351 $ 4,224,265 $ (2,719,916) $ 68,383,700 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 40 Beginning Ending Balance Increase Decrease Balance Business type activities Capital assets, not being depreciated Land $ 362,843 $ -$ -$ 362,843 Construction in process 1,080,262 8,356,211 (587,889) 8,848,584 Total capital assets, not being depreciated 1,443,105 8,356,211 (587,889) 9,211,427 Capital assets, being depreciated Buildings 35,348,650 --35,348,650 Improvements 106,188,279 587,889 -106,776,168 Equipment 4,228,856 89,810 -4,318,666 Total capital asssets, being depreciated 145,765,785 677,699 -146,443,484 Less: accumulated depreciation for: Buildings (12,661,528) (1,048,708) -(13,710,236) Improvements (50,625,116) (2,934,961) -(53,560,077) Equipment (1,670,488) (126,723) -(1,797,211) Total accumulated depreciation (64,957,132) (4,110,392) -(69,067,524) Total capital assets, being depreciated, net 80,808,653 (3,432,693) -77,375,960 Business type activities, capital assets, net $ 82,251,758 $ 4,923,518 $ (587,889) $ 86,587,387 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government $ 403,461 Public safety 184,086 Public works 5,842,530 Community development 168,754 Culture and recreation 244,781 Health and welfare 50,187 Public transportation 448,757 Captial assets held by the government's internal service funds are charged to the various functions based on their usage of assets 2,112,113 Total depreciation expense -governmental activities $ 9,454,669 Business type activities: Water and sewer $ 4,109,577 Solid waste 815 Total depreciation expense -buisness type activities $ 4,110,392 Construction commitments The primary government has active construction projects as of September 30, 2010. At year end, the City’s major commitments with contractors are as follows:Contract Spent thru Remaining Project Amount 9/30/2010 Commitment Texas Water Development Board /ARRA Sanitary Sewer Rehab Projects $ 15,404,916 $ 6,917,385 $ 8,487,531 Police Station Remodel 2,246,511 102,354 2,144,157 Recreation Center Improvements 1,449,194 626,617 822,577 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 41 Activity for the capital assets of the Port Arthur Economic Development Corporation, for the year ended September 30, 2010, was as follows: Port Arthur Economic Development Corporation Beginning Ending Balance Increase Decrease Balance Governmental activities Capital assets, not being depreciated Land $ 5,779,130 $ -$ (21,499) $ 5,757,631 Total capital assets, not being depreciated 5,779,130 -(21,499) 5,757,631 Capital assets being depreciated Building 315,480 --315,480 Equipment 35,826 --35,826 Less: accumulated depreciation (34,361) (19,343) -(53,704) Total capital assets being depreciated 316,945 (19,343) -297,602 Governmental activites, capital assets, net $ 6,096,075 $ (19,343) $ (21,499) $ 6,055,233 Activity for the capital assets of the Pleasure Island Commission, for the year ended September 30, 2010, was as follows: Pleasure Island Commission Beginning Ending Balance Increase Decrease Balance Governmental Activities Capital assets, being depreciated: Buildings and improvements $ 4,789,225 $ -$ -$ 4,789,225 Total capital assets being depreciated 4,789,225 --4,789,225 Less:Accumulated depreciation for: Buildings and improvements (1,785,789) (173,496) -(1,959,285) Total accumulated depreciation (1,785,789) (173,496) -(1,959,285) Governmental Activities, capital assets, net $ 3,003,436 $ (173,496) $ -$ 2,829,940 Business-type Activities Capital assets, not being depreciated: Construction in progress $ 81,431 $ -$ (81,431) $ -Total capital assets, not being depreciated 81,431 -(81,431) -Capital assets, being depreciated: Buildings and improvements 4,104,255 --4,104,255 Equipment 243,660 --243,660 Total capital assets being depreciated 4,347,915 --4,347,915 Less: accumulated depreciation for: Buildings and improvements (1,571,470) (119,914) -(1,691,384) Equipment (218,758) (9,326) -(228,084) Total accumulated depreciation (1,790,228) (129,240) -(1,919,468) Total capital assets, being depreciated, net 2,557,687 (129,240) -2,428,447 Business-type activities, capital assets, net 2,557,687 (129,240) (81,431) 2,428,447 Total assets $ 5,561,123 $ (302,736) $ -$ 5,258,387 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 42 D. INTERFUND PAYABLES, RECEIVABLES AND TRANSFERS Interfund balances resulted from a time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. These balances also include the amount of working capital loans made from the general fund and debt service fund that are expected to be collected in the subsequent year. The composition of interfund balances as of September 30, 2010, is as follows: Interfund Interfund Receivables Payables Governmental Fund Types: General fund $ 26,550,162 $ -Community development block grant -571,889 FEMA -4,339,795 Capital Projects 981,321 -Nonmajor funds 198,632 3,512,244 Governmental total 27,730,115 8,423,928 Proprietary Fund Types: Enterprise Funds Water and Sewer fund 112,806 19,418,993 Solid Waste Fund -1,524,079 Enterprise Funds total 112,806 20,943,072 Internal service funds 2,926,418 1,402,339 Proprietay funds total 3,039,224 22,345,411 Total interfund receivables and payables $ 30,769,339 $ 30,769,339 Interfund transfers are budgeted cost allocations and reimbursements between funds for items such as administrative and insurance reimbursements. Certain transfers also fund cash matches as required under grants. Transfers In Transfers Out Governmental Fund Types: General fund $ 7,969,327 $ 3,552,051 Debt service fund -477,876 Community development block grant -601,489 Capital Projects 1,326,679 -Nonmajor funds 895,951 311,966 Governmental total 10,191,957 4,943,382 Proprietary Fund Types: Enterprise Funds Water and Sewer fund -6,669,497 Solid Waste Fund -817,504 Enterprise Funds total -7,487,001 Internal service funds 2,517,676 279,250 Proprietay funds total 2,517,676 7,766,251 Total interfund transfers $ 12,709,633 $ 12,709,633 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 43 E. LEASES The City has entered into lease agreements as lessee for financing the acquisition of equipment. These lease agreements qualify as capital leases for accounting purposes and have been recorded at the present value of the future minimum lease payments as of the inception in the internal service funds. The assets acquired through capital leases are as follows: Asset Telephone system $ 505,000 Equipment 1,300,000 Fire apparatus 449,144 Total $ 2,254,144 The future minimum lease payments and the net present value of these minimum lease payments as of September 30, 2010, were as follows: Year ending Telephone Fire September 30 System Equipment Apparatus Total 2011 $ 84,051 $ 287,087 $ 54,305 $ 425,443 2012 -71,772 54,305 126,077 2013 --54,305 54,305 2014 --54,306 54,306 2015 --54,306 54,306 2016 --54,306 54,306 2017 --54,306 54,306 2018 --54,306 54,306 Total 84,051 358,859 434,445 877,355 Interest (3,713) (9,323) (62,859) (75,895) Net present value $ 80,338 $ 349,536 $ 371,586 $ 801,460 F. LONG -TERM DEBT General Obligation Debt. The City issues general obligation bonds and certificates of obligation 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. The original amount of general obligation bonds issued in prior years was $115,040,000. General obligation bonds are direct obligations and pledge the full faith and credit of the City. General obligation bonds of $80,310,000 are currently outstanding. The annual debt service requirements to maturity, for all bonds, are as follows: Year Ended Total Setpember 30 Principal Interest 2011 $ 6,085,000 $ 3,188,397 2012 5,835,000 2,950,549 2013 6,050,000 2,725,087 2014 6,325,000 2,480,230 2015 5,545,000 2,219,388 2016-2020 29,075,000 7,554,912 2021-2025 14,695,000 2,427,063 2026-2030 6,700,000 542,109 Total $ 80,310,000 $ 24,087,735 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 44 At September 30, 2010, bonds payable consisted of the following individual issues: 2010 General Obligation Bonds, $8,000,000,3.0% to 4.3%, $275,000 to $600,000, annually to 2030 $ 8,000,000 2008 General Obligation Bonds, $9,000,000, 3.5% to 5.0%, $170,000 to $665,000 annually to 2028; $3,000,000 of which is funded by the City of Port Arthur Section 4A Economic Development Corporation 8,520,000 2007 Certificates of Obligation, $10,000,000, 4.05%, $330,000 to $715,000 annually to 2028 9,325,000 2006 General Obligation Refunding Series, $8,585,000, 4.0%, $0 to $1,540,000 annually to 2022 8,425,000 2005 General Obligation Refunding Series, $11,280,000,3.25% to 5.0%, $0 to $1,125,000 annually to 2021 9,670,000 2003 General Obligation Refunding Series, $18,225,000, 2.0% to 4.0%, $1,050,000 to $1,435,000 annually to 2020 12,150,000 2002C Certificates of Obligation Series, $5,000,000, 4.25% to 5.1%, $180,000 to $395,000 annually to 2022, funded by the City of Port Arthur Section 4A Economic Development Corp 3,590,000 2002B Certificates of Obligation Series, $17,000,000, 4.125% to 5.0%, $610,000 to $1,335,000 annually to 2022 6,185,000 2002A Certificiates of Obligation Series, $15,000,000, 0.75% to 4.2%, $605,000 to $1,050,000 annually to 2022 10,185,000 2001 General Obligation Refunding Series, $10,550,000, 3.875% to 4.375%, $770,000 to $1,075,000 annually to 2014 3,985,000 2000 Certificates of Obligation Series, $2,400,000, 4.7% to 5.124%, $225,000 to $275,000 annually to 2011 275,000 $ 80,310,000 Changes in long-term liabilities Beginning Balance Additions Reductions Ending Balance Due within 1 Year Governmental activities: Bonds payable General obligation bonds $ 45,980,000 $ 8,000,000 $ (3,230,000) $ 50,750,000 $ 3,795,000 Certificates of obligation 31,745,000 -(2,185,000) 29,560,000 2,290,000 Total bonds payable 77,725,000 8,000,000 (5,415,000) 80,310,000 6,085,000 Capital leases 1,236,830 -(435,370) 801,460 399,466 Compensated absences 7,546,370 1,619,507 (1,134,957) 8,030,920 -Governmental activities Long-Term Liabilities $ 86,508,200 $ 9,619,507 $ (6,985,327) $ 89,142,380 $ 6,484,466 Business-type activities: Compensated absences 1,055,760 292,616 (242,231) 1,106,145 192,954 Business-type activities Long-Term Liabilities $ 1,055,760 $ 292,616 $ (242,231) $ 1,106,145 $ 192,954 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 45 Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for governmental activities. At the year end, $28,618 of internal service funds compensated absences and $801,460 of capital lease obligations are included in the above amounts. Also, for the governmental activities, claims and judgments and compensated absences are generally liquidated by the General Fund. The Tax Reform Act of 1986 established regulations for the rebate to the federal government of arbitrage earnings on certain local government bond issued after December 31, 1985, and all local governmental bonds issued after August 31, 1986. Issuing governments must calculate any rebate due and remit the amount due at least every five years. As of September 30, 2010, there is no estimated liability for arbitrage rebate. The debt service and residual balances in the capital project funds have typically been used to liquidate the arbitrage liability in previous years. Arbitrage Rebate Liability The Port Arthur Economic Development (EDC) issued a sales tax revenue bond, Series 2003 to provide funds for the development of infrastructure related to development projects. This issue, $ 8.05 million, pledged the sales tax revenue of the EDC. The issue is payable at $220,000 to $570,000, 3% to 5%, to 2024, the balance outstanding at September 30, 2010, $6,110,000. Port Arthur Economic Development Corporation As stated above, the EDC funds the City’s 2002C Certificates of Obligation debt service, and 33% of the debt service for the 2008 General Obligation Bond. V. Other Information A. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the City maintains a limited risk management program. Claims in excess of the self-insured retention amounts are covered through third-party limited-coverage insurance policies. The City also maintains a limited risk management program for workers’ compensation. Premiums are paid into the Employee Benefit Fund and the General Liability Fund by all other funds and are available to pay claims, claim reserves and administrative costs, and insurance premiums. These interfund premiums are recorded as revenue in the Employee Benefit Fund and the General Liability Fund as they are Internal Service Funds. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Worker's General Compensation Liability Total Estimated liability, 9/30/08 $ 722,191 $ 529,192 $ 1,251,383 fiscal 2009 claims incurred 1,062,431 2,287,805 3,350,236 fiscal 2009 claims paid (946,145) (1,132,680) (2,078,825) Estimated liability, 9/30/09 $ 838,477 $ 1,684,317 $ 2,522,794 fiscal 2010 claims incurred 762,920 1,352,435 2,115,355 fiscal 2010 claims paid (844,537) (1,486,555) (2,331,092) Estimated liability, 9/30/10 $ 756,860 $ 1,550,197 $ 2,307,057 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 46 Liabilities of the funds are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNRs). The result of the process to estimate the claims liability is not an exact amount as it depends on many complex factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly claims are reevaluated periodically to consider the effects of inflation, recent claims trends (including frequency and amount of pay-outs), and other economic and social factors. The estimate of claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims. Estimated recoveries, for example from salvage or subrogation, are another component of the claims liability estimate. estimate. An excess coverage insurance policy covers claims in excess of $300,000. Settlements have not exceeded coverages for each of the past three fiscal years. B. CONTINGENT LIABILITIES The City is defendant in various lawsuits arising in the ordinary course of its municipal and enterprise activities. In the opinion of City management, the outcome of all pending litigation will not materially affect the financial position of the City. Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial. C. OTHER POSTEMPLOYMENT BENEFITS Retiree Health Insurance Program Program Description In addition to the pension benefits described in Note D that that follows, as required by state law, the City makes available healthcare benefits to all employees who retire from the City and who are eligible to receive benefits from a City sponsored retirement program (Texas Municipal Retirement System, or the Port Arthur Firemen’s Relief and Retirement Fund) through a single-employer defined benefit healthcare plan. This Program provides lifetime health insurance for eligible retirees, their spouses and dependents through the City's group health insurance plan, which covers both active and retired participants. Benefit provisions are established by management. Employees retiring on or before December 31, 2010 are allowed to remain in the health insurance plan at approximately 30% of the expected under age 65 cost or 75% of the expected over age 65 costs. These costs (a.k.a. retiree contribution rates) are calculated separately for retirees not eligible for Medicare (under age 65) and retirees eligible for Medicare (over age 65). Employees retiring on or after January 1, 2011 contribute a tiered percentage of the retiree contribution rates based upon their years of City service at retirement. The percentage ranges from 50% for retirees with at least 30 years of City service to 100% for retirees with less than 20 years of City service. Employees hired on or after November 1, 2010 are required to contribute 100% of the retiree contribution rates upon retirement. For financial reporting purposes, the Retiree Health Insurance Program is accounted for in the Employee Benefit Fund, an internal service fund. Funding Policy Current retirees over age 65 contribute $163 per month effective October 1, 2009 and $179 effective October 1, 2010 or approximately 75% of their expected cost. Current retirees under age 65 contribute $206 per CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 47 month effective October 1, 2009 and $226 effective October 1, 2010 or approximately 30% of their expected cost. Future retirees who retire on or after January 1, 2011 will contribute a percentage ranging from 50% to 100% of their expected costs. Effective January 1, 2011, the expected cost is $248 per month for retirees over age 65 and $833 for retirees under age 65. Costs for retiree spouses and dependents are also similarly subsidized, in part, by the City. For fiscal year 2010, the City finances this program on a pay-as-you-go basis. As of September 30, 2010 the City had 173 retirees participating in this plan,. In fiscal year 2010, the Program incurred actual retiree costs of $2,285,541 offset by retiree contributions of $555,397 for a net cost to the City of $1,730,144. Annual OPEB Cost and Net OPEB Obligation The City's annual other postemployment benefit (OPEB) cost (expense) for the Retiree Health Insurance Program is is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover benefits earned each year (i.e. normal costs) and an amortization of the unfunded actuarial liability (UAAL). The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation. 9/30/2008 9/30/2009 9/30/2010 Annual required contribution (ARC) $ 10,041,987 $ 10,041,987 $ 1,657,081 Interest on Net OPEB obligation --727,865 Adjustment to ARC --(723,150) Annual OPEB cost (expense) $ 10,041,987 $ 10,041,987 $ 1,661,796 Contributions made (939,553) (947,798) (1,730,144) Change in OPEB obligation $ 9,102,434 $ 9,094,189 $ (68,348) Net OPEB -beginning of year -9,102,434 18,196,623 Net OPEB -end of year $ 9,102,434 $ 18,196,623 $ 18,128,275 Fiscal year ended Discount Rate Annual OPEB Cost Precentage of OPEB Cost Contributed Net OPEB Obligation 9/30/2006 N/A N/A N/A N/A 9/30/2007 N/A N/A N/A N/A 9/30/2008 4% $ 10,041,987 9.36% $ 9,102,434 9/30/2009 4% 10,041,987 9.44% 18,196,623 9/30/2010 4% 1,661,796 104.11% 18,128,275 Actuarial valuations on an ongoing plan involve 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 healthcare 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. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 48 Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce shortterm volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the October 1, 2009 actuarial valuation, the Projected Unit Credit actuarial cost method was used. The actuarial assumptions used included a 4% discount rate, 4% expected long-term investment return and annual healthcare trend rates of 10% initially declining ½% annually to an ultimate rate of 5% after 10 years. The initial UAAL UAAL and subsequent unanticipated changes in UAAL are being amortized over closed 30-year periods in amounts that increase 3% per year (assumed payroll growth rate). Supplemental Death Benefit The City also participates in the cost sharing multiple-employer defined benefit group-term life insurance plan operated by the Texas Municipal Retirement System (TMRS) known as the Supplemental Death Benefit Fund (SDBF). The City elected, by ordinance, to provide group-term life insurance coverage to both current and retired employees (with the exception of firefighters). The City may terminate coverage under and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1. The city contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation. The rate is equal to the cost of providing one-year term life insurance. The funding policy for the SBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year; the intent is not to pre-fund retiree term life insurance during employees’ entire careers. Schedule of Contributions and Rates Calendar ARC Actual % of ARC Actual Year Rate Rate Contributed Contributions 2007 0.10% 0.10% 100% $ 21,349 2008 0.10% 0.10% 100% 25,073 2009 0.10% 0.10% 100% 25,827 2010 0.825% 0.825% 100% 22,783 D. EMPLOYEE RETIREMENT SYSTEMS Texas Municipal Retirement System (TMRS) Plan Description. The City provides pension benefits for all of its eligible employees, with the exemption of firefighters, through a non-traditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent multi-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 may be obtained by writing to TMRS, P.O. Box 149153, Austin, TX 78714-9153 or by calling 800-924-8677; in addition, the report is available on the TMRS’ website at www.TMRS.com. CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 49 The plan provisions are adopted by the City Council, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. Plan provisions for the City of Port Arthur were as follows: Plan Year 2008 Plan Year 2009 Employee deposit rate 5% 5% Matching ratio (city to employee) 2 to 1 2 to 1 Years required for vesting 10 10 Service retirement eligibility (expressed as age/years of service) 60/10,0/20 60/10,0/20 Updated Service Credit 100% Repeating, Transfers 100% Repeating, Transfers Annuity Increase (to retirees) 70% of CPI Repeating 70% of CPI Repeating Contributions. Under the state law governing TMRS, the City’s contribution rate is annually determined by the actuary, using the Projected Unit Credit actuarial cost method. This rate consists of the normal cost contribution rate and the prior service contribution rate, which is calculated to be a level percentage 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 actuarially liability over the applicable period. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits, such as Updated Service Credits and Annuity Increases. The City contributed 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 the net pension obligation are as follows: Annual Required Contribution (ARC) $ 5,073,226 Interest on Net Pension Obligation -Adjustment to the ARC -Annual Penison Cost (APC) 5,073,226 Contributions Made (4,685,647) Increase in net pension obligation 387,579 Net Pension Obligation, beginnning of the year 244,106 Net Pension Obligation, end of the year $ 631,685 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 50 Fiscal year ended Annual Pension Cost (ARC) Actual Contribtuion Made Precentage of ARC Contributed Net OPEB Obligation 9/30/2004 $ 2,545,329 $ 2,545,329 100.00% $ -9/30/2005 2,992,314 2,992,314 100.00% -9/30/2006 3,020,170 3,020,170 100.00% -9/30/2007 3,074,361 3,074,361 100.00% -9/30/2008 3,496,139 3,496,139 100.00% -9/30/2009 4,460,181 4,216,075 95.76% 244,106 9/30/2010 5,073,226 4,685,646 92.36% 387,579 A summary of actuarial assumptions is as follows: Actuarial Valuation Date December 31, 2009 Actuarial Cost Method Projected Unit Credit Amortization Method Level Percent of Payroll Remaining Amortization Period 28 Years – Closed Period Asset Valuation Method 10 year smoothed market Investment Rate of Return 7.5% Payroll Growth Varies by age and service Includes Inflation At 3 % Cost-of-Living Adjustments 2.1% The funded status as of December 31, 2009, the most recent actuarial valuation date, is as follows: Actuarial Valuation Date Actuarial Value of Assets Actuarial Accrued Liability (AAL) Funded Ratio Unfunded AAL (UAAL) Covered Payroll UAAL as a Percentage of Covered Payroll 12/31/2007 $ 56,671,406 $ 92,838,703 61.0% $ 36,167,297 $ 22,849,860 158.28% 12/31/2008 $ 56,101,664 $ 94,396,612 59.4% $ 38,294,948 $ 25,708,137 148.96% 12/31/2009 $ 58,868,681 $ 97,757,164 60.2% $ 38,888,483 $ 27,175,618 143.10% 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. Port Arthur Firemen’s Relief and Retirement Fund (Fund) Plan Description. The fund is established pursuant to the Texas Local Fire Fighters Retirement Act (TELFRA). TELFRA provides for a Board of Trustees to administer a single-employer defined benefit pension plan covering all City firefighters. The plan is an independent entity for financial reporting purposes. The Board (composed of the Mayor and the Director of Finance as ex-officio Trustees, three firemen elected by a majority vote of firemen, and two citizens who must be appointed unanimously by the first five trustees), is subject to administrative supervision by the State Firemen’s Pension Commissioner. The City does not hold title to any of the Fund’s assets, have right to any surpluses, or responsibility for any deficits. The City’s contribution rate is set by the City Charter to be the same as the rate required by the CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 51 TMRS. The fund issues its own stand alone financial statements, prepared using the accrual basis of accounting, which can be obtained from the fund’s office at P.O. Box 1089, Port Arthur, Texas 77641. All active firefighters of the City are members of the Fund. The Fund provides service retirement, death, disability, and withdrawal benefits. Benefits vest after 20 years of credited service. Employees may retire at age 50 with 20 years of service. Vested termination benefits on a deferred basis are available for firefighters who terminate employment with 20 or more years of service but who have not attained age 50 at their date of termination. A firefighter who becomes disabled is eligible for disability benefits for 30 months. After 30 months, the board may continue, terminate or reduce benefits. In the event of the death of a firefighter in active service, the firefighter’s spouse will receive a monthly benefit. Each unmarried child will also receive benefits until 18 (22 if full-time student or for life if disabled). The sum of all benefits payable may not exceed the service retirement benefit to which the firefighter was entitled as the date of his/her death. A firefighter at age of 53 and with at least 20 years of service may enroll in the Deferred Retirement Option Plan (DROP), which allows the participant to receive certain amount of benefits in lump a sum payment. For the plan in effect January 1, 2010, the Fund required fire fighters to contribute 13% of pay and 17% was the City’s contribution rate. A summary of actuarial assumptions is as follows: Actuarial Valuation Date January 1, 2010 Actuarial Cost Method Individual Entry Age Amortization Method Level Percent of Payroll Remaining Amortization Method 22.5 Years – Open Period Asset Valuation Method 5 Year Smoothed Market Value Investment Rate of Return 8% Payroll Growth Rate 4% Projected Salary Increases 5% Post Retirement Cost-of-Living Adjustments None Fiscal Year Annual Pension Cost (APC) Percentage of APC Contribution Net Pension Obligation 2004 2005 2006 2007 2008 2009 2010 $674,081 795,186 725,597 803,263 898,683 1,118,605 1,192,906 100% 100% 100% 100% 100% 100% 100% -------E. LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS State and federal laws and regulations require that the City place a final cover on its landfill when closed and perform certain maintenance and monitoring functions at the landfill site for thirty years after closure. In addition to operating expenses related to current activities of the landfill, an expense provision and related liability are being recognized based on the future closure and postclosure care costs that will be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and postclosure care costs is based on the amount of the landfill used during the year. The estimated liability for landfill closure and postclosure care cost has a balance of $2,127,796 as of September 30, 2010, which is based on 20.4% usage (filled) of the landfill. It is estimated that an additional $8,255,114 will be recognized CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2010 52 as closure and postclosure care expenses between the date of the balance sheet and the date the landfill is expected to be filled to capacity (2035). The estimated total current cost of the landfill closure and postclosure care $10,382,910 based on the amount that would be paid if all equipment, facilities, and services required to close, monitor, and maintain the landfill were acquired as of September 30, 2010. However, the actual cost of closure and postclosure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. The City was required by state and federal laws and regulations to meet financial assurance regulations by April 9, 1997, with updates annually. The City met these requirements and is in full compliance with the financial assurance requirement. F. PRIOR PERIOD ADJUSTMENTS The beginning fund balance of certain governmental funds as of October 1, 2009 were restated in order to correct prior year reporting of accrued compensated absences. Beginning Fund Balance As Previously Reported Adjustment Beginning Fund Balance, As Restated Exhibit 4 General Fund (GAAP Basis) $11,416,518 $843,133 $12,259,651 Exhibit 6 General Fund (Budget Basis) 28,416,518 843,133 29,259,651 Schedule A-2 Health Grants Fund (436,429) 35,929 (400,429) Schedule A-2 Transit System Fund 155,956 33,049 189,005 This prior period adjustment was also required for the component unit, the Port Arthur Section 4A Economic Development Corporation. Beginning Fund Balance As Previously Reported Adjustment Beginning Fund Balance, As Restated Schedule C-2 Port Arthur EDC $5,873,845 $7,870 $5,881,715 G. RESTATEMENT OF NET ASSETS The beginning net assets of the component unit, the Port Arthur Section 4A Economic Development Corporation, were increased $260,769. The restatement was due to a land purchase that was not recorded on the Government Wide Statement of Net Assets at September 30, 2009. H. SUBSEQUENT EVENTS On On March 22, 2011, The City of Port Arthur issued $9,875,000, General Obligation Refunding Bonds, Series 2011 dated April 15, 2011. This issue refunded the following issues: General Obligation, Series 2001 $2,910,000 Combination Tax and Revenue Certificates of Obligation, Series 2002B $3,810,000 Combination Tax and Revenue Certificates of Obligation, Series 2002C $2,895,000 $9,615,000 REQUIRED SUPPLEMENTARY INFORMATION CITY OF PORT ARTHUR, TEXAS Exhibit 10 REQUIRED SUPPLEMENTARY INFORMATION FUNDING PROGRAMS FOR EMPLOYEE RETIREMENT SYSTEMS FOR THE YEAR ENDED SEPTEMBER 30, 2010 TEXAS MUNICIPAL RETIREMENT SYSTEM SCHEDULE OF FUNDING PROGRESS Fiscal Year Actuarial Value of Assets Actuarial Accrued Liability (AAL) Unit Credit Percentage Funded Unfunded AAL (UAAL) Annual Covered Payroll UAAL as a Percentage of Covered Payroll 2000 $48,768,656 $ 64,451,464 75.70% $15,682,808 $17,412,819 90.06% 2001 51,791,900 68,595,818 75.50% 16,803,918 17,731,568 94.77% 2002 52,575,295 70,081,814 75.02% 17,506,519 17,843,154 98.11% 2003 52,706,294 72,720,969 72.48% 20,014,675 18,796,803 106.48% 2004 55,364,346 76,399,642 72.47% 21,035,296 19,549,195 107.60% 2005 55,693,241 77,526,396 71.84% 21,833,155 21,282,677 102.59% 2006 56,992,953 80,450,851 70.84% 23,457,898 20,998,934 111.71% 2007 * 56,671,406 92,838,703 61.04% 36,167,297 22,849,680 158.28% 2008 56,101,664 94,396,612 59.43% 38,294,948 25,708,137 148.96% 2009 58,868,681 97,757,164 60.22% 38,888,483 27,547,731 141.17% * New actuarial cost method and assumptions were adopted by the TMRS Board of Trustees effective for the 2007 valuation. 55 CITY OF PORT ARTHUR, TEXAS Exhibit 11 REQUIRED SUPPLEMENTARY INFORMATION FUNDING PROGRAMS FOR EMPLOYEE RETIREMENT SYSTEMS FOR THE YEAR ENDED SEPTEMBER 30, 2010 PORT ARTHUR FIREMEN'S RELIEF & RETIREMENT FUND SCHEDULE OF FUNDING PROGRESS Year Actuarial Value of Assets Actuarial Accrued Liability (AAL) Percentage Funded Unfunded AAL (UAAL) Annual Covered Payroll UAAL as a Percentage of Covered Payroll 2000 Not Calculated 2001 $ 22,465,692 $ 27,464,875 81.8% $ 4,999,183 $ 4,653,127 107.44% 2002 Not Calculated 2003 22,728,647 30,926,645 73.5% 8,197,998 4,987,935 164.36% 2004 Not Calculated 2005 26,289,674 35,769,252 73.5% 9,479,578 5,462,233 173.55% 2006 Not Calculated 2007 * 31,142,242 40,077,603 77.7% 8,935,361 5,848,497 152.78% 2008 Not Calculated 2009 * 33,233,278 45,889,421 72.4% 12,656,143 6,994,938 180.93% * Date of actuarial study 1/1 56 CITY OF PORT ARTHUR, TEXAS Exhibit 12 REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 2010 PORT ARTHUR FIREMEN'S RELIEF & RETIREMENT FUND SCHEDULE OF EMPLOYER CONTRIBUTIONS Plan Year Ended December 31 Annual Contribution As a Fixed Percentage of Payroll Annual Required Contribution Percentage Contributed 2000 12.08% 12.08% 100.00% 2001 12.37% 12.08% 102.40% 2002 12.66% 12.66% 100.00% 2003 12.96% 12.66% 102.37% 2004 12.85% 12.20% 105.33% 2005 13.64% 12.20% 113.40% 2006 13.77% 8.85% 155.59% 2007 * 13.47% 10.22% 131.80% 2008 14.08% 15.52% 137.77% 2009 17.00% 14.74% 115.33% * Date of actuarial study 1/1/2008 57 CITY OF PORT ARTHUR, TEXAS Exhibit 13 REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 2010 PORT ARTHUR FIREMEN'S RELIEF & RETIREMENT FUND NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial evaluation follows: Valuation date January 1, 2010 Actuarial cost method Entry Age Normal Amortization method level percent open Remaining amortization period for the plan 22.5 years Asset valuation method 5 year smoothed market Actuarial assumptions Investment rate of return, net of expenses compounded annually 8.00% Projected salary increases including promotion and longevity 5.00% Payroll growth rate 4.00% Post retirement cost of living adjustments None 58 CITY OF PORT ARTHUR, TEXAS Exhibit 14 REQUIRED SUPPLEMENTARY INFORMATION FUNDING PROGRAMS FOR OTHER POST EMPLOYMENT BENEFITS (OPEB) FOR THE YEAR ENDED SEPTEMBER 30, 2010 RETIREE HEALTH INSURANCE PROGRAM ANALYSIS OF FUNDING PROGRESS Valuation Date Actuarial Value of Assets Discount Rate Actuarial Accrued Liability (AAL) Percentage Funded Unfunded AAL (UAAL) 10/1/2005 $ -N/A N/A N/A N/A 10/1/2006 -N/A N/A N/A N/A 10/1/2007 -4% $ 93,760,224 0.00% $93,760,224 10/1/2008 NOT CALCLULATED 10/1/2009 -4% 32,067,950 0.00% 32,067,950 59 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Non-Major Governmental Funds Special Revenue Funds Special Revenue Funds are used to account for resources which may be used only for purposes specified by law or City Council. A brief description of each fund reported as a Special Revenue Fund follows: Health Grants Fund Accounts for grants received from the State of Texas to provide health care services. Library Special Fund Accounts for donations received by the City's public library. These revenues are set aside for the library's use. Library Grant Fund Accounts for various State and local grants received by the Public Library. Golf Course Fund Accounts for funds derived from the operation of the Babe Zaharias public golf course. These funds are designated for improvements to this golf course, and for operations at the Palms on Pleasure Island Course. Municipal Court Technology Fund Accounts for funds received from a portion of municipal court fines dedicated, by State law, to technology acquisition for the court. JAG – ARRA Grant Accounts for supplemental Office of Justice Programs – Justice Assistance Grant funding received from the American Recovery and Recovery Act of 2009. CDBG Rita Supplement Fund Accounts for revenues received through the Federal Community Development Block Grant program specifically for Hurricane Rita recovery activities. CDBG /TDHCA Ike Fund Accounts for revenues received from the Federal Community Development Block Grant program through the Texas Department of Housing and Community Affairs, specifically for Hurricane Ike housing recovery activities. CDBG /TDRA Ike Fund Accounts for revenues received from the Federal Community Development Block Grant program through the Texas Department of Rural Affairs, specifically for Hurricane Ike infrastructure. CDBG – ARRA Fund Accounts for supplemental Community Development Block Grant funding received from the American Recovery and Recovery Act of 2009. HOME Grant Fund Accounts for grants received from the federal government, passed through the State of Texas, under the HOME program. TCEQ SEP Fund Accounts for funds received from industry for supplemental Environmental Projects (SEP) through the Texas Commission of Environmental Quality (TCEQ). Job Training Fund Accounts for funds received from the National Institute of Environmental Health, Katrina and Rita Brownsfield Minority Worker Training Program. Revolving Loan Fund Accounts for the proceeds from repayments of loans made from Community Development Block Grant Funds and City Revolving Loan Fund contributions. These funds are restricted for additional loans to stimulate job development by the small business sector of the City’s economy. HPRP – ARRA Fund Accounts for Homeless Assistance and Rapid Rehousing funds received from the American Recovery and Recovery Act of 2009. Literacy Support Fund Accounts for donations received by the Port Arthur Literacy Support Program. Police Special Fund Accounts for assets seized by the City's police department as the result of drug enforcement arrests. These assets are forfeited to the City to be used to fund specific types of expenditures for the police department. Law Enforcement Grants Fund Accounts for federal funds received under the Local Law Enforcement Block Grant. Housing Programs Fund Accounts for funds designated by the City of Port Arthur and the Port Arthur Housing Finance Corporation. These funds are used to finance programs providing affordable housing in the City. Social Services Block Grant Fund Accounts for the funds received under the Social Services Block Grant program for Rita recovery projects. ARRA – Energy Grant Accounts for funds received from the American Recovery and Reinvestment Act (ARRA) through the Department of Energy. Neighborhood Stabilization Fund Accounts for funds received from the Department of Housing and Urban Development through the Texas Department of Housing and Rural Affairs for community stabilization efforts. Hotel Occupancy Tax Fund Accounts for the hotel occupancy tax revenue received by the City. Downtown Renaissance District Accounts for funds dedicated to downtown redevelopment activities Assessment Projects Fund Accounts for a special assessment levied on property owners. Library Trust Fund Accounts trust revenues received and related interest income. ARRA Transit Grant Accounts for funds received from the American Recovery and Reinvestment Act (ARRA) for Transit projects. Transit System Fund Accounts for the operations of the City’s bus service. This fund is heavily subsidized by Federal and State Grants and contributions from the City’s General Fund. CITY OF PORT ARTHUR, TEXAS Combining Balance Sheet Non-Major Governmental Funds September 30, 2010 Special Revenue Funds Municipal Health Library Library Golf Court JAG Grants Special Grant Course Technology ARRA Fund Fund Fund Fund Fund Fund Assets Cash $ -$ 1,069 $ 1,529 $ 16,265 $ 3,032 $ 29,937 Investments -55,000 20,000 100,000 50,000 -Due from other funds -63,216 ---69,460 Accounts receivable, net of allowance ------Federal and state grants receivable 605,457 -----Inventories ------Total assets $ 605,457 $ 119,285 $ 21,529 $116,265 $ 53,032 $ 99,397 Liabilities and Fund Balances Liabilities Wages payable $ 60,522 $ -$ -$ -$ -$ -Accounts payable 30,221 -10,321 2,710 --Due to other funds 1,006,213 -----Other liabilities ------Deferred revenue ------Total liabilities 1,096,956 -10,321 2,710 --Fund balances (deficit): Undesignated (491,499) 119,285 11,208 113,555 53,032 99,397 Total fund balances (491,499) 119,285 11,208 113,555 53,032 99,397 Total liabilities and fund balances $ 605,457 $ 119,285 $ 21,529 $116,265 $ 53,032 $ 99,397 64 A-1 Special Revenue Funds CDBG CDBG/CDBG/CDBG HOME TCEQ Job Revolving HPRP Rita TDCHA TDRA ARRA Grant SEP Training Loan ARRA Supplement IKE Fund IKE Fund Fund Fund Fund Fund Fund Fund $ -$ -$ -$ -$ 48,492 $ 11,880 $ 53,007 $ 13,229 $ ------75,000 -100,000 --------------153,401 --165,054 -229,399 42,616 379,376 230,648 153,270 ---32,443 ---------$ 229,399 $ 42,616 $ 379,376 $ 230,648 $ 355,163 $ 86,880 $ 53,007 $ 278,283 $ 32,443 $ -$ 3,262 $ -$ 26,895 $ 2,127 $ -$ -$ -$ 122 -2,215 60,848 9,788 25,894 ----220,142 37,139 318,528 193,965 ----32,321 -------------128,211 --164,941 -220,142 42,616 379,376 230,648 156,232 --164,941 32,443 9,257 ---198,931 86,880 53,007 113,342 -9,257 ---198,931 86,880 53,007 113,342 -$ 229,399 $ 42,616 $ 379,376 $ 230,648 $ 355,163 $ 86,880 $ 53,007 $ 278,283 $ 32,443 continued on next page 65 CITY OF PORT ARTHUR, TEXAS Combining Balance Sheet Non-Major Governmental Funds September 30, 2010 (continued from previous page) Special Revenue Funds Law Social Literacy Police Enforcement Housing Services ARRA -Support Special Grants Programs Block Energy Fund Fund Fund Fund Grant Grant S Assets Cash $ 7,572 $ 9,677 $ -$ 35,591 $ 23,112 $ -Investments -100,000 -200,000 50,000 961,515 Due from other funds ---65,956 --Accounts receivable, net of allowance ---57,855 -424,258 Federal and state grants receivable --97,873 -191,962 -Inventories ------Total assets $ 7,572 $ 109,677 $ 97,873 $ 359,402 $ 265,074 $ 1,385,773 Liabilities and Fund Balances Liabilities Wages payable $ -$ -$ -$ -$ 4,345 $ -Accounts payable -2,987 -(775) 3,576 453,469 Due to other funds --63,216 --449,564 Other liabilities -89,483 ----Deferred revenue ---77,902 --Total liabilities -92,470 63,216 77,127 7,921 903,033 Fund balances (deficit): Undesignated 7,572 17,207 34,657 282,275 257,153 482,740 Total fund balances 7,572 17,207 34,657 282,275 257,153 482,740 Total liabilities and fund balances $ 7,572 $ 109,677 $ 97,873 $ 359,402 $ 265,074 $ 1,385,773 66 A-1 Special Revenue Funds Hotel Total Neighbor-Weed Occupancy Downtown Assessment Library ARRA Transit Nonmajor hood and Seed Tax Renaissance Projects Trust Transit System Governmental Stabilization Fund Fund Board Fund Fund Grant Fund Funds $ -$ 1,513 $ 19,621 $ 35,001 $ 4,613 $ 547 $ -$ 500 $ 316,187 --75,000 --25,000 --1,811,515 --------198,632 ----157,817 ---958,385 558,404 -----66,880 517,046 3,105,374 -------116,515 116,515 $ 558,404 $ 1,513 $ 94,621 $ 35,001 $ 162,430 $ 25,547 $ 66,880 $ 634,061 $ 6,506,608 $ 235 $ -$ -$ -$ -$ -$ -$ 53,270 $ 150,778 16,630 -278 500 --924 84,607 704,193 543,566 ---112,806 -65,956 468,828 3,512,244 --------89,483 --------371,054 560,431 -278 500 112,806 -66,880 606,705 4,827,752 (2,027) 1,513 94,343 34,501 49,624 25,547 -27,356 1,678,856 (2,027) 1,513 94,343 34,501 49,624 25,547 -27,356 1,678,856 $ 558,404 $ 1,513 $ 94,621 $ 35,001 $ 162,430 $ 25,547 $ 66,880 $ 634,061 $ 6,506,608 67 CITY OF PORT ARTHUR, TEXAS Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds Special Revenue For the Year Ended September 30, 2010 Special Revenue Funds Municipal Health Library Library Golf Court JAG Grants Special Grants Course Technology ARRA Fund Fund Fund Fund Fund Fund Revenues: Taxes $ -$ -$ -$ -$ -$ -User fees ---9,833 --Fines and forfeiture ----44,200 -Intergovernmental 1,693,855 -15,156 --181,332 Donations -1,872 1,893 ---Program revenue ------Interest revenue -672 -703 355 -Miscellaneous ------Total revenues 1,693,855 2,544 17,049 10,536 44,555 181,332 Expenditures: Current: General government ----57,646 -Culture and recreation -9,244 17,660 117,258 --Public safety -----81,935 Community development ------Health and welfare 1,784,925 -----Public transportation ------Total expenditures 1,784,925 9,244 17,660 117,258 57,646 81,935 Excess (deficiency) of revenues over expenditures (91,070) (6,700) (611) (106,722) (13,091) 99,397 Other financing sources (uses): Transfers in ---110,000 --Transfers out ------Total other financing sources (uses) ---110,000 --Net change in fund balances (91,070) (6,700) (611) 3,278 (13,091) 99,397 Fund balances, beginning of year as previously reported (436,358) 125,985 11,819 110,277 66,123 -Prior period adjustment, Note V.F. 35,929 -----Fund balances, beginning of year as restated (400,429) 125,985 11,819 110,277 66,123 -Fund balances end of year $ (491,499) $ 119,285 $ 11,208 $ 113,555 $ 53,032 $ 99,397 68 A-2 Special Revenue Funds CDBG CDBG/CDBG /CDBG /HOME TCEQ Job Revolving HPRP Rita TDHCA TDRA ARRA Grant SEP Training Loan ARRA Supplement IKE Fund IKE Fund Fund Fund Fund Fund Fund Fund $ -$ -$ -$ -$ -$ -$ -$ -$ --------------------42,616 379,376 287,726 571,935 ---85,551 -------------106,498 --425 ------412 -611 -----------42,616 379,376 287,726 678,433 412 -1,036 85,551 --379,376 287,726 -----------------------743 42,616 --607,644 --425 85,551 ------------------743 42,616 379,376 287,726 607,644 --425 85,551 (743) ---70,789 412 -611 -------------------------- --(743) ---70,789 412 -611 -10,000 ---128,142 86,468 53,007 112,731 ----------10,000 ---128,142 86,468 53,007 112,731 -$ 9,257 $ -$ -$ -$ 198,931 $ 86,880 $ 53,007 $ 113,342 $ -continued on next page ued on next page 69 CITY OF PORT ARTHUR, TEXAS Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds Special Revenue For the Year Ended September 30, 2010 (continued from previous page) Special Revenue Funds Law Social Literacy Police Enforcement Housing Services ARRA Support Special Grants Programs Block Energy Fund Fund Fund Fund Grant Grant Revenues: Taxes $ -$ -$ -$ -$ -$ -User fees ------Fines and forfeiture -107,833 ----Intergovernmental --931,081 -857,230 1,473,695 Donations -3,900 ----Program revenue ---285 --Interest revenue 41 401 249 1,633 1,587 1,515 Miscellaneous -4,894 ----Total revenues 41 117,028 931,330 1,918 858,817 1,475,210 Expenditures: Current: General government -----1,093,420 Culture and recreation ------Public safety -179,401 1,108,853 ---Community development ---139,781 813,436 -Health and welfare ------Public transportation ------Total expenditures -179,401 1,108,853 139,781 813,436 1,093,420 Excess (deficiency) of revenues over expenditures 41 (62,373) (177,523) (137,863) 45,381 381,790 Other financing sources (uses): Transfers in -----100,950 Transfers out --(74,239) ---Total other financing sources (uses) --(74,239) --100,950 Net change in fund balances 41 (62,373) (251,762) (137,863) 45,381 482,740 Fund balances, beginning of year as previously reported 7,531 79,580 286,419 420,138 211,772 -Prior period adjustment, Note V.F. ------Fund balances, beginning of year as restated 7,531 79,580 286,419 420,138 211,772 -Fund balances end of year $ 7,572 $ 17,207 $ 34,657 $ 282,275 $ 257,153 $ 482,740 70 A-2 Special Revenue Funds Hotel Total Neighbor-Weed Occupancy Downtown Assessment Library ARRA Transit Nonmajor hood and Seed Tax Renaissance Projects Trust Transit System Governmental Stabilization Fund Fund Board Fund Fund Grant Fund Funds $ -$ -$ 858,192 $ -$ -$ -$ -$ -$ 858,192 ----330 --124,657 134,820 --4,680 -----156,713 558,405 -----186,709 2,063,635 9,328,302 --------7,665 --------107,208 --813 -849 140 --9,981 -------193,611 198,505 558,405 -863,685 -1,179 140 186,709 2,381,903 10,801,386 ---500 ----1,818,668 --669,271 -----813,433 --------1,370,189 560,432 (927) ------2,249,701 --------1,784,925 ------186,709 3,055,825 3,242,534 560,432 (927) 669,271 500 --186,709 3,055,825 11,279,450 (2,027) 927 194,414 (500) 1,179 140 -(673,922) (478,064) ---35,001 ---650,000 895,951 --(100,000) ----(137,727) (311,966) --(100,000) 35,001 ---512,273 583,985 (2,027) 927 94,414 34,501 1,179 140 -(161,649) 105,921 586 (71) -48,445 25,407 -155,956 1,503,957 -------33,049 68,978 -586 (71) -48,445 25,407 -189,005 1,572,935 $ (2,027) $ 1,513 $ 94,343 $ 34,501 $ 49,624 $ 25,547 $ -$ 27,356 $ 1,678,856 71 CITY OF PORT ARTHUR, TEXAS A -3 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Debt Service Fund For the Year Ended September 30, 2010 Variance with Budgeted Amounts Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues Taxes: Property $ 7,800,000 $ 7,800,000 $ 7,659,925 $ (140,075) Interest 45,000 45,000 30,369 (14,631) Miscellaneous income 609,635 609,635 609,635 -Total revenues 8,454,635 8,454,635 8,299,929 (154,706) Expenditures Debt service: Principal retirement 5,415,000 5,415,000 5,414,884 116 Interest and fiscal charges 3,086,182 3,259,196 3,252,051 7,145 Total expenditures 8,501,182 8,674,196 8,666,935 7,261 Excess of revenues over expenditures (46,547) (219,561) (367,006) (147,445) Other financing sources (uses) Transfers out (477,876) (477,876) (477,876) -Total other financing sources (uses) (477,876) (477,876) (477,876) -Net changes in fund balances $ (524,423) $ (697,437) (844,882) $ (147,445) Fund balance, beginning of the year 4,053,409 Fund balance, end of the year $ 3,208,527 73 CITY OF PORT ARTHUR, TEXAS A -4 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Library Special Fund For the Year Ended September 30, 2010 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues: Donations $ 2,200 $ 2,200 $ 1,872 $ (328) Interest 800 800 672 (128) Total revenues 3,000 3,000 2,544 (456) Expenditures: Current: Culture and recreation 10,000 10,000 9,244 756 Total expenditures 10,000 10,000 9,244 756 Excess (deficiency) of revenues over expenditures $ (7,000) $ (7,000) (6,700) $ 300 Fund balance, beginning of the year 125,985 Fund balance, end of the year $ 119,285 Budgeted Amounts 74 CITY OF PORT ARTHUR, TEXAS A -5 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Golf Course Fund For the Year Ended September 30, 2010 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues: User fees $ 3,400 $ 3,400 $ 9,833 $ 6,433 Interest 1,000 1,000 703 (297) Total revenues 4,400 4,400 10,536 6,136 Expenditures: Current: Culture and recreation 195,284 195,284 117,258 (78,026) Total expenditures 195,284 195,284 117,258 (78,026) Excess (deficiency) of revenges over expenditures (190,884) (190,884) (106,722) 84,162 Other financing sources: Operating transfers in 100,000 100,000 -(100,000) Net change in fund balance $ (90,884) $ (90,884) (106,722) $ (15,838) Fund balance, beginning of the year 110,277 Fund balance, end of the year $ 3,555 Budgeted Amounts 75 CITY OF PORT ARTHUR, TEXAS A -6 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Municipal Court Technology Fund For the Year Ended September 30, 2010 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues: Fines and forfeiture $ 50,000 $ 50,000 $ 44,200 $ (5,800) Interest 4,000 4,000 355 (3,645) Total revenues 54,000 54,000 44,555 (9,445) Expenditures: Current: General government 70,000 70,000 57,646 12,354 Total expenditures 70,000 70,000 57,646 12,354 Excess (deficiency) of revenues over expenditures $ (16,000) $ (16,000) (13,091) $ 2,909 Fund balance, beginning of the year 66,123 Fund balance, end of the year $ 53,032 76 Budgeted Amounts CITY OF PORT ARTHUR, TEXAS A -7 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Hotel Occupancy Tax Fund For the Year Ended September 30, 2010 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues: Hotel occupancy tax $ 1,000,000 $ 1,000,000 $ 858,192 $ (141,808) Penalty and interest --4,680 4,680 Interest 1,000 1,000 813 (187) Total revenues 1,001,000 1,001,000 863,685 (137,315) Expenditures: Current: Culture and recreation 913,136 929,136 669,271 259,865 Total expenditures 913,136 929,136 669,271 259,865 Excess (deficiency) of revenues over expenditures 87,864 71,864 194,414 -Other financing (uses): Transfers out --(100,000) (100,000) Total other financing (uses) --(100,000) (100,000) Excess (deficiency) of revenues over expenditures and other uses $ 87,864 $ 71,864 94,414 $ 122,550 Fund balance, beginning of the year (71) Fund balance, end of the year $ 94,343 77 Budgeted Amounts CITY OF PORT ARTHUR, TEXAS A -8 Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Police Special Fund For the Year Ended September 30, 2010 Variance with Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues: Fines and forfeiture $ 56,800 $ 56,800 $ 107,833 $ 51,033 Interest revenue 1,800 1,800 401 (1,399) Miscellaneous --4,894 4,894 Total revenues 58,600 58,600 113,128 54,528 Expenditures: Public safety 46,852 46,852 179,401 (132,549) Excess revenues over expenditures $ 11,748 $ 11,748 (66,273) $ 187,077 Fund balance, beginning of the year 79,580 Fund balance, end of the year $ 13,307 78 Budgeted Amounts CITY OF PORT ARTHUR, TEXAS A-9 Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Transit System Fund For the Year Ended September 30, 2010 Variance with Budgeted Amounts Actual Final Budget GAAP Positive Original (Negative) Revenues:User fees $ 135,000 $ 135,000 $ 124,657 $ (10,343) Intergovernmental 3,028,446 3,028,446 2,063,635 (964,811) Miscellaneous --193,611 193,611 Total revenues 3,163,446 3,163,446 2,381,903 (781,543) Expenditures: Public transportation 4,030,372 4,030,372 3,055,825 974,547 Excess (deficiency) of revenues over expenditures (866,926) (866,926) (673,922) 193,004 Other financing (uses): Transfers in 650,000 650,000 650,000 -Transfers out (76,700) (76,700) (137,727) (61,027) Total other financing sources (uses) 573,300 573,300 512,273 (61,027) (Deficiency) of revenues over expenditures and other financing uses $ (293,626) $ (293,626) (161,649) $ 131,977 Fund balance, beginning of the year, ad previously reported 155,956 Prior period adjustment, Note V.F. 33,049 Fund balance, beginning of the year, as restated 189,005 Fund balance, end of the year $ 27,356 79 INTERNAL SERVICE FUNDS CITY OF PORT ARTHUR, TEXAS B -1 Internal Service Funds Combining Statement of Net Assets September 30, 2010 Equipment General Employee Equipment Services Liability Benefits Replacement Fund Fund Fund Fund Total Assets Current assets Cash $ 100 $ 108,811 $ 862,189 $ 32,610 $ 1,003,710 Investments -2,500,000 3,000,000 1,060,270 6,560,270 Due from other funds --2,926,418 -2,926,418 Accounts receivable --33,516 -33,516 Inventories 53,598 ---53,598 Prepaid expense --131,000 -131,000 Total current assets 53,698 2,608,811 6,953,123 1,092,880 10,708,512 Non current assets Capital assets Buildings and improvements 878,663 ---878,663 Equipment 135,217 --22,720,566 22,855,783 Total 1,013,880 --22,720,566 23,734,446 Accumulated depreciation (945,627) --(16,400,000) (17,345,627) Total capital assets, net of accumulated depreciation 68,253 --6,320,566 6,388,819 Total assets $ 121,951 $ 2,608,811 $ 6,953,123 $ 7,413,446 $ 17,097,331 Liabilities Current liabilities Wages payable $ 20,816 $ -$ 137 $ -$ 20,953 Accounts payable 39,652 885 25,063 11,242 76,842 Due to other funds 1,402,339 ---1,402,339 Capital leases payable ---399,466 399,466 Compensated absences 14,377 ---14,377 Total current liabilities 1,477,184 885 25,200 410,708 1,913,977 Noncurrent liabilities Capital leases payable ---401,994 401,994 Compensated absences 14,241 ---14,241 Long-term risk liability -1,550,197 755,860 -2,306,057 Total noncurrent liabilities 14,241 1,550,197 755,860 401,994 2,722,292 Total liabilities 1,491,425 1,551,082 781,060 812,702 4,636,269 Net Assets Invested in capital assets, net of related debt 68,253 --5,519,106 5,587,359 Unrestricted (1,437,727) 1,057,729 6,172,063 1,081,638 6,873,703 Total net assets $ (1,369,474) $ 1,057,729 $ 6,172,063 $ 6,600,744 $ 12,461,062 83 CITY OF PORT ARTHUR, TEXAS B -2 Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Assets For the Year Ended September 30, 2010Equipment General Employee Equipment Services Liability Benefits Replacement Fund Fund Fund Fund Total Operating revenues: Charges for services $ 3,097,342 $ 4,964 $ 9,403,791 $ 1,223,563 $ 13,729,660 Operating expenses: Personnel services 646,702 ---646,702 Supplies 65,083 ---65,083 Contractual services 2,466,643 --15,290 2,481,933 Depreciation 9,398 --2,102,714 2,112,112 Health and life insurance --7,876,708 -7,876,708 Employee injury claims --680,820 -680,820 Other employee benefits --402,841 -402,841 Damage claims -1,352,435 --1,352,435 Total operating expenses 3,187,826 1,352,435 8,960,369 2,118,004 15,618,634 Income (loss) from operations (90,484) (1,347,471) 443,422 (894,441) (1,888,974) Nonoperating revenues (expenses) Interest revenue -9,455 37,464 17,642 64,561 Interest expense ---(42,506) (42,506) State capital grants ---60,228 60,228 60,228 Gain on asset disposal ---29,965 29,965 Total nonoperating revenues (expenses) -9,455 37,464 65,329 112,248 Income (loss) before transfers (90,484) (1,338,016) 480,886 (829,112) (1,776,726) Transfers in -2,039,800 -477,876 2,517,676 Transfers out (36,000) -(243,250) -(279,250) Change in net assets (126,484) 701,784 237,636 (351,236) 461,700 Net assets, beginning of year, (1,242,990) 355,945 5,934,427 6,951,980 11,999,362 Net assets, end of year $ (1,369,474) $ 1,057,729 $ 6,172,063 $ 6,600,744 $ 12,461,062 84 CITY OF PORT ARTHUR, TEXAS B -3 Internal Service Funds Combining Statement of Cash Flows Year Ended September 30, 2010 Equipment General Employee Equipment Services Liability Benefits Replacement Fund Fund Fund Fund Total CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 3,097,342 $ -$ 9,403,791 $ 1,223,563 $ 13,724,696 Payments to employees (639,795) ---(639,795) Payments to suppliers (2,480,278) (1,480,764) (8,980,316) (204,926) (13,146,284) Net cash provided by operating activities (22,731) (1,480,764) 423,475 1,018,637 (61,383) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Advances from (to) other funds 58,731 -(1,582,810) -(1,524,079) Transfers from other funds -2,039,800 -477,876 2,517,676 Transfers to other funds (36,000) -(243,250) -(279,250) Net cash provided by noncapital financing activities 22,731 2,039,800 (1,826,060) 477,876 714,347 CASH FLOWS FROM CAPITAL AND RELATED ACTIVITIES Acquisition and construction of capital assets ---(1,154,127) (1,154,127) Principal paid on on capital debt ---(435,370) (435,370) Interest paid on capital debt ---(42,506) (42,506) Capital grants ---60,228 60,228 Proceeds from sale of capital assets ---83,167 83,167 Net cash by capital and related financing activities ---(1,488,608) (1,488,608) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from the sale of investments -1,250,000 4,500,000 750,000 6,500,000 Purchase of investments -(2,500,000) (3,000,000) (1,060,270) (6,560,270) Interest on cash and investments -9,455 37,464 17,642 64,561 Net cash provided by investing activities -(1,240,545) 1,537,464 (292,628) 4,291 Net (decrease) in cash and cash investments -(681,509) 134,879 (284,723) (831,353) Cash, beginning of year 100 790,320 727,310 317,333 1,835,063 Cash, end of year $ 100 $ 108,811 $ 862,189 $ 32,610 $ 1,003,710 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Income (loss) from operations $ (90,484) $ (1,347,471) $ 443,422 $ (894,441) $ (1,888,974) Adjustments to reconcile income (loss) from operations to net cash provided (used) by operating activities: Depreciation 9,398 --2,102,714 2,112,112 Change in assets and liabilities Decrease in other receivables --41,513 -41,513 Decrease in inventories 82,838 ---82,838 Decrease in prepaid expense --1,000 23,924 24,924 Increase (decrease) in wages payable 2,066 -(331) -1,735 Increase (decrease) in accounts payable (31,390) 827 20,488 (213,560) (223,635) Increase in compensated absences 4,841 ---4,841 (Decrease) in long term risk liability -(134,120) (82,617) -(216,737) Net cash provided (used) by operating activities $ (22,731) $ (1,480,764) $ 423,475 $ 1,018,637 $ (61,383) 85 COMPONENT UNIT PORT ARTHUR ECONOMIC DEVELOPMENT CORPORATION CITY OF PORT ARTHUR, TEXAS C -1 Component Unit Port Arthur Economic Development Corporation Balance Sheet September 30, 2010 Small Debt Business General Service Loan Fund Fund Fund Total Assets Cash $ 1,212,847 $ 28,819 $ -$ 1,241,666 Investments 6,300,000 676,456 -6,976,456 Accounts receivable 428,127 --428,127 Total Assets $ 7,940,974 $ 705,275 $ -$ 8,646,249 Liabilities and Fund Balances Liabilities Wages payable $ 15,311 $ -$ -$ 15,311 Accounts payable 55,403 --55,403 Deferred revenue 422,151 --422,151 Total liabilities 492,865 --492,865 Fund balances Reserved for: Future development 1,000,000 --1,000,000 Debt service -705,275 -705,275 Special projects ----Unreserved, reported in: -General fund 6,448,109 --6,448,109 Total fund balances 7,448,109 705,275 -8,153,384 Total liabilities and fund balances $ 7,940,974 $ 705,275 $ -Reconciliation to government wide statement of net assets: Capital assets used in governmental activities are not financial resources, and, therefore, are not reported in these funds funds 6,055,233 Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in these funds 422,151 Long term liabilities are not due and payable in the current period, and therefore are not reported in these funds (6,119,739) Net assets of governmental activities $ 8,511,029 89 CITY OF PORT ARTHUR, TEXAS C-2 Component Unit Port Arthur Economic Development Corporation Statement of Revenue, Expenditures and Changes in Fund Balances For the Year Ended September 30, 2010 Small Debt Business General Service Loan Fund Fund Fund Total Revenues Taxes: Sales $ 3,480,753 $ 573,741 $ -$ 4,054,494 Interest revenue 41,009 2,358 -43,367 Loan repayments 48,131 -48,131 Business park 10,321 --10,321 Miscellaneous 90,268 --90,268 Total revenues 3,670,482 576,099 -4,246,581 Expenditures: Current: Economic development 2,104,088 -100,000 2,204,088 Capital outlay ----Debt service: Principal retirements -315,000 -315,000 Interest and fiscal charges -258,741 -258,741 Total expenditures 2,104,088 573,741 100,000 2,777,829 Excess of revenue over expenditures before transfers 1,566,394 2,358 (100,000) 1,468,752 Fund balances, beginning of year, as previously reported 5,873,845 702,917 100,000 Prior period adjustment, Note V.F. 7,870 --Fund balances, beginning of year, as restated 5,881,715 702,917 100,000 Fund balances, end of year $ 7,448,109 $ 705,275 $ -Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay as expenditure. However, in the statement of activities, the cost of those assets are allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. (19,343) The net effect of miscellaneous transactions involving capital assets is to decrease net assets (21,499) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds (35,780) Some expenses reported in the statement of activities do not require the use of current financial resources, and therefore, are not reported as expenditures in the governmental funds (1,869) The repayment of the principal of long-term debt consumes the current financial resources of governmental funds, however has no effect on net assets. 315,000 Changes in net assets $ 1,705,261 90 CITY OF PORT ARTHUR, TEXAS C -3 Component Unit Port Arthur Economic Development Corporation General Operating Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual For the Year Ended September 30, 2010 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Taxes: Sales $ 3,926,259 $ 3,926,259 $ 3,480,753 $ (445,506) Interest revenue 25,000 25,000 41,009 16,009 Loan repayments 100,000 100,000 48,131 (51,869) Business park revenues 10,000 10,000 10,321 321 Sale of business park land --80,818 80,818 Miscellaneous --9,450 9,450 Total revenues 4,061,259 4,061,259 3,670,482 (390,777) Expenditures: Current: General government: Personnel services 384,277 384,277 423,188 (38,911) Contractual services 1,314,466 1,314,466 1,142,806 171,660 Capital outlay 343,636 343,636 384,094 (40,458) Development projects 1,883,880 1,883,880 154,000 1,729,880 Total expenditures 3,926,259 3,926,259 2,104,088 1,822,171 Excess (deficiency) of revenues over expenditures $ 135,000 $ 135,000 1,566,394 $ 1,431,394 Fund balance, beginning of year, as previously reported 5,873,845 Prior period adjustment, Note V.F. 7,870 Fund balance, beginning of year, as restated 5,881,715 Fund balance, end of year $ 7,448,109 91 CITY OF PORT ARTHUR, TEXAS C -4 Component Unit Port Arthur Economic Development Corporation Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual For the Year Ended September 30, 2010 Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Taxes: Sales $ 573,741 $ 573,741 $ 573,741 $ -Interest revenue 2,000 2,000 2,358 358 Total revenues 575,741 575,741 576,099 358 Expenditures: Debt service: Principal retirement 315,000 315,000 315,000 -Interest and fiscal charges 259,241 259,241 258,741 (500) Total expenditures 574,241 574,241 573,741 (500) Excess of revenues over expenditures $ 1,500 $ 1,500 2,358 $ (142) Fund balance, beginning of year 702,917 Fund balance, end of year $ 705,275 92 CITY OF PORT ARTHUR, TEXAS Comprehensive Annual Financial Report For the Year Ended September 30, 2010 Statistical Table of Contents Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Net Assets by Component Schedule 1 Changes in Net Assets Schedule 2 Governmental Activities Tax Revenue by Source Schedule 3 Fund Balances of Governmental Funds Schedule 4 Changes in Fund Balances of Governmental Funds Schedule 5 General Governmental Tax Revenues by Source Schedule 6 Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue sources. Assessed Value and Estimated Actual Value of Taxable Property Schedule 7 Property Tax Rates -Direct and Overlapping Governments Schedule 8 Principal Property Taxpayers Schedule 9 Principal Industrial Districts Schedule 10 Property Tax Levies and Collections Schedule 11 Industrial District Payments Schedule 12 Debt Capacity These schedules contain information to help the reader assess the affordability of the City's current level of outstanding debt and the City's ability to issue additional debt in the future. Ratios of Outstanding Debt by Type Schedule 13 Ratios of General Bonded Debt Outstanding Schedule 14 Direct and Overlapping Governmental Activities Debt Schedule 15 Legal Debt Margin Information Schedule 16 CITY OF PORT ARTHUR, TEXAS Comprehensive Annual Financial Report For the Year Ended September 30, 2010 Statistical Table of Contents Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Demographic and Economic Statistics Schedule 17 Principal Employers Schedule 18 Operating Information 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 government provides and the activities in performs. Full Time Equivalent City Employees by Function Schedule 19 Operating Indicators by Function Schedule 20 Capital Assets by Function Schedule 21 CITY OF PORT ARTHUR, TEXAS Net Assets by Component Last Eight Fiscal Years (accrual basis of accounting) Fiscal Year 2003 2004 2005 Governmental activities Invested in capital assets, net of related debt $ 28,798,071 $ 17,575,084 $ 4,671,088 Restricted 6,456,352 3,960,448 4,622,619 Unrestricted 4,910,822 19,604,098 12,446,595 Total governmental activities net assets $ 40,165,245 $ 41,139,630 $ 21,740,302 Business-type activities Invested in capital assets, net of related debt $ 19,317,549 $ 25,397,872 $ 89,380,233 Restricted 27,527,741 16,200,454 9,028,750 Unrestricted (10,073,985) (7,450,385) (11,174,963) Total business-type activities net assets $ 36,771,305 $ 34,147,941 $ 87,234,020 Primary Government Invested in capital assets, net of related debt $ 48,115,620 $ 42,972,956 $ 94,051,321 Restricted 33,984,093 20,160,902 13,651,369 Unrestricted (5,163,163) 12,153,713 1,271,632 Total primary government net assets $ 76,936,550 $ 75,287,571 $ 108,974,322 Note: The City began to report accrual information when when it implemented GASB Statement 34 in fiscal year 2003. 96 Schedule 1 Fiscal Year 2006 2007 2008 2009 2010 $ 6,298,355 $ 3,965,040 $ (16,787,610) $ 57,871,638 $ 52,886,404 6,175,645 8,115,974 14,529,546 10,073,955 12,159,977 16,642,827 16,593,389 18,325,406 (65,869,037) (57,114,701) $ 29,116,827 $ 28,674,403 $ 16,067,342 $ 2,076,556 $ 7,931,680 $ 89,789,908 $ 87,847,713 $ 84,578,549 $ 82,251,758 $ 86,587,387 7,251,971 5,302,979 13,721,708 12,748,482 10,896,172 (14,669,600) (16,625,691) (17,758,037) (23,262,102) (27,739,568) $ 82,372,279 $ 76,525,001 $ 80,542,220 $ 71,738,138 $ 69,743,991 $ 96,088,263 $ 91,812,753 $ 67,790,939 $ 140,123,396 $ 139,473,791 13,427,616 13,418,953 28,251,254 22,822,437 23,056,149 1,973,227 (32,302) 567,369 (89,131,139) (84,854,269) $ 111,489,106 $ 105,199,404 $ 96,609,562 $ 73,814,694 $ 77,675,671 97 CITY OF PORT ARTHUR, TEXAS Changes in Net Assets Last Eight Fiscal Years (accrual basis of accounting) 2003 2004 2005 Expenses Governmental activities General government $ 5,692,837 $ 6,630,177 $ 6,826,332 Public safety 17,994,721 19,466,665 21,583,467 Public works 5,902,888 6,000,333 11,677,900 Community development 3,354,389 1,982,109 1,526,504 Culture and recreation 2,696,507 2,904,238 3,432,762 Health and welfare 1,679,535 1,746,368 2,024,499 Public transportation 1,613,232 1,601,850 1,604,625 Interest on long-term debt 3,508,014 3,556,107 3,325,994 Total governmental activities expenses 42,442,123 43,887,847 52,002,083 Business-type activities Water and sewer 11,996,699 12,472,993 13,114,542 Solid waste 4,899,713 5,112,665 5,673,696 Total business-type activities expenses 16,896,412 17,585,658 18,788,238 Total primary government expenses 59,338,535 61,473,505 70,790,321 Program Revenues Governmental activities Charges for services: General government 418,700 318,326 296,826 Public safety 717,856 985,525 843,246 Community development 525,448 -444,190 Culture and recreation 157,825 202,962 180,893 Health and welfare 151,021 163,821 179,116 Public transportation 168,494 126,249 118,888 Operating grants and contributions 4,803,189 7,199,995 5,701,339 Capital grants and contributions 182,512 413,514 1,784,209 Total governmental activities program revenues 7,125,045 9,410,392 9,548,707 Business-type activities Charges for services: Water and sewer 14,395,703 14,319,481 13,327,211 Solid waste 5,464,192 5,182,936 4,994,403 Operating grants and contributions 14,650 -28,348 Capital grants and contributions 355,184 183,592 564,361 Total business-type activities program revenues 20,229,729 19,686,009 18,914,323 Total primary government program revenues 27,354,774 29,096,401 28,463,030 98 CITY OF PORT ARTHUR, TEXAS Changes in Net Assets Last Eight Fiscal Years (continued) (accrual basis of accounting) 2003 2004 2005 Net (Expense) Governmental activities $ (35,317,078) $ (34,477,455) $ (42,453,376) Business-type activities 3,333,317 2,100,351 126,085 Total primary government net expenses (31,983,761) (32,377,104) (42,327,291) General Revenues and Other Changes in Net Assets Government activities TaxesProperty Taxes 9,295,652 9,810,300 11,102,923 Industrial district payments 13,343,972 13,325,800 14,179,684 Gross receipts 2,578,504 2,547,414 2,858,715 Sales taxes 4,860,621 5,323,127 5,651,775 Other taxes 426,160 474,722 496,789 Investment earnings 727,260 479,080 815,493 Miscellaneous 168,917 414,325 1,066,517 Transfers 7,682,145 7,334,192 6,082,634 Total governmental activities 39,083,231 39,708,960 42,254,530 Business-type activities Investment earnings 18,167 27,843 30,742 Miscellaneous 9,400 31,809 16,707 Transfers (6,534,933) (7,334,192) (6,082,634) Total Business-type activities (6,507,366) (7,274,540) (6,035,185) Total primary government general revenues and other changes in net assets 32,575,865 32,434,420 36,219,345 Change in Net Assets Governmental activities 3,766,153 5,231,505 (198,846) Business-type activities (3,174,049) (5,174,189) (5,909,100) Total primary government $ 592,104 $ 57,316 $ (6,107,946) Note: The City began to report accrual information when it implemented GASB Statement 34, in fiscal year 2003. 100 Schedule 2 Fiscal Year 2006 2007 2008 2009 2010 $ 20,165,793 $ 15,620,967 $ 13,332,504 $ 21,411,497 $ 13,639,715 21,074,558 22,822,830 25,025,968 32,421,145 29,371,645 11,348,530 11,859,564 14,038,090 14,588,581 14,006,598 1,565,422 1,453,406 1,543,713 1,490,108 3,201,371 2,993,539 5,824,415 4,351,668 5,361,406 4,968,703 1,831,279 2,106,857 4,349,172 2,723,071 2,905,668 1,938,632 2,122,404 2,361,839 2,563,463 3,061,791 3,002,311 2,753,310 2,944,208 3,421,325 3,294,557 63,920,064 64,563,753 67,947,162 83,980,596 74,450,048 14,010,621 14,081,351 15,767,793 16,965,508 17,579,403 5,208,237 6,798,600 6,934,443 9,685,522 8,422,715 19,218,858 20,879,951 22,702,236 26,651,030 26,002,118 83,138,922 85,443,704 90,649,398 110,631,626 100,452,166 739,412 1,178,285 692,713 915,882 728,594 807,375 1,307,213 1,378,647 1,778,882 1,793,753 500,794 443,473 (92,746) 144,867 155,726 87,395 75,477 105,849 120,472 338,417 221,907 207,120 211,292 195,722 -103,975 130,319 127,961 120,483 124,657 12,003,439 9,666,676 11,074,206 19,279,958 9,980,518 4,146,167 80,551 -34,800 1,172,641 18,610,464 13,089,114 13,497,922 22,591,066 14,294,306 14,507,437 15,216,011 15,262,727 15,543,061 16,931,852 5,909,138 6,698,486 7,056,561 10,667,345 7,653,032 1,615,186 234,871 -------6,850,178 22,031,761 22,149,368 22,319,288 26,210,406 31,435,062 40,642,225 35,238,482 35,817,210 48,801,472 45,729,368 99 Schedule 2 Fiscal Year 2006 2007 2008 2009 2010 $ (45,309,600) $ (51,474,639) $ (54,449,240) $ (61,389,530) $ (60,155,742) 2,812,903 1,269,417 (382,948) (440,624) 5,432,944 (42,496,697) (50,205,222) (54,832,188) (61,830,154) (54,722,798) 12,432,896 11,424,235 $ 13,139,237 $ 15,329,768 $ 16,082,423 14,898,245 15,259,988 16,238,958 14,605,507 26,520,879 3,219,599 3,933,880 4,251,127 4,439,957 4,414,729 6,939,254 7,288,008 8,248,052 9,801,361 8,108,987 667,218 793,620 1,083,948 1,115,410 985,368 971,310 1,221,857 692,378 240,344 379,046 7,942,824 3,885,701 2,192,092 1,999,733 1,940,243 6,245,740 7,224,926 (4,003,613) 6,651,553 7,487,001 53,317,086 51,032,215 41,842,179 54,183,633 65,918,676 79,711 107,236 349,468 108,582 53,355 28,418 5,652 42,429 -6,555 (6,245,740) (7,224,926) 4,003,613 (6,651,553) (7,487,001) (6,137,611) (7,112,038) 4,395,510 (6,542,971) (7,427,091) 47,179,475 43,920,177 46,237,689 47,640,662 58,491,585 8,007,486 (442,424) (12,607,061) (7,205,897) 5,762,934 (3,324,708) (5,842,621) 4,012,562 ((6,983,595) (1,994,147) $ 4,682,778 $ (6,285,045) $ (8,594,499) $ (14,189,492) $ 3,768,787 101 CITY OF PORT ARTHUR, TEXAS Schedule 3 Governmental Activities Tax Revenues by Source Governmental Funds Last Eight Fiscal Years (accrual basis of accounting)Industrial Gross Hotel Fiscal Property District Receipts Sales Occupancy Penalties Year Taxes Payments Taxes Tax Taxes & Interest Total 2003 $ 9,064,850 $ 13,343,973 $ 2,578,504 $4,860,621 $ 367,232 $ 230,802 $ 30,445,982 2004 9,581,920 13,325,800 2,547,415 5,323,127 410,254 228,380 31,416,896 2005 10,839,546 14,179,684 2,858,715 5,651,775 433,668 263,377 34,226,765 2006 12,174,338 14,898,245 2,059,024 6,939,254 605,375 258,558 36,934,794 2007 11,118,394 15,259,988 3,933,880 7,288,008 712,663 305,841 38,618,774 2008 12,803,551 16,238,958 4,251,127 8,248,052 990,764 335,686 42,868,138 2009 15,003,724 14,605,507 4,439,957 9,801,361 1,115,410 326,044 45,292,003 2010 15,772,539 26,520,879 4,414,729 8,108,987 985,368 309,884 56,112,386 Note: The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003. 102 CITY OF PORT ARTHUR, TEXAS Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2001 2002 2003 2004 General Fund Reserved $ 81,633 $ 31,203 $ 98,812 $ 111,752 Unreserved 10,056,252 9,567,007 9,794,228 9,838,483 Total general fund $ 10,137,885 $ 9,598,210 $ 9,893,040 $ 9,950,235 All Other Governmental Funds Reserved, reported in Special revenue funds $ -$ 5,160 $ -$ -Capital projects funds 1,747,108 8,118,398 3,383,376 1,561,719 Debt service funds 926,471 2,532,067 3,072,973 2,398,729 Unreserved, reported in: Special revenue funds 1,231,551 3,207,977 2,442,946 3,410,724 Total all other governmental funds $ 3,905,130 $ 13,863,602 $ 8,899,295 $ 7,371,172 Total governmental funds $ 14,043,015 $ 23,461,812 $ 18,792,335 $ 17,321,407 104 Schedule 4 Fiscal Year 2005 2006 2007 2008 2009 2010 $ 86,971 $ 54,376 $ 33,104 $ 30,962 $ 28,561 $ 128,709 8,834,592 10,899,509 11,875,374 14,477,134 11,387,958 16,107,851 $ 8,921,563 $ 10,953,885 $ 11,908,478 $ 14,508,096 $ 11,416,519 $ 16,236,560 $ 2,000,000 $ -$ 386,650 $ -$ -$ -1,402,753 2,097,248 2,346,951 10,831,709 6,020,546 8,951,450 3,219,866 4,078,397 4,821,810 3,697,837 4,053,409 3,208,527 1,627,937 2,311,065 -3,351 2,211,515 1,678,856 $ 8,250,556 $ 8,486,710 $ 7,555,411 $ 14,532,897 $ 12,285,470 $ 13,838,833 $ 17,172,119 $ 19,440,595 $ 19,463,889 $ 29,040,993 $ 23,701,989 $ 30,075,393 105 CITY OF PORT ARTHUR, TEXAS Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2001 2002 2003 2004 2005 Revenues Taxes $ 16,864,539 $ 16,477,379 $ 17,160,937 $ 18,155,563 $ 20,110,202 Industrial district payments 12,503,378 15,848,972 13,343,972 13,325,800 14,179,684 Licenses, fees, and permits 351,142 353,777 313,080 239,364 276,052 User fees 606,578 440,394 570,646 609,033 550,239 Fines and penalties 695,299 606,793 730,169 948,488 792,678 Intergovernmental 3,955,615 3,731,662 4,932,581 6,422,103 5,697,146 Investment earnings 815,989 760,309 727,260 451,975 728,342 Other revenues 482,845 655,294 747,485 1,221,619 2,644,732 Total revenues 36,275,385 38,874,580 38,526,130 41,373,945 44,979,075 Expenditures General Government 9,353,807 10,566,650 5,592,267 6,370,974 6,423,106 Public safety 16,522,237 17,110,280 17,908,692 19,129,229 20,220,301 Community development --2,129,993 1,974,243 1,368,945 Culture and recreation --2,527,931 2,745,206 3,140,721 Health and welfare 1,383,868 551,147 1,685,247 1,739,565 1,925,058 Public transportation --1,438,528 1,445,171 1,517,573 Public works 5,669,952 5,955,094 5,928,990 5,920,879 6,777,147 Capital outlay 1,952,494 3,585,880 5,087,137 3,378,300 1,961,024 Debt service Lease payments 210,175 210,175 ---Other contractual payments 380,152 ----Principal 1,605,000 2,350,000 3,635,000 3,450,000 3,815,000 Interest and fiscal charges 2,224,884 3,111,430 3,498,373 3,534,281 3,059,150 Total Expenditures 39,302,569 43,440,656 49,432,158 49,687,848 50,208,025 Excess (deficiency) of revenues over expenditures (3,027,184) (4,566,076) (10,906,028) (8,313,903) (5,228,950) Other Financing Sources (uses) Bonds issued -47,550,000 18,124,979 -11,981,093 Capital contributed to other funds -(28,000,000) --(11,946,796) Payment of refunding bonds -(11,550,792) (18,435,215) --Bond issuance cost -(86,171) (163,907) -(219,220) Transfers in 5,829,029 9,059,988 8,487,673 8,749,430 8,589,031 Transfers out (2,885,659) (4,425,850) (2,022,056) (2,111,385) (3,324,447) Total other financing sources 2,943,370 12,547,175 5,991,474 6,638,045 5,079,661 Net change in fund balances $ (83,814) $ 7,981,099 $ (4,914,554) $ (1,675,858) $ (149,289) Debt service as a percentage of non capital expenditures 13.19% 16.49% 19.17% 17.76% 16.62% 106 Schedule 5 Fiscal Year 2006 2007 2008 2009 2010 $ 23,007,397 $ 23,323,221 $ 26,534,916 $ 30,592,466 $ 29,448,938 14,898,245 15,259,988 16,238,958 14,605,507 26,520,879 668,483 1,152,675 679,444 868,612 702,347 492,619 474,310 489,141 521,730 489,321 798,962 1,271,429 1,347,877 1,747,157 1,793,753 15,129,686 9,666,577 11,064,309 19,279,958 11,060,266 827,537 926,542 531,776 201,293 314,485 7,360,537 5,088,475 2,096,949 2,080,210 2,085,663 63,183,466 57,163,217 58,983,370 69,896,933 72,415,652 20,035,929 15,178,668 12,958,322 21,851,794 13,243,057 20,312,025 22,951,494 23,347,832 25,633,260 28,914,842 1,404,831 3,077,736 1,503,913 1,581,240 3,008,202 2,879,934 3,892,484 3,920,103 4,591,672 4,579,614 1,890,588 2,121,923 4,334,973 2,652,941 2,862,270 1,728,129 1,778,597 1,808,289 1,857,396 3,242,534 5,905,021 6,871,788 7,018,114 7,749,763 8,224,026 3,978,598 184,686 1,572,125 6,362,702 7,553,541 ----------3,815,000 3,410,000 3,290,000 4,275,000 5,414,884 2,956,278 2,682,620 2,881,939 3,362,396 3,252,051 64,906,333 62,149,996 62,635,610 79,918,164 80,295,021 (1,722,867) (4,986,779) (3,652,240) (10,021,231) (7,879,369) -8,514,181 9,000,000 -8,092,240 ------(8,351,347) ----(137,511) ---7,621,520 9,597,019 8,362,563 9,782,085 10,191,957 (2,999,216) (4,612,629) (4,132,859) (5,099,858) (4,943,382) 4,622,304 5,009,713 13,229,704 4,682,227 13,340,815 $ 2,899,437 $ 22,934 $ 9,577,464 $ (5,339,004) $ 5,461,446 12.50% 10.90% 11.24% 11.59% 13.53% 107 CITY OF PORT ARTHUR, TEXAS Schedule 6 General Governmental Tax Revenues by Source Last Ten Fiscal Years (modified accrual basis of accounting) Industrial Gross Hotel Fiscal Property District Receipts Sales Occupancy Penalties Year Taxes Payments Taxes Tax Taxes & Interest Total 2001 $ 8,731,486 $ 12,503,378 $3,101,028 $ 4,355,136 $ 414,267 $ 203,493 $ 29,308,788 2002 8,822,136 15,848,973 2,468,176 4,512,538 415,614 196,826 32,264,263 2003 9,064,850 13,343,973 2,578,504 4,860,621 367,232 230,802 30,445,982 2004 9,581,920 13,325,800 2,547,415 5,323,127 410,254 228,380 31,416,896 2005 10,843,420 14,179,684 2,858,715 5,651,775 433,668 263,377 34,230,639 2006 11,924,508 14,898,245 2,059,024 6,939,254 605,375 258,558 36,684,964 2007 10,988,432 15,259,988 3,933,880 7,288,008 793,620 319,281 38,583,209 2008 12,616,103 16,238,958 4,251,127 8,248,052 990,764 335,686 42,680,690 2009 14,909,694 14,605,507 4,439,957 9,801,361 1,115,410 326,044 45,197,973 2010 15,604,285 26,520,879 4,414,729 8,108,987 858,192 335,569 55,842,641 108 City of Port Arthur, Texas Schedule 7 Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Estimated Taxable Assessed Total Taxable Total Actual Value as a Fiscal Residential Commercial Assessed Tax Taxable Percentage of Year Property Property Value Rate Value Actual Taxable Value 2001 $383,030,712 $ 752,664,735 $ 1,135,695,447 $ 0.775 $ 1,135,695,447 100% 2002 396,639,950 763,744,880 1,160,384,830 0.775 1,160,384,830 100% 2003 411,629,657 771,740,713 1,183,370,370 0.775 1,183,370,370 100% 2004 457,002,827 787,178,758 1,244,181,585 0.775 1,244,181,585 100% 2005 492,468,962 926,454,971 1,418,923,933 0.775 1,418,923,933 100% 2006 526,306,321 1,001,079,529 1,527,385,850 0.775 1,527,385,850 100% 2007 462,014,658 968,998,287 1,431,012,945 0.775 1,431,012,945 100% 2008 613,616,150 1,117,679,965 1,731,296,115 0.760 1,731,296,115 100% 2009 721,579,294 1,249,334,573 1,970,913,867 0.760 1,970,913,867 100% 2010 757,766,082 1,292,473,250 2,050,239,332 0.792 2,050,239,332 100% Source: Jefferson and Orange County Appraisal Districts Notes: Property in Jefferson and Orange Counties are assessed once every two years on average. The counties assess property at 100 percent of actual value for commercial, industrial, and residential property. Estimated actual taxable value is calculated by dividing taxable assessed value by those percentages. Tax rates are per $100 at assessed value. 109 CITY OF PORT ARTHUR, TEXAS DIRECT AND OVERLAPPING PROPERTY TAX RATES Last Ten Fiscal Years (rate per $100 of assessed value) City Direct Rates Overlapping Rates General Obligation Total Port Port Neches -Fiscal Maintenance Debt Direct Arthur Nederland Groves Year & Operation Service Rate I.S.D. I.S.D. I.S.D. 2001 $ 0.427600 $ 0.347400 $ 0.775 $ 1.500 $ 1.540 $ 1.684053 2002 0.221000 0.554000 0.775 1.532 1.530 1.677181 2003 0.107310 0.667690 0.775 1.532 1.560 1.656362 2004 0.284514 0.490486 0.775 1.500 1.550 1.633300 2005 0.260333 0.514667 0.775 1.624 1.550 1.627792 2006 0.286644 0.488356 0.775 1.681 1.550 1.619000 2007 0.309200 0.465800 0.775 1.484 1.380 1.478300 2008 0.465599 0.294401 0.760 1.278 1.120 1.192500 2009 0.357990 0.402010 0.760 1.311 1.120 1.284000 2010 0.387469 0.404531 0.792 1.370 1.215 1.454950 Source: Jefferson County Appraisal District Note: Overlapping rates are those of local and county governments that apply to property owners within the City of Port Arthur. Not all overlapping rates apply to all city property owners. 110 Schedule 8 Overlapping Rates Sabine Port Sabine Pass Arthur Jefferson Pass Port Navigation County Jefferson I.S.D. Authority Dist DD #7 County Total $ 1.680 $ 0.262177 $ 0.138556 $ 0.170500 $ 0.3650 $ 8.11529 1.685 0.295151 0.131937 0.170500 0.3650 8.16177 1.689 0.295151 0.131277 0.188100 0.3650 8.19189 1.689 0.308600 0.130870 0.188100 0.3650 8.13987 1.696 0.251377 0.121909 0.188100 0.4250 8.25918 1.675 0.183709 0.128150 0.179063 0.4250 8.21592 1.542 0.268104 0.128150 0.160000 0.4000 7.61566 1.177 0.257650 0.128150 0.145809 0.3900 6.44970 1.177 0.204479 0.128150 0.139650 0.3650 6.48947 1.116 0.199886 0.128150 0.138977 0.3650 6.78011 111 CITY OF PORT ARTHUR, TEXAS Schedule 9 PRINCIPAL PROPERTY TAX PAYERS CURRENT YEAR AND NINE YEARS AGO 2010 2001 Percentage Percentage of Total City of Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Value Rank Value Entergy $ 162,104,286 1 7.888% $ 148,289,780 1 13.057% Southeast Texas Hospital 73,692,300 2 3.586% -Central Mall 33,269,320 3 1.619% 23,067,630 2 2.031% Wal-Mart Stores 33,090,230 4 1.610% Rowan Companines 20,823,290 5 1.013% Horizon Vessels 19,662,990 6 0.957% 12,170,080 7 1.072% Motiva Enterprises 17,545,120 7 0.854% Southwestern Bell 16,775,080 8 0.816% 16,008,230 5 1.410% Lowe's Home Centers 14,496,630 9 0.705% Ballard Exploration 1,628,100 10 0.079% Restaurant Management --16,655,570 3 1.467% Park Place Hospital --16,384,220 4 1.443% Friede Goldman Offshore --12,396,880 6 1.092% Kansas City Southern Industries --12,106,560 8 1.066% Equilon Pipeline --10,347,240 9 0.911% KMCO --9,756,160 10 0.859% $ 393,087,346 19.129% $ 277,182,350 24.406% Source: Jefferson County Appraisal District 112 CITY OF PORT ARTHUR, TEXAS Schedule 10 PRINCIPAL INDUSTRIAL DISTRICTS CURRENT YEAR AND NINE YEARS AGO 2010 2001 Percentage Percentage of Total of Total Taxable Industrial Taxable Industrial Assessed District Assessed District Industry Value Rank Values Value Rank Values Motiva (formerly Star Enterprises) $ 1,822,048,520 1 28.74% $ 631,940,470 1 26.25% Valero (formerly Premcor Refining) 1,751,281,930 2 27.62% 303,785,930 5 12.62% TOTAL (formerly American Petrofina) 526,249,630 3 8.30% 338,343,430 3 14.05% BASF/Fina Joint Venture 486,347,240 4 7.67% 121,500,000 6 5.05% Flint Hills Resources (formerly Huntsman) 313,303,680 5 4.94% 305,167,610 4 12.67% ExxonMobil Golden Pass LNG 311,849,840 6 4.92% Chevron-Phillips 280,121,559 7 4.42% 427,209,160 2 17.74% Air Products 182,680,170 8 2.88% Sabina Petrochemicals 165,893,700 9 2.62% OxBow Calcining (formerly GLC) 86,850,240 10 1.37% 36,761,600 9 1.53% BASF (formerly Sandoz) 114,091,470 7 4.74% Equistar 64,292,770 8 2.67% Onyx Environmental 17,995,220 10 0.75% $ 5,926,626,509 93.47% $ 2,361,087,660 98.06% Source: Jefferson County Appraisal District 113 CITY OF PORT ARTHUR, TEXAS Schedule 11 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Collected within the Taxes Levied Fiscal Year of the Levy Collection in Total Collections to Date Fiscal for the Percentage Subsequent Percentage Year Fiscal Year Amount of Levy Years Amount of Levy 2001 $ 8,720,041 $ 8,378,294 96.1% $ 262,762 $ 8,641,056 99.1% 2002 8,777,851 8,518,287 97.0% 159,159 8,677,446 98.9% 2003 8,997,418 8,697,696 96.7% 182,361 8,880,057 98.7% 2004 8,756,655 8,230,587 94.0% 393,906 8,624,493 98.5% 2005 10,764,466 10,305,833 95.7% 303,039 10,608,872 98.6% 2006 11,860,231 11,322,307 95.5% 317,688 11,639,996 98.1% 2007 11,112,672 10,672,169 96.0% 248,426 10,920,595 98.3% 2008 13,028,647 12,645,882 97.1% 104,563 12,750,445 97.9% 2009 15,214,119 14,610,056 96.0% 141,398 14,751,454 97.0% 2010 15,991,143 15,151,502 94.7% -15,151,502 94.7% (1) All funds (2) Excluding industrial district payments 114 CITY OF PORT ARTHUR, TEXAS Schedule 12 INDUSTRIAL DISTRICT PAYMENTS LAST TEN FISCAL YEARS Total Total Fiscal Payments Payments Percent Amount Year Due Collected Collected Outstanding 2001 $ 12,503,377 $ 12,503,377 100% $ -2002 15,848,972 (1) 15,848,972 100% -2003 13,343,972 13,343,972 100% -2004 13,325,800 13,325,800 100% -2005 14,179,684 14,179,684 100% -2006 14,898,255 14,898,255 100% -2007 15,259,988 15,259,988 100% -2008 16,238,958 16,238,958 100% -2009 14,605,507 14,605,507 100% -2010 23,040,879 23,040,879 100% -(1) Includes a one time payment that crossed fiscal years 115 CITY OF PORT ARTHUR, TEXAS Schedule 13 Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities General Certificates Total Percentage Fiscal Obligation of Capital Primary of Personal Per Year Bonds Obligation Leases Government Income 1 Capita 1 2001 $ 29,710,000 $ 7,905,000 $ 204,345 $ 37,819,345 4.62% $ 655 2002 38,690,000 43,650,000 288,323 82,628,323 10.09% 1,431 2003 41,965,000 38,140,000 1,099,173 81,204,173 9.91% 1,406 2004 39,625,000 36,480,000 880,937 76,985,937 9.40% 1,333 2005 38,155,000 34,740,000 1,333,496 74,228,496 9.06% 1,285 2006 35,890,000 33,190,000 990,094 70,070,094 8.55% 1,213 2007 42,075,000 24,215,000 1,756,033 68,046,033 8.31% 1,178 2008 48,835,000 33,165,000 1,655,776 83,655,776 10.21% 1,448 2009 45,980,000 31,745,000 1,286,830 79,011,830 9.65% 1,368 2010 50,750,000 29,560,000 801,460 81,111,460 9.90% 1,404 Details regarding the City's outstanding debt can be found in the notes to the financial statements. 1 See the Schedule of Demographic and Economic Statistics (Schedule 17) for personal income and population data. 116 CITY OF PORT ARTHUR, TEXAS Schedule 14 Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years General Bonded Debt Outstanding As a Percentage of General Certificate Actual Taxable Fiscal Obligation of Value of Per Year Bonds Obligation Total Property Capita 2001 $ 29,710,000 $ 7,905,000 $ 37,615,000 3.31% $ 651 2002 38,690,000 43,650,000 82,340,000 7.10% 1,426 2003 41,965,000 38,140,000 80,105,000 6.77% 1,387 2004 39,625,000 36,480,000 76,105,000 6.12% 1,317 2005 38,155,000 34,740,000 72,895,000 5.14% 1,262 2006 35,890,000 33,190,000 69,080,000 4.52% 1,196 2007 42,075,000 24,215,000 66,290,000 4.63% 1,147 2008 48,835,000 33,165,000 82,000,000 4.74% 1,419 2009 45,980,000 31,745,000 77,725,000 3.94% 1,345 2010 50,750,000 29,560,000 80,310,000 3.92% 1,390 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. See Schedule 7 for property value data. Population data can be found in Schedule 17. 117 CITY OF PORT ARTHUR, TEXAS Schedule 15 Direct and Overlapping Governmental Activities Debt As of September 30, 2010 Estimated Share of Estimated Direct and Debt Percentage Overlapping Outstanding Applicable Debt Overlapping debt: Port Arthur Independent School District $ 238,847,274 100.00% $ 238,847,274 Jefferson County 64,565,000 10.83% 6,992,390 Jefferson County Drainage District #7 -20.13% -Port of Port Arthur Navigation District 39,085,000 34.62% 13,531,227 Nederland Independent School District 9,840,000 7.57% 744,888 Port Neches -Groves Independent School District 133,366,078 5.35% 7,135,085 Sabine Pass Independent School District 33,656,156 100.00% 33,656,156 Sabine Pass Port Authority 1,265,000 100.00% 1,265,000 Subtotal, overlapping debt $ 302,172,020 Direct debt: City of Port Arthur 80,310,000 100.00% 80,310,000 Total, direct and overlapping debt $ 382,482,020 Estimate of overlapping percentages are provided by the Municipal Advisory Council of Texas 118 CITY OF PORT ARTHUR, TEXAS Debt Margin Information Last Ten Fiscal Years Debt Margin Calculation for Fiscal Year 2009 Assessed value plus industrial district value $ 9,047,969,852 Debt Limit (10%of assessed value) 904,796,985 Debt applicable to limit: General obligation bonds 80,310,000 Other debt 801,460 Less: Amount set aside for repayment of general obligaton debt (3,208,527) Total net debt applicable to limit 77,902,933 Debt margin $ 826,894,052 2001 2002 2003 2004 Debt Limit $ 281,666,810 $ 306,049,348 $ 304,904,211 $ 354,749,275 Total net debt applicable to limit 36,844,345 82,128,323 82,128,323 77,535,937 Debt margin $ 244,822,465 $ 223,921,025 $ 222,775,888 $ 277,213,338 Total net debt applicable to the limit as a percentage of debt limit 13.08% 26.83% 26.94% 21.86% There is no debt limit established by law; therefore, the limit is governed by the City's ability to levy and collect taxes to service the debt. The Attorney General of the State of Texas will not approve more than $1.00 of the tax rate for debt service. The City's maximum legal tax rate is $2.00 per $100 valuation assessed at 100% of the market value. Ten percent (10%) of the assessed value has been applied as a "rule of thumb" procedure. 120 Schedule 16 2005 2006 2007 2008 2009 2010 $ 499,690,528 $ 528,470,070 $ 728,339,922 $ 790,629,481 $ 836,028,026 $ 826,894,052 74,228,497 65,991,697 63,224,223 79,957,939 74,908,421 77,902,933 $ 425,462,031 $ 462,478,373 $ 665,115,699 $ 710,671,542 $ 761,119,605 $ 748,991,119 14.85% 12.49% 8.68% 10.11% 8.96% 9.42% 121 CITY OF PORT ARTHUR, TEXAS Schedule 17 Demographic and Economic Statistics Last Ten Fiscal Years Median Education Income Level in Calendar per Median Personal Years of School Unemployment year Population(1) household (1) Age (1) Income (1) Schooling (2) Enrollment (2) Rate (3) 2001 57,755 $ 26,455 34.6 14,183 11.9 10,738 12.1% 2002 57,755 26,455 34.5 14,183 11.9 10,971 10.7% 2003 57,755 26,455 35.1 14,183 12.1 10,438 13.9% 2004 57,775 26,455 35.1 14,183 12.1 9,439 13.0% 2005 57,775 26,455 35.1 14,183 12.1 8,824 9.1% 2006 57,775 26,455 35.1 14,183 12.1 8,442 7.6% 2007 57,775 26,455 34.6 14,183 12.1 7,922 7.2% 2008 57,529 26,455 36.0 16,895 12.1 9,097 9.4% 2009 53,989 27,150 35.4 16,895 12.1 9,261 10.7% 2010 53,818 31,043 35.6 16,895 12.1 9,238 14.5% 1) U. S. Census Bureau 2) Texas Education Agency 3) Texas Workforce Commission 122 CITY OF PORT ARTHUR, TEXAS Schedule 18 PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 2010 2001 Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment Port Arthur Independent School District 1,301 1 5.34% 1,425 1 5.62% The Medical Center of Southeast Texas 900 2 3.45% ---Motiva Enterprises 900 2 3.45% 1,300 2 24.27% Christus St. Mary Hospital * 850 4 3.26% 1,200 4 4.73% Wal-Mart Supercenters (2 locations) ** 816 5 3.13% ---Valero Refining (formerly Clark) 750 6 2.87% 800 6 3.16% City of Port Arthur 658 7 2.52% 653 7 2.51% TOTAL Petrochemicals 450 8 1.72% 465 9 1.83% Flint Hills Resources (formerly Huntsman) 180 9 0.69% 1,290 3 5.09% Park Place Hospital ---1,085 5 4.28% Texas Drydock ---650 8 2.56% Sandoz Argo Inc. ---323 10 1.27% 123 CITY OF PORT ARTHUR, TEXAS Schedule 19 Full-time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 General government 55 67 68 66.3 65 66 89.5 88.5 89.5 108.5 Culture and recreation 37.25 37.25 38.75 34.25 34.25 33.25 34 34 36 37.25 Public Safety Police 145 145 145 145 148 146 151.9 154.9 154.9 165 Fire 107 107 107 107 107 107 107 107 107 107 Community development 8 8 8 8 10 10 10 12 12 -Health and welfare 27.1 26.1 26.1 28.1 27.5 29.5 32.5 32.5 29.5 38.5 Public works 69 69 68 63 63 63 67 67 69 73 Public transportation 23.5 23.5 23.5 24.5 24.5 23.5 24.5 24.5 24.5 24.5 Water utilities 103 103 104 98 98 97 85 85 85 85 Solid waste 49 49 49 47 45 45 47 49 50 51 Equipment services 16 15 15 9 9 11 12 12 12 12 Total 639.35 649.60 652.10 630.10 631.50 631.50 660.40 666.40 669.40 701.75 Source: City of Port Arthur annual budgets 124 Fiscal Year CITY OF PORT ARTHUR, TEXAS Operating Indicators by Function/Program Last Ten Fiscal Years 2001 2002 2003 2004 General government Bulding permits issued Commercial Construction 220 230 134 122 Residential Construction 122 92 87 69 Police Calls for service 52,413 53,438 58,122 57,312 FireFires 507 478 470 429 Rescue, EMC 4,309 4,297 5,456 5,797 Other Calls 1,073 1,353 1,431 1,516 Landfill Compacted refuse disposed (cubic yards) 136,952 146,870 175,626 159,743 Non-compacted refuse disposed (cubic yards) 122,152 154,429 280,213 258,169 Other public works Street resurfacing (miles) 7.47 9.51 --8.22 Drainage regrading (miles) 9.73 13.62 15.76 15.34 Library Volumes in collection 145,360 158,939 158,939 158,939 Library cards in force 18,969 37,803 38,703 37,803 Water and Sewer Meters in service 18,839 18,295 18,390 18,390 Water calls 7,838 5,719 4,728 4,679 Average daily production (millions of gallons) 12.79 11.52 11.42 13.76 Peak daily production (millions of gallons) 17.02 13.20 12.92 18.07 Wastewater Sewer calls 10,757 11,225 10,428 9,416 Transit Total route miles 334,250 345,134 348,146 347,246 Passengers 179,250 171,652 143,263 146,145 Sources: Various city departments. 126 Schedule 20 Fiscal Year 2005 2006 2007 2008 2009 2010 116 217 160 21 10 69 82 61 174 136 531 768 55,472 56,681 59,633 63,366 62,249 59,790 506 551 517 544 475 427 5,045 5,667 5,811 6,295 6,084 6,299 1,573 1,665 2,394 1,696 1,387 1,567 145,699 156,921 171,896 194,568 194,568 208,967 206,953 390,544 513,933 559,872 559,872 660,081 4.43 4.67 5.67 6.13 5.67 10.09 9.88 4.04 14.97 19.46 19.46 30.10 156,100 137,575 159,436 159,440 159,729 163,886 18,969 10,862 11,319 8,384 9,113 10,364 18,390 17,492 17,895 18,025 18,156 18,174 4,755 6,129 3,816 4,061 4,345 5,109 14.94 13.61 12,811 12,668 13,102 14,303 19.49 16.17 15,255 18,530 16,494 20,325 9,368 8,660 7,373 6,627 7,603 8,363 333,155 328,495 333,327 246,208 365,650 373,436 137,102 116,828 99,923 98,862 119,083 115,625 127 CITY OF PORT ARTHUR, TEXAS Capital Asset Statistics by Function Last Ten Fiscal Years Fiscal Year 2001 2002 2003 2004 Public Safety PoliceStations 1 1 1 1 Fires Stations 7 7 7 7 Hydrants 1,883 1,907 1,926 1,926 Streets Streets (miles) 331.4 331.4 341.8 341.8 Sidewalks (miles) 125.7 125.7 125.7 125.7 Drainage Storm Sewers (miles) 181.4 181.4 181.4 181.4 Libraries Number of libraries 1 1 1 1 Parks and Recreation Acreage 332.52 332.52 515.10 515.10 Golf Course 1 1 2 2 Swimming Pools 3 3 3 3 Playgrounds 31 33 33 33 Recreation center 1 1 1 1 Water and Sewer Water mains (miles) 371 371 371 371 Sanitary sewer mains (miles) 282 282 282 282 Sources: Various city departments. 128 Schedule 21 Fiscal Year 2005 2006 2007 2008 2009 2010 1 1 1 1 1 1 7 7 7 7 8 8 1,985 2,014 2,015 2,026 2,128 2,162 341.8 341.8 341.8 341.8 341.8 342.7 125.7 125.7 125.7 125.7 125.7 125.7 181.4 181.4 181.4 181.4 181.4 182.0 1 1 1 1 1 1 515.10 515.10 515.10 515.10 515.02 515.02 2 2 2 2 2 2 3 3 3 3 3 3 33 33 33 33 33 33 1 1 1 1 1 1 371 371 371 371 350 353 282 282 282 282 354 356 129