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R-2017-4256 - 3/9/2017 RESOLUTION NO. R-2017-4256 WHEREAS,the City of Round Rock's Comprehensive Annual Financial Report("Report")for the fiscal year ended September 30, 2016 has been submitted to the City Council, and WHEREAS, the City Council desires to acknowledge the receipt and acceptance of the attached Report,Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK,TEXAS, That the City of Round Rock's Comprehensive Annual Financial Report for the fiscal year ended September 30, 2016, attached hereto as Exhibit "A" and incorporated herein, is hereby received and accepted. The City Council hereby finds and declares that written notice of the date,hour,place and subject of the meeting at which this Resolution was adopted was posted and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter hereof were discussed, considered and formally acted upon, all as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended. RESOLVED this 9th day of March, 2017. / rte ALAN MCGRAW, Mayor City of Round Rock, Texas ATTEST: - &g=,- 94*— SARA L. WHITE, City Jerk 0112.1704;00373234 EXHIBIT «A„ ROUND ROCK T A'A City of Round Rock, Texas Comprehensive Annual Financial Report Fiscal Year Ended September 30, 2016 ELECTED OFFICIALS Alan McGraw, Mayor Craig Morgan, Mayor Pro Tem Rene Flores, Council Member Frank Leffingwell, Council Member Will Peckham, Council Member Writ Baese, Council Member Kris Whitfield, Council Member MANAGEMENT STAFF Laurie Hadley City Manager Bryan Williams Assistant City Manager Brooks Bennett Assistant City Manager OFFICIAL ISSUING REPORT Susan L. Morgan, CPA Chief Financial Officer /A �� x� TABLE OF CONTENTS INTRODUCTORY SECTION: Letter of Transmittal 3 City Organizational Chart 11 Certificate of Achievement for Excellence in Financial Reporting 12 FINANCIAL SECTION: Independent Auditors' Report 15 Management's Discussion and Analysis 19 Basic Financial Statements Government-Wide Financial Statements: Statement of Net Position 32 Statement of Activities 34 Fund Financial Statements: Governmental Funds: Balance Sheet 36 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 39 Statement of Revenues, Expenditures and Changes in Fund Balances 40 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 42 Statement of Revenues,Expenditures and Changes in Fund Balance- Budget and Actual—General Fund 43 Statement of Revenues,Expenditures and Changes in Fund Balance- Budget and Actual—Round Rock Transportation and Economic Development Corporation Revenue Fund 44 Proprietary Funds: Statement of Net Position 45 Statement of Revenues, Expenses and Changes in Net Position 47 Statement of Cash Flows 48 Fiduciary Fund: Statement of Fiduciary Net Position 50 Notes to the Financial Statements 53 Required Supplementary Information Schedule of Funding Progress 102 Schedule of Changes in the Net Pension Liability and Related Ratios 103 Schedule of Contributions 104 TABLE OF CONTENTS Combining and Individual Fund Statements and Schedules Nonmajor Governmental Funds: Combining Balance Sheet-Nonmajor Governmental Funds 106 Combining Statement of Revenues, Expenditures and Changes in Fund Balance—Nonmajor Governmental Funds 107 Combining Balance Sheet—Nonmajor Special Revenue Funds 110 Combining Statement of Revenues,Expenditures and Changes in Fund Balances— Nonmajor Special Revenue Funds 112 Combining Balance Sheet—Nonmajor Capital Projects Funds 116 Combining Statement of Revenues, Expenditures and Changes in Fund Balances— Nonmajor Capital Projects Funds 118 Schedules of Revenues,Expenditures and Changes in Fund Balances— Budget and Actual: General Fund 122 Debt Service Fund 126 Nonmajor Special Revenue Funds: Hotel-Motel Occupancy Tax 127 Hotel-Motel Occupancy Venue Tax 128 Police 129 Municipal Court 130 Landscape 131 Community Development Block Grant 132 Library 133 Public Education& Government 134 Traffic Safety Program 135 Supplemental Schedules: Statement of Changes in Assets and Liabilities—Agency Fund—Public Improvement Districts 138 Schedule of Capital Assets—by Sources 140 TABLE OF CONTENTS STATISTICAL SECTION(UNAUDITED): Financial Trends: Net position by Component—Last Ten Fiscal Years 144 Changes in Net position—Last Ten Fiscal Years 146 Fund Balances of Governmental Funds—Last Ten Fiscal Years 150 Changes in Fund Balances of Governmental Funds—Last Ten Fiscal Years 152 Revenue Capacity: Actual and Taxable Assessed Value of Property—Last Ten Fiscal Years 154 Property Tax Rates—Direct and Overlapping Governments Per$ 100 of Assessed Value—Last Ten Fiscal Years 155 Principal Property Taxpayers—Current Year and Nine Years Ago 156 Property Tax Levies and Collections—Last Ten Fiscal Years 157 Taxable Sales by Category—Last Ten Calendar Years 158 Hotel Taxpayers 160 Hotel Occupancy Tax Collection History by Quarter—Last Ten Fiscal Years 161 Debt Capacity: Ratios of Outstanding Debt by Type—Last Ten Fiscal Years 162 Ratios of Net General Bonded Debt Outstanding to Assessed Value and Net Bonded Debt Per Capita—Last Ten Fiscal Years 163 Computation of Direct and Overlapping Bonded Debt 165 Legal Debt Margin Information—Last Ten Fiscal Years 166 Schedule of Revenue Bond Coverage—Last Ten Fiscal Years 168 Demographic and Economic Information: Demographic and Economic Statistics—Last Ten Fiscal Years 169 Principal Employers—Current Year and Nine Years Ago 170 Operating Information: Full-Time Equivalent City Government Employees by Function—Last Ten Fiscal Years 171 Operating Indicators by Function—Last Ten Fiscal Years 172 Capital Asset Statistics by Function—Last Ten Fiscal Years 174 Top Ten Water Customers 176 Water and Sewer Retail Rates 177 TABLE OF CONTENTS SINGLE AUDIT SECTION: Schedule of Expenditures of Federal Awards 181 Notes to Schedule of Expenditures of Federal Awards 182 Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Perfonned in Accordance with Government Auditing Standards 183 Independent Auditors' Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance 185 Schedule of Findings and Questioned Costs 187 INTRODUCTORY SECTION Imp SS C.P . 2 re-r Mayor Councilmembers City Manager Alan McGraw Rene Flores Laurie Hadley Frank Leff ingwell ROUND ROCK TEXAS Will Peckham Mayor Pro-Tem Writ Baese City Attorney ADMINISTRATION DEPARTMENT Craig Morgan Kris Whitfield Stephan L.Sheets January 27, 2017 Honorable Mayor and Members of the City Council City of Round Rock,Texas The Comprehensive Annual Financial Report of the City of Round Rock, Texas for the fiscal year ended September 30, 2016, is submitted herewith. This report has been prepared by the City's Finance Department and responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the data is accurate in all material aspects and are presented in a manner designed to clearly state the financial position and results of operations of the City as measured by the financial activity of its various funds. All disclosures have been included to enable the reader to gain the maximum understanding of the City's financial affairs. The City Charter requires an annual audit of the books of account, financial records and transactions of all departments of the City by independent certified public accountants selected by the City Council. Brockway,Gersbach,Franklin&Niemeier,P.C., Certified Public Accountants,have issued an unmodified ("clean")opinion on the City of Round Rock's financial statements for the year ended September 30,2016. The independent auditors' report is located at the front of the financial section of this report. Management's discussion and analysis (MD&A) can be found immediately following the report of the independent auditors. The MD&A is a narrative introduction, overview and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. City of Round Rock Profile The City of Round Rock, established in 1851, is a municipal corporation incorporated under Article XI, Section S of the Constitution of the State of Texas (Home Rule Amendment). The City operates under a Council-Manager form of government with six council members and a mayor. The City Manager is appointed by the City Council and is responsible to them for managing and administering all City affairs. The Chief Financial Officer is appointed by the City Manager and is responsible for supervising the operations of the Finance Department. This department maintains all accounting records of the City. The financial reporting entity (the government) includes all the funds of the primary government(the City of Round Rock as legally defined) as well as its component units. Component units are legally separate entities for which the primary government is financially accountable. The City provides a full range of services which include police and fire protection, parks and library, construction and maintenance of infrastructure, planning and community development, convention and tourism activities, and general 3 CITY OF ROUND ROCK 221 East Main Street,Round Rock,Texas 78664 [P]512.218.5401 • [F] 512.218.7097 • roundroclktexas.gov administrative services. In addition,the City owns and operates a water,sewer and drainage utility system. These activities are included in the accompanying financial statements. Blended component units, although legally separate entities, are in substance part of the primary government's operations and included as part of the primary government. Accordingly, Round Rock Transportation and Economic Development Corporation revenues are reported in a special revenue fund of the City while capital improvements are reported in a capital project fund of the City. Annual budgets are legally adopted for the General Fund, Special Revenue Funds,Debt Service Fund, and the Proprietary Funds. Capital Projects Funds have no binding annual budget. Project-length financial plans are adopted for all capital projects;accordingly,no comparison of budget to actual is presented in the financial statements. Budgetary control is maintained at the department level by the encumbrance of estimated purchase amounts prior to the release of purchase orders to vendors. Purchase orders which result in an overrun of balances are not released until additional appropriations are made available. The City had no material encumbrances as of September 30, 2016. Siznifccant Local Economic Events Strategic Goals The City of Round Rock is the largest City within Williamson County and is adjacent to the City of Austin. The City has experienced tremendous population growth which has led to an increased demand for city services. To adequately prepare for the effect of this activity on the City, much effort goes into planning and funding infrastructure and service programs. Each February,Council reviews the City's successes and challenges and refines both the short-term and long-term strategic goals for the City. These goals set the direction for the allocation of staff and financial resources and are the basis for the development of the following year's budget. Financially Sound Great Community City Providing High to Live Value Services Ir- City Authentic Infrastructure: City of Downtown- Today and for Round ROC Exciting Community Tomorrow Development "The Sports Capital Sustainable of Texas"for Tourism Neighborhoods- and Residents Old and New Economy Round Rock continues to see strong population and economic growth. As the largest city in Williamson County and part of the Austin Metropolitan Statistical Area(MSA), Round Rock is a key city in one of the fastest growing regions across the nation. From 2008 to the projected population for 2017, the City of Round Rock has experienced population growth of over twenty percent(20%) over the past 10 years. The long-range population estimates from the City's Planning and Development Services Department predict 4 this increase continuing at a growth rate of between two(2)and three(3)percent per year for the foreseeable future. The population for 2030 is projected to be over 158,000 within the City limits and over 215,000 in Greater Round Rock, which includes the City limits and the City's extraterritorial jurisdiction (ETJ). While most of the long-range growth will likely occur in northeast Round Rock where there are still large tracts of land that could be developed into additional neighborhoods, population density will likely increase across the City as residential development continues for single family townhomes,multifamily apartments,and senior living facilities. The City is planning and preparing for this population growth to ensure the high-quality services Round Rock residents have come to expect are expanded to serve residents of today and of tomorrow. A leading driver of the City's population growth is a strong local economy. The City's unemployment rate is 3.0%, remaining lower than the Austin MSA rate of 3.1%and the statewide rate of 4.4%. As the Texas economy faces some uncertainties due to unstable oil prices, the Central Texas area's geographic and economic distance from the oil industry has and will likely continue to insulate the region from major impacts. Round Rock businesses have seen continued growth in revenues, especially in the hotel and restaurant industries, as more tourists and visitors come to enjoy Round Rock's "Sports Capital of Texas" sporting events, historic downtown, and unique blend of destination shopping experiences. Round Rock continues to gain recognition for the value of the high-quality services provided to our residents. Below are a few of our most recent accolades: • Ranked number 4 by Niche.com as one of the"2016 Safest Cities in the Country" • Ranked number 4 by Livability.com as one of the "2016 Best Affordable Places to Live" • Ranked number 12 by Bankrate.com as of the"Best Cities to Retire" • Ranked number 23 by Niche.com as one of the"2016 Best Cities for Millennials in America" • Ranked number 8 by SmartAsset.com as one of the"Best Cities for Living the American Dream" The local hotel/motel industry continues to be a particularly vibrant industry for Round Rock. The 27 hotels within the City boast a solid occupancy rate of 75.6%across all of their combined 2,788 hotel rooms. Two additional hotels are under development that will add an additional 240 new rooms by the end of fiscal year 2017. This strong industry bodes well for the hotel occupancy tax collections which support local tourism events and debt service for the Dell Diamond/Convention Center,the home of the "Round Rock Express" Triple A Baseball team and the Round Rock Sports Center, the City's 82,800 square foot indoor sports venue which opened in January 2014. The City is in the construction phase of a$27 million tournament class outdoor multipurpose sports complex with an estimated completion date of Spring 2017. This complex will attract major sporting tournaments such as soccer and other field sports and events from across the country. With several area sports facilities in place and statewide events being planned, Round Rock continues its marketing strategy as the "Sports Capital of Texas." Tourism is an expanded component of the City's overall economic development strategy. The City's success in this industry was recognized with Round Rock being named the number one "Best Minor League Baseball Town of 2016". The City also received this honor in 2015. Economic Development The City understands that diversification of Round Rock's economy is a key to financial stability. The local retail market place continues to thrive. The major destination retail hubs provide continued expansion and broaden Round Rock's economy. The Round Rock Premium Outlets celebrated its 10-year anniversary in August 2016. The 430,000-square-foot outlet mall serves as a destination for shoppers from Central Texas and beyond.A retail hub has grown up around the outlet mall to include IKEA which opened in 2007 and Bass Pro Shops which opened in 2015. These destination-based retail stores were intentionally sought 5 out by the City's economic development program to locate in Round Rock.These stores generate sales tax revenues for the City, bring in shoppers to the area which benefits neighboring retail and restaurants, and place a relatively low demand on City services such as police,fire,and parks and recreation. Additionally,the City Council has approved several economic development agreements in recent months. The resulting economic expansions have created new jobs, modernized work equipment and/or brought new services to Round Rock. The long-standing partnership between the City and Round Rock Chamber of Commerce continues to attract new development to the City. The funding is leveraged with the Chamber of Commerce Momentum funding to create a public/private partnership for economic development priorities. This partnership continues to yield a new,inspired approach to economic development for Round Rock. The City will see new additions within the city limits in the next year. The economic development wins of the past will continue to add to the diversity of Round Rock's economy into the future as several companies have recently announced plans to locate in the City. Houghton Mifflin Harcourt(HMH)relocated its Texas regional office to Round Rock in July 2016. Their relocation brought over 270 jobs to the City with an average salary, including benefits,of at least$70,000.HMH now anchors a brand new 100,000-square-foot Class A office building in La Frontera. Along with Emerson and Dell, HMH adds to a growing presence of business headquarters along SH 45 in Round Rock. ProPortion Foods LLC, a Los Angeles-based food service company, finalized an economic development agreement in December 2015 to relocate its office, food processing, storage, and warehouse facility to the City.The company bought the building at 101 Chisholm Valley Trail previously used by Sysco,a food and food products distributor.In order to receive the economic incentives outlined in the economic development agreement,the total investment in renovations to the building must be at least$13 million and ProPortion Foods must retain at least 400 full-time employees over a five-year period. Airco Mechanical, a commercial and residential heating,ventilation,and air conditioning service provider, has relocated its Central Texas headquarters and its 400 employees to a previously vacant 47,000 square foot building located on the Interstate 35 frontage road at 1000 S. IH 35. United Parcel Service (UPS) announced they will be the next Fortune 500 company to expand in Round Rock with a new regional distribution center that will provide additional operating capacity for the Austin area. The$70 million facility, projected to open in 2018, will be 225,000 square feet located on fifty acres of land near SH 45 and A.W. Grimes Boulevard. The new distribution center will employ more than 300 people. In December 2016, the City Council approved a series of agreements with Kalahari Resorts and Conventions. The City views this partnership as a game-changer for the community. Its 351.7 acre site and proximity to Old Settlers Park and Dell Diamond — two well-established venues that draw more than a million visitors annually—bodes well for a successful,tourism-oriented development. The convention and resort business is a new industry for Round Rock that will provide substantial property tax revenues and diversify the local economy.The proposed project is under design and will feature a minimum of 975 guest rooms, a 150,000 square-foot convention center, a 200,000 square-foot indoor/outdoor water park, and other potential indoor and outdoor activities. The development will also include restaurants, additional entertainment, recreation, and other mixed uses. For more information, please visit: www.roundrocktexas.gov/Kalahari. Round Rock continues to see significant growth in the medical industry. The City is home to several hospitals offering comprehensive world-class healthcare services.These hospitals continue to expand their facilities and services to keep up with Round Rock's growing population. Baylor Scott & White Health broke ground on March 8, 2016 on a new 100,000 square-foot cancer care facility on the campus of the Baylor Scott & White Medical Center off of University Boulevard. The facility is scheduled to open in 6 2017 and will provide services for radiation oncology, medical oncology, surgical oncology, and hematology. To complement the healthcare and medical facilities, Round Rock is home to several higher education facilities, many of which focus on healthcare disciplines. These institutions of higher learning include the Texas A&M Health Science Center, Texas State University, Austin Community College, and the Art Institute of Austin. Texas State University is undergoing construction of a new $70 million building on their Round Rock campus which, when complete in 2018,will house their College of Health Professions. Relevant Financial Policies Accounting System and Controls It is the policy of the City to maintain a General Fund balance equivalent to at least 33% of operations. Working capital in the Water/Wastewater Utility Fund is also maintained at a similar level of operations. Balances in excess of the above levels are earmarked for future uses or reduced to the target levels over an appropriate length of time. In developing and evaluating the City's accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition; and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within the above framework. We believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Long-Term Financial Planning A new comprehensive long range financial planning model was created in fiscal year 2016 to reflect the changing economic environment and challenges the City will be facing over the next five years and beyond. The basis of this model is to ensure that the City is responding to continual growth with a limited revenue base. The model takes a comprehensive approach to evaluating the long-term needs for property tax rates and other revenues to provide for the maintenance and operations of the General Fund. The City's General Fund relies heavily on sales tax as a revenue source. The sales tax is a less stable revenue source than the property tax but provides the taxpayers with more discretion and a lower property tax rate. Because of this revenue makeup,the City tends to carry higher fund balances, estimates sales tax revenues conservatively, and introduces new programs somewhat more cautiously until projected revenue levels are attained. The City is also more attentive to the health of its economy because of the reliance upon commerce to produce the sales tax. The City's economy is expected to generate approximately$60.3 million in sales tax revenue for fiscal year 2017, net of sales tax rebates paid to Dell, Sears and Bass Pro Shops in accordance with economic development agreements in effect. This amount includes the one-half(0.5) percent or $16.4 million in additional sales and use tax for roads and economic development. The remaining one and one-half(1.5) percent is projected to generate $43.9 million for general operations, property tax reduction and capital projects. 7 In 2016, Dell, the City's largest employer and taxpayer, completed its acquisition of EMC Corporation. This acquisition transformed Dell into a major player in the data storage, information security, virtualization, analytics and cloud computing markets. As a result of this merger, Dell Inc. changed its name to Dell Technologies. Dell continues to be a vital part of the Round Rock economy with 4 of its 5 worldwide operating divisions headquartered in Round Rock. Although the City has experienced declining sales tax revenue from Dell, the high-level jobs provided by the City's largest employer has continued to provide a strong local economy. Dell sales tax receipts for fiscal year 2016 accounted for 15.8%of total sales tax collected which met the 2009 Financial Management Policy to lower reliance on Dell receipts well ahead of the 20%target for 2017. A concentration risk account has been established to mitigate the City's annual net exposure to declining sales tax from any single sales taxpayer that represents more than 5%of the City's net General Fund revenues. While the City has reduced its reliance on Dell receipts,the remaining sales tax base has grown from$29.3 million in 2008 to a projected $37.8 million for 2017, an increase of 29% over the ten-year period. Total sales tax collections for the City have remained relatively flat over the past 10 years with$41.0 million in 2008 and$43.9 million expected in 2017. The reduced reliance on both Dell and sales tax in general makes the City's finances more stable and less susceptible to any negative effects of economic downturns. The City sets utility rates based on the cost of service. This model establishes an equitable rate structure for total cost recovery. In order to fund the capital improvement program and to meet increasing system demand and operational cost pressures,multiple-year rate increases were implemented. Even with the rate increases, Round Rock water and wastewater rates continue to be among the lowest in the region. The City planned ahead to ensure its utility system will serve the future citizens of Round Rock. With multiple contracts in place with the Brazos River Authority,the City has secured its water supply through expected buildout in 2050. Water from Lake Georgetown and Stillhouse Hollow Lake in the Brazos River Basin provide water to the City's current 52 million gallons per day(MGD)water treatment plant.The City also secured water from Lake Travis in the Lower Colorado River Basin. In order to treat water from Lake Travis, the City partnered with the Cities of Cedar Park and Leander to form the Brushy Creek Utility Authority(BCRUA).The BCRUA system will ultimately pump and treat 105.6 MGD which meets all three Cities' supply needs through buildout. In 2009, in order to provide the most cost effective wastewater services,the City partnered with the Cities of Cedar Park and Austin to purchase the Brushy Creek Regional Wastewater System (BCRWWS). The system is currently undergoing improvements to increase capacity to collect and treat up to 28 MGD of wastewater. The City's portion will be approximately 23 MGD and will serve Round Rock through 2035. In fiscal year 2016, the City's Utility Revenue bonds received an upgraded rating to AA+ from Standard and Poor's(S&P). This raised rating reflects the general creditworthiness and stability of the City's utility system. S&P also noted that the system had good financial management policies and practices. Prospects for the Future As we look to the future, there are several key initiatives in process now that will shape the development of Round Rock for the next decade. The City is leveraging available resources to attract industries from across the globe to strengthen its property tax and sales tax bases. Significant investment in the medical industry including several state-of-the-art medical facility expansions, combined with the impact of multiple higher education centers, will provide community development and unlimited opportunities. Not only will these initiatives shape the physical development of the City but they will also influence the knowledge base and creativity found in the community. With the City's natural commercial attractiveness,a strong economic development plan and a strengthening economy,the future of the community is bright. 8 Awards and Acknowledilements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Round Rock,Texas for its comprehensive annual financial report for the fiscal year ended September 30, 2015.This was the thirtieth consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. In addition, the City of Round Rock also received the GFOA's Distinguished Budget Presentation Award for its annual budget document for the fiscal year beginning October 1, 2015. To qualify for the Distinguished Budget Presentation Award,the government's budget document had to be judged proficient as a policy document,a financial plan, an operations guide and a communications device. The City of Round Rock earned the Texas Comptroller Leadership Circle Platinum member certificate. This award spotlights those local governments who are; opening their books to the public, providing clear, consistent pictures of spending, and sharing information in a user-friendly format that lets taxpayers easily drill down for more detail. Additionally, the GFOA awarded a Certificate of Outstanding Achievement in Popular Annual Financial Reporting for the fiscal year ended September 30,2015. This award recognizes the City's ability to extract information from their comprehensive annual financial report to produce high quality popular annual financial reports specifically designed to be readily accessible and easily understandable to the general public and other interested parties without a background in public finance and then to recognize individual governments that are successful in achieving that goal. The presentation of this report on a timely basis could not be accomplished without the efficient and dedicated services of the entire staff of the Finance Department. We would like to express our appreciation to all members of the Department who assisted and contributed to its presentation. Acknowledgement is also given to Brockway, Gersbach, Franklin&Niemeier, P. C. for their valuable assistance in production of the report. We would also like to thank the Mayor and Council members for their commitment in planning and conducting the financial operations of the City in a responsible and progressive manner. Respectfully submitted, Laurie Hadley City Manager ' 1 Susan L. Morgan, CPA Chief Financial Officer 9 �. 10 c Mayor&Council Municipal Judge City Attorney Assistant City Manager Assistant City Manager General Services City Clerk Communications&Marketin ff, Parks and Recreation Building Construction Records Mane ement Arts&Special pedal Evenis Facility Maintenance Special Events Finance Vehicle Maintenance Facility Social Media& DigilaI Content Accounting&Treasury Planning&Development Video Production Services Budget Downtown Marketing Municipal Court Sports Management& Commerical&Residential&'I Tourism Civil Inspections Information Technolo Purchasing gy Code Enforcement Utility Billing y Ta Development Services Office Enterprise Applicationst.onvontion ;VistYots Burnt Infrastructure&Customer Long Range Planning& ZoningFire Department support Y Geographic Information Systems Transportation Department Fire Suppression Fire Prevention Library Community Engagement Operations&Maintenance Transportation Planning& Inspections Administration Legislative Issues Engineering TransiVPublic Transportation Public Education Technical Service Construction inspection Human Resources Public Services Services Youth Services Utilities&Environmental Benefits Services Adult Services Recruitment Pierttgn &E1 " Risk Management f Police Department r Patrol Alra2rf 'ir ,. Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Round Rock Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2015 Executive Director/CEO 12 FINANCIAL SECTION or�f,-rwr.jzo ► ..............RQC Olt 14 rg BROCKWAY GERSBACH LJ FRANKLIN & NIEMEIER,P.C. CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT To the Honorable Mayor and Members of the City Council City of Round Rock, Texas Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Round Rock,Texas (the City), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement,whether due to fraud or error. Auditors'Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 15 3520 SW H.K.DODGEN LOOP n TEMPLE,TERAS 76504 n 254.773.9907 . FAX 254.773.1570 • INDEPENDENT AUDITORS' REPORT (CONTINUED) Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Round Rock, Texas, as of September 30, 2016, and the respective changes in financial position, and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 19 - 30 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section, combining and individual fund statements and schedules, and statistical section, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. 16 INDEPENDENT AUDITORS' REPORT (CONTINUED) The combining and individual fund statements and schedules and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund statements and schedules and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 27, 2017, on our consideration of the City of Round Rock, Texas' internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Round Rock, Texas' internal control over financial reporting and compliance. Temple,Texas January 27,2017 17 18 CITY OF ROUND ROCK, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30,2016 The discussion and analysis of the City of Round Rock's financial performance provides an overview and analysis of the City's financial activities for the fiscal year ended September 30,2016. It should be read in conjunction with the accompanying transmittal letter and the accompanying basic financial statements. Financial Highlights • The assets and deferred outflows of resources of the City of Round Rock exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by$791,197,740(net position). Of this amount, $178,941,993 (unrestricted net position) may be used to meet the City's ongoing obligations to its citizens and creditors. • The City's total net position increased by $31,489,951 after restatement of the beginning net position balance as disclosed in Note I (X). This increase is a result of contributions from developers in both governmental and business-type activities,as well as an increase in property tax revenues for governmental activities. • As of the close of the current fiscal year, the City of Round Rock's governmental funds reported combined ending fund balances of$174,030,546, a decrease of$36,047,986 in comparison with the prior year. The decrease is primarily due to the spending down of bond proceeds. Approximately 30.1 percent of the total fund balance amount, $52,427,796, is available for spending at the government's discretion(unassigned fund balance). • At the end of the current fiscal year,unassigned fund balance for the general fund was$52,427,796, or 57.5 percent of the total general fund expenditures. • The City of Round Rock's total debt decreased by$14,614,237 during the current fiscal year. The change was primarily due to the refunding of various debt issuances, along with the offset by regularly scheduled debt principal retirement and savings from a refunding certificates issue as more fully described in Note IV(F)to the financial statements. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City of Round Rock's basic financial statements. The City's basic financial statements comprise three components: 1) government- wide financial statements,2)fund financial statements,and 3)notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City of Round Rock's finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City's assets, liabilities, and deferred outflows (inflows) of resources with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Round Rock is improving or deteriorating. 19 CITY OF ROUND ROCK, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30,2016 Government-wide Financial Statements(Continued) The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City of Round Rock that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works and culture and recreation. The business-type activities of the City of Round Rock include water, sewer and drainage utility and a golf course. Fund Financial Statements A fimd is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Round Rock, like other local governments,uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories:governmental funds,proprietary funds,and fiduciary funds. Governmental funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on the near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues,expenditures,and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Round Rock maintains 23 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues,expenditures, and changes in fund balances for the general fund, debt service fund, the Round Rock Transportation and Economic Development Corporation (RRTEDC) revenue fund, the self-financed construction fund, the 2014 General Obligation Bond fund, and the 2014 Transportation Certificates of Obligation fund, all of which are considered to be major funds. Data from the other 17 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in the report. 20 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30,2016 Fund Financial Statements(Continued) The City adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with the budget. Proprietary funds The City of Round Rock maintains two different 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 its water, sewer and drainage utility and for its golf course. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses an internal service fund to account for its self-funded health insurance program and funding of its OPEB liability as of September 30, 2016. Because this service predominantly benefits governmental rather than business-type functions, it has been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water,sewer and drainage utility and for the golf course. The water, sewer and drainage utility is considered a major fund of the City. Since the golf course fund is the only remaining enterprise fund, it is being presented as a major fund even though it does not meet the criteria of a major fund established in GASB Statement No. 34. The internal service fund is a single presentation in the proprietary fund financial statements. Fiduciary funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. The Public Improvement Districts agency fund is reported in the statement of fiduciary net position. The resources accounted for in this fund are excluded from the government-wide financial statements because these funds are not available to finance the City's operations. Consequently, the City is responsible for ensuring that these resources are used only for their intended purpose. As of September 30,2016,the City was no longer custodian of the Public Improvement District. 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 The combining statements referred to earlier in connection with nomnajor governmental funds and individual fund schedules are presented immediately following the notes to the financial statements. Additional information on capital assets used in the operation of governmental funds is provided following the individual fund schedules. 21 CITY OF ROUND ROCK, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30,2016 Other Information (Continued) Government-wide Financial Analysis Net position is a useful indicator of a government's financial position. For the City of Round Rock,assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by$791,197,740 as of September 30,2016. The largest portion of the City's net position (68.90%)reflects its investments in capital assets (e.g.,land, buildings and improvements, improvements other than buildings, machinery and equipment and construction in progress), less any debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to its citizens; consequently,these assets are not available for fixture spending. Although the City's investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net position (8.48%) represents resources that are subject to external restriction on how they may be utilized. The remaining balance of unrestricted net position$178,941,993 may be used to meet the City's ongoing obligations to citizens and creditors. As of September 30,2016 and 2015,the City was able to report positive balances in all three categories of net position, both for the City as a whole, as well as for its separate governmental and business-type activities. The following table provides a comparative summary of the City's net position as of September 30, 2016 and 2015. The 2015 amounts have been restated for the impact of removing $64.7 million in infrastructure assets. Net Position(in 000's) Governmental Business-Type Activities Activities Total 2016 2015 2016 2015 2016 2015 Current and other assets $ 201,297 $ 240,056 $ 145,435 $ 138,011 $ 346,732 $ 378,067 Capital assets 492,228 451,014 324,346 316,695 816,574 767,709 Total assets 693,525 691,070 469,781 454,706 1,163,306 1,145,776 Deferred outflows 21,535 13,589 6,678 937 28,213 14,526 Long term liabilities 277,812 279,970 96,609 93,797 374,421 373,767 Other liabilities 21,381 23,546 2,910 3,239 24,291 26,785 Total liabilities 299,193 303,516 99,519 97,036 398,712 400,552 Deferred inflows 1,416 37 193 5 1,609 42 Net position,as restated: Net investment in capital assets 310,186 299,731 234,981 228,867 545,167 528,598 Restricted 51,813 48,020 15,276 19,216 67,089 67,236 Unrestricted 52,452 53,355 126,490 110,519 178,942 163,874 Total net position $ 414,451 $ 401,106 $ 376,747 $ 358,602 $ 791,198 $ 759,708 22 CITY OF ROUND ROCK, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30,2016 Analysis of Changes in Net Position The following table summarizes the changes in the City's net position from its activities for the fiscal year ended September 30,2016 with comparisons to the previous year. Changes in Net Position(in 000's) Governmental Business-Type Activities Activities Total 2016 2015 2016 2015 2016 2015 Revenues: Program revenues: Charges for services $ 8,589 $ 8,669 $ 49,014 $ 46,219 $ 57,603 $ 54,888 Operating grants and contributions 947 1,199 - - 947 1,199 Capital grants and contributions 8,013 4,234 19,607 17,743 27,620 21,977 General revenues: Property taxes 44,239 39,932 - - 44,239 39,932 Franchise taxes 7,175 7,255 - - 7,175 7,255 Sales tax 67,340 67,621 - - 67,340 67,621 Hotel occupancy tax 5,408 5,084 - - 5,408 5,084 Public service taxes 567 516 - - 567 516 Investment earnings 7,958 5,021 1,215 867 9,173 5,888 Total revenues 150,236 139,531 69,836 64,829 220,072 204,360 Expenses: General government 28,205 27,917 - - 28,205 27,917 Public safety 49,440 45,237 - - 49,440 45,237 Public works 33,448 33,413 - - 33,448 33,413 Culture and recreation 20,885 19,203 - - 20,885 19,203 Interest on long-term debt 8,294 8,118 - - 8,294 8,118 Issuance costs 229 943 - - 229 943 Water and sewer utility - - 47,948 46,070 47,948 46,070 Golf course - - 133 145 133 145 Total expenses 140,501 134,831 48,081 46,215 188,582 181,046 Increases in net position before transfers 9,735 4,700 21,755 18,614 31,490 23,314 Transfers 3,610 3,740 (3,610) (3,740) - - Increase in net position 13,345 8,440 18,145 14,874 31,490 23,314 Net position-beginning,as restated 401,106 392,666 358,602 343,728 759,708 736,394 Net position-ending $ 414,451 $ 401,106 $ 376,747 $ 358,602 $ 791,198 $ 759,708 Governmental Activities Governmental activities increased the City's net position by $13,345,120 or 42.4 percent of the total increase in the net position of the City over the prior year. Key factors for the increase are as follows: REVENUES • Developer contributions of subdivision improvements approximated $7.6 million and are included in program revenues of public works and culture and recreation activities. This represents an increase of$4.0 million, or 109.5 percent over prior year. 23 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2016 Governmental Activities (Continued) • Amounts received for property taxes increased from last year by 10.8 percent due primarily to the addition of new property to the tax base; regularly scheduled debt service requirements on bonds and a reduced reliance on sales tax. Other factors include continued aggressive collection efforts. Property tax makes up 33.3 percent of total general revenues. • Sales tax collections of$67.3 million remained relatively flat,decreasing 0.4 percent, compared to prior year. This is a result of a shift in Dell Technologies' business model from primarily a computer manufacturer and seller to a global technology services provider. While this shift has led to declining sales tax revenues for the City from Dell, sales tax collections from sources other than Dell continue to grow,allowing sales tax revenues to hold fairly steady from year to year. • Charges for services decreased by $80,000 primarily due to a decrease in municipal court revenue as a result of the City of Round Rock Police Department focusing on community policing initiatives. • Hotel occupancy tax revenues increased as a result of 108 new rooms and higher average room rates for area hotel/motels. The occupancy rate decreased from 75.9 percent in 2015 to 75.6 percent in 2016. The statewide occupancy rate was 62.8 percent in 2016. • Program revenues increased 24.4 percent, or $3.4 million. This increase is due largely to capital grants and contributions received in public works. EXPENSES Expenses for governmental activities for the City totaled $140,501,553 for the year ended September 30,2016. Significant factors include the following: • General government costs increased$287,000 from$27.9 million in 2015 to$28.2 million in 2016, or 1.03 percent. This increase is due to an increase in the net pension liability and expense on the financial statements, due to GASB 68. • Public safety program costs including police and fire department activities totaled about $49.4 million, or 35.2 percent of total expenses for governmental activities. This is an increase of 9.3 percent, compared to prior year. Most significant is personnel costs which included eight new positions, including five 911 call takers and three battalion fire chiefs, plus increased health benefits. • Public works program costs remained fairly constant compared to prior year, increasing only 0.11%. • Culture and recreation increased $1.7 million from $19.2 million in 2015 to $20.9 million, or 8.8 percent, in 2016. This increase is due in part to the opening of the expanded Rock'N River Pool Complex and the continued popularity of the Round Rock Sports Center. 24 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30,2016 Business-Type Activities Business-type activities increased the City's net position by$18,144,831 or 57.6 percent of the total growth in the net position of the City over the prior year. Key factors for the increase are as follows: REVENUES • The City's water,sewer and drainage utility continues to show increases in the number of customers and operating revenues. Scheduled uses of impact fees received have allowed current rates to remain stable while still providing adequate times coverage of utility bonded debt service. Comparative data for the past two fiscal years are presented as follows: 2016 2015 Operating revenues $ 48,653,788 $ 45,898,090 Operating income $ 4,397,665 $ 3,871,316 Income available for debt service $ 21,146,727 $ 19,413,015 Annual debt service $ 6,680,204 $ 6,894,788 Coverage 3.53 2.82 • The City sets utility rates based on the cost of service. This model establishes an equitable rate structure for total cost recovery. In order to fund the capital improvement program and to meet increasing system demand and operational cost pressures, multiple-year rate increases were implemented. Retail volumetric and base rates increased collectively 3 percent in January 2016. Higher wholesale water rates went into effect October 1, 2015 as part of a 3 year scheduled rate increase. The City's wholesale customers make up approximately 15 percent of revenues each year. Even with the rate increases, Round Rock water and wastewater rates continue to be among the lowest in the region. EXPENSES • Expenses of the business-type activities increased $1.9 million from prior year due to costs of treating higher volumes of water to serve a growing number of customers and normal weather fluctuations. Financial Analysis of the Government's Funds As noted earlier,the City of Round Rock uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the City's governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. 25 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30,2016 Governmental Funds (Continued) For the fiscal year ended September 30, 2016, the City's governmental funds reported combined ending fund balances of$174,030,546. Approximately 30.1 percent of this total amount of$52,427,796 constitutes unassigned fund balance and is available for spending at the City's discretion. $27,604,905 of the fund balance is committed to either construction or special revenue projects/programs. The remainder of fund balance is restricted or non-spendable to indicate that it is not available for new spending because it has already been committed to 1) pay debt service of $2,749,645, 2) fund authorized capital projects of $77,545,478,3)other restricted purposes of$13,330,434 or 4)non-spendable of$372,288. The general fund is the chief operating fund of the City. At the close of the current fiscal year,fund balance of the general fund reached$52,800,084,of which$52,427,796 was unassigned. Unassigned fund balance represented 57.5 percent of total general fund expenditures. During the current fiscal year, the fund balance of the General Fund increased by $2,091,874 because of continued revenue growth. The general fund total revenues exceed the budget by over $4,000,000 contributing to the increase in fund balance. The City continues to budget revenues conservatively but with the continued population growth and increase in property values,the property taxes and sales tax revenues continue to surpass budgeted projections. The debt service fund had a total fund balance of$2,749,645 at the end of the fiscal year, all of which is restricted for the payment of debt service. The net increase in fund balance during the year was$397,865. Debt service expenditure requirements increased by$1,095,252 during the fiscal year and were adequately funded by the debt service portion of the property tax. The fund balance of the RRTEDC revenue fund was $35,218,813,an increase of$3,143,649 compared to the prior year. The increase reflects a reduction in transfers out of this fund to fund transportation system improvements and related maintenance and debt service costs. This is a result of less costs incurred for transportation projects,compared to the prior year,as well as issuance of the 2014 transportation certificates of obligation which provided an alternative source of funding for transportation system improvements during 2016. The self-financed construction fund, the 2014 general obligation bond fund, and 2014 transportation certificates of obligation fund had a combined total fund balance at year-end of$65,288,854. The collective net decrease of$41,965,836 is a result of the spending down of the 2014 general obligation bonds and the 2014 transportation certificates of obligation bonds. Proprietary Funds The City's proprietary fund statements provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net position of the water and sewer fund totaled $124,993,982 at September 30, 2016. The total growth in net position for the water and sewer fund was $18,517,947. The unrestricted net position represented 33.7 percent of the utility's total net position. 26 CITY OF ROUND ROCK, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30,2016 General Fund Budgetary Highlights One budget amendment was taken to City Council for the General Fund for the year ended September 30, 2016. The budget amendment transferred excess General Fund fund balance to the General Self-Financed Construction Fund to provide funding for future cash funded projects,repairs and maintenance for IT,parks and recreation, and facilities, and for transportation improvements. Capital Assets and Debt Administration Capital Assets The City of Round Rock's investment in capital assets for its governmental and business-type activities as of September 30, 2016, amounted to $816,574,126 (net of accumulated depreciation). This investment includes land, buildings and improvements, improvements other than buildings (including infrastructure), machinery and equipment and construction in progress. Major capital asset events during the year ended September 30, 2016, included the following: • The City removed infrastructure assets with a net book value of$64.7 million. It was determined that the City does not own,nor is the City required to maintain this infrastructure. • Additional facilities were completed at the Round Rock Sports Center for a total cost of $1.4 million. • Projects underway and completed that were funded by the 2014 G.O. bonds are as follows: • Parks and recreation improvements at Old Settler's Park were completed in Spring 2016 for the Rock'N River expansion at a cost of$8 million. • Construction is underway at Old Settler's Park's Multipurpose Field Complex and soccer fields. The total cost is estimated at$30.3 million with$13.3 million spent to date. • Expansion of citywide trails began at an estimated cost of$20.1 million with$2.8 million incurred to date. • Neighborhood park improvements, ADA upgrades, and facility improvements are underway with total cost estimated at$3.5 million with$2.1 million spent to date. • Design is underway for a public safety training facility. The total estimated cost is $29.4 million with an anticipated completion date in Summer 2018. • Construction was near completion for two fire stations and remodel of existing fire stations. Land was also purchased for future construction. The total spent to date is$8.6 million. • Major arterial, signal, and road projects are underway and at various stages of completion. Completed projects totaled$14.8 million while construction in progress at year-end approximated $31.6 million. • Major City facility improvements were completed at a cost of$233,000 and information technology infrastructure upgrades were completed at a cost of$528,000. • Various street,sidewalk,fencing,drainage,and traffic signal improvement projects were underway with completions totaling $1.6 million while construction in progress approximated $602,000 at year end. 27 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30,2016 Capital Assets(Continued) • Design began for a new utility and transportation center with construction starting in 2017. The total estimated cost is$16.5 million funded from both utility and general construction funds. • Developers contributed infrastructure improvements for governmental activities of$7.6 million, and $11.3 million for water, sewer and drainage system infrastructure improvements. • Design is underway for various water pump station improvements throughout the City. The total cost is estimated at$3.7 million with completion in 2018. • The program to replace water meters citywide with automated reading equipment is substantially complete at a cost of$4.1 million. • Various water and wastewater line replacement projects were completed and placed in service at a cost of$3.2 million and similar projects were in progress costing$8.1 million to date. Capital Assets(in 000's) Governmental Business-Type Activities Activities Total 2016 2015 2016 2015 2016 2015 Land $ 53,134 $ 45,751 $ 8,453 $ 8,453 $ 61,587 $ 54,204 Buildings and improvements 135,706 133,813 22,437 22,437 158,143 156,250 Improvements other than bldgs 592,991 566,972 437,267 423,042 1,030,258 990,014 Machinery and equipment 73,386 67,539 16,012 15,032 89,398 82,571 Accumulated depreciation (422,643) (393,235) (172,385) (157,585) (595,028) (550,820) Construction in progress 59,654 30,174 12,562 5,316 72,216 35,490 Total $ 492,228 $ 451,014 $ 324,346 $ 316,695 $ 816,574 $ 767,709 Additional information on the City of Round Rock's capital assets can be found in Note IV (E) to the financial statements. Long-Term Debt At the end of the current fiscal year, the City of Round Rock had total debt outstanding of$294,337,387. Of this amount,$176,635,000 comprises debt backed by the full faith and credit of the City. The remainder of the City's debt is secured solely by specified revenue sources(i.e.,revenue bonds and state infrastructure bank loans). During the current fiscal year, the City of Round Rock's total debt decreased by $14,614,237. The net decrease is largely due to the City's refinancing of various existing debt issuances to take advantage of favorable interest rates. Details of the refunding issuances can be found in Note IV(F)(4)to the financial statements. Regularly scheduled debt principal was retired during 2016 as well. 28 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30,2016 Long-Term Debt(Continued) Long-Term Debt(in 000's) Governmental Business-Type Activities Activities Total 2016 2015 2016 2015 2016 2015 General obligation bonds $ 149,540 $ 154,925 $ - $ - $ 149,540 $ 154,925 Certificates of obligation 27,095 29,675 - - 27,095 29,675 Hotel tax revenue bonds 12,320 13,225 - - 12,320 13,225 Sales tax revenue bonds 9,180 11,920 - - 9,180 11,920 State infrastructure bank loans 11,527 13,082 - - 11,527 13,082 Water and wastewater revenue bonds - - 84,675 86,125 84,675 86,125 Total $ 209,662 $ 222,827 $ 84,675 $ 86,125 $ 294,337 $ 308,952 The City of Round Rock benefits substantially in reduced interest costs resulting from recently affirmed bond ratings by Moody's Investors Service of Aal, and Standard & Poor's raised its rating of the Utility Revenue bonds to AA+. There is no direct debt limitation in the City Charter or under state law. The City operates under a Home Rule Charter(Article XI, Section 5, Texas Constitution), approved by the voters,that limits the maximum tax rate,for all City purposes to$2.50 per$100 assessed valuation. Administratively,the Attorney General of the State of Texas will permit allocation of$1.50 of the$2.50 maximum tax rate for general obligation debt service. The resulting legal debt margin is$1,616,197,913. Of the maximum tax rate for debt service of$1.50, the City uses $0.16019, or 10.68%. Of$44,063,923 levied in property taxes for the fiscal year ended September 30, 2016, 99.62% of taxes levied were collected during the fiscal year. The City is conservative in how it issues debt and has adopted a"pay as you go"philosophy by using excess cash funds to fund current projects and issuing debt only when deemed necessary. Additional information on the City's long-term debt can be found in Note IV(F)to the financial statements. Economic Factors and Next Year's Budgets and Rates The development of the City's budget is guided by several factors including the Council's Strategic Goals, prevailing economic conditions and the continuing need to provide basic and improved customer services for a growing population. The fiscal year 2016-2017 budget adopted by the City Council adheres to the City's financial policies and preserves the City's strong financial position while providing excellent levels of service. During the creation of the 2016-2017 budget process the City Manager and Executive team focused on various budget drivers in the decision making process. • Addressing council Strategic Goals • Meeting the demands of growth with additions to maintain service levels • Biennial citizen survey results • Voter authorized general obligation debt to expand programs and services • Transportation certificates of obligation to address roadway and traffic issues • Debt payments for these new programs • Competitive employee compensation and benefits • Maintenance of parks, facilities,and streets • Compliance with financial policies 29 CITY OF ROUND ROCK, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30,2016 Economic Factors and Next Year's Budgets and Rates(Continued) Revenue assumptions in general for fiscal year 2016-2017 are expected to follow the growth curve of job creation, population growth, retail sales activity, and housing starts. The City's economy is expected to generate approximately$60.3 million in sales tax revenue for fiscal year 2017. This amount includes the 1/2% or $16.4 million in additional sales and use tax for roads and economic development. The remaining 1 1/2% is projected to generate $43.9 million for general operations,property tax reduction, and capital projects. The fiscal year 2017 certified taxable property value for Round Rock is $11.3 billion, an increase of 7.6% from last year's $10.5 billion. The adopted property tax rate for fiscal year 2017 is $0.42500 per$100 of valuation. The tax rate is an increase of 3.07 cents over the effective rate of$0.39428,and well below the rollback rate of$0.42961. The three cent($0.03) increase in the adopted tax rate is focused on enhancing City services in public safety and transportation, two areas that rate as major issues facing Round Rock over the next five years. With an adopted rate of$0.42500, the City continues to have one of the lowest tax rates in Central Texas, and is among the lowest rates in the state for medium-sized cities. The Water and Wastewater Utility operations are funded primarily through user fees. The City's utility infrastructure and service delivery systems have been carefully planned and have sufficiently met demand for a growing customer base. Water sales are conservatively estimated using customer base projections, while at the same time taking into account changing weather conditions. Water conservation and drought contingency programs continue to help the City conserve existing water sources. No retail rate increases are planned for water or wastewater in fiscal year 2017. Wholesale water rates increased October 1,2016. Every three years,the City conducts a cost of service rate study. In fiscal year 2017, a rate study analyzing the current rate structure is planned. Requests for Information This financial report is designed to provide citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Chief Financial Officer, City of Round Rock, 221 East Main Street,Round Rock,Texas 78664. 30 BASIC FINANCIAL STATEMENTS 31 CITY OF ROUND ROCK,TEXAS STATEMENT OF NET POSITION SEPTEMBER 30, 2016 Governmental Business-Type Activities Activities Total ASSETS Cash and cash equivalents $ 15,436,199 $ 14,019,442 $ 29,455,641 Investments 90,800,544 88,750,888 179,551,432 Receivables(net of allowance for uncollectibles)- Property taxes 333,829 - 333,829 Accounts&other 5,816,336 7,949,519 13,765,855 Loans 912,130 - 912,130 Accrued interest 339,095 124,375 463,470 Intergovernmental - 4,084,180 4,084,180 Grants 325,621 - 325,621 Interfund (874,899) 874,899 - Inventories 241,059 671,180 912,239 Other current assets 218,729 419,264 637,993 Restricted assets- Cash and cash equivalents 8,461,150 4,873,018 13,334,168 Investments 77,593,697 11,282,450 88,876,147 Property tax receivable 201,431 - 201,431 Accounts and other 1,409,290 172,249 1,581,539 Accrued interest 82,179 10,961 93,140 Investment in joint venture - 12,202,372 12,202,372 Capital assets- Land and construction in progress 112,787,637 21,015,258 133,802,895 Capital asset,net of accumulated depreciation 379,440,601 303,330,630 682,771,231 Total assets 693,524,628 469,780,685 1,163,305,313 DEFERRED OUTFLOWS OF RESOURCES Deferred amount on refundings 6,552,832 4,641,777 11,194,609 Pension contributions after measurement date 5,660,385 765,371 6,425,756 Pension actuarial losses,net of amortization 9,322,141 1,271,201 10,593,342 Total deferred outflows of resources 21,535,358 6,678,349 28,213,707 The accompanying notes are an integral part of this financial statement. 32 Governmental Business-Type Activities Activities Total LIABILITIES Accounts payable $ 16,577,619 $ 1,930,545 $ 18,508,164 Accrued payroll 2,448,351 438,620 2,886,971 Unearned revenue 1,038,437 - 1,038,437 Accrued interest payable 1,316,911 541,243 1,858,154 Noncurrent liabilities- Net pension liability 38,237,184 5,214,162 43,451,346 Customer deposits - 1,094,130 1,094,130 Due within one year 19,311,833 3,755,119 23,066,952 Due in more than one year 220,263,055 86,545,170 306,808,225 Total liabilities 299,193,390 99,518,989 398,712,379 DEFERRED INFLOWS OF RESOURCES Pension actuarial gains,net of amortization 1,415,833 193,068 1,608,901 NET POSITION Net investment in capital assets 310,185,706 234,981,264 545,166,970 Restricted for- Debt service 1,723,344 564,770 2,288,114 Capital projects 36,759,340 14,710,889 51,470,229 Hotel-motel tax 12,653,710 - 12,653,710 Public safety 676,724 - 676,724 Unrestricted 52,451,939 126,490,054 178,941,993 Total net position $ 414,450,763 $ 376,746,977 $ 791,197,740 33 CITY OF ROUND ROCK,TEXAS STATEMENT OF ACTIVITIES SEPTEMBER 30,2016 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Governmental activities: General government $ 28,204,761 $ 2,258,333 $ 813,202 $ - Public safety 49,439,902 1,669,550 - - Public works 33,448,357 742,437 - 7,835,022 Culture and recreation 20,885,009 3,919,254 133,402 178,017 Interest on long-term debt 8,294,279 - - - Issuance costs 229,245 - - - Total governmental activities 140,501,553 8,589,574 946,604 8,013,039 Business-type activities: Water and sewer utility 47,947,818 48,653,788 - 19,607,086 Golf course 133,270 360,371 - - Total business-type activities 48,081,088 49,014,159 - 19,607,086 Total primary government $ 188,582,641 $ 57,603,733 $ 946,604 $ 27,620,125 The accompanying notes are an integral part of this financial statement. 34 Net(Expense) Revenue and Changes in Net Position Governmental Business-Type Functions/Programs Activities Activities Total Governmental activities: General government $ (25,133,226) $ - $ (25,133,226) Public safety (47,770,352) - (47,770,352) Public works (24,870,898) - (24,870,898) Culture and recreation (16,654,336) - (16,654,336) Interest on long-term debt (8,294,279) - (8,294,279) Issuance costs (229,245) - (229,245) Total governmental activities (122,952,336) - (122,952,336) Business-type activities: Water and sewer utility - 20,313,056 20,313,056 Golf course - 227,101 227,101 Total business-type activities - 20,540,157 20,540,157 Total primary government $ (122,952,336) $ 20,540,157 $ (102,412,179) General revenues: Taxes: Property taxes, levied for general purpose 27,156,302 - 27,156,302 Property taxes, levied for debt service 17,082,765 - 17,082,765 Franchise taxes 7,175,948 - 7,175,948 Sales taxes 67,340,120 - 67,340,120 Hotel occupancy tax 5,407,667 - 5,407,667 Public service taxes 566,712 - 566,712 Unrestricted investment earnings and other 7,957,942 1,214,674 9,172,616 Transfers 3,610,000 (3,610,000) - Total general revenues and transfers 136,297,456 (2,395,326) 133,902,130 Change in net position 13,345,120 18,144,831 31,489,951 Net position-beginning,as restated 401,105,643 358,602,146 759,707,789 Net position-ending $ 414,450,763 $ 376,746,977 $ 791,197,740 35 CITY OF ROUND ROCK,TEXAS GOVERNMENTAL FUNDS BALANCE SHEET SEPTEMBER 30,2016 Round Rock Transportation and Economic Development General Debt Service Corporation Fund Fund Revenue Fund ASSETS Cash and cash equivalents $ 8,222,738 $ - $ 87 Investments 48,363,976 - - Receivables(net of allowance for uncollectibles)- Property taxes, including interest and penalties 333,829 - - Accounts and other 5,342,867 - - Loans - - - Accrued interest 78,691 - - Interfund - 11,135 - Grants 58,984 - - Inventories 241,059 - - Other current assets 131,229 - - Restricted assets- Cash and cash equivalents - 1,938,572 5,255,217 Investments - 801,013 30,137,774 Receivables- Property taxes, including interest and penalties - 201,431 - Sales tax - - 1,409,290 Accrued interest - - 48,763 Total assets $ 62,773,373 $ 2,952,151 $ 36,851,131 LIABILITIES AND FUND BALANCES Liabilities- Accounts payable $ 7,002,969 $ - $ 132,300 Accrued payroll 2,432,216 - - Interfund payables 87,067 - 1,500,000 Deferred revenue 451,037 202,506 - Totalliabilities 9,973,289 202,506 1,632,300 Fund balances- Nonspendable 372,288 - - Restricted-debt service - 2,749,645 - Restricted- authorized construction - - 35,218,831 Restricted-hotel-motel tax - - - Restricted-public safety - - - Committed, reported in- Committed - - - Capital projects funds - - - Unassigned 52,427,796 - - Total fund balances 52,800,084 2,749,645 35,218,831 Total liabilities and fund balances $ 62,773,373 $ 2,952,151 $ 36,851,131 The accompanying notes are an integral part of this financial statement. 36 2014 Self- 2014 Transportation Financed General Certificates of Other Total Construction Obligation Obligation Governmental Governmental Fund Bonds Fund Fund Funds Funds $ 3,625,482 $ - $ - $ 2,402,371 $ 14,250,678 21,336,701 - - 14,122,836 83,823,513 - - - - 333,829 - - - 455,662 5,798,529 912,130 - - - 912,130 230,239 - - 20,295 329,225 7,316 - - 1,575,932 1,594,383 111,087 - - 155,550 325,621 - - - - 241,059 - - - - 131,229 318,675 668,873 279,813 8,461,150 - 39,418,972 6,024,180 1,211,758 77,593,697 - - - 201,431 - - - - 1,409,290 - 32,143 - 1,273 82,179 $ 26,222,955 $ 39,769,790 $ 6,693,053 $ 20,225,490 $ 195,487,943 $ 1,357,178 $ 3,376,311 $ 2,663,455 $ 1,308,753 $ 15,840,966 - - - 16,135 2,448,351 - - - 7,316 1,594,383 - - - 920,154 1,573,697 1,357,178 3,376,311 2,663,455 2,252,358 21,457,397 - - - - 372,288 - - - 2,749,645 36,393,479 4,029,598 1,903,570 77,545,478 - - 12,653,710 12,653,710 - - - 676,724 676,724 - - - 2,739,128 2,739,128 24,865,777 - - - 24,865,777 - - - - 52,427,796 24,865,777 36,393,479 4,029,598 17,973,132 174,030,546 $ 26,222,955 $ 39,769,790 $ 6,693,053 $ 20,225,490 $ 195,487,943 37 w v • icy► �o f 38 CITY OF ROUND ROCK,TEXAS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION Total Fund Balances-Governmental Funds $ 174,030,546 Amounts reported for Governmental Activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and,therefore,are not reported in the funds. These assets consist of: Land $ 53,133,747 Construction in progress 59,653,890 Building and improvements 728,697,300 Equipment 73,386,255 Accumulated depreciation (422,642,954) Total capital assets $ 492,228,238 492,228,238 Deferred amounts on refundings are deferred outflows of resources and, therefore, are not reported in the funds. 6,552,832 Contributions to the pension plan after the measurement date are deferred outflows of resources and,therefore,are not reported in the funds. 5,660,385 Pension actuarial losses (gains) are deferred outflows (inflows) of resources and,therefore,are not reported in the funds. 7,906,308 Property tax revenues in the governmental funds are deferred because they are not collected within the prescribed time period after year end. On the accrual basis, however, those revenues would be recognized, regardless of when they are collected. 535,260 Internal service funds are used by management to charge the costs of self- funded insurance to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Position. 6,666,177 Accrued interest payable in the governmental funds are not recognized because they are not paid within the prescribed time period after year end. (1,316,911) Some long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. They are detailed in Note III (A). (277,812,072) Net Position of Governmental Activities $ 414,450,763 The accompanying notes are an integral part of this financial statement. 39 CITY OF ROUND ROCK, TEXAS GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED SEPTEMBER 30, 2016 Round Rock Transportation and Economic Debt Development General Service Corporation Fund Fund Revenue Fund Revenues- Taxes and franchise, including interest and penalties $ 85,075,121 $ 17,036,313 $ 16,835,030 Licenses,permits and fees 1,838,308 - Charges for services 4,856,792 - - Fines and forfeitures 1,339,334 - - Grants 470,988 - - Hotel occupancy tax - - - Investment and other 5,506,530 44,422 392,839 Contributions - - - Total revenues 99,087,073 17,080,735 17,227,869 Expenditures- Current- General government 23,764,134 - - Public safety 43,685,927 - - Public works 10,668,619 - 1,394,220 Culture and recreation 13,010,711 - - Debt service- Principal retirement - 13,463,922 - Interest and fiscal charges - 9,641,498 - Issuance costs - 229,245 - Capital projects - - - Total expenditures 91,129,391 23,334,665 1,394,220 Excess(deficiency)of revenues over expenditures 7,957,682 (6,253,930) 15,833,649 Other financing sources(uses)- Issuance of lease - - - Issuance of refunding bonds - 11,450,000 - Issuance of premium - 1,094,690 - Payment to refunding agent - (12,309,895) - Transfers in 3,290,000 6,417,000 30,000 Transfers out (9,155,808) - (12,720,0.00) Total other financing sources(uses) (5,865,808) 6,651,795 (12,690,000) Net change in fund balances 2,091,874 397,865 3,143,649 Fund balances, October 1,2015 50,708,210 2,351,780 32,075,182 Fund balances, September 30,2016 $ 52,800,084 $ 2,749,645 $ 35,218,831 The accompanying notes are an integral part of this financial statement. 40 2014 Self- 2014 Transportation Financed General Certificates of Other Total Construction Obligation Obligation Governmental Governmental Fund Bonds Fund Fund Funds Funds $ - $ - $ - $ 264,969 $ 119,211,433 - - - 5,325 1,843,633 - - - 315,673 5,172,465 - - 234,142 1,573,476 177,481 - - 342,214 990,683 - - - 5,407,667 5,407,667 168,660 238,811 60,856 1,551,736 7,963,854 192,510 - - 176,238 368,748 538,651 238,811 60,856 8,297,964 142,531,959 - - - 630,258 24,394,392 702,954 44,388,881 - - - - 12,062,839 - - - 2,068,253 15,078,964 - - - - 13,463,922 - - 9,641,498 - - - - 229,245 10,144,310 27,166,872 16,870,288 11,233,529 65,414,999 10,144,310 27,166,872 16,870,288 14,634,994 184,674,740 (9,605,659) (26,928,061) (16,809,432) (6,337,030) (42,142,781) 2,250,000 - - - 2,250,000 - - - - 11,450,000 - - - 1,094,690 - - - - (12,309,895) 9,157,316 1,602,002 - 10,055,808 30,552,126 (1,632,002) - - (3,434,316) (26,942,126) 9,775,314 1,602,002 - 6,621,492 6,094,795 169,655 (25,326,059) (16,809,432) 284,462 (36,047,986) 24,696,122 61,719,538 20,839,030 17,688,670 210,078,532 $ 24,865,777 $ 36,393,479 $ 4,029,598 $ 17,973,132 $ 174,030,546 41 CITY OF ROUND ROCK, TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30,2016 Amounts reported for governmental activities in the statement of activities are different because: Net Change in Fund Balances-Total Governmental Funds $ (36,047,986) 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. 33,619,061 The net effect of various miscellaneous transactions involving capital assets (i.e. sales, disposals,and donations) is to increase net position. 7,594,300 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. 110,414 The issuance of long-term debt (i.e. bonds, leases) provides current financial resources to the governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Also,governmental funds report the effect of issuance costs,premiums, discounts, and similar items when debt is first issued, whereas these 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. 11,104,646 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. These include: Pension costs, net (1,533,111) Interest and employee expense (31,550) Internal service funds are used to charge the costs of self-funded insurance to the individual funds. The net revenue of certain activities of the internal service fund is reported with governmental activities. (1,470,654) Change in Net Position of Governmental Activities $ 13,345,120 The accompanying notes are an integral part of this financial statement. 42 CITY OF ROUND ROCK,TEXAS GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30,2016 Variance- Budgeted Amounts Positive Original Final Actual (Negative) Revenues- Taxes and franchise, including interest and penalties $ 82,461,000 $ 82,461,000 . $ 85,075,121 $ 2,614,121 Licenses,permits and fees 1,032,160 1,032,160 1,838,308 806,148 Charges for services 4,289,000 4,289,000 4,856,792 567,792 Fines and forfeitures 2,065,000 2,065,000 1,339,334 (725,666) Grants 377,000 377,000 470,988 93,988 Investment and other 3,963,010 3,963,010 5,506,530 1,543,520 Total revenues 94,187,170 94,187,170 99,087,073 4,899,903 Expenditures- Current- General government 26,270,917 25,527,917 23,764,134 1,763,783 Public safety 44,756,614 45,462,111 43,685,927 1,776,184 Public works 13,163,623 11,279,305 10,668,619 610,686 Culture and recreation 13,197,352 13,215,352 13,010,711 204,641 Total expenditures 97,388,506 95,484,685 91,129,391 4,355,294 Excess(deficiency) of revenues over expenditures (3,201,336) (1,297,515) 7,957,682 9,255,197 Other financing sources(uses)- Transfers in 3,290,000 3,290,000 3,290,000 - Transfers out - (9,155,808) (9,155,808) - Total other financing sources(uses) 3,290,000 (5,865,808) (5,865,808) - Net change in fund balance $ 88,664 $ (7,163,323) 2,091,874 $ 9,255,197 Fund balance, October 1,2015 50,708,210 Fund balance, September 30,2016 $ 52,800,084 The accompanying notes are an integral part of this financial statement. 43 CITY OF ROUND ROCK, TEXAS ROUND ROCK TRANSPORTATION AND ECONOMIC DEVELOPMENT CORPORATION REVENUE FUND STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2016 Variance- Budgeted Amounts Positive Original Final Actual (Negative) Revenues- Sales tax $ 16,333,400 $ 16,333,400 $ 16,835,030 $ 501,630 Investment and other 300,000 300,000 392,839 92,839 Total revenues 16,633,400 16,633,400 17,227,869 594,469 Expenditures- Public works 1,417,500 2,390,840 1,394,220 996,620 Total expenditures 1,417,500 2,390,840 1,394,220 996,620 Excess of revenues over expenditures 15,215,900 14,242,560 15,833,649 1,591,089 Other financing sources(uses)- Transfers in - - 30,000 30,000 Transfers out (6,590,000) (6,590,000) (12,720,000) (6,130,000) Total other financing sources(uses) (6,590,000) (6,590,000) (12,690,000) (6,100,000) Net change in fund balances $ 8,625,900 $ 7,652,560 3,143,649 $ (4,508,911) Fund balance,October 1,2015 32,075,182 Fund balance, September 30,2016 $ 35,218,831 The accompanying notes are an integral part of this financial statement. 44 CITY OF ROUND ROCK, TEXAS PROPRIETARY FUNDS STATEMENT OF NET POSITION SEPTEMBER 30,2016 Business-Type Activities Governmental Enterprise Funds Activities Water and Golf Course Internal Sewer Fund Fund Total Service ASSETS Current assets: Cash and cash equivalents $ 13,934,152 $ 85,290 $ 14,019,442 $ 1,185,521 Investments 88,248,936 501,952 88,750,888 6,977,031 Receivables(net of allowance for uncollectibles of$ 1,686,852)- Accounts 7,916,276 33,243 7,949,519 17,807 Accrued interest 123,687 688 124,375 9,870 Intergovernmental 4,084,180 - 4,084,180 - Inventories 671,180 - 671,180 - Other current assets 419,264 - 419,264 87,500 Total current assets 115,397,675 621,173 116,018,848 8,277,729 Noncurrent assets: Restricted cash, cash equivalents and investments: Impact fees 2,956,018 - 2,956,018 - Construction 11,571,661 - 11,571,661 - Customer deposits 1,063,019 - 1,063,019 - Revenue bond covenant accounts 564,770 - 564,770 - Restricted accounts and accrued interest receivable: Restricted impact fees 172,249 - 172,249 - Restricted accrued interest 10,961 - 10,961 - Investment in joint venture 12,202,372 - 12,202,372 - Capital assets: Land and construction in progress 19,056,055 1,959,203 21,015,258 - Capital assets being depreciated 300,589,465 2,741,165 303,330,630 - Total capital assets(net of accumulated depreciation of$172,385,328) 319,645,520 4,700,368 324,345,888 - Total noncurrent assets 348,186,570 4,700,368 352,886,938 - Total assets 463,584,245 5,321,541 468,905,786 8,277,729 DEFERRED OUTFLOWS OF RESOURCES Pension contributions after measurement date 765,371 - 765,371 - Pension actuarial losses, net of amortization 1,271,201 - 1,271,201 - Deferred charges on refunding 4,641,777 - 4,641,777 - Total deferred outflows of resources 6,678,349 - 6,678,349 - The accompanying notes are an integral part of this financial statement. (CONTINUED) 45 CITY OF ROUND ROCK, TEXAS PROPRIETARY FUNDS STATEMENT OF NET POSITION SEPTEMBER 30,2016 Business-Type Activities Governmental Enterprise Funds Activities Water and Golf Course Internal Sewer Fund Fund Total Service LIABILITIES Current liabilities: Accounts payable $ 1,930,545 $ - $ 1,930,545 $ 736,653 Accrued payroll 438,620 - 438,620 - Accrued interest 541,243 - 541,243 - Current portion of bonds payable 3,337,191 - 3,337,191 - Accrued benefit obligations 417,928 - 417,928 - Total current liabilities 6,665,527 - 6,665,527 736,653 Noncurrent liabilities: Bonds payable 86,027,433 - 86,027,433 - Noncurrent accrued benefit obligations 517,737 - 517,737 - Net pension liability 5,214,162 - 5,214,162 - Customer deposits 1,094,130 - 1,094,130 - Total noncurrent liabilities 92,853,462 - 92,853,462 - Totalliabilities 99,518,989 - 99,518,989 736,653 DEFERRED INFLOWS OF RESOURCES Pension actuarial gains, net of amortization 193,068 - 193,068 - NET POSITION Net investment in capital assets 230,280,896 4,700,368 234,981,264 - Restricted for: Debt service 564,770 - 564,770 - Capital projects 14,710,889 - 14,710,889 - Committed: Other post employment benefits - - - 2,726,128 Unrestricted 124,993,982 621,173 125,615,155 4,814,948 Total net position $ 370,550,537 $ 5,321,541 375,872,078 $ 7,541,076 Reconciliation to government-wide statement of net position: Adjustment to reflect the cumulative net profit of the internal service fund that was allocated to enterprise fund functions. 874,899 Total net position of business-type activities $ 376,746,977 The accompanying notes are an integral part of this financial statement. 46 CITY OF ROUND ROCK, TEXAS PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEAR ENDED SEPTEMBER 30, 2016 Business-Type Activities Governmental Enterprise Funds Activities Water and Golf Course Internal Sewer Fund Fund Total Service Operating revenues- Charges for services $ 44,406,721 $ 360,371 $ 44,767,092 $ 10,112,460 Licenses,permits, and fees 4,247,067 - 4,247,067 - Total revenues 48,653,788 360,371 49,014,159 10,112,460 Operating expenses- Personnel services 9,742,128 - 9,742,128 - Contractual services 15,222,355 13,194 15,235,549 2,450,242 Supplies 899,513 - 899,513 - Materials 1,191,818 - 1,191,818 434 Heat, light and power 1,662,779 - 1,662,779 - Claims expense - - - 9,625,120 Depreciation 15,537,530 120,076 15,657,606 - Total operating expenses 44,256,123 133,270 44,389,393 12,075,796 Operating income(loss) 4,397,665 227,101 4,624,766 (1,963,336) Nonoperating revenues (expenses)- Investment and other revenues 1,211,532 3,142 1,214,674 209,323 Interest and fiscal charges (3,408,336) - (3,408,336) - Total nonoperating revenues(expenses) (2,196,804) 3,142 (2,193,662) 209,323 Income before contributions and transfers 2,200,861 230,243 2,431,104 (1,754,013) Contributions and transfers- Contributions- impact fees 8,269,652 - 8,269,652 - Contributions- infrastructure 11,337,434 - 11,337,434 - Transfers out (3,290,000) (320,000) (3,610,000) - Total contributions and transfers 16,317,086 (320,000) 15,997,086 - Change in net position 18,517,947 (89,757) 18,428,190 (1,754,013) Net position, October 1,2015 352,032,590 5,411,298 9,295,089 Net position,September 30,2016 $ 370,550,537 $ 5,321,541 $ 7,541,076 Reconciliation to government-wide statement of activities: Adjustment to reflect the net profit of the internal service fund that was allocated to enterprise fund functions (283,359) Change in net position of business-type activities $ 18,144,831 The accompanying notes are an integral part of this financial statement. 47 CITY OF ROUND ROCK,TEXAS PROPRIETARY FUNDS STATEMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 2016 Business-Type Activities Governmental Enterprise Funds Activities Water and Golf Internal Sewer Fund Course Total Service Cash flows from operating activities: Cash received from customers $ 48,260,452 $ 327,128 $ 48,587,580 $ 506,151 Cash received from other funds for services provided - - - 9,588,502 Cash payments to suppliers for goods and services (19,054,891) (20,508) (19,075,399) (11,761,122) Cash payments to employees for services (9,816,946) - (9,816,946) Net cash provided(used)by operating activities 19,388,615 306,620 19,695,235 (1,666,469) Cash flows from noncapital financing activities: Transfers to other funds (3,290,000) (320,000) (3,610,000) Net cash used for noncapital financing activities (3,290,000) (320,000) (3,610,000) - Cash flows from capital and related financing activities: Proceeds from refunding of bonds 1,410,000 - 1,410,000 - Premium on issuance of bonds 3,096,496 - 3,096,496 - Receipts of capital contributions 8,097,403 - 8,097,403 - Acquisition and construction of capital assets (12,754,578) (59,362) (12,813,940) - Investment in joint venture 178,209 - 178,209 - Principal paid on revenue bonds (2,860,000) - (2,860,000) - Collection of loans 428,512 - 428,512 - Interest and fiscal charges paid (3,136,342) - (3,136,342) - Net cash used by capital and related financing activities (5,540,300) (59,362) (5,599,662) - Cash flows from investing activities: Purchase of investments (78,797,345) (49,687) (78,847,032) (335,548) Proceeds from sale of investments 55,781,403 34,174 55,815,577 487,866 Investment and other income 1,318,797 3,142 1,321,939 209,323 Net cash provided(used) by investing activities (21,697,145) (12,371) (21,709,516) 361,641 Net decrease in cash and cash equivalents (11,138,830) (85,113) (11,223,943) (1,304,828) Cash and cash equivalents at beginning of year 29,946,000 170,403 30,116,403 2,490,349 Cash and cash equivalents at end of year $ 18,807,170 $ 85,290 $ 18,892,460 $ 1,185,521 The accompanying notes are an integral part of this financial statement. (CONTINUED) 48 Business-Type Activities Governmental Enterprise Funds Activities Water and Golf Internal Sewer Fund Course Total Service Reconciliation of Cash and Cash Equivalents to Proprietary Fund Statement of Net Position Cash and cash equivalents $ 13,934,152 $ 85,290 $ 14,019,442 $ 1,185,521 Restricted assets- Cash and cash equivalents 4,873,018 - 4,873,018 - Cash and cash equivalents $ 18,807,170 $ 85,290 $ 18,892,460 $ 1,185,521 Reconciliation of operating income to net cash provided by perating activities Operating income $ 4,397,665 $ 227,101 $ 4,624,766 $ (1,963,336) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 15,537,530 120,076 15,657,606 - Provision for bad debts 35,196 - 35,196 - (Increase)decrease in: Receivables (770,327) (33,243) (803,570) (17,807) Inventory (79,185) - (79,185) - Other assets (83,280) - (83,280) - Pension related deferred outflows (1,119,493) - (1,119,493) Increase(decrease) in: Accounts payable 54,935 (7,314) 47,621 314,674 Accrued payroll (157,223) - (157,223) - Customer deposits 32,202 - 32,202 - Compensated absences 82,405 - 82,405 - Premium on bonds payable 109,820 - 109,820 - Pension related deferred inflows 187,980 - 187,980 - Increase in net pension liability 1,160,390 - 1,160,390 - Total adjustments 14,990,950 79,519 15,070,469 296,867 Net cash provided by operations $ 19,388,615 $ 306,620 $ 19,695,235 $ (1,666,469) NOTES: (1) Noncash capital and related financing activities: In fiscal year 2016,the Water and Sewer Fund had$11,337,434 in capital assets contributed, recognized$769,999 in unrealized investment gains, and loss on joint venture of$4,493,579. The accompanying notes are an integral part of this financial statement. 49 CITY OF ROUND ROCK, TEXAS FIDUCIARY FUND STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30,2016 AGENCYFUND Public Improvement Districts ASSETS Cash and cash equivalents $ - Total assets $ - LIABILITIES Liabilities- Due to participants $ - Total liabilities $ - * As of September 30, 2016,the City was no longer a custodian of the Behren's Ranch Public Improvement District. The accompanying notes are an integral part of this financial statement. 50 NOTES TOT E FINANCIAL STATEMENTS Na•• 10 1 INV d� • 52 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Round Rock, Texas (the City) is a municipal corporation incorporated under Article XI, Section 5 of the Constitution of the State of Texas (Home Rule Amendment). The City operates under a Council-Manager form of government. The financial statements of the City have been prepared in accordance with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting Standards which, along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units. The more significant of these accounting policies are described below, and where appropriate, subsequent pronouncements will be referenced. A. REPORTING ENTITY The City provides various services and performs many different functions. These include a police force, a fire fighting and protection force, emergency medical services, a park and recreation system, a municipal golf course, a public library, convention and tourism support, planning and zoning, and a waterworks and sewer utility system. The City's staff provides the necessary support for the services provided. All are responsible to the Citizens of Round Rock and are therefore included within the reporting entity. As required by generally accepted accounting principles,these financial statements present the City and its component unit, an entity for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City's operations and so data from these units are combined with data of the City. Blended Component Unit The Round Rock Transportation and Economic Development Corporation(Corporation), an entity legally separate from the City, is governed by a seven-member board appointed by the City Council. The City Council maintains budgetary control of the Corporation. For financial reporting purposes,the Round Rock Transportation and Economic Development Corporation is presented as a part of the City's operations because its purpose is to utilize sales tax revenues for the improvement of the City's transportation system and for economic development purposes. No less than 90% of the Type B Funds will be used for transportation projects. The remaining 10% may be used for economic development purposes covered under local government code. The revenues of the Corporation and its administrative expenditures are accounted for in a special revenue fund, while the capital improvements are accounted for in a capital projects fund. B. BASIS OF PRESENTATION—GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The basic financial statements include both government-wide (based on the City as a whole) and fund financial statements. GASB Statement No. 34 requires certain supplementary information. Management's Discussion and Analysis includes an analytical overview of the City's financial activities. In addition, budgetary comparison statements are presented that compare the adopted and amended budgets of the General Fund and the Round Rock Transportation and Economic Development Corporation Revenue Fund with their actual results. 53 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. BASIS OF PRESENTATION—GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) Government-wide Statements: The government-wide financial statements(i.e.,the statement of net position and the statement of activities) report information on all non-fiduciary activities of the primary government and its component unit. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities,which are funded by fees and charges for services. The City's statement of net position includes both non-current assets and non-current liabilities of the City. In addition,the government-wide statement of activities reflects depreciation expense on the City's capital assets, including infrastructure. The government-wide statement of activities demonstrates the degree to which the direct expenses of a functional category (police, fire, public works, etc.) are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. 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, 2) grants and contributions that are restricted to meeting the operational requirements of a particular function or segment and 3) grants and contributions that are restricted to meeting the capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. The net cost(by function or business-type activity)is normally covered by general revenue(property,sales or franchise taxes, intergovernmental revenues, interest income, etc.). The government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from financial activities of the fiscal period. The focus of the fund financial statements is on the major individual funds of the governmental and business-type categories, as well as the fiduciary funds, and the component unit. Each presentation provides valuable information that can be analyzed and compared to enhance the usefulness of the information. Fund Financial Statements: Separate fund based financial statements are provided for governmental funds, proprietary funds and fiduciary funds,even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. An emphasis is placed on major funds within the governmental and proprietary categories. GASB Statement No. 34 sets forth minimum criteria (percentage of assets, liabilities, revenues or expenditures/expenses of either fund category for the governmental and enterprise combined)for the determination of major funds. The major governmental funds are the General Fund,the Debt Service Fund, the Round Rock Transportation and Economic Development Corporation's Revenue Fund, the Self-Financed Construction Fund, the 2014 General Obligation Bonds Fund, and the 2014 Transportation Certificates of Obligation Fund. The nonmajor funds are combined in a separate column in the fund financial statements. 54 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. BASIS OF PRESENTATION–GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS(CONTINUED) The internal service fund,which provides services to the other funds of the government, is presented as part of the proprietary fund financial statements. Because the principal users are the City's governmental activities, financial statements of the internal service fund are consolidated into the governmental column when presented at the government-wide level. The costs of these services are reflected in the appropriate functional activity (general government,public safety,public works, etc.). The City's fiduciary fund is presented in the fund financial statements by type. Since by definition these assets are being held for the benefit of a third party and cannot be used to address activities or obligations of the government,this fund is not incorporated into the government-wide statements. C. GOVERNMENTAL FUND TYPES Governmental funds are those through which most governmental functions of the City are financed. The acquisition, use and balances of the City's expendable financial resources and the related current liabilities (except those, if any, which should be accounted for in proprietary funds) are accounted for through governmental funds. The measurement focus is upon determination of financial position and changes in financial position, rather than upon net income determination. The City maintains the following governmental fund types: The General Fund accounts for financial resources in use for general types of operations, which are not encompassed within other funds. The general fund is considered a major fund in the fund financial statements. The Special Revenue Funds are used to account for the proceeds of specific revenue sources(other than major capital projects)that are legally restricted to expenditures for specified purposes. There are ten groups of funds within the Special Revenue Funds which account for the activities related to grant programs,hotel-motel room taxes,transportation system improvement sales tax and funds designated for specific service programs. They are as follows: Major Fund — Round Rock Transportation and Economic Development Corporation Revenue Fund Nonmajor Funds — Hotel-Motel Occupancy Tax Fund — Hotel-Motel Occupancy Venue Tax Fund — Police Fund — Municipal Court Fund — Landscape Fund — Community Development Block Grant Fund — Librafy Fund — Public Education & Government Fund — Traffic Safety Program Fund 55 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. GOVERNMENTAL FUND TYPES(CONTINUED) The Round Rock Transportation and Economic Development Corporation Revenue Fund is considered a major fund in the fund financial statements. It accounts for sales tax monies received for streets, drainage and other transportation system improvements, including maintenance costs associated with such authorized projects. The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, governmental long-term debt principal, interest and related costs. The Debt Service Fund is considered a major fund in the fund financial statements. The Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of capital facilities(other than those financed by proprietary funds). There are eleven groups of funds within the Capital Projects Fund which account for the activities related to various capital improve- ments projects as follows: Major Funds — Self-Financed Construction Fund — 2014 General Obligation Bonds Fund — 2014 Certificates of Obligation Fund Nonmajor Funds — Streets and Drainage Fund — 2007 General Obligation Bonds Fund — 2004 General Obligation Bonds Fund — Park Development Fund — 2002 General Obligation Bonds Fund — Convention Center Complex Fund — Round Rock Transportation and Economic Development Corporation Project Fund — Tourism Development Fund The Self-Financed Construction Fund,the 2014 General Obligation Bonds Fund,and the 2014 Certificates of Obligation Fund are considered major funds in the fund financial statements. The Self-Financed Construction Fund accounts for the costs of authorized general capital improvements and facilities. Financing is provided by general government resources. The 2014 General Obligation Bonds Fund accounts for projects related to fire department facilities, parks and recreational purposes, library facilities and police and fire training facilities. The 2014 Certificates of Obligation Bonds Fund accounts for transportation improvements,payments of costs, and issuance of the bond funds. D. PROPRIETARY FUND TYPES The Proprietary Funds are used to account for the City's ongoing organizations and activities that are similar to those found in the private sector. The measurement focus is upon capital maintenance and upon determination of net income, financial position and cash flows. The City maintains the following Proprietary Fund types: 56 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. PROPRIETARY FUND TYPES(CONTINUED) The Enterprise Fund is used to account for operations that are financed and operated in a manner similar to private business enterprises-where the intent of the governing body is that the costs(expenses including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. The City's Enterprise Fund consists of the Water and Sewer Utility Fund, which includes the City's storm water drainage program, and the Golf Course Fund. These funds are primarily supported by user charges. E. OTHER FUND TYPES The Internal Service Fund is used to account for the financing of goods or services provided by one department or agency to other City departments or agencies on a cost-plus basis. The City's Internal Service Fund is the Self-Funded Health Insurance Fund,which is used to account for the activities of the City's self- funded health insurance program. The Agency Fund is purely custodial (assets equal liabilities) and thus, does not involve measurement of results of operations. The Agency Fund is the Public Improvement Districts Fund. As of September 30, 2016, the City was no longer custodian of the Behrens Ranch Public Improvement District. As such, the Agency Fund will not be presented subsequent to fiscal year 2016. F. NON-CURRENT GOVERNMENTAL ASSETS/LIABILITIES GASB Statement No. 34 eliminated the presentation of account groups, but provides for these records to be maintained and incorporates the information into the governmental activities column in the government- wide statement of net position. G. BASIS OF ACCOUNTING Government-wide Statements The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the 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. Fund Financial Statements In the fund financial statements, all governmental funds are accounted for using a modified accrual basis of accounting. Governmental funds use the current financial resources measurement focus. Under this basis, revenues are recognized in the accounting period in which they become measurable and available. Expenditures are recognized in the accounting period in which the fund liability is incurred, if measurable. 57 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) G. BASIS OF ACCOUNTING(CONTINUED) Governmental Funds Revenue Recognition In applying the susceptible to accrual concept under the modified accrual basis of accounting,revenues are recorded when deemed both measurable and available. Measurable means that the amount of the transaction can be determined. Available means the amount of the transaction is collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal year. Property tax revenues are recognized when they become available. In this case,available means when due, or past due and receivable within the current period and collected within the current period or soon enough thereafter to be used to.pay liabilities of the current period. Such time thereafter shall not exceed 60 days. Tax collections expected to be received subsequent to the 60-day availability period are reported as deferred revenue. Hotel taxes, franchise fees, and special assessments are recorded when susceptible to accrual, both measurable and available. Sales taxes collected and held by the State at year-end on behalf of the City are also recognized as revenue. Licenses and permits, charges for services, fines and forfeitures and other revenues (except earnings on investments) are recorded as revenues when received in cash because they are generally not measurable until actually received. Earnings on investments are recorded on the accrual basis in all funds. Unrealized gains or losses on investments are also recognized in accordance with GASB Statement No. 31. In applying the susceptible to accrual concept to grant revenues, the legal and contractual requirements of the individual grant programs are used for guidance. Monies received are generally unrestricted as to purpose of expenditure and are revocable only for failure to comply with prescribed compliance requirements. These resources are recognized as revenues at the time of receipt,or sooner,if the susceptible to accrual criteria are met. The City reports deferred revenue on its fund financial statements. Deferred revenues arise when potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise when the City receives resources before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met or when the City has a legal claim to the resources,the liability for deferred revenue is removed from the balance sheet and revenue is recognized. Expenditure Recognition The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures)rather than expenses. Most expenditures are measurable and are recorded when the related fund liability is incurred except for unmatured principal and interest on governmental long-term debt which 58 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) G. BASIS OF ACCOUNTING(CONTINUED) are recognized when paid. Allocations of costs, such as depreciation and amortization, are not recognized in the governmental funds' fund financial statements. Proprietary and Agency Funds In the fund financial statements and the government-wide statements, proprietary and agency funds utilize the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized in the accounting period in which they are earned and become measurable. Expenses are recorded in the accounting period incurred, if measurable. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the water and sewer fund,the golf course fund and the internal service fund are charges to customers for sales and services. Operating expenses for the enterprise funds and internal service fund include the cost of sales and service, administrative expenses and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as non-operating revenues and expenses. The proprietary funds follow GAAP prescribed by GASB and all Financial Accounting Standards Board's standards issued prior to November 30, 1989. Subsequent to this date,the City accounts for its proprietary funds as prescribed by the GASB. H. CASH AND CASH EQUIVALENTS In accordance with GASB Statement No. 9, for reporting purposes,the City has developed a definition of cash equivalents. Cash equivalents are demand deposit account balances, investments with the State Investment Pool, repurchase agreements, obligations of the United States government and its agencies, commercial paper and certificates of deposit with original maturities of three months or less. I. INVESTMENTS All investments are presented at fair value. The fair value of U.S. Government Securities is based upon discounted future cash flows. The fair value of the positions in the state investment pools is the same as the value of the pool shares. J. INVENTORIES AND PREPAID ITEMS Inventories of supplies for all funds are valued at cost. The consumption method is used to account for inventories. Under the consumption method, an expenditure is recognized when inventory items are used. Cost is determined for inventories of supplies on the first-in, first-out method. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items (other current assets)in both the government-wide and fund financial statements. 59 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) K. JOINT VENTURE Joint venture represents the City's equity interest calculated in accordance with the agreement for Brushy Creek Regional Utility Authority(BCRUA). The City's initial investment in this joint venture was recorded at cost. The City shares in the operating results in this joint venture so the City adjusts its equity interest by the amount of its participating share of the joint venture's change in net position. L. CAPITAL ASSETS Capital assets are stated at historical cost. Maintenance and repairs are charged to operations as incurred. Improvements and betterments, which extend the useful lives of assets, are capitalized. The accounting and reporting treatment applied to the capital assets associated with a fund are determined by the fund's measurement focus. The minimum capitalization threshold is any individual item with a total cost greater than$5,000 and a useful life of at least 5 years. Contributed assets are recorded at the estimated fair market value at the time received. Public domain capital assets (infrastructure) have been capitalized. Infrastructure consists of certain improvements other than buildings, including roads, curbing, gutters, streets and sidewalks and drainage systems. In the government-wide statements, depreciation of plant and equipment classified by functional components is provided by the straight-line method over their estimated useful lives. Estimated useful lives are as follows: Buildings 30 —50 years Improvements other than buildings 10 —40 years Machinery and equipment 5 —10 years When capital assets are retired or otherwise disposed of, a gain or loss on disposal of assets is recognized. In the fund financial statements,because of the application of the current financial resources focus and the use of modified accrual accounting for governmental funds, depreciation is only recognized for the Enterprise Funds. For the Enterprise Fund's capital assets,interest is capitalized on construction costs. The amount of interest cost capitalized for assets constructed with tax-exempt borrowings is equal to the cost of borrowing, less interest earned on related interest-bearing investments acquired with proceeds of the related tax-exempt borrowings. The total amount of interest expense incurred and expensed was$3,408,336. M. LONG-TERM DEBT In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds 60 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. LONG-TERM DEBT(CONTINUED) payable is reported net of the applicable bond premium or discount. Deferred amounts related to refundings are reported as deferred outflow of resources and amortized over the shorter of the refunded or refunding debt. In the fund financial statements,governmental fund types recognize bond premiums and discounts,as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Hotel Occupancy Tax Revenue Bonds were issued to fund the City's portion of the construction of a convention center complex. The project costs were shared with a private corporation in accordance with the Master Agreement Regarding Convention Center Development. Venue Tax and Hotel Occupancy Revenue Bonds were issued to fund a portion of the construction of a sports center. The Hotel Occupancy Tax Revenue Bonds and Venue Tax and Hotel Occupancy Tax Revenue Bonds are to be repaid from the hotel tax revenues. Loans from the State Infrastructure Bank have been received to fund transportation improvements. The loans are to be repaid from revenues of the Round Rock Transportation and Economic Development Corporation. Revenue bonds, which have been issued to fund capital projects of the Enterprise Fund, are to be repaid from net revenues of the utility systems. Sales tax revenue bonds have been issued to fund transportation improvements. The bonds are to be repaid from revenues of the Round Rock Transportation and Economic Development Corporation. N. ACCRUED BENEFIT OBLIGATIONS Unpaid Compensated Absences Each employee may accumulate a total of two years vacation eligibility. Employees are paid for the accumulated vacation upon termination. Effective January 1, 1994, a liability for sick pay is not recorded since sick pay does not vest. The City accrues a liability for accumulated vacation and sick leave benefits, which meet the following criteria: — The City's obligation to fund accumulated vacation and sick leave benefits is attributable to employees'services already rendered. — The obligation relates to rights that vest or accumulate. — Payment of the compensation is probable. — The amount can be reasonably estimated. 61 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) N. ACCRUED BENEFIT OBLIGATIONS(CONTINUED) All vacation pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Other Post-Employment Benefits The City provides its retirees the opportunity to maintain health insurance coverage by participating in the City's self insurance plan. The City accrues a liability for the annual required contribution, as determined by an actuary,less the actual cost incurred on a pay as you go basis on the government-wide and proprietary fund financial statements. The actual cost recorded in the governmental fund financial statements is the cost of the health benefits incurred on behalf of the retirees less the premiums collected from the retirees. O. TRANSACTIONS BETWEEN FUNDS Short-term advances between funds are accounted for in the appropriate interfund receivable and payable accounts. All legally authorized transfers are appropriately treated as transfers and are included in the results of operations of both governmental and proprietary funds. Nonrecurring or non-routine transfers of equity between funds — for example, contribution of capital assets to a proprietary fund or transfers of residual balances of discontinued funds to other funds-are accounted for as transfers. As a rule, the effect of interfund activity has been eliminated from the government-wide statement of net position. Exceptions to this rule are cost reimbursement transactions between the enterprise fund and various other functions of the government for utilities and for reimbursement of personnel costs for employees administering grant programs. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. P. NET POSITION Net position in government-wide and proprietary fund financial statements are classified as net investment in capital assets, restricted, and unrestricted. Net position classified as restricted are balances with constraints on resources that are either externally imposed by creditors, grantors, contributors,or laws or regulations of other governments or imposed by law through state statute. Certain bond proceeds, as well as resources set aside for their repayment, are classified as restricted assets because their use is limited by bond covenants. Other assets are restricted due to City Ordinance restrictions on their use. Net position has been restricted for the excess of restricted assets over related liabilities to the extent such restricted assets were accumulated from revenues (i.e., in some cases, restricted assets were obtained in total or in part from the proceeds of bond sales or grants). When both restricted and unrestricted resources are available for use,it is the City's policy to use restricted resources first,then unrestricted resources as they are needed. 62 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Q. CLASSIFICATION OF FUND EQUITY Governmental funds fund balance classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used: Nonspendable fund balance—Nonspendable fund balances are amounts that are not in spendable form or are required to be maintained intact. Restricted fund balance—Restricted fund balances are amounts that are constrained to specific purposes by creditors,grantors,contributors, or laws or regulations of other governments. Committed fund balance—Committed fund balances are amounts that are committed to specific purposes by City Council through an ordinance. Amounts cannot be used for other purposes unless the City Council takes the same action to remove or change the constraint. The most significant commitment in the special revenue funds is for public education and government fund activities. Assigned fund balance—Assigned fund balances are amounts that the City intends to use for a specific purpose but are neither restricted nor committed. Assignments are made by City management based on Council direction. Unassigned fund balance — Unassigned fund balances are amounts that are available for any legal purposes. The general fund is the only fund that reports an unassigned fund balance amount. For the classification of governmental fund balances, the City considers the expenditure to be made from the most restrictive first when more than one classification is available. R. MINIMUM FUND BALANCE POLICY It is the desire of the City to maintain an adequate fund balance in the General Fund to maintain liquidity and in anticipation of economic downturns or natural disasters. The City Council has adopted a financial standard to maintain a General Fund minimum fund balance of 120 days of budgeted expenditures. S. DEFERRED OUTFLOWS/INFLOWS OF RESOURCES In addition to assets, the statement of financial position and/or balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources,represents a consumption of net position that applies to a future period(s)and so will not be recognized as an outflow of resources(expense/expenditure)until then. The City has the following items that qualify for reporting in this category: • Deferred charges on refundings-A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The deferred charge on refundings is reported in the government-wide statement of net position. 63 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) S. DEFERRED OUTFLOWS/INFLOWS OF RESOURCES(CONTINUED) • Pension contributions after measurement date-These contributions are deferred and recognized in the following fiscal year. • Difference in projected and actual earnings on pension assets - This difference is deferred and amortized over a closed five-year period. In addition to liabilities, the statement of financial position and/or balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s)and so will not be recognized as an inflow of resources(revenue)until that time. Reported as a deferred inflow for the City are the difference in expected and actual pension experience and the difference arising from changes in assumptions. Both are deferred and recognized over the estimated average remaining lives of all members determined as of the measurement date. T. TAP-IN(CONNECTION FEES)AND IMPACT FEES Water and sewer tap-in fees(connection fees)represent reimbursement of the costs incurred to perform the connection of the respective utilities. These fees are recorded as operating revenue at the time of service. The impact fee substantially exceeds the cost of connection to the water and sewer system,and is therefore viewed as a contribution. Effective with the implementation of GASB Statement No. 33, impact fees are recorded as contributions in the Enterprise Fund. U. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Specifically,the actuarial calculations to determine the annual required contributions of the retirement and other post-employment benefits are based on assumptions about events far into the future. Accordingly, actual results could differ from those estimates. V. PENSIONS For purposes of measuring the net pension liability, pension related deferred outflows and inflows of resources, and pension expense, City specific information about its Fiduciary Net Position in the Texas Municipal Retirement System (TMRS) and additions to/deductions from the City's Fiduciary Net Position have been determined on the same basis as they are reported by TMRS. For this purpose,plan contributions are recognized in the period that compensation is reported for the employee, which is when contributions are legally due. Benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Information regarding the City's Total Pension Liability is obtained from TMRS through a report prepared for the City by TMRS' consulting actuary, Gabriel Roeder Smith&Company,in compliance with GASB Statement No.68,Accounting and Financial Reporting for Pensions-an amendment of GASB Statement No. 27. 64 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) W. NEW AND FUTURE FINANCIAL REPORTING REQUIREMENTS Statement No. 72, "Fair Value Measurement and Application," is effective in fiscal year 2016. This statement addresses accounting and financial reporting issues related to fair value measurements and provides guidance for determining a fair value measurement for financial reporting purposes,as well as for applying fair- value to certain investments and disclosures related to all fair- value measurements. This statement did not have a material effect for the City. The GASB has issued the following statements which will become effective in future years. Statement No. 75, "Accounting and Financial Reporting for Postemployrnent Benefits Other Than Pensions."—This statement changes the focus of accounting of postemployment benefits other than pension from whether they are responsibly funding the benefits over time to a point-in-time liability that is reflected on the employer's financial statements for any actuarially underfunded portion of benefits earned to date. This statement will become effective for the City in fiscal year 2018. Statement No. 77, "Tax Abatement Disclosures"—This statement requires governments that enter into tax abatement agreements to provide certain disclosures regarding these commitments. Although, this statement is not effective for the City until fiscal year 2017, the City has early implemented in fiscal year 2016. X. PRIOR PERIOD ADJUSTMENT The City restated its government-wide net position as of September 30,2015 to remove infrastructure assets with a net book value of$64.7 million. It was determined that the City does not own and is not required to maintain this infrastructure. Government-Wide Statement ofActivities Governmental Business-type Activities Activities Total Net position at September 30,2015, as previously reported $ 465,853,469 $ 358,602,146 $ 824,455,615 Removal of governmental capital assets (64,747,826) - (64,747,826) Net position at September 30, 2015, as restated $ 401,105,643 $ 358,602,146 $ 759,707,789 65 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. BUDGETARY ACCOUNTING The City follows these procedures in establishing the appropriated budget as reflected in the accompanying financial statements: (1) At least sixty days prior to the beginning of each fiscal year, the City Manager submits to the City Council a proposed budget for the fiscal year beginning on the following October 1. The operating budget, which represents the financial plan for the ensuing fiscal year, includes proposed expenditures and the means of financing them. (2) Public hearings are conducted at which all interested persons' comments concerning the budget may be heard. (3) The budget is legally enacted by the City Council through passage of an appropriation ordinance and tax-levying ordinance not later than the final day of the last month of the fiscal year. (4) Formal budgetary integration is employed as a management control device during the year for the General Fund, Special Revenue Funds, Debt Service Fund and Proprietary Funds. Management control for the operating budget is maintained at the individual office, department, or agency level. (5) Annual budgets are legally adopted for the General Fund, Special Revenue Funds, Debt Service Fund and the Proprietary Funds. Capital Projects Funds have no binding annual budget. Project-length financial plans are adopted for all capital projects; accordingly, no comparison of budget to actual is presented in the financial statements. (6) Amendments that alter total expenditures of any fund must be approved by the City Council. Although costs are monitored on a departmental basis,the level of control at which expenditures may not exceed the budget is at the fund level. The reported budgetary data has been revised for amendments authorized. (7) Any appropriation balances lapse or revert to the undesignated fund balances at the close of each fiscal year. 66 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (CONTINUED) A. BUDGETARY ACCOUNTING(CONTINUED) The budgets of the various funds are prepared on a basis consistent with generally accepted accounting principles as described above. The following table compares original to final budgets for the General Fund. Amendments Original Increase Final Budget (Decrease) Budget Revenues- Taxes and franchise, including interest and penalties $ 82,461,000 $ - $ 82,461,000 Licenses, permits and fees 1,032,160 - 1,032,160 Charges for services 4,289,000 - 4,289,000 Fines and forfeitures 2,065,000 - 2,065,000 Intergovernmental 377,000 - 377,000 Investment and other 3,963,010 - 3,963,010 Total revenues 94,187,170 - 94,187,170 Expenditures- Current- General government 26,270,917 (743,000) 25,527,917 Public safety 44,756,614 705,497 45,462,111 Public works 13,163,623 (1,884,318) 11,279,305 Culture and recreation 13,197,352 18,000 13,215,352 Total expenditures 97,388,506 (1,903,821) 95,484,685 Excess(deficiency)of revenues over expenditures (3,201,336) 1,903,821 (1,297,515) Other financing sources(uses)- Transfers in 3,290,000 - 3,290,000 Transfers out - (9,155,808) (9,155,808) Total other financing sources(uses) 3,290,000 (9,155,808) (5,865,808) Net change in fund balances $ 88,664 $ (7,251,987) $ (7,163,323) B. ENCUMBRANCES Encumbrances represent commitments related to unperformed(executory) contracts for goods or services. For budgetary purposes, encumbrances lapse at fiscal year-end. 67 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 III. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUNDS BALANCE SHEET AND THE GOVERNMENT-WIDE STATEMENT OF NET POSITION The governmental fund balance sheet includes a reconciliation between fund balance-total governmental finds and net position-governmental activities as reported in the government-wide statement of net position. One element of that reconciliation explains that"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 difference are as follows: Bonds payable $ 198,135,000 Plus: Issuance premium(amortized against interest expense) 15,088,834 Less: Issuance discount(amortized against interest expense) (115,748) Bank loans 11,527,387 Capital leases payable 4,746,029 Net pension liability 38,237,184 Compensated absences 6,992,295 Other post-employment benefits 3,201,091 Net adjustment to reduce fund balance-total governmental funds to arrive at net position-governmental activities $ 277,812,072 B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES AND THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation of net changes in fund balances — total governmental funds to changes in net position of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that "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 difference are as follows: Capital outlay $ 65,116,395 Depreciation expense (31,497,334) Net adjustment to increase net changes in fund balances- total governmental funds to arrive at changes in net position ofgovernmental activities $ 33,619,061 68 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 III. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES AND THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES (CONTINUED) Another element of the reconciliation states that "The net effect of various miscellaneous transactions involving capital assets(i.e. sales, disposals, and donations) is to increase net position." The details of this difference are as follows: Donations $ 7,600,212 Reclassifications, disposals, and transfers (5,912) Net adjustment to increase net changes in fund balances-total governmental funds to arrive at changes in net position of governmental activities $ 7,594,300 Another element of the reconciliation states that "The issuance of long-term debt (e.g. bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long- term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued,whereas these amounts are deferred and amortized in the statement of activities." The details of this difference are as follows: Issuance of lease $ (2,250,000) Issuance of debt (11,450,000) Premiums received on issuance of debt (1,094,690) Deferred amount on refunding 275,618 Debt payments/refundings 24,614,237 Capital lease payments 1,009,481 Net adjustment to increase net changes in fund balances- total governmental funds to at-rive at changes in net position ofgovernmental activities $ 11,104,646 69 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2016 III. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES AND THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES (CONTINUED) Another element of the reconciliation states that"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." The details of these differences are as follows: Increase in net pension obligation $ (8,509,529) Deferred net actuarial loss 6,535,368 Increase in deferred pension premiums 441,050 Net adjustment to decrease net changes in fund balances-total governmental funds to arrive at changes in net position of governmental activities $ (1,533,111) Increase in OPEB liability $ (426,137) Change in compensated absences (827,113) Amortization of bond premium/discount 1,091,288 Change in accrued interest 814,267 Amortization of deferred amount on refunding (683,855) Net adjustment to decrease net changes in fund balances-total governmental funds to arrive at changes in net position of governmental activities $ (31,550) IV. DETAILED NOTES ON ALL FUNDS A. CASH AND INVESTMENTS At September 30, 2016, the carrying amount of deposits was a debit balance of$33,362,594, including $2,033,169 in outstanding checks, and the respective bank balances totaled $35,395,763. The City's bank balances were fully insured or collateralized with securities held by the City's agent in the City's name. Investments— All investments are presented at fair value. The fair value of U.S. Government Securities is based upon discounted future cash flows. The fair value of the positions in the state investment pools is the same as the value of the pool shares. The change in the fair value of investments during the year ended September 30,2016 is as follows: Fair value at September 30,2016 $ 277,854,794 Add: Proceeds of investments matured this fiscal year 266,148,876 Less: Cost of investments purchased this fiscal year (236,370,661) Less: Fair value at September 30,2015 (305,886,500) Change in fair value of investments $ 1,746,509 70 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) A. CASH AND INVESTMENTS(CONTINUED) Reconciliation of cash and investments to the statement of net position amounts for cash and cash equivalents and investments is as follows: Cash in banks $ 33,362,594 Investments 277,854,794 Total cash and investments $ 311,217,388 Statement of net position presentation: Cash and cash equivalents $ 29,455,641 Investments 179,551,432 Restricted assets- Cash and cash equivalents 13,334,168 Investments 88,876,147 Total cash and cash equivalents and investments $ 311,217,388 Following Statement No. 72, "Fair Value Measurement and Application," the City categorizes its fair value measurements within the hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The City's investments are classified below and have the following recurring fair value measurements as of September 30, 2016. Weighted Average Carrying Fair Input Maturity Amount Value Level (Days) U. S. Government Securities $ 113,000,078 $ 113,000,078 1 194 Certificates of Deposit 148,246,336 148,246,336 1 438 State Investment Pools 16,608,380 16,608,380 1 1 $ 277,854,794 $ 277,854,794 Portfolio weighted average maturity 316 In accordance with its investment policy, the City manages its interest rate risk by limiting the weighted average maturity of its portfolio to less than 540 days. 71 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) A. CASH AND INVESTMENTS(CONTINUED) Leilal and Contractual Provisions Governing Deposits and Investments The Public Funds Investment Act(PFIA)(Government Code Chapter 2256) contains specific provisions in the areas of investment practices,management reports and establishment of appropriate policies. Among other things,it requires the City to adopt,implement,and publicize an investment policy. That policy must address the following areas:(1)safety of principal and liquidity,(2)portfolio diversification,(3)allowable investments,(4)acceptable risk levels,(5)expected rates of return,(6)maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for certificates of deposit. Statutes authorize the City to invest in (1) obligations of the U.S. Treasury, certain U.S. agencies, and the State of Texas, (2) certificates of deposit, (3) certain municipal securities, (4) money market savings accounts, (5) repurchase agreements, (6) banker's acceptances, (7) mutual funds,(8)investment pools,(9)guaranteed investment contracts,and(10)common trust funds. The Act also requires the City to have independent auditors perform test procedures related to investment practices as provided by the Act. The City is in substantial compliance with the requirements of the Act and with local policies. In addition,the funds of the City must be deposited and invested under the terms of a contract,contents of which are set out in the Depository Contract Law. The depository bank places approved pledged securities for safekeeping and trust with the City's agent bank in an amount sufficient to protect City funds on a day-to-day basis during the period of the contract. The pledge of approved securities is waived only to the extent of the depository bank's dollar amount of Federal Deposit Insurance Corporation (FDIC) insurance. Policies Governing Deposits and Investments 1. Foreign Currency Risk—The City's deposits and investments are not exposed to foreign currency risk. 2. Custodial Credit Risk—The City's policy is to be collateralized. The City was fully collateralized during the year. 3. Interest Rate Risk—In compliance with the City's Investment Policy,as of September 30,2016,the City minimized its interest rate risk in the portfolio by: a) Limiting the weighted average maturity to 540 days; b) Structuring the portfolio so that maturities meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the secondary market prior to maturity; c) Monitoring credit ratings of portfolio positions to assure compliance with rating requirements imposed by PFIA; and d) Investing operating funds primarily in short-term securities, money market mutual funds, or government investment pools. 4. Credit Risk — In compliance with the City's Investment Policy, as of September 30, 2016, the City minimized credit risk losses due to default of security issuer or backer by: 72 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) A. CASH AND INVESTMENTS (CONTINUED) a) Limiting investments to the safest rated securities. All the City's purchased investments in U. S. Agencies were rated AAA, AAA, and Aaa by Standard & Poor's, Fitch and Moody's respectively; b) Using a registered investment advisor to provide investment and market advice; and c) Diversifying the investment portfolio so that potential losses on individual securities were minimized. The City invests on a short-term basis in three investment pools. At September 30,2016,$10,834,686 was invested in TexPool. The Comptroller of Public Accounts is the sole officer and director of the Texas Treasury Safekeeping Trust Company, which is authorized to operate the state investment pool. The Comptroller maintains oversight of all operations of the pool. The state investment pool is rated AAAm by Standard and Poor's. In addition, $189,874 was invested in the Texas Short Term Asset Reserve Program (TexSTAR) and $5,583,819 in TexasDAILY. Both are an investment pool that is authorized under Chapters 791 (Cooperation Act)and 2256(Investment Act)of the Texas Government Code. These investment pools are managed by board of directors and member advisory boards. Participants have representation on the board. TexSTAR and TexasDAILY are rated AAAm by Standard&Poor's. Concentration Risk — The City invests in pools, certificates of deposit, money market funds, municipal bonds and U. S.Government Securities. State law authorizes the City to invest in obligations of the United States government and its agencies, commercial paper, money market funds, certificates of deposit of any state or federally chartered bank, obligations of states, agencies, counties, cities and other political subdivisions of any state not rated less than A or equivalent. All investments made in 2016 were in the aforementioned categories. B. PROPERTY TAXES AND RECEIVABLES Property taxes attach as an enforceable lien on January 1. Taxes are levied on or about October 1, are due on November 1, and are past due the following February 1. The Williamson and Travis Central Appraisal Districts established appraisal values in accordance with requirements of the Texas Legislature. The City Council levies taxes based upon the appraised values. Williamson County and Travis County bills and collects the City's property taxes. The property tax rates, established in accordance with state law, were based on 100% of the net assessed valuation of real and personal property within the City on the 2015 tax roll. The tax rate, based on total taxable assessed valuation of$10,492,085,922 was$0.41465 on each$100 valuation and was allocated to the General Fund and Debt Service Fund at$0.254460 and$0.160190, respectively. 73 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) B. PROPERTY TAXES AND RECEIVABLES(CONTINUED) General Debt Service Fund Fund Total Current year levy $ 104,460 $ 58,759 $ 163,219 Prior years' levies 232,775 144,727 377,502 337,235 203,486 540,721 Less- allowance for uncollectible taxes (3,406) (2,055) (5,461) $ 333,829 $ 201,431 $ 535,260 Allowances for uncollectible taxes are based upon historical experience in collecting property taxes. The City is prohibited from writing off real property taxes without specific statutory authority from the Texas Legislature. C. INTERFUND,RECEIVABLES,PAYABLES AND TRANSFERS Interfund receivables and payables as of September 30,2016 were as follows: Receivable Fund Payable Fund Receivable Payable Debt Service Fund General Fund $ 11,135 $ 11,135 Round Rock Transportation and Economic Development Nonmajor Governmental Funds Corporation Revenue Fund 1,500,000 1,500,000 Self-Financed Construction Fund Nonmajor Governmental Funds 7,316 7,316 Nonmajor Governmental Funds General Fund 75,932 75,932 Governmental Funds $ 1,594,383 $ 1,594,383 Remaining balances resulted from the 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. The City reports interfund transfers between many of its funds. These routine transfers are consistent with the activities of the funds. Transfers are used to(1)move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. A summary of transfers between funds is on the next page. 74 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) C. INTERFUND RECEIVABLES,PAYABLES AND TRANSFERS(CONTINUED) Transfers In Transfers Out General Fund- Water and Sewer Fund $ 3,290,000 $ - Self-financed Construction Fund - 9,150,000 Nonmajor Governmental Funds - 5,808 3,290,000 9,155,808 Debt Service Fund- Golf Course Fund 320,000 - Round Rock Transportation and Economic Development Corporation Revenue Fund 5,020,000 - Nonmajor Governmental Funds 1,077,000 - 6,417,000 - Round Rock Transportation and Economic Development Corporation Revenue Fund- Debt Service Fund - 5,020,000 Self-Financed Construction Fund 30,000 - Nonmajor Governmental Funds - 7,700,000 30,000 12,720,000 Self-Financed Construction- General Fund 9,150,000 - Round Rock Transportation and Economic Development Corporation Revenue Fund - 30,000 2014 General Obligation Bonds Fund - 1,602,002 Nonmajor Governmental Funds 7,316 - 9,157,316 1,632,002 2014 General Obligation Bonds Fund Self-Financed Construction Fund 1,602,002 - 1,602,002 - Other Governmental Funds- General Fund 5,808 - Debt Service Fund - 1,077,000 Round Rock Transportation and Economic Development Corporation Revenue Fund 7,700,000 - Nonmajor Governmental Funds 2,350,000 2,357,316 10,055,808 3,434,316 Subtotal of Governmental Funds 30,552,126 26;942,126 Water and Sewer Fund- General Fund - 3,290,000 - 3,290,000 Golf Course Fund- Debt Service Fund - 320,000 - 320,000 Subtotal of Proprietary Funds - 3,610,000 Total Transfers $ 30,552,126 $ 30,552,126 75 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) D. JOINT VENTURE The City entered into a partnership with the cities of Leander and Cedar Park and formed Brushy Creek Regional Utility Authority(BCRUA). The BCRUA has the responsibility to provide reliable,cost effective sources of water. The City accounts for this partnership as a joint venture. Condensed financial statements for BCRUA are shown below. Financial statements may be obtained at the BCRUA,221 East Main Street, Round Rock,Texas, 78664. STATEMENT OF NET POSITION As of September 30,2016 Total City's Interest ASSETS Cash and cash equivalents $ 5,936,436 $ 3,079,818 Receivables, other current assets 126,659 66,397 Restricted investments 24,537,787 11,158,246 Capital assets 161,800,202 58,644,739 Total Assets 192,401,084 72,949,200 Deferred outflows of resources 8,871,232 6,353,306 LIABILITIES Accounts payable 298,106 32,157 Retainage payable 1,582,268 546,199 Accrued bond interest payable 779,130 75,878 Total current liabilities 2,659,504 654,234 Bonds payable 179,141,559 66,445,900 Total Liabilities 181,801,063 67,100,134 NET POSITION $ 19,471,253 $ 12,202,372 STATEMENT OF ACTIVITIES AND CHANGES IN NET POSITION For the Year Ended September 30,2016 Total City's Interest Operating revenues $ 688,730 $ 220,147 Interest expense (7,665,566) (2,498,413) Other operating expenses (5,280,578) (1,599,361) Other expenses (822,804) (615,952) Changes in Net Position (13,080,218) (4,493,579) Net position, October 1,2015 20,753,872 12,380,581 Contribution of capital,net 11,797,599 4,315,370 Net position, September 30, 2016 $ 19,471,253 $ 12,202,372 76 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) E. CAPITAL ASSETS Capital asset activity for the year ended September 30, 2016 was as follows: October 1, 2015 Additions/ Retirements/ September 30, (restated) Completions Adjustments 2016 Governmental Activities: Capital assets not being depreciated: Land $ 45,751,142 $ 7,382,605 $ - $ 53,133,747 Construction in progress 30,174,237 60,347,426 (30,867,773) 59,653,890 Total capital assets not being depreciated 75,925,379 67,730,031 (30,867,773) 112,787,637 Capital assets being depreciated: Buildings and improvements 700,785,247 27,912,053 - 728,697,300 Equipment 67,538,831 7,942,296 (2,094,872) 73,386,255 Total capital assets being depreciated 768,324,078 35,854,349 (2,094,872) 802,083,555 Less accumulated depreciation for: Buildings and improvements 342,457,957 25,009,784 - 367,467,741 Equipment 50,776,623 6,487,550 (2,088,960) 55,175,213 Total accumulated depreciation 393,234,580 31,497,334 (2,088,960) 422,642,954 Total capital assets being depreciated,net 375,089,498 4,357,015 (5,912) 379,440,601 Governmental activities capital assets,net $ 451,014,877 $ 72,087,046 $ (30,873,685) $ 492,228,238 Business-Type activities: Capital assets not being depreciated: Land $ 8,452,956 $ - $ - $ 8,452,956 Construction in progress 5,316,019 11,162,844 (3,916,561) 12,562,302 Total capital assets not being depreciated 13,768,975 11,162,844 (3,916,561) 21,015,258 Capital assets being depreciated: Buildings and improvements 445,478,004 14,577,831 (352,508) 459,703,327 Equipment 15,032,403 1,486,266 (506,038) 16,012,631 Total capital assets being depreciated 460,510,407 16,064,097 (858,546) 475,715,958 Less accumulated depreciation for: Building and improvements 146,453,575 14,059,905 (352,508) 160,160,972 Equipment 11,130,964 1,597,701 (504,309) 12,224,356 Total accumulated depreciation 157,584,539 15,657,606 (856,817) 172,385,328 Total capital assets being depreciated,net 302,925,868 406,491 (1,729) 303,330,630 Business-type activities capital assets,net $ 316,694,843 $ 11,569,335 $ (3,918,290) $ 324,345,888 77 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) E. CAPITAL ASSETS (CONTINUED) Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: General government $ 3,248,098 Public safety 2,995,743 Public works 20,216,206 Culture and recreation 5,037,287 Total depreciation expense—governmental activities $ 31,497,334 Business-Type Activities: Water and sewer utility $ 15,537,530 Golf course 120,076 Total depreciation expense—business-type activities $ 15,657,606 Major construction contracts in progress from inception to September 30, 2016, consisted of the following: Expended to Project September 30, Future Authorization 2016 Committed Financing Projects funded principally by general obligation debt- Parks, public safety, streets and public service facilities $ 31,881,778 $ 31,868,135 $ 13,643 None Parks, public safety and library 71,029,740 33,133,031 37,896,709 None Municipal complex, public safety and street improvements 21,753,034 21,403,615 349,419 None Self-financed construction 48,753,417 33,003,024 15,750,393 None Round Rock Transportation System- road improvements 79,982,411 73,138,841 6,843,570 None Sports venue complex 22,588,212 22,502,657 85,555 None $ 275,988,592 $ 215,049,303 $ 60,939,289 Projects funded by revenue bonds and developer contributions- Drainage system improvements $ 4,620,297 $ 1,529,199 $ 3,091,098 None Utility line improvements 2,445,057 411,071 2,033,986 None Self-financed construction 81,703,671 56,304,901 25,398,770 None $ 88,769,025 $ 58,245,171 $ 30,523,854 78 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) F. LONG-TERM DEBT The following is a summary of long-term debt transactions, including current portion, of the City for the year ended September 30,2016: Balance Balance October 1, Refundings/ September 30, Due within 2015 Additions Retirements 2016 one year Governmental Activities General obligation bonds $ 154,925,000 $ 6,995,000 $ (12,380,000) $ 149,540,000 $ 7,510,000 Certificates of obligation 29,675,000 - (2,580,000) 27,095,000 780,000 Hotel tax revenue bonds 13,225,000 4,455,000 (5,360,000) 12,320,000 645,000 Sales tax revenue bonds 11,920,000 - (2,740,000) 9,180,000 1,780,000 State infrastructure bank loans 13,081,624 - (1,554,237) 11,527,387 1,618,507 Plus deferred amount: For issuance premium 15,099,111 1,094,690 (1,104,967) 15,088,834 1,185,541 For issuance discount (129,427) - 13,679 (115,748) (13,679) Lease purchase payable 3,505,510 2,250,000 (1,009,481) 4,746,029 1,121,626 Net pension liability 29,727,655 8,509,529 - 38,237,184 - Compensated absences 6,165,182 5,273,513 (4,446,400) 6,992,295 4,684,838 Other post-employment benefits 2,774,954 934,835 (508,698) 3,201,091 - Total governmental activities 279,969,609 29,512,567 (31,670,104) 277,812,072 19,311,833 Business-Type Activities Revenue bonds 86,125,000 35,185,000 (36,635,000) 84,675,000 3,105,000 Plus deferred amount: For issuance premium 1,702,948 3,096,496 (109,820) 4,689,624 232,191 Net pension liability 4,053,772 1,160,390 - 5,214,162 - Compensated absences 504,728 525,849 (501,554) 529,023 417,928 Other post-employment benefits 348,532 127,478 (69,368) 406,642 - Total business-type activities 92,734,980 40,095,213 (37,315,742) 95,514,451 3,755,119 Total government $ 372,704,589 $ 69,607,780 $(68,985,846) $ 373,326,523 $ 23,066,952 The General Fund and Hotel/Motel Fund are responsible for liquidating the liability for compensated absences and other post-employment benefits in the governmental activities and the Water and Sewer Fund and Drainage Fund are responsible for liquidating the liability for compensated absences and other post- employment benefits in the business-type activities. 79 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) F. LONG-TERM DEBT(CONTINUED) Long-term debt at September 30, 2016 is comprised of the following: Business- Governmental Type Activities Activities General Obligation Bonds: $ 18,575,000 2010 refunding bonds due in annual installments of$ 140,000 to$ 1,940,000 through 2027; interest at 2.0%to 4.0% $ 16,505,000 $ - $ 19,580,000 2011 refunding bonds due in annual installments of$405,000 to$ 1,885,000 through 2027; interest at 2.0%to 4.0% 13,745,000 - $ 8,615,000 2013 refunding bonds due in annual installments of$455,000 to$925,000 through 2024; interest at 1.00%to 1.65% 5,890,000 - $ 10,465,000 2014A GO and refunding bonds due in annual installments of$270,000 to$ 1,740,000 through 2021; interest at 2.0%to 5.0% 7,055,000 - $ 66,885,000 2014 GO and refunding bonds due in annual installments of$-0-to$4,790,000 through 2038; interest at 3.0%to 5.0% 66,885,000 - $ 32,465,000 2015 refunding bonds due in annual installments of$-0-to$3,445,000 through 2032; interest at 4.0%to 5.0% 32,465,000 - $ 6,995,000 2016 refunding bonds due in annual installments of$-0-to$ 755,000 through 2032; interest at 2.0%to 4.0% 6,995,000 - Total General Obligation Bonds 149,540,000 - Certificates of Obligation: $27,270,000 2014 Combination tax and revenue certificates of obligation due in installments of$ 175,000 to $ 1,700,000 through 2039; interest at 2.0%to 4.0% 27,095,000 - Total Certificates of Obligation 27,095,000 - Hotel Tax Revenue Bonds: $ 8,920,000 2007 refunding bonds due in annual installments of $345,000 to$ 690,000 through 2025; interest at 4.0%to 4.5% 490,000 - $ 7,715,000 2012 venue tax and hotel bonds due in annual installments of $ 110,000 to$590,000 through 2038; interest at 2.0%to 4.0% 7,375,000 - $4,455,000 2016 refunding bonds due in annual installments of $ 30,000 to$ 630,000 through 2025; interest at 2.0%to 4.0% 4,455,000 - Total Hotel Tax Revenue Bonds 12,320,000 - Sales Tax Revenue Bonds: $ 10,930,000 2015 refunding bonds due in annual installments of $ 1.75 to$ 1.89 million through 2021 including interest at 1.56% 9,180,000 - Total Sales Tax Revenue Bonds 9,180,000 - 80 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) F. LONG-TERM DEBT(CONTINUED) Business- Governmental Type Activities Activities State Infrastructure Bank Loans: $ 7,000,000 2006 note due in annual installments of$ 557,759 through 2021 including interest at 4.0% $ 2,833,229 $ - $ 16,000,000 2008 note due in annual installments of$ 1,459,255 through 2023 including interest at 4.2% 8,694,158 - Total State Infrastructure Bank Loans 11,527,387 - Utility System Revenue Bonds: $ 12,000,000 2006 bonds due in annual installments of $365,000 to$ 835,000 through 2026; interest at 2.20%to 2.95% - 7,395,000 $ 78,785,000 2009 bonds due in annual installments of $ 645,000 to$4,455,000 through 2039; interest at 2.0%to 5.0% - 34,410,000 $ 8,000,000 2014 bonds due in annual installments of $ -0-to$585,000 through 2034; interest at 2.0%to 4.0% - 7,685,000 $35,185,000 2016 bonds due in annual installments of $ 155,000 to$ 3,400,000 through 2035; interest at 2.0%to 5.0% - 35,185,000 Total Utility System Revenue Bonds - 84,675,000 Issuance premium 15,088,834 4,689,624 Issuance discount (115,748) - Lease purchases payable: $ 5,700,000 leases due in semi-annual installments including interest ranging from 1.02%- 1.619%due in 2021. The lease obligation is funded with general revenue sources. 4,746,029 - Net pension liability 38,237,184 5,214,162 Compensated absences 6,992,295 529,023 Other post-employment benefits 3,201,091 406,642 Total Primary Government Debt $ 277,812,072 $ 95,514,451 81 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) F. LONG-TERM DEBT (CONTINUED) The annual requirements to amortize bonded, certificates of obligation, loan and lease debt at September 30,2016, including interest are as follows: Governmental Activities: Year Ending September 30, General and Certificates of Obligation Debt Principal Interest Total 2017 $ 8,290,000 $ 7,312,976 $ 15,602,976 2018 8,590,000 7,016,559 15,606,559 2019 10,875,000 6,730,029 17,605,029 2020 11,275,000 6,333,129 17,608,129 2021 9,790,000 5,860,406 15,650,406 2022-2026 47,575,000 22,946,850 70,521,850 2027-2031 33,145,000 14,196,694 47,341,694 2032-2036 28,385,000 7,421,825 35,806,825 2037-2041 18,710,000 1,581,225 20,291,225 $ 176,635,000 $ 79,399,693 $ 256,034,693 Year Ending September 30, Hotel Tax Revenue Principal Interest Total 2017 $ 645,000 $ 366,848 $ 1,011,848 2018 620,000 397,830 1,017,830 2019 630,000 382,805 1,012,805 2020 645,000 364,955 1,009,955 2021 665,000 343,280 1,008,280 2022-2026 3,320,000 1,317,950 4,637,950 2027-2031 2,120,000 881,175 3,001,175 2032-2036 2,520,000 489,140 3,009,140 2037-2038 1,155,000 46,700 1,201,700 $ 12,320,000 $ 4,590,683 $ 16,910,683 Year Ending September 30, Sales Tax Revenue Principal Interest Total 2017 $ 1,780,000 $ 143,208 $ 1,923,208 2018 1,810,000 115,440 1,925,440 2019 1,840,000 87,204 1,927,204 2020 1,860,000 58,500 1,918,500 2021 1,890,000 29,484 1,919,484 $ 9,180,000 $ 433,836 $ 9,613,836 82 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) F. LONG-TERM DEBT (CONTINUED) Governmental Activities: Year Ending September 30, State Infrastructure Bank Loans Principal Interest Total 2017 $ 1,618,507 $ 478,484 $ 2,096,991 2018 1,685,435 411,555 2,096,990 2019 1,755,133 341,858 2,096,991 2020 1,827,714 269,277 2,096,991 2021 1,896,172 193,692 2,089,864 2022-2026 2,744,426 174,084 2,918,510 $ 11,527,387 $ 1,868,950 $ 13,396,337 Year Ending September 30, Lease Purchases Principal Interest Total 2017 $ 1,121,626 $ 65,307 $ 1,186,933 2018 1,138,303 48,630 1,186,933 2019 1,155,231 31,702 1,186,933 2020 868,906 15,678 884,583 2021 461,963 4,596 466,559 $ 4,746,029 $ 165,913 $ 4,911,942 Business-Type Activities: Year Ending September 30, Utility System Revenue Bonds Principal Interest Total 2017 $ 3,105,000 $ 3,247,459 $ 6,352,459 2018 3,190,000 3,153,554 6,343,554 2019 3,295,000 3,038,199 6,333,199 2020 3,415,000 2,897,619 6,312,619 2021 3,555,000 2,747,831 6,302,831 2022-2026 19,305,000 11,710,403 31,015,403 2027-2031 17,675,000 8,400,744 26,075,744 2032-2036 18,395,000 5,545,906 23,940,900 2037-2041 12,740,000 1,294,750 14,034,750 $ 84,675,000 $ 42,036,459 $ 126,711,459 In prior years, the City defeased certain revenue and general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. At September 30,2016,there are no bonds outstanding which have been reported as defeased. 83 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) F. LONG-TERM DEBT (CONTINUED) Bond ordinances also provide for other limitations and restrictions. The City is in compliance with all significant limitations and restrictions contained in the various bond ordinances. In November 2013,the voters authorized the issuance of general obligation bonds to fund capital assets of the general government. The full faith and credit of the City as well as the City's ad valorem taxing authority back general obligation bonds. Date Amount Amount Unissued Purpose Authorized Authorized Issued(*) Balance Fire Department 11/5/2013 $ 16,500,000 $ 7,000,000 $ 9,500,000 Parks &Recreation 11/5/2013 56,500,000 46,200,000 10,300,000 Library 11/5/2013 23,200,000 1,500,000 21,700,000 Police&Fire 11/5/2013 27,400,000 16,300,000 11,100,000 $ 123,600,000 $ 71,000,000 $ 52,600,000 (*)"Amount issued"column is adjusted pursuant to rules used by the Texas Attorney General. The City may incur non-voted debt payment from or secured by its levy and collection of ad valorem taxes and other sources of revenue,including tax notes,public property finance contractual obligations,and leases for various purposes. (1) UTILITY REVENUE BONDS The City is required by bond ordinances to pledge the net revenues of the waterworks and sewer system for the retirement of its outstanding revenue bonds,including interest thereon,and is required for such purposes to maintain debt service funds and bond reserve funds for all outstanding revenue bonds. The debt service funds are restricted within the Enterprise Fund and require that net revenues of the City's waterworks and sewer system, after operating and maintenance expenses are deducted, be irrevocably pledged by providing equal monthly installments which will accumulate to the semi-annual principal and interest requirements as they become due. The bond reserve funds for revenue bond retirement are also restricted within the Enterprise Fund. The City is in compliance with the requirement to maintain a combined reserve fund containing cash and investments in an amount equal to the average annual principal and interest requirements of all bonds then outstanding. The City also covenants under the bond indentures that reserve funds shall be invested in time deposits, certificates of deposit and direct or guaranteed obligations of the United States of America. (2) HOTEL TAX REVENUE BONDS The debt service fund for the hotel tax revenue bonds, aggregating $835,312 at September 30, 2016, is reported in the governmental funds. Bond covenants require that the hotel tax revenues be irrevocably pledged by providing quarterly installments, which will accumulate to the semi-annual principal and interest requirements as they become due. 84 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) F. LONG-TERM DEBT(CONTINUED) The bond reserve fund for hotel tax revenue bond retirement aggregates $809,769 at September 30,2016. This amount is in compliance with the requirements contained in the bond's Indenture Agreement. This agreement requires '/z of the average annual debt service requirements of the bonds in the reserve fund be deposited upon issuance of the bonds, with quarterly installments until the required reserve is attained. (3) SALES TAX REVENUE BONDS The Round Rock Transportation and Economic Development Corporation issued the sales tax revenue bonds. The Corporation is a blended component unit of the City of Round Rock, which collects Y2 of I% of the sales tax collected by the State on its behalf. Although the Corporation is presented as a blended component unit, none of the City's assets are pledged to payment of the bonds. The bonds are secured solely by a pledge of the revenues of the Round Rock Transportation and Economic Development Corporation. The debt service fund for the sales tax revenue bonds, aggregating $147,886 at September 30, 2016, is reported in the governmental funds. Bond covenants require that the Corporation's share of the sales tax is pledged as security for the bonds. The Corporation provides monthly installments that accumulate to the semi-annual principal and interest requirements as they become due. A reserve fund was not established for these bonds. The Corporation purchased bond insurance to provide for payment of the principal and interest requirements in the event that pledged revenues are not sufficient. (4) 2016 REFUNDING/ISSUANCE In June 2016, the City advance refunded portions of General Obligation and Revenue Refunding Bonds and Combination Tax and Revenue Certificates of Obligation. The net proceeds of the $6,995,000 of General Obligation Refunding Bonds plus the reoffering premium (after payment of underwriting fees, insurance and other issuance costs) were used to purchase U.S. government securities. Those securities were deposited into irrevocable trusts with an escrow agent for the purpose of generating resources for all future debt service payments for the refunded debt. As a result,the refunded bonds are considered defeased, and the debt for these bonds has been removed from the City's financial statements. This advance refunding will reduce the total debt service payments over the next 16 years by$1,510,218, and will result in an economic gain (i.e., the difference between the present value of the debt service payments of the refunded debt and the refunding bonds) of$1,250,259. Additionally, in June 2016 the City advance refunded portions of Utility System Revenue Bonds. The net proceeds of the $35,185,000 of Utility System Revenue Refunding Bonds (after payment of underwriting fees, insurance and other issuance costs) were used to purchase U.S. government securities. Those securities were deposited into irrevocable trusts with an escrow agent for the purpose of generating resources for all future debt service payments for the refunded debt. As a result, the refunded bonds are considered defeased, and the debt for these bonds has been removed from the City's financial statements. 85 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) F. LONG-TERM DEBT(CONTINUED) This advance refunding will reduce the total debt service payments over the next 19 years by$6,042,787, and will result in an economic gain (i.e., the difference between the present value of the debt service payments of the refunded debt and the refunding bonds)of$4,671,016. In September 2016, the City advance refunded portions of Hotel Occupancy Tax Revenue Refunding Bonds. The net proceeds of the $4,455,000 of Hotel Occupancy Tax Revenue Refunding Bonds (after payment of underwriting fees, insurance and other issuance costs)were used to purchase U.S.government securities. Those securities were deposited into irrevocable trusts with an escrow agent for the purpose of generating resources for all future debt service payments for the refunded debt. As a result,the refunded bonds are considered defeased, and the debt for these bonds has been removed from the City's financial statements. This advance refunding will reduce the total debt service payments over the next nine years by$567,175, and will result in an economic gain (i.e. the difference between the present value of the debt service payments of the refunded debt and the refunding bonds) of$481,558. G. ACCRUED COMPENSATED ABSENCES Changes to accrued compensated absences for the year ended September 30,2016,were as follows: Governmental Business-Type Activities Activities Balance, October 1,2015 $ 6,165,182 $ 504,728 Additions 5,273,513 525,849 Reductions (4,446,400) (501,554) Balance,September 30,2016 $ 6,992,295 $ 529,023 Accrued compensated absences due within one year were $4,684,838 for governmental activities and $417,928 for business-type activities. Liabilities for accrued compensated absences are funded from general fund revenue for the governmental activities and water and sewer fund and drainage fund program revenues for the business-type activities. 86 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 IV. DETAILED NOTES ON ALL FUNDS (CONTINUED) H. RESTRICTED ASSETS The following summarizes restricted assets by purpose at September 30, 2016: Cash& Property Sales Accrued Cash Taxes Tax Interest Equivalents Investments Receivable Receivable Receivable Governmental Activities: Debt Service Fund $ 1,938,572 $ 801,013 $ 201,431 $ - $ - Restricted by debt covenants- Round Rock Transportation and Economic Development Corporation Fund 5,255,217 30,137,774 - 1,409,290 48,763 2014 General Obligation Bonds Fund 318,675 39,418,972 - - 32,143 2014 Certificates of Obligation Bond Fund 668,873 6,024,180 - - - Nonmajor capital projects funds 279,813 1,211,758 - - 1,273 Total Governmental Activities $ 8,461,150 $ 77,593,697 $ 201,431 $ 1,409,290 $ 82,179 Cash& Accrued Cash Accounts Interest Equivalents Investments Receivable Receivable Business-Type Activities: Water and sewer fund- Impact fees $ 429,330 $ 2,526,688 $ 172,249 $ - Construction 2,815,899 8,755,762 - - Customer deposits 1,063,019 - - - Revenue bond debt service 564,770 - - - Accrued interest receivable - - - 10,961 Total Business-Type Activities $ 4,873,018 $ 11,282,450 $ 172,249 $ 10,961 V. OTHER INFORMATION A. COMMITMENTS AND CONTINGENCIES Tax Collections The City has a contract with Williamson and Travis counties tax offices to collect City taxes and deposit monies to the City's accounts. For this service, Williamson County was paid $8,322 and Travis County was paid$494 for the fiscal year ended September 30,2016. 87 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 V. OTHER INFORMATION (CONTINUED) A. COMMITMENTS AND CONTINGENCIES(CONTINUED) Commitments for Road Construction The City's component unit, the Round Rock Transportation and Economic Development Corporation has entered into various commitments with the State of Texas, Department of Transportation relative to the construction of roadways. Water Supply Agreements On May 2, 1978,the City entered into the"Water Supply Contract"with the Brazos River Authority(BRA), providing the City the right to purchase 6,720 acre-feet of water per year from Lake Georgetown. A new agreement, "System Water Availability Agreement for Lake Georgetown" dated September 1, 2001, replaced that agreement. The new agreement revised the rate methodology from a tiered system rate, wherein rates change based upon the City's consumption,to a level system rate. For the fiscal year ended September 30, 2016,the City's cost under this contract was$473,760. On September 12, 1991,the City entered into the"Replacement Water Supply Agreement"with the BRA, wherein it received the right to purchase 8,134 acre-feet of water per year from Stillhouse Hollow Lake. Rights for an additional 10,000 acre-feet of water were acquired in the November 13, 1996"System Water Supply Agreement". These agreements were replaced with the"System Water Availability Agreement for Stillhouse Hollow Lake"dated September 1, 2001. Under this agreement,the City purchases 18,134 acre- feet of water per year at the new system rate. For the fiscal year ended September 30,2016,the City's cost under-this contract was$1,278,447. Effective September 1, 2001, the City entered into a"System Water Availability Agreement for Colorado River Basin Water" with the BRA, wherein it received reserved water rights for an additional 6,944 acre- feet of water. Two subsequent agreements granted Round Rock rights to 13,984 additional acre-feet of water per year from the Colorado River Basin. For the fiscal year ended September 30, 2016,the City's cost under these contracts was$1,727,406. Future annual charges under the Water Supply Agreements will be based upon the system rate periodically set by the BRA. Regional Wastewater Project In October 1996, as part of a plan for a regional wastewater collection,treatment and disposal system,the City and the City of Cedar Park entered into agreements with an alliance (Alliance) formed by the Brazos River Authority (BRA) and the Lower Colorado River Authority (LCRA). In 1998, LCRA acquired the treatment facilities of the City (these facilities were repurchased from the LCRA in 2009, as described below). BRA contracted with the Cities to operate and maintain the regional system. In September 2009, the Cities of Round Rock, Austin and Cedar Park entered into a Purchase Agreement with the LCRA wherein they agreed to buy the Brushy Creek Regional Wastewater System (BCRWWS) from the LCRA. The agreement outlined the proportional share that each city would purchase of the 88 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 V. OTHER INFORMATION (CONTINUED) A. COMMITMENTS AND CONTINGENCIES(CONTINUED) wastewater transportation and treatment system. On December 8, 2009, the three cities purchased the BCRWWS assets and entered into a Master Contract for the Financing, Construction, Ownership and Operation of the BCRWWS. The Master Contract provided for the terms and conditions by which the cities would jointly own and operate the BCRWWS. The system currently has a total treatment capacity of 24.5 MGD which is sufficient to meet future projected flows through 2019. The City of Round Rock's current wastewater capacity in the system is 20.1 MGD. The BRA is contracted to provide operation of the system, for which each of the cities is invoiced relative to their system usage. For the fiscal year ended September 30, 2016, expenditures for operation of the regional facilities were$3,705,470. In June,2010 the Cities of Round Rock,Austin and Cedar Park sold a share of the BCRWWS assets to the City of Leander, and all parties entered into the Amended and Restated Master Contract for the Financing, Construction, Ownership and Operation of the Brushy Creek Regional Wastewater System. Other The City is a defendant in a number of lawsuits arising principally from claims against the City for alleged improper actions by City employees. Total damages claimed are substantial;however,it has been the City's experience that such actions are usually dismissed or settled for amounts substantially less than the claimed amounts. The City Attorney estimates that the potential claims against the City not covered by various insurance policies would not materially affect the financial condition of the City. Arbitrage Rebate Due to requirements of the Tax Reform Act of 1986, the City annually contracts for the computations of arbitrage rebate requirements for the City's various bond issues. At September 30, 2016, the potential rebate was calculated at$0. Deferred Compensation Plan The City offers its employees a deferred compensation plan that permits them to defer a portion of their current salary until future years. Any contributions made to the deferred compensation plan, in compliance with Section 457 of the Internal Revenue Code, are not available to employees until termination of employment, retirement, death or an unforeseen emergency. A third party administrator, Nationwide Retirement Solutions, administers contributions to the plan. Effective January 1997, and in compliance with the provisions of the IRC Section 457(g), the plan assets are in custodial accounts for the exclusive benefit of the plans' participants and beneficiaries. In accordance with GASB Statement No. 32, the City provides neither administrative services nor investment advice to the plans and therefore, no fiduciary relationship exists between the City and the deferred compensation plan. 89 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 V. OTHER INFORMATION (CONTINUED) A. COMMITMENTS AND CONTINGENCIES(CONTINUED) Tax Abatements The City of Round Rock negotiates property tax abatement agreements, property tax rebates,and sales tax rebates on an individual basis. Each agreement was negotiated under The Texas Property Redevelopment and Tax Abatement Act,Chapter 312,Tax Code,V.A.T.S.as amended,allowing localities to abate property taxes for economic development purposes which include business relocation, retention and expansion. Property must be located within a reinvestment zone to be eligible for a tax abatement,and agreements are limited to ten (10) years in length. The abatement value can only be to the extent its value for that year exceeds its value for the year in which the agreement is executed. The City has an Abatement Recapture clause in all Tax Abatement Agreements in the event that the recipient does not fulfill the requirements of the agreement. The tax rebate program is for a period greater than 10 years, and taxes paid are reimbursed back to the owner. Amount of Taxes Abated during the Tax Abatement Program Fiscal Year Economic Development Property Tax $ 73,412 Tax Rebate Program Economic Development Property Tax 820,452 Sales Tax 5,959,618 The City has not made any commitments as part of the agreements other than to reduce taxes.The City is not subject to any tax abatement agreements entered into by other governmental entities. B. RISK MANAGEMENT The City is a member of the Texas Municipal League's Intergovernmental Risk Pool(Pool).The Pool was created for the purpose of providing coverage against risks, which are inherent in operating a political subdivision. The City pays annual premiums to the Pool for liability,property and workers' compensation coverage and all billed premiums upon the coverage have been paid. The City's agreement with the Pool provides that the Pool will be self-sustaining through member premiums and will provide reinsurance contracts through commercial companies. The Pool agrees to handle all liability, property and workers' compensation claims and provide any defense as is necessary. The Pool makes available to the City loss control services to assist the City in following a plan of loss control that may result in reduced losses. The City agrees that it will cooperate in instituting any and all reasonable loss control recommendations made by the Pool. The City has experienced no significant reductions in coverage through the Pool over the past year. There have been no insurance settlements exceeding Pool coverage for any of the past three years. 90 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 V. OTHER INFORMATION (CONTINUED) B. RISK MANAGEMENT(CONTINUED) Self-Funded Health Insurance Fund The City is self-insured for medical and dental claims. The self-insurance program is maintained in the Self-Funded Health Insurance Internal Service Fund. This program provides health benefit coverage in accordance with a pre-approved plan that establishes coverage limits per employee per year with unlimited health coverage benefits. The City purchases commercial insurance for claims in excess of a contractual City liability limit. Additionally, commercial insurance covers claims in excess of an aggregate amount for the City up to $1,000,000 per plan year. Settled claims have not exceeded the commercial coverage in any of the past three fiscal years. The liability is estimated based upon claims settled within the next month. An analysis of claims activities is presented below: Claims and Beginning Changes in Actual Claim Balance Fiscal Year Liability Estimates Payments at Year-End 2014 $ 468,850 $ 7,118,789 $ 6,981,727 $ 605,912 2015 $ 605,912 $ 8,351,468 $ 8,535,401 $ 421,979 2016 $ 421,979 $ 9,625,120 $ 9,310,446 $ 736,653 C. EMPLOYEE RETIREMENT PLAN Plan Description The City participates as one of 866 plans in the non-traditional,joint contributory, hybrid defined benefit plan administered by the Texas Municipal Retirement System(TMRS). TMRS is an agency created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G,Title 8, Texas Government Code (the TMRS Act) as an agent multiple-employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the System with a six-member Board of Trustees. Although the Governor,with the advice and consent of the Senate,appoints the Board,TMRS is not fiscally dependent on the State of Texas. TMRS'defined benefit pension plan is a tax-qualified plan under Section 401 (a) of the Internal Revenue Code. TMRS issues a publicly available comprehensive annual financial report(CAFR)that can be obtained at www.tinrs.com. All eligible employees of the City are required to participate in TMRS. Benefits Provided TMRS provides retirement,disability,and death benefits. Benefit provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. At retirement,the benefit is calculated as if the sum of the employee's contributions, with interest, and the 91 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 V. OTHER INFORMATION (CONTINUED) C. EMPLOYEE RETIREMENT PLAN(CONTINUED) city-financed monetary credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven payment options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75%of the member's deposits and interest. A summary of plan provisions for the City is as follows: Employee deposit rate 7% Matching ratio(city to employee) 2 to 1 Years required for vesting 5 Service retirement eligibility 20 years at any age, 5 years at age 60 and above Updated Service Credit 100%Repeating, Transfers Annuity increase(to retirees) 70%of CPI Repeating Employees Covered by Benefit Terms At the December 31,2015 valuation and measurement date,the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 249 Inactive employees entitled to but not yet receiving benefits 318 Active employees 855 Total 1,422 Contributions The contribution rates for employees in TMRS are either 5%, 6%, or 7%of employee gross earnings, and the city matching percentages are either 100%, 150%, or 200%, both as adopted by the governing body of the city. Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the Entry Age Normal (EAN)actuarial cost method. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year,with an additional amount to finance any unfunded accrued liability. Since the City needs to know its contribution rates 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. Employees for the City were required to contribute 7%of their annual gross earnings during the fiscal year. The City elected to contribute the full rate of 15.40% and 15.74% in calendar years 2015 and 2016, respectively. Accordingly, contributions to TMRS for the year ended September 30, 2016, were $8,739,633, and were equal to the required contributions. 92 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 V. OTHER INFORMATION (CONTINUED) C. EMPLOYEE RETIREMENT PLAN(CONTINUED) Net Pension Liability The City's Net Pension Liability (NPL) was measured as of December 31, 2015, and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. Actuarial assumptions: The Total Pension Liability in the December 31, 2015, actuarial valuation was determined using the following actuarial assumptions: Inflation 2.5%per year Overall payroll growth 3.0%per year Investment rate of return 6.75%, net of pension plan investment expense, including inflation Salary increases were based on a service-related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender-district RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment,with male rates multiplied by 109%and female rates multiplied by 103%.The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For disabled annuitants, the gender-distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment are used with males' rates multiplied by 109% and female rates multiplied by 103% with a 3-year set-forward for both males and females. In addition, a 3% minimum mortality rate is applied to reflect the impairment for younger members who become disabled. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements subject to the 3%floor. Actuarial assumptions used in the December 31, 2015, valuation were based on the results of actuarial experience studies. The experience study in TMRS was for the period December 31, 2010 through December 31,2014. Healthy post-retirement mortality rates and annuity purchase rates were updated based on a Mortality Experience Investigation Study covering 2009 through 2011,and dated December 31,2013. These assumptions were first used in the December 31, 2013 valuation, along with a change to the Entry Age Normal (EAN) actuarial cost method. Assumptions are reviewed annually. No additional changes were made for the 2014 valuation. After the Asset Allocation Study analysis and experience investigation study, the Board amended the long-term expected rate of return on pension plan investments from 7% to 6.75%. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short-term and long-term funding needs of TMRS. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return(expected returns,net of pension plan investment expense and inflation)are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. In determining their best estimate of a recommended investment return assumption under the various alternative asset allocation portfolios, GRS focused on the area between(1)arithmetic mean(aggressive)without an adjustment for time(conservative) 93 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 V. OTHER INFORMATION (CONTINUED) C. EMPLOYEE RETIREMENT PLAN(CONTINUED) and (2) the geometric mean (conservative) with an adjustment for time (aggressive). At its meeting on July 30,2015,the TMRS Board approved a new portfolio target allocation. The target allocation and best estimates of real rates of return for each major asset class are summarized in the table below: Target Long-Term Expected Real Asset Class Allocation Rate of Return (Arithmetic) Domestic Equity 17.5% 4.55% . International Equity 17.5% 6.10% Core Fixed Income 10.0% 1.00% Non-Core Fixed Income 20.0% 3.65% Real Return 10.0% 4.03% Real Estate 10.0% 5.00% Absolute Return 10.0% 4.00% Private Equity 5.0% 8.00% Total 100.0% Single Discount Rate The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rates specified in statute. Based on that assumption,the pension plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. Under this funding policy, the City will finance the unfunded actuarial accrued liability over the years remaining for the closed period existing for each base in addition to the employer portion of all future benefit accruals(i.e.,the employer normal cost). 94 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2016 V. OTHER INFORMATION (CONTINUED) C. EMPLOYEE RETIREMENT PLAN(CONTINUED) Changes in the Net Pension Liability Increase(Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a)-(b) Balance at December 31,2014 $ 205,128,282 $ 171,346,855 $ 33,781,427 Changes for the year: Service cost 8,990,916 - 8,990,916 Interest 14,481,391 - 14,481,391 Difference between expected and actual experience (662,530) - (662,530) Changes of assumptions (1,208,085) - (1,208,085) Contributions-employer - 8,195,714 (8,195,714) Contributions-employee - 3,644,800 (3,644,800) Net investment income - 252,867 (252,867) Benefit payments, including refunds of employee contributions (5,493,451) (5,493,451) - Administrative expense - (154,001) 154,001 Other - (7,606) 7,606 Net changes 16,108,241 6,438,322 9,669,919 Balance at December 31,2015 $. 221,236,523 $ 177,785,177 $ 43,451,346 Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the City,calculated using the discount rate of 6.75%, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower(5.75%)or 1-percentage-point higher(7.75%)than the current rate: Current 1% Decrease Discount Rate 1% Increase 5.75% 6.75% 7.75% City's net pension liability $ 79,969,779 $ 43,451,346 $ 13,897,119 Pension Plan Fiduciary Net Position Detailed information about the pension plan's Fiduciary Net Position is available in a separately-issued TMRS financial report. That report may be obtained on the Internet at www.tmrs.coin. 95 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 V. OTHER INFORMATION (CONTINUED) C. EMPLOYEE RETIREMENT PLAN(CONTINUED) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources For the year ended September 30, 2016, the City recognized pension expense of $10,439,077. At September 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Balance at September 30,2015 $ 1,600,283 $ (42,397) Differences between expected and actual economic experience - (557,533) Changes in actuarial assumptions - (1,016,629) Difference between projected and actual investment earnings 9,393,130 - Amortization of prior years' deferrals (400,071) 7,658 Balance at September 30, 2016 $ 10,593,342 $ (1,608,901) Contributions After the Measurement Date Balance at September 30, 2015 $ 5,964,543 Reversal of prior year contributions after December 31, 2014 (5,964,543) Contributions after December 31, 2015 6,425,756 Balance at September 30,2016 $ 6,425,756 Deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date of $6,425,756 will be recognized as a reduction of the net pension liability for the measurement year ending December 31, 2016 (i.e., recognized in the City's financial statements September 30, 2017). Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Measurement Net Deferred Year ended Outflows(Inflows) December 31, of Resources 2016 $ 2,444,243 2017 2,444,243 2018 2,444,242 2019 2,044,170 2020 (300,560) Thereafter (91,897) Total $ 8,984,441 96 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 V. OTHER INFORMATION (CONTINUED) C. EMPLOYEE RETIREMENT PLAN(CONTINUED) Supplemental Death Benefits Fund The City also participates in the cost sharing multiple-employer defined benefit group-term life insurance plan operated by TMRS known as the Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance, to provide group-term life insurance coverage to both current and retired employees. The City may terminate coverage under and discontinue participation in this fund by adopting an ordinance before November 1, of any year to be effective the following January 1. The death benefit for active employees provides a lump-sum payment approximately equal to the employee's annual salary (calculated based on the employee's actual earnings, for the 12-month period preceding the month of death); retired employees are insured for $7,500; this coverage is an "other post- employment benefit,"or OPEB. The City offers supplemental death benefits to both active employees and retirees for plan years 2016 and 2015. 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 and represents 0.13% of required contributions. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year;the intent is not to pre-fund retiree term life insurance during employees' entire careers. The City also provides basic life and accidental death and dismemberment insurance for all eligible employees at no cost. The benefit is equal to the employee's annual base earnings up to a maximum of $100,000. This benefit is paid out to the beneficiaries in the event of the employee's death. D. OTHER POST-EMPLOYMENT BENEFITS In addition to the contributions made to the pension system as previously described, the City provides a single employer plan for certain other post-employment benefits (OPEB) to its retirees. Other post- employment benefits include access to medical and dental insurance for the retiree and the retiree's family. All retirees who are eligible to receive pension benefits under any of the City's pension system are eligible for other post-employment benefits. Retirees may also enroll eligible dependents under the medical and dental plan(s)in which they participate. Eligible dependents of the retiree include a legally married spouse and unmarried children dependent on the retiree for support. The children covered include children under age 25 and eligible disabled children beyond 25 years of age,if covered prior to age 25. A surviving spouse of a deceased retiree may continue medical coverage until the date the surviving spouse remarries. A surviving spouse of a deceased retiree may continue dental coverage for 36 months by paying the entire premium plus a 2 percent administrative fee. Other surviving dependents of a deceased retiree may continue medical and dental coverage for 36 months by paying the entire premium plus a 2 percent administrative fee. 97 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 V. OTHER INFORMATION (CONTINUED) D. OTHER POST-EMPLOYMENT BENEFITS(CONTINUED) The City is under no obligation, statutory or otherwise, to offer other post-employment benefits or to pay any portion of the cost of other post-employment benefits to any retirees or their dependents. Allocation of city funds to pay other post-employment benefits or to make other post-employment benefits available is determined on an annual basis by the City Council as part of the budget approval process. Group dental coverage is available to retirees and their eligible dependents. The retiree pays the full cost of the dental premium. Annual OPEB Cost and Net OPEB Obligation Other post-employment benefits are funded on a pay-as-you-go basis. The City recognizes the cost of providing these benefits as an expense and corresponding revenue in the Internal Service Fund(self funded health insurance). Medical, dental and life insurance claims and premiums are reported in the Internal Service Fund. As of September 30,2016 and September 30,2015,this fund had adequate resources to fund the net OPEB obligation. A designation of committed fund balance for the annual net OPEB obligation was established and reported on the Statement of Net Position. The City recognized the following liability in the financial statements at September 30, 2016. The City performed an actuarial valuation during fiscal year 2015. The annual required contribution and OPEB liability for fiscal year 2016 is based upon the September-30,2015 biennial actuarial valuation. The annual OPEB cost associated with the City's retiree benefits for the fiscal year ended September 30, 2016, is as follows: 2016 Amounts 2015 Total Governmental Proprietary Total Annual required contribution $ 925,834 $ 923,257 $ 125,899 $ 1,049,156 Interest on net OPEB obligation 120,703 123,690 16,867 140,557 Adjustment to annual required contribution (109,403) (112,112) (15,288) (127,400) Annual OPEB cost 937,134 934,835 127,478 1,062,313 Contributions made (495,926) (508,698) (69,368) (578,066) Change in net OPEB obligation 441,208 426,137 58,110 484,247 Beginning net OPEB obligation 2,682,278 2,774,954 348,532 3,123,486 Net OPEB obligation $ 3,123,486 $ 3,201,091 $ 406,642 $ 3,607,733 Percentage of annual OPEB cost contributed 52.9% 54.4% 98 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 V. OTHER INFORMATION (CONTINUED) D. OTHER POST-EMPLOYMENT BENEFITS(CONTINUED) The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2016 and the preceding two years is as follows: Three-Year Trend Information Fiscal Year Annual OPEB Actual Contribution %of Annual Cost Net OPEB Ending Cost Made Contributed Obligation 2014 $ 815,010 $ 322,367 39.60% $ 2,682,278 2015 $ 937,133 $ 495,926 52.90% $ 3,123,486 2016 $ 1,062,313 $ 578,066 54.42% $ 3,607,733 Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the fixture. The required schedule of funding progress immediately following the notes to the financial statements presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Calculations are based on the types of benefits provided under the terms of the substantive plan at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. Actuarial calculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The actuarial cost method and significant assumptions underlying the actuarial calculation are as follows: Schedule of Actuarial Valuations Actuarial Valuation Date October 1, 2013 October 1, 2014 October 1, 2015 Actuarial Cost Methods Projected Unit Credit Projected Unit Credit Projected Unit Credit Amortization Method Level Percent Open Level Percent Open Level Percent Open Remaining Amortization Period 30 years 30 years 30 years Inflation Rate 3.5% 3.5% 3.5% Assumed Rate of Return on Investments 4.5% 4.5% 4.5% Projected Salary Increases 3.0% 3.0% 3.0% Post-retirement Benefit 10%in 2011, 10%in 2011, 10%in 2011, Increases decreasing 0.5%per decreasing 0.5%per decreasing 0.5%per year for ten years to an year for ten years to an year for ten years to an ultimate trend of 5%in ultimate trend of 5% in ultimate trend of 5%in 2021 2021 2021 99 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2016 V. OTHER INFORMATION (CONTINUED) E. MUNICIPAL GOLF COURSE Management Agreement Management of the City's golf course has been performed by a private operator in accordance with the terms of a Management Agreement since 1989. On May 1,2015,the City entered into a New Management Agreement with the operator for a period of four years and eight months with an early termination option on the early termination date of December 31, 2016. Under conditions set forth in the New Management Agreement,the operator shall be paid a monthly base management fee.Additionally,the operator may earn a variable fee based upon gross receipts of the golf course. Gross receipts from operations are agreed to be used, in order, for monthly scheduled debt payments, payments to a capital reserve account, current operating expenses, an operating reserve, the base management fee, repayment of any City capital improvements,a 1%distribution to the City,the variable fee and any unpaid obligations limited by available gross receipts. Any remaining gross receipts are to be distributed to the City. The City has exercised the early termination option on the current management agreement with an early termination date of December 31, 2016. On November 22, 2016, the City signed a new Management Agreement with a new operator with an initial term of three years that shall automatically renew for two additional 1-year terms. The agreement shall begin on January 1, 2017. Under conditions set forth in the new Management Agreement, the operator shall be paid a monthly base management fee. Additionally, the operator may earn an annual incentive management fee based upon gross receipts of the golf course. F. SUBSEQUENT EVENTS Kalahari Resort Project On December 15, 2016, City Council approved a series of agreements with Kalahari Resorts and Conventions (Kalahari). These agreements include a Master Development Agreement, an Economic Development Agreement and a Ground Lease. Kalahari will build a family resort, water park and convention center on 351 acres south of U.S. 79 near Old Settlers Park and Dell Diamond. Kalahari intends to open the Round Rock resort no later than December 2021. The agreements provide for Kalahari to employ a minimum 700 and invest at least$350 million in a 975-room resort, 200,000 square-foot indoor/outdoor water park and 150,000 square-foot convention center. As part of the arrangement, the City purchased the 351 acres for approximately $27.5 million on December 20,2016. The City will be repaid by Kalahari in the form of two lease payments: a$17 million initial lease payment made on December 20,2016,and a$10.5 million lease payment,plus interest,in eight years. The property will be leased to Kalahari for up to 99 years. 100 r. 101 CITY OF ROUND ROCK, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30,2016 (UNAUDITED) Schedule of Funding Progress Percentage Actuarial Actuarial Actuarial Annual of UAAL Valuation Value of Accrued Funded Covered to Covered Plan Date Assets Liability UAAL Ratio Payroll Payroll Other Post-Employment Benefits 9/30/2014 $ - $ 9,092,582 $ 9,092,582 0.0% $ 48,391,789 18.8% 9/30/2015 $ - $ 11,162,966 $ 11,162,966 0.0% $ 52,956,052 21.1% 9/30/2016 $ - $ 11,661,976 $ 11,661,976 0.0% $ 56,923,747 20.5% See Independent Auditors' Report. 102 CITY OF ROUND ROCK,TEXAS REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30,2016 (UNAUDITED) Schedule of Changes in the Net Pension Liability and Related Ratios Measurement period ending December 31, 2014 2015 Total pension liability Service Cost $ 8,066,254 $ 8,990,916 Interest(on the Total Pension Liability) 13,330,143 14,481,391 Difference between expected and actual experience (50,055) (662,530) Change of assumptions - (1,208,085) Benefit payments, including refunds of employee contributions (5,231,094) (5,493,451) Net Change in Total Pension Liability 16,115,248 16,108,241 Total Pension Liability-Beginning 189,013,034 205,128,282 Total Pension Liability-Ending(a) $ 205,128,282 $ 221,236,523 Plan Fiduciary Net Position Contributions-Employer $ 7,787,328 $ 8,195,714 Contributions-Employee 3,423,287 3,644,800 Net Investment Income 8,955,552 252,867 Benefit payments, including refunds of employee contributions (5,231,094) (5,493,451) Administrative Expense (93,479) (154,001) Other (7,685) (7,606) Net Change in Plan Fiduciary Net Position 14,833,909 6,438,322 Plan Fiduciary Net Position-Beginning 156,512,946 171,346,855 Plan Fiduciary Net Position-Ending(b) 171,346,855 177,785,177 Net Pension Liability-Ending(a)-(b) $ 33,781,427 $ 43,451,346 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 83.53% 80.36% Covered Employee Payroll $ 48,839,040 $ 51,731,390 Net Pension Liability as a Percentage of Covered Employee Payroll 69.17% 83.99% Notes to Schedule: 1)No significant factors noted to disclose. 2)No significant methods and assumptions to disclose. 3) Schedule will be built out to 10 years. See Independent Auditors' Report. 103 CITY OF ROUND ROCK,TEXAS REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30,2016 (UNAUDITED) Schedule of Contributions Fiscal year ending September 30,2016 2015 2016 Actuarially Determined Contribution $ 8,077,742 $ 8,507,987 Contributions in relation to the actuarially determined contribution 8,193,478 8,739,633 Contribution deficiency(excess) $ (115,736) $ (231,646) Covered employee payroll $ 51,159,783 $ 54,924,766 Contributions as a percentage of covered employee payroll 16.02% 15.91% Notes to Schedule of Contributions Valuation Date: Actuarially determined contribution rates are calculated as of December 31 and become effective in January, 12 months and a day later. Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal Amortization Method Level Percentage of Payroll, Closed Remaining Amortization Period 24 years Asset Valuation Method 10 year smoothed market; 15%soft corridor Inflation 2.5% Salary Increases 3.50%to 10.5%including inflation Investment Rate of Return 6.75% Retirement Age Experience-based table of rates that are specific to the City's plan of benefits. Last updated for the 2015 valuation pursuant to an experience study of the period 2010-2014. Mortality RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109%and female rates multiplied by 103%and projected on a fully generational basis with scale BB. Other Information: There were no benefit changes during the year. Schedule will be built out to ten years. See Independent Auditors' Report. 104 NONMAJOR GOVERNMENTAL FUNDS NONMAJOR SPECIAL REVENUE FUNDS Special Revenue Funds account for specific resources, other than major capital projects that are restricted to expenditures for specified purposes. NONMAJOR CAPITAL PROJECTS FUNDS Capital Projects Funds are used to account for financial resources to be used for major capital projects(other than those financed by the proprietary fund). General obligation bonds are the primary funding source for capital projects. 105 CITY OF ROUND ROCK, TEXAS NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET SEPTEMBER 30,2016 Total Nonmaj or Special Capital Governmental Revenue Projects Funds ASSETS Cash and cash equivalents $ 2,060,768 $ 341,603 $ 2,402,371 Investments 12,112,431 2,010,405 14,122,836 Receivables- Accounts and other 455,662 - 455,662 Accrued interest 17,472 2,823 20,295 Interfund 75,932 1,500,000 1,575,932 Grants 155,550 - 155,550 Restricted assets- Cash and cash equivalents - 279,813 279,813 Restricted investments - 1,211,758 1,211,758 Restricted accrued interest - 1,273 1,273 Total assets $ 14,877,815 $ 5,347,675 $ 20,225,490 LIABILITIES AND FUND BALANCES Liabilities- Accounts payable $ 225,740 $ 1,083,013 $ 1,308,753 Accrued payroll 16,135 - 16,135 Interfund payables - 7,316 7,316 Deferred revenue - 920,154 920,154 Total liabilities 241,875 2,010,483 2,252,358 Fund balances- Restricted-authorized construction - 1,903,570 1,903,570 Restricted-hotel-motel tax 12,653,710 - 12,653,710 Restricted-public safety 676,724 - 676,724 Committed 1,305,506 1,433,622 2,739,128 Total fund balances 14,635,940 3,337,192 17,973,132 Total liabilities and fund balances $ 14,877,815 $ 5,347,675 $ 20,225,490 106 CITY OF ROUND ROCK,TEXAS NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED SEPTEMBER 30, 2016 Total Nonmaj or Special Capital Governmental Revenue Projects Funds Revenues- Taxes and franchise $ 264,969 $ - $ 264,969 Licenses, permits and fees 5,325 - 5,325 Charges for services 315,673 - 315,673 Fines and forfeitures 234,142 - 234,142 Grants 342,214 - 342,214 Hotel occupancy tax 5,407,667 - 5,407,667 Investment and other 1,074,849 476,887 1,551,736 Contributions 61,932 114,306 176,238 Total revenues 7,706,771 591,193 8,297,964 Expenditures- Current- General government 630,258 - 630,258 Public safety 702,954 - 702,954 Culture and recreation 2,068,253 - 2,068,253 Capital projects - 11,233,529 11,233,529 Total expenditures 3,401,465 11,233,529 14,634,994 Excess(deficiency) of revenues over expenditures 4,305,306 (10,642,336) (6,337,030) Other financing sources (uses)- Transfers in 405,808 9,650,000 10,055,808 Transfers out (3,427,000) (7,316) (3,434,316) Total other financing sources(uses) (3,021,192) 9,642,684 6,621,492 Net change in fund balances 1,284,114 (999,652) 284,462 Fund balances, October 1,2015 13,351,826 4,336,844 17,688,670 Fund balances, September 30,2016 $ 14,635,940 $ 3,337,192 $ 17,973,132 107 N 108 NONMAJOR SPECIAL REVENUE FUNDS Special Revenue Funds account for specific resources, other than major capital projects that are restricted to expenditures for specified purposes. Hotel— Motel Occupancy Tax Fund — To account for the levy and use of the hotel — motel bed tax received. Proceeds from this tax are to be used toward tourism, community events, cultural enhancements and promotion of the City. Hotel—Motel Occupancy Venue Tax Fund—To account for the levy and use of the hotel—motel bed venue tax received. Proceeds from this tax are to be used toward the construction and maintenance of a sports venue that will prompt tourism and promotion of the City. Police Fund—To account for amounts received through drug enforcement actions. Municipal Court Fund —To account for amounts received through child safety fines, court security, and court technology fees. Landscape Fund—To account for amounts received through the City's landscape ordinance. Community Development Block Grant Fund —To account for grant monies received for programs benefiting persons of low to moderate income. Library Fund—To account for contributions received designated to specific programs for the City's library. Public Education & Government Fund — To account for amounts received for programs to provide public education in government. Traffic Safety Program Fund—To account for amounts received to promote traffic safety programs. 109 CITY OF ROUND ROCK,TEXAS NONMAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET SEPTEMBER 30,2016 Hotel-Motel Hotel-Motel Occupancy Occupancy Municipal Tax Venue Tax Police Court ASSETS Cash and cash equivalents $ 1,228,450 $ 550,379 $ 21,210 $ 50,260 Investments 7,229,678 3,223,498 124,820 295,788 Receivables- Accounts and other 354,405 101,257 - - Accrued interest 10,239 4,601 474 460 Interfund - - - - Grants - - - - Total assets $ 8,822,772 $ 3,879,735 $ 146,504 $ 346,508 LIABILITIES AND FUND BALANCES Liabilities- Accounts payable $ 2,658 $ 30,004 $ 7,163 $ - Accrued payroll 10,108 6,027 - - Total liabilities 12,766 36,031 7,163 - Fund balances- Restricted-hotel-motel tax 8,810,006 3,843,704 - - Restricted-public safety - - 139,341 346,508 Committed - - - - Total fund balances 8,810,006 3,843,704 139,341 346,508 Total liabilities and fund balances $ 8,822,772 $ 3,879,735 $ 146,504 $ 346,508 110 Total Nonmajor Community Public Traffic Special Development Education& Safety Revenue Landscape Block Grant Library Government Program Funds $ 35,167 $ - $ 1,782 $ 156,826 $ 16,694 $ 2,060,768 206,961 - 10,485 922,952 98,249 12,112,431 - - - - - 455,662 302 - 15 1,381 - 17,472 - - - - 75,932 75,932 - 155,550 - - - 155,550 $ 242,430 $ 155,550 $ 12,282 $ 1,081,159 $ 190,875 $ 14,877,815 $ 30,350 $ 155,550 $ 15 $ - $ - $ 225,740 - - - - - 16,135 30,350 155,550 15 - - 241,875 - - - - - 12,653,710 - - - - 190,875 676,724 212,080 - 12,267 1,081,159 - 1,305,506 212,080 - 12,267 1,081,159 190,875 14,635,940 $ 242,430 $ 155,550 $ 12,282 $ 1,081,159 $ 190,875 $ 14,877,815 111 CITY OF ROUND ROCK, TEXAS NONMAJOR SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED SEPTEMBER 30,2016 Hotel-Motel Hotel-Motel Occupancy Occupancy Municipal Tax Venue Tax Police Court Revenues- Taxes and franchise $ - $ - $ - $ - Licenses, permits and fees - - - - Charges for services - 315,673 - - Fines and forfeitures - - 161,075 73,067 Grants - - - - Hotel occupancy tax 4,205,966 1,201,701 - - Investment and other 45,462 982,541 37,497 1,985 Contributions - 61,396 - - Total revenues 4,251,428 2,561,311 198,572 75,052 Expenditures- Current- General government - - - 174,047 Public safety - - 702,812 - Culture and recreation 711,613 1,354,892 - - Total expenditures 711,613 1,354,892 702,812 174,047 Excess(deficiency) of revenues over expenditures 3,539,815 1,206,419 (504,240) (98,995) Other financing sources(uses)- Transfers in - 400,000 - - Transfers out (3,056,000) (371,000) - - Total other financing sources (uses) (3,056,000) 29,000 -Net change in fund balances 483,815 1,235,419 (504,240) (98,995) Fund balances, October 1,2015 8,326,191 2,608,285 643,581 445,503 Fund balances, September 30,2016 $ 8,810,006 $ 3,843,704 $ 139,341 $ 346,508 112 Total Nonmajor Community Public Traffic Special Development Education& Safety Revenue Landscape Block Grant Library Government Program Funds $ - $ - $ - $ 264,969 $ - $ 264,969 5,325 - - - - 5,325 - - - - - 315,673 - - - - - 234,142 342,214 - - - 342,214 - - - - - 5,407,667 1,374 - 65 5,925 - 1,074,849 - - 536 - - 61,932 6,699 342,214 601 270,894 - 7,706,771 67,285 342,214 - 46,712 - 630,258 - - - - 142 702,954 - - 1,748 - - 2,068,253 67,285 342,214 1,748 46,712 142 3,401,465 (60,586) - (1,147) 224,182 (142) 4,305,306 - 5,808 405,808 - - - (3,427,000) - 5,808 (3,021,192) (60,586) - (1,147) 224,182 5,666 1,284,114 272,666 - 13,414 856,977 185,209 13,351,826 $ 212,080 $ - $ 12,267 $ 1,081,159 $ 190,875 $ 14,635,940 113 114 NONMAJOR CAPITAL PROJECTS FUNDS Capital Projects Funds are used to account for financial resources to be used for major capital projects(other than those financed by the proprietary fund). General obligation bonds are the primary funding source for capital projects. Streets and Drainage Fund - To account for street and drainage improvements in the Arterial II section of the City. Financing is provided by general government resources. 2007 General Obligation Bonds Fund—To account for street, traffic safety and sidewalk improvement projects, improvements and equipment for police, fire and municipal office facilities. 2004 General Obligation Bonds Fund—To account for street, traffic safety and sidewalk improvement projects, improvements and equipment for police, fire and municipal office facilities. Park Development Fund—To account for the development of and improvements to various neighborhood parks. Financing is provided by general government resources. 2002 General Obligation Bonds Fund—To account for costs of public service and public safety facilities and streets and related improvements. Convention Center Complex Fund — To account for construction and expansion of convention center complex. Funding is provided by the 1999 Series Hotel Tax Revenue Bonds,hotel tax revenues and private contributions. Round Rock Transportation and Economic Development Corporation Project Fund—To account for construction and expansion of the City's transportation system. Funding is provided by the 2015 Series Sales Tax Revenue Refunding Bonds,sales tax revenue, and private contributions. Tourism Development Fund—To account for the development of tourism. Funding is provided by hotel tax revenues. 115 CITY OF ROUND ROCK, TEXAS NONMAJOR CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET SEPTEMBER 30,2016 2007 2004 Streets and General General Drainage Obligation Bonds Obligation Bonds ASSETS Cash and cash equivalents $ 167,286 $ - $ - Investments 984,511 - - Receivables- Accrued interest 1,453 - - Interfund - - - Restricted assets- Cash and cash equivalents - 32,899 84,629 Restricted investments - 18,912 280,027 Restricted accrued interest - - - Total assets $ 1,153,250 $ 51,811 $ 364,656 LIABILITIES AND FUND BALANCES Liabilities- Accounts payable $ 1,055 $ 38,169 $ 15,237 Interfund payables - - - Deferred revenue - - - Totalliabilities 1,055 38,169 15,237 Fund balances- Restricted-authorized construction - 13,642 349,419 Committed 1,152,195 - - Total fund balances 1,152,195 13,642 349,419 Total liabilities and fund balances $ 1,153,250 $ 51,811 $ 364,656 116 Round Rock Transportation 2002 and Economic Total General Development Nonmajor Park Obligation Convention Corporation Tourism Capital Projects Development Bonds Center Complex Project Development Funds $ 174,317 $ - $ - $ - $ - $ 341,603 1,025,894 - - - - 2,010,405 1,370 - - - - 2,823 - - - 1,500,000 - 1,500,000 - 7,201 80,188 19,070 55,826 279,813 115 471,923 112,235 328,546 1,211,758 - - 788 - 485 1,273 $ 1,201,581 $ 7,316 $ 552,899 $ 1,631,305 $ 384,857 $ 5,347,675 $ - $ - $ 126,340 $ 819,428 $ 82,784 $ 1,083,013 7,316 - - - 7,316 920,154 - - - - 920,154 920,154 7,316 126,340 819,428 82,784 2,010,483 - - 426,559 811,877 302,073 1,903,570 281,427 - - - - 1,433,622 281,427 - 426,559 811,877 302,073 3,337,192 $ 1,201,581 $ 7,316 $ 552,899 $ 1,631,305 $ 384,857 $ 5,347,675 117 CITY OF ROUND ROCK, TEXAS NONMAJOR CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED SEPTEMBER 30,2016 2007 2004 Streets General General and Obligation Obligation Drainage Bonds Bonds Revenues- Investment and other $ 6,369 $ - $ - Contributions - - - Total revenues 6,369 - - Expenditures- Capital projects - 15,871 111,613 Total expenditures - 15,871 111,613 Excess(deficiency) of revenues over expenditures 6,369 (15,871) (111,613) Other financing sources(uses)- Transfers in - - - Transfers out - - - Total other financing sources(uses) - - - Net change in fund balances 6,369 (15,871) (111,613) Fund balances, October 1,2015 1,145,826 29,513 461,032 Fund balances, September 30,2016 $ 1,152,195 $ 13,642 $ 349,419 118 Round Rock Transportation 2002 and Economic Total General Convention Development Nonmajor Park Obligation Center Corporation Tourism Capital Projects Development Bonds Complex Project Development Funds $ 11,421 $ - $ 459,065 $ 32 $ - $ 476,887 72,006 - - 42,300 - 114,306 83,427 - 459,065 42,332 - 591,193 111,162 - 532,045 8,784,918 1,677,920 11,233,529 111,162 - 532,045 8,784,918 1,677,920 11,233,529 (27,735) - (72,980) (8,742,586) (1,677,920) (10,642,336) - 350,000 7,700,000 1,600,000 9,650,000 - (7,316) - - - (7,316) (7,316) 350,000 7,700,000 1,600,000 9,642,684 (27,735) (7,316) 277,020 (1,042,586) (77,920) (999,652) 309,162 7,316 149,539 1,854,463 379,993 4,336,844 $ 281,427 $ - $ 426,559 $ 811,877 $ 302,073 $ 3,337,192 119 .ti . ,� 120 SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL, DEBT SERVICE AND NONMAJOR SPECIAL REVENUE FUNDS 121 CITY OF ROUND ROCK,TEXAS GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30,2016 WITH COMPARATIVE TOTALS FOR YEAR ENDED SEPTEMBER 30, 2015 Variance- Budgeted Amounts Positive 2015 Original Final Actual (Negative) Actual Revenues- Taxes and franchise- Property tax $ 26,550,000 $ 26,550,000 $ 27,017,296 $ 467,296 $ 25,416,409 Penalty and interest 90,000 90,000 75,044 (14,956) 80,666 Sales tax 48,445,000 48,445,000 50,505,090 2,060,090 50,715,636 Franchise 6,900,000 6,900,000 6,910,979 10,979 6,991,328 Bingo tax 36,000 36,000 38,759 2,759 37,250 Mixed drink tax 440,000 440,000 527,953 87,953 478,528 Total taxes and franchise 82,461,000 82,461,000 85,075,121 2,614,121 83,719,817 Licenses,permits and fees- Building permits 435,000 435,000 614,937 179,937 531,993 Other permits 52,060 52,060 50,533 (1,527) 50,625 Fees 545,100 545,100 1,172,838 627,738 1,065,656 Total licenses,permits, and fees 1,032,160 1,032,160 1,838,308 806,148 1,648,274 Charges for services- Trash collection fees 1,303,000 1,303,000 1,297,118 (5,882) 1,335,075 Swimming pool fees 913,000 913,000 1,090,494 177,494 449,066 Recreation program fees 1,905,000 1,905,000 2,264,562 359,562 2,253,399 Filing and reproduction fees 25,000 25,000 27,410 2,410 26,450 Other 143,000 143,000 177,208 34,208 181,320 Total charges for services 4,289,000 4,289,000 4,856,792 567,792 4,245,310 Fines and forfeitures 2,065,000 2,065,000 1,339,334 (725,666) 2,021,086 Grants 377,000 377,000 470,988 93,988 549,079 Investment and other- Investment income 301,000 301,000 373,585 72,585 265,991 Other 3,662,010 3,662,010 5,132,945 1,470,935 4,227,095 Total investment and other 3,963,010 3,963,010 5,506,530 1,543,520 4,493,086 Total revenues 94,187,170 94,187,170 99,087,073 4,899,903 96,676,652 122 (CONTINUED) CITY OF ROUND ROCK, TEXAS GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2016 WITH COMPARATIVE TOTALS FOR YEAR ENDED SEPTEMBER 30,2015 Variance- Budgeted Amounts Positive 2015 Original Final Actual (Negative) Actual Expenditures- Current- General government Executive- Personnel services $ 11,093,283 $ 10,434,783 $ 10,128,213 $ 306,570 $ 9,678,944 Contractual services 4,615,395 4,575,810 3,879,733 696,077 3,805,586 Supplies and materials 1,032,386 1,024,971 713,094 311,877 608,013 Other services and charges 8,619,690 8,577,990 8,168,563 409,427 8,192,627 Capital outlay 93,000 97,200 65,568 31,632 102,155 Total executive 25,453,754 24,710,754 22,955,171 1,755,583 22,387,325 Judicial- Personnel services 724,046 740,221 740,218 3 724,868 Contractual services 62,467 46,292 46,024 268 53,357 Supplies and materials 19,725 19,725 15,810 3,915 11,103 Other services and charges 10,925 10,925 6,911 4,014 6,946 Total judicial 817,163 817,163 808,963 8,200 796,274 Total general government 26,270,917 25,527,917 23,764,134 1,763,783 23,183,599 Public safety Police- Personnel services 23,868,785 24,118,785 23,639,739 479,046 22,329,995 Contractual services 1,543,421 1,565,503 903,824 661,679 1,291,709 Supplies and materials 1,804,913 1,823,338 1,348,856 474,482 1,329,215 Other services and charges 1,162,380 1,096,490 937,028 159,462 973,392 Capital outlay 10,000 10,000 8,495 1,505 806,849 Total police 28,389,499 28,614,116 26,837,942 1,776,174 26,731,160 Fire- Personnel services 14,733,346 15,216,101 15,216,099 2 14,452,908 Contractual services 371,445 339,590 339,587 3 335,017 Supplies and materials 963,190 1,059,085 1,059,084 1 970,663 Other services and charges 183,134 156,444 156,440 4 150,003 Capital outlay 116,000 76,775 76,775 - 125,538 Total fire 16,367,115 16,847,995 16,847,985 10 16,034,129 Total public safety 44,756,614 45,462,111 43,685,927 1,776,184 42,765,289 123 (CONTINUED) CITY OF ROUND ROCK,TEXAS GENERAL FUND SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30,.2016 WITH COMPARATIVE TOTALS FOR YEAR ENDED SEPTEMBER 30,2015 Variance- Budgeted Amounts Positive 2015 Original Final Actual (Negative) Actual Expenditures-(cont'd) Current-(cont'd) Public works Administration- Personnel services $ 3,138,114 $ 3,236,234 $ 3,236,231 $ 3 $ 3,253,278 Contractual services 166,220 147,470 128,934 18,536 141,442 Supplies and materials 864,862 778,744 720,639 58,105 731,880 Other services and charges 586,790 813,390 813,386 4 829,378 Capital outlay 20,000 32,050 31,975 75 9,146 Total administration 4,775,986 5,007,888 4,931,165 76,723 4,965,124 Streets- Personnel services 2,136,243 2,086,623 1,937,976 148,647 1,815,908 Contractual services 3,477,040 1,469,040 1,400,444 68,596 1,406,278 Supplies and materials 871,785 823,185 733,937 89,248 783,108 Other services and charges 45,153 45,153 17,880 27,273 12,557 Capital outlay 421,000 421,000 232,429 188,571 560,931 Total streets 6,951,221 4,845,001 4,322,666 522,335 4,578,782 Maintenance shop- Personnel services 1,250,147 1,230,192 1,225,516 4,676 1,134,414 Contractual services 43,973 43,973 37,029 6,944 36,489 Supplies and materials 120,921 129,306 129,303 3 107,384 Other services and charges 21,375 22,945 22,940 5 26,959 Total maintenance shop 1,436,416 1,426,416 1,414,788 11,628 1,305,246 Total public works 13,163,623 11,279,305 10,668,619 610,686 10,849,152 124 (CONTINUED) CITY OF ROUND ROCK,TEXAS GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30,2016 WITH COMPARATIVE TOTALS FOR YEAR ENDED SEPTEMBER 30,2015 Variance- Budgeted Amounts Positive 2015 Original Final Actual (Negative) Actual Expenditures-(cont'd) Current-(cont'd) Culture and recreation Library- Personnel services $ 1,892,410 $ 1,945,335 $ 1,940,132 $ 5,203 $ 1,896,201 Contractual services 149,625 133,675 132,561 1,114 144,391 Supplies and materials 374,216 328,941 328,935 6 326,195 Other services and charges 175,333 201,633 201,632 1 157,793 Total library 2,591,584 2,609,584 2,603,260 6,324 2,524,580 Parks and recreation- Personnel services 6,925,643 7,023,783 6,877,096 146,687 6,424,785 Contractual services 1,866,818 1,688,578 1,637,709 50,869 1,717,010 Supplies and materials 1,454,122 1,471,242 1,471,239 3 1,441,706 Other services and charges 262,185 314,165 314,164 1 280,480 Capital outlay 97,000 108,000 107,243 757 452,843 Total parks and recreation 10,605,768 10,605,768 10,407,451 198,317 10,316,824 Total culture and recreation 13,197,352 13,215,352 13,010,711 204,641 12,841,404 Total expenditures 97,388,506 95,484,685 91,129,391 4,355,294 89,639,444 Excess (deficiency)of revenues over expenditures (3,201,336) (1,297,515) 7,957,682 9,255,197 7,037,208 Other financing sources(uses)- Issuance of lease - - - - 1,327,490 Transfers in 3,290,000 3,290,000 3,290,000 - 3,290,000 Transfers out - (9,155,808) (9,155,808) - (70,124) Total other financing sources (uses) 3,290,000 (5,865,808) (5,865,808) - 4,547,366 Net change in fund balances $ 88,664 $ (7,163,323) 2,091,874 $ 9,255,197 11,584,574 Fund balance, October 1,2015 50,708,210 39,123,636 Fund balance,September 30,2016 $ 52,800,084 $ 50,708,210 125 CITY OF ROUND ROCK,TEXAS DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30,2016 Variance- Budgeted Amounts Positive Original Final Actual (Negative) Revenues- Taxes and franchise $ 16,562,000 $ 16,562,000 $ 17,036,313 $ 474,313 Investment and other 5,000 5,000 44,422 39,422 Total revenues 16,567,000 16,567,000 17,080,735 513,735 Expenditures- Debt service- Principal retirement 13,950,521 13,950,521 13,463,922 486,599 Interest and fiscal charges 9,723,874 9,723,874 9,641,498 82,376 Issuance costs 229,245 229,245 229,245 - Total expenditures 23,903,640 23,903,640 23,334,665 568,975 Excess(deficiency)of revenues over expenditures (7,336,640) (7,336,640) (6,253,930) 1,082,710 Other financing sources(uses)- Issuance of refunding bonds 11,450,000 11,450,000 11,450,000 - Issuance of premium 1,094,690 1,094,690 1,094,690 - Payment to refunding agent (12,309,895) (12,309,895) (12,309,895) - Transfers in 6,910,000 6,910,000 6,417,000 (493,000) Total other financing sources (uses) 7,144,795 7,144,795 6,651,795 (493,000) Net change in fund balances $ (191,845) $ (191,845) 397,865 $ 589,710 Fund balance,October 1,2015 2,351,780 Fund balance, September 30,2016 $ 2,749,645 126 CITY OF ROUND ROCK, TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL HOTEL-MOTEL OCCUPANCY TAX FUND YEAR ENDED SEPTEMBER 30,2016 Variance- Budgeted Amounts Positive Original Final Actual (Negative) Revenues- Hotel occupancy tax $ 3,708,000 $ 3,708,000 $ 4,205,966 $ 497,966 Investment and other 8,000 8,000 45,462 37,462 Total revenues 3,716,000 3,716,000 4,251,428 535,428 Expenditures- Current- Culture and recreation- Personnel services 293,338 293,338 272,335 21,003 Contractual services 328,837 328,837 229,692 99,145 Supplies and materials 20,780 20,780 8,908 11,872 Other services and charges 405,000 405,000 200,678 204,322 Total expenditures 1,047,955 1,047,955 711,613 336,342 Excess of revenues over expenditures 2,668,045 2,668,045 3,539,815 871,770 Other financing sources (uses)- Transfers out (1,452,000) (3,056,000) (3,056,000) - Total other financing sources (uses) (1,452,000) (3,056,000) (3,056,000) - Net change in fund balances $ 1,216,045 $ (387,955) 483,815 $ 871,770 Fund balance,October 1,2015 8,326,191 Fund balance, September 30,2016 $ 8,810,006 127 CITY OF ROUND ROCK, TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL HOTEL-MOTEL OCCUPANCY VENUE TAX FUND YEAR ENDED SEPTEMBER 30,2016 Variance- Budgeted Amounts Positive Original Final Actual (Negative) Revenues- Charges for services $ 245,030 $ 245,030 $ 315,673 $ 70,643 Hotel occupancy tax 1,030,000 1,030,000 1,201,701 171,701 Investment and other 482,095 482,095 982,541 500,446 Contributions 52,000 52,000 61,396 9,396 Total revenues 1,809,125 1,809,125 2,561,311 752,186 Expenditures- Current- Culture and recreation- Personnel services 784,949 784,949 775,683 9,266 Contractual services 413,340 413,340 295,682 117,658 Supplies and materials 275,060 275,060 243,578 31,482 Other services and charges 88,100 88,100 39,949 48,151 Capital outlay 50,000 50,000 - 50,000 Total expenditures 1,611,449 1,611,449 1,354,892 256,557 Excess of revenues over expenditures 197,676 197,676 1,206,419 1,008,743 Other financing sources(uses)- ' Transfers in 400,000 400,000 400,000 - Transfers out (371,000) (371,000) (371,000) - Total other financing sources(uses) 29,000 29,000 29,000 - Net change in fund balances $ 226,676 $ 226,676 1,235,419 $ 1,008,743 Fund balance,October 1,2015 2,608,285 Fund balance, September 30,2016 $ 3,843,704 128 CITY OF ROUND ROCK, TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL POLICE FUND YEAR ENDED SEPTEMBER 30,2016 Variance- Budgeted Amounts Positive Original Final Actual (Negative) Revenues- Fines and forfeitures $ 240,000 $ 240,000 $ 161,075 $ (78,925) Investment and other 50 50 37,497 37,447 Total revenues 240,050 240,050 198,572 (41,478) Expenditures- Current- Public safety- Supplies and materials - 10,000 10,000 - Other services and charges 61,284 61,284 61,283 1 Capital outlay 660,000 650,000 631,529 18,471 Total expenditures 721,284 721,284 702,812 18,472 Net change in fund balances $ (481,234) $ (481,234) (504,240) $ (23,006) Fund balance, October 1,2015 643,581 Fund balance,September 30,2016 $ 139,341 129 CITY OF ROUND ROCK, TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL MUNICIPAL COURT FUND YEAR ENDED SEPTEMBER 30,2016 Variance- Budgeted Amounts Positive Original Final Actual (Negative) Revenues- Fines and forfeitures $ 99,000 $ 99,000 $ 73,067 $ (25,933) Investment and other 150 150 1,985 1,835 Total revenues 99,150 99,150 75,052 (24,098) Expenditures- Current- General government- Supplies and materials 99,550 179,550 173,397 6,153 Other services and charges 265,130 185,130 650 184,480 Total expenditures 364,680 364,680 174,047 190,633 Excess(deficiency)of revenues over expenditures (265,530) (265,530) (98,995) 166,535 Other financing sources(uses)- Transfers out (75,000) (75,000) - 75,000 Total other financing sources (uses) (75,000) (75,000) - 75,000 Net change in fund balances $ (340,530) $ (340,530) (98,995) $ 241,535 Fund balance, October 1,2015 445,503 Fund balance, September 30,2016 $ 346,508 130 CITY OF ROUND ROCK, TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL LANDSCAPE FUND YEAR ENDED SEPTEMBER 30,2016 Variance- Budgeted Amounts Positive Original Final Actual (Negative) Revenues- Licenses, pen-nits and fees $ 35,000 $ 35,000 $ 5,325 $ (29,675) Investment and other 100 100 1,374 1,274 Contributions 1,000 1,000 - (1,000) Total revenues 36,100 36,100 6,699 (29,401) Expenditures- Current- General government- Supplies and materials 139,662 139,662 67,285 72,377 Total expenditures 139,662 139,662 67,285 72,377 Net change in fund balances $ (103,562) $ (103,562) (60,586) $ 42,976 Fund balance,October 1,2015 272,666 Fund balance,September 30,2016 $ 212,080 131 CITY OF ROUND ROCK, TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL COMMUNITY DEVELOPMENT BLOCK GRANT YEAR ENDED SEPTEMBER 30,2016 Variance- Budgeted Amounts Positive Original Final Actual (Negative) Revenues- Grants $ 342,214 $ 342,214 $ 342,214 $ - Total revenues 342,214 342,214 342,214 - Expenditures- Current- General government- Contractual services 158 158 158 - Supplies and materials 21,910 21,910 21,910 - Other services and charges 188,088 188,088 188,088 - Capital outlay 132,058 132,058 132,058 - Total expenditures 342,214 342,214 342,214 - Net change in fund balances $ - $ - - $ - Fund balance, October 1,2015 - Fund balance, September 30,2016 $ - 132 CITY OF ROUND ROCK, TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL LIBRARY FUND YEAR ENDED SEPTEMBER 30,2016 Variance- Budgeted Amounts Positive Original Final Actual (Negative) Revenues- Investment and other $ 10 $ 10 $ 65 $ 55 Contributions 3,000 3,000 536 (2,464) Total revenues 3,010 3,010 601 (2,409) Expenditures- Current- General government- Supplies and materials 2,400 2,400 1,748 652 Other services and charges 14,158 14,158 - 14,158 Total expenditures 16,558 16,558 1,748 14,810 Net change in fund balances $ (13,548) $ (13,548) (1,147) $ 12,401 Fund balance,October 1,2015 13,414 Fund balance, September 30,2016 $ 12,267 133 CITY OF ROUND ROCK, TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL PUBLIC EDUCATION & GOVERNMENT FUND YEAR ENDED SEPTEMBER 30,2016 Variance- Budgeted Amounts Positive Original Final Actual (Negative) Revenues- Taxes and franchise $ 240,000 $ 240,000 $ 264,969 $ 24,969 Investment and other 50 50 5,925 5,875 Total revenues 240,050 240,050 270,894 30,844 Expenditures- Current- General Government- Capital outlay 916,049 928,162 46,712 881,450 Total expenditures 916,049 928,162 46,712 881,450 Net change in find balances $ (675,999) $ (688,112) 224,182 $ 912,294 Fund balance, October 1,2015 856,977 Fund balance, September 30,2016 $ 1,081,159 134 CITY OF ROUND ROCK, TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -BUDGET AND ACTUAL TRAFFIC SAFETY PROGRAM FUND YEAR ENDED SEPTEMBER 30,2016 Variance- Budgeted Amounts Positive Original Final Actual (Negative) Expenditures- Current- Public safety $ 154,594 $ 154,594 $ 142 $ 154,452 Total expenditures 154,594 154,594 142 154,452 Other financing sources (uses)- Transfers in - - 5,808 5,808 Total other financing sources(uses) - - 5,808 5,808 Net change in fund balances $ (154,594) $ (154,594) 5,666 $ 160,260 Fund balance, October 1,2015 185,209 Fund balance, September 30,2016 $ 190,875 135 136 STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND Agency funds are purely custodial (assets equal liabilities) and thus do not involve measurement of results of operations. 137 CITY OF ROUND ROCK, TEXAS AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES PUBLIC IMPROVEMENT DISTRICTS YEAR ENDED SEPTEMBER 30,2016 Balances Balances October 1, September 30, 2015 Additions Deductions 2016 Assets Cash and cash equivalents $ 17,132 $ - $ 17,132 $ - Total assets $ 17,132 $ - $ 17,132 $ - Liabilities Due to participants $ 17,132 $ - $ 17,132 $ - Total liabilities $ 17,132 $ - $ 17,132 $ - 138 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS 139 CITY OF ROUND ROCK, TEXAS SCHEDULE OF CAPITAL ASSETS - BY SOURCES SEPTEMBER 30,2016 Capital assets- Land $ 53,133,747 Construction in progress 59,653,890 Buildings and improvements 728,697,300 Equipment 73,386,255 $ 914,871,192 Investment in capital assets from- Capital projects funds- General obligation bonds $ 285,615,893 Federal grants 4,459,489 State grants 1,008,753 General fund revenues 151,625,293 Special revenue fund revenues 148,475,285 Hotel occupancy tax revenues 38,059,099 Gifts 284,910,471 Special assessments 716,909 $ 914,871,192 140 STATISTICAL SECTION 142 CITY OF ROUND ROCK, TEXAS STATISTICAL SECTION (UNAUDITED) This part of the City of Round Rock's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and supplementary information says about the City's overall financial health. This information has not been audited by the independent auditors. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the 144 City's financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the City's significant 154 local revenue sources,the property and sales tax. Debt Capacity These schedules present information to help the reader assess the affordability of the 162 City's currently outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader 169 understand the environment within which the City's financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand 171 how the information contained in the City's financial report relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the City's comprehensive annual financial reports for the relevant year. 143 CITY OF ROUND ROCK,TEXAS NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) 2007 2008 2009 2010 Governmental activities- Net investment in capital assets $ 232,909,510 $ 212,133,161 $ 244,059,034 $ 248,153,129 Restricted 52,064,611 60,414,392 59,433,510 61,882,505 Unrestricted 76,791,880 77,912,630 74,490,409 76,111,460 Total governmental activities net position $ 361,766,001 $ 350,460,183 $ 377,982,953 $ 386,147,094 Business-type activities- Net investment in capital assets $ 203,541,558 $ 219,607,998 $ 217,990,010 $ 210,960,047 Restricted 21,938,288 14,376,789 15,571,119 9,125,932 Unrestricted 46,122,809 53,228,109 66,770,620 85,930,757 Total business-type activities net position $ 271,602,655 $ 287,212,896 $ 300,331,749 $ 306,016,736 Primary government- Net investment in capital assets $ 436,451,068 $ 431,741,159 $ 462,049,044 $ 459,113,176 Restricted 74,002,899 74,791,181 75,004,629 71,008,437 Unrestricted 122,914,689 131,140,739 141,261,029 162,042,217 Total primary government activities net position $ 633,368,656 $ 637,673,079 $ 678,314,702 $ 692,163,830 144 2011 2012 2013 2014 2015 2016 $ 245,403,528 $ 252,984,681 $ 295,777,997 $ 303,977,353 $ 299,730,557 $ 310,185,706 66,810,986 72,780,050 42,970,091 43,974,370 48,019,726 51,813,118 77,864,804 76,870,782 74,833,175 44,713,408 53,355,360 52,451,939 $ 390,079,318 $ 402,6355513 $ 413,581,263 $ 392,665,131 $ 401,105,643 $ 414,450,763 $ 213,536,543 $ 212,883,311 $ 2145178,908 $ 221,062,599 $ 228,866,895 $ 234,981,264 11,984,130 13,994,028 6,868,062 7,764,750 19,215,972 15,275,659 95,693,542 104,985,805 116,650,981 114,901,064 110,519,279 126,490,054 $ 321,214,215 $ 331,863,144 $ 337,697,951 $ 343,728,413 $ 358,602,146 $ 376,746,977 $ 458,940,071 $ 465,867,992 $ 509,956,905 $ 525,039,952 $ 528,597,452 $ 545,166,970 78,795,116 86,774,078 49,838,153 51,739,120 67,235,698 67,088,777 173,558,346 181,856,587 191,484,156 159,614,472 163,874,639 178,941,993 $ 711,293,533 $ 734,498,657 $ 751,279,214 $ 736,393,544 $ 759,707,789 $ 791,197,740 145 CITY OF ROUND ROCK, TEXAS CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) 2007 2008 2009 2010 Expenses: Governmental activities- General government $ 21,823,415 $ 24,154,706 $ 24,856,934 $ 27,064,905 Public safety 28,879,882 34,541,169 37,104,418 36,688,203 Public works 36,410,236 55,835,912 13,955,375 29,053,781 Culture and recreation 11,905,643 12,842,679 16,433,602 14,260,057 Interest on long-term debt 8,733,873 9,353,621 9,410,388 9,394,116 Issuance costs - - - - Total governmental activities expenses 107,753,049 136,728,087 101,760,717 116,461,062 Business-type activities- Water and sewer utility 29,275,204 33,032,588 37,178,011 37,623,591 Golf course 167,906 185,659 182,521 192,595 Total business-type activities expenses 29,443,110 33,218,247 37,360,532 37,816,186 Total primary government expenses 137,196,159 169,946,334 139,121,249 154,277,248 Program revenues: Governmental activities- Charges for services- General government 1,766,153 1,941,519 3,820,455 3,927,379 Public safety 2,851,787 3,197,900 3,646,892 4,150,577 Public works 1,337,371 1,295,783 877,676 836,169 Culture and recreation 2,489,438 2,721,570 2,503,925 2,531,989 Operating grants and contributions 931,269 1,097,733 1,064,411 932,879 Capital grants and contributions 17,322,551 3,825,335 14,083,063 7,634,857 Total governmental activities program revenues 26,698,569 14,079,840 25,996,422 20,013,850 Business-type activities- Charges for services- Water and sewer utility 30,968,868 35,060,024 37,802,909 37,512,213 Golf course 476,025 474,353 485,972 349,424 Capital grants and contributions 24,381,521 13,967,314 12,490,491 6,014,265 Total business-type activities program revenues 55,826,414 49,501,691 50,779,372 43,875,902 Total primary government program revenues 82,524,983 63,581,531 76,775,794 63,889,752 Net(expense)revenue- Governmental activities (81,054,480) (122,648,247) (75,764,295) (96,447,212) Business-type activities 26,383,304 16,283,444 13,418,840 6,059,716 Total primary government net expense (54,671,176) (106,364,803) (62,345,455) (90,387,496) 146 2011 2012 2013 2014 2015 2016 $ 28,487,648 $ 30,406,768 $ 27,923,780 $ 28,050,936 $ 27,917,481 $ 28,204,761 39,140,352 40,944,978 41,842,363 45,283,826 45,236,987 49,439,902 36,442,333 29,295,041 31,215,489 33,537,533 33,412,841 33,448,357 14,514,561 15,069,456 15,702,435 18,024,001 19,202,557 20,885,009 8,608,399 7,144,755 6,915,772 8,478,700 8,118,490 8,294,279 - - - - 942,596 229,245 127,193,293 122,860,998 123,599,839 133,374,996 134,830,952 140,501,553 38,602,875 38,842,107 42,657,792 44,605,155 46,069,705 47,947,818 174,149 157,135 141,153 71,090 144,993 133,270 38,777,024 38,999,242 42,798,945 44,676,245 46,214,698 48,081,088 165,970,317 161,860,240 166,398,784 178,051,241 181,045,650 188,582,641 3,519,857 3,104,355 2,822,715 2,559,380 2,168,842 2,258,333 4,295,283 4,215,243 3,248,867 2,652,480 2,461,782 1,669,550 2,032,530 2,760,386 2,942,382 726,785 749,524 742,437 3,136,422 2,737,969 2,844,842 3,032,109 3,288,970 3,919,254 1,130,628 1,135,386 829,367 1,042,301 1,199,574 946,604 9,257,876 9,782,214 5,310,541 5,901,038 4,234,018 8,013,039 23,372,596 23,735,553 17,998,714 15,914,093 14,102,710 17,549,217 44,922,715 43,327,656 43,094,185 43,705,878 45,898,090 48,653,788 431,413 480,116 522,169 382,081 320,846 360,371 9,518,890 7,533,264 6,514,369 10,226,302 17,742,568 19,607,086 54,873,018 51,341,036 50,130,723 54,314,261 63,961,504 68,621,245 78,245,614 75,076,589 68,129,437 70,228,354 78,064,214 86,170,462 (103,820,697) (99,125,445) (105,601,125) (117,460,903) (120,728,242) (122,952,336) 16,095,994 12,341,794 7,331,778 9,638,016 17,746,806 20,540,157 (87,724,703) (86,783,651) (98,269,347) (107,822,887) (102,981,436) (102,412,179) (CONTINUED) 147 CITY OF ROUND ROCK, TEXAS CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) 2007 2008 2009 2010 General revenues and other changes in net position: Governmental activities- Taxes- Property $ 24,409,535 $ 27,560,939 $ 29,867,765 $ 33,040,085 Franchise 5,499,222 5,748,333 6,213,263 5,934,540 Sales 67,924,755 64,038,208 58,777,622 59,545,288 Hotel occupancy 2,838,689 2,939,352 2,394,145 2,291,326 Public service 257,384 286,179 315,739 327,723 Investment earnings 9,912,657 8,220,228 4,112,703 1,365,802 Miscellaneous 152,805 257,495 - - Transfers 1,668,221 2,291,695 1,605,828 2,106,589 Total governmental activities 112,663,268 111,342,429 103,287,065 104,611,353 Business-type activities- Investment earnings 1,055,364 1,618,492 1,305,841 1,731,860 Transfers (1,668,221) (2,291,695) (1,605,828) (2,106,589) Total business-type activities (612,857) (673,203) (299,987) (374,729) Total primary government 112,050,411 110,669,226 102,987,078 104,236,624 Change in net position: Governmental activities 31,608,788 (11,305,818) 27,522,770 8,164,141 Business-type activities 25,770,447 15,610,241 13,118,853 5,684,987 Total primary government $ 57,379,235 $ 4,304,423 $ 40,641,623 $ 13,849,128 148 2011 2012 2013 2014 2015 2016 $ 33,578,991 $ 34,379,529 $ 34,979,578 $ 36,502,409 $ 39,932,573 $ 44,239,067 6,221,790 6,326,735 5,952,712 6,460,448 7,255,212 7,175,948 61,734,643 63,305,917 66,216,447 68,462,292 67,620,848 67,340,120 2,684,046 3,252,542 4,140,920 4,646,208 5,083,556 5,407,667 352,159 316,320 347,846 477,606 515,778 566,712 988,222 1,635,630 2,026,554 1,882,139 5,020,786 7,957,942 2,193,070 2,464,967 2,882,818 1,800,895 3,740,000 3,610,000 107,752,921 111,681,640 116,546,875 120,231,997 129,168,753 136,297,456 1,294,555 772,102 1,385,847 1,397,321 866,927 1,214,674 (2,193,070) (2,464,967) (2,882,818) (1,800,895) (3,740,000) (3,610,000) (898,515) (1,692,865) (1,496,971) (403,574) (2,873,073) (2,395,326) 106,854,406 109,988,775 115,049,904 119,828,423 126,295,680 133,902,130 3,932,224 12,556,195 10,945,750 2,771,094 8,440,511 13,345,120 15,197,479 10,648,929 5,834,807 9,234,442 14,873,733 18,144,831 $ 19,129,703 $ 23,205,124 $ 16,780,557 $ 12,005,536 $ 23,314,244 $ 31,489,951 149 CITY OF ROUND ROCK, TEXAS FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2007 2008 2009 2010 Nonspendable- Inventories,prepaids and other $ - $ - $ - $ - Restricted for- Debt service 3,058,395 3,431,063 2,887,281 1,944,761 Authorized construction 116,277,182 104,541,402 90,000,407 88,064,514 Hotel-motel tax 5,191,941 6,368,822 7,005,856 7,314,509 Public safety 564,391 521,354 497,243 862,273 Community development 19,181 - - - Committed to- Authorized construction 32,755,858 34,543,559 31,250,099 33,739,591 Drainage - - - - Public education - - - - Landscape improvements 388,111 788,440 574,093 571,705 Annexation fees 62,340 158,190 158,886 158,990 Library 14,815 15,164 14,302 11,176 Arterial II - - - - Park Improvements - - - - Unassigned 36,689,422 36,415,765 36,785,055 36,857,155 Total governmental funds $ 195,021,636 $ 186,783,759 $ 169,173,222 $ 169,524,674 150 2011 2012 2013 2014 2015 2016 $ 288,758 $ 321,044 $ 375,087 $ 397,271 $ 430,821 $ 372,288 2,238,270 2,301,340 2,415,427 2,278,062 2,351,780 2,749,645 88,021,123 81,424,206 43,630,036 106,539,802 117,515,606 77,545,478 8,114,729 8,927,441 9,549,082 11,173,765 10,934,476 12,653,710 1,024,405 937,105 1,249,246 1,050,349 1,274,293 676,724 35,731,396 35,645,374 31,856,334 26,570,024 24,696,122 24,865,777 573,809 1,179,777 1,570,994 - - - 862,066 872,484 826,282 684,199 856,977 1,081,159 542,779 248,771 283,518 264,662 272,666 212,080 39,163 39,190 39,211 - - - 11,239 6,625 10,530 12,438 13,414 12,267 - - - - 1,145,826 1,152,195 - - - - 309,162 281,427 36,238,854 36,912,381 38,604,781 38,726,365 50,277,389 52,427,796 $ 173,686,591 $ 168,815,738 $ 130,410,528 $ 187,696,937 $ 210,078,532 $ 174,030,546 151 CITY OF ROUND ROCK,TEXAS CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2007 2008 2009 2010 Revenues- Taxes and franchise $ 97,889,771 $ 97,759,902 $ 95,097,743 $ 98,990,298 Licenses,permits and fees 1,585,091 1,593,711 1,053,959 907,705 Charges for services 3,569,077 3,895,886 3,757,215 3,767,565 Fines and forfeitures 1,849,523 2,014,379 2,057,353 2,260,401 Intergovernmental 2,578,680 1,317,506 1,232,594 3,953,092 Hotel occupancy tax 2,986,136 2,939,352 2,394,145 2,291,326 Investment and other 11,424,988 9,977,103 8,406,513 3,652,629 Contributions 826,807 2,094,375 1,729,637 972,641 Total revenues 122,710,073 121,592,214 115,729,159 116,795,657 Expenditures- General government 22,105,269 22,858,670 22,640,290 22,874,155 Public safety 28,456,892 32,949,754 34,099,601 34,539,844 Public works 8,719,701 9,360,999 10,065,601 9,565,430 Culture and recreation 10,711,796 11,693,213 11,813,663 11,157,995 Capital projects 36,542,219 53,298,559 38,798,458 21,184,635 Debt service- Principal retirement 11,940,981 10,448,506 10,942,820 11,456,810 Interest and fiscal charges 7,052,015 9,060,707 9,290,481 9,097,057 Other charges 3,994,688 - - 1,327,989 Total expenditures 129,523,561 149,670,408 137,650,914 121,203,915 Excess(deficiency)of revenues over expenditures (6,813,488) (28,078,194) (21,921,755) (4,408,258) Other financing sources(uses)- Issuance of lease 3,250,000 750,000 1,505,390 1,310,569 Issuance of debt 80,110,000 16,798,622 - 18,575,000 Premium on bonds issued 573,448 - - 1,387,593 Payment to refunded bond escrow agent (30,175,015) - - (19,682,356) Transfers in 45,681,150 26,429,303 33,385,722 24,459,490 Transfers out (44,012,929) (24,137,608) (30,579,894) (21,290,586) Total other financing sources(uses) 55,426,654 19,840,317 4,311,218 4,759,710 Net change in fund balances $ 48,613,166 $ (8,237,877) $ (17,610,537) $ 351,452 Capital outlay including amounts reported under departmental current expenditures $ 36,542,219 $ 53,298,559 $ 40,000,535 $ 22,684,310 Debt service as a percentage of noncapital expenditures 20.4% 20.2% 20.7% 20.9% 152 2011 2012 2013 2014 2015 2016 $ 101,914,916 $ 104,318,270 $ 107,417,612 $ 111,592,909 $ 115,508,506 $ 119,211,433 2,155,358 3,094,983 3,567,437 1,243,857 1,704,374 1,843,633 3,985,634 4,198,815 4,436,779 4,645,527 4,513,428 5,172,465 2,492,261 2,814,987 3,208,637 2,673,670 2,451,316 1,573,476 3,302,276 2,158,621 1,225,195 3,044,095 1,679,993 990,683 2,684,046 3,252,543 4,140,920 4,646,208 5,083,556 5,407,667 3,786,134 2,635,613 3,565,842 4,783,567 7,207,478 7,963,854 3,282,812 5,858,346 2,567,327 3,152,100 600,919 368,748 123,603,437 128,332,178 130,129,749 135,781,933 138,749,570 142,531,959 24,346,515 25,332,577 23,783,735 24,375,794 23,838,520 24,394,392 36,556,318 37,646,821 39,475,791 42,306,841 43,067,272 44,388,881 8,797,799 9,791,618 11,852,443 11,291,499 12,328,284 12,062,839 11,336,602 11,95 8,179 12,440,948 13,775,702 14,766,040 15,078,964 22,981,288 39,916,082 65,523,775 38,694,239 33,476,554 65,414,999 11,815,968 13,040,604 12,852,059 14,395,697 13,919,366 13,463,922 8,072,821 6,825,065 6,797,281 7,372,652 8,597,372 9,641,498 247,433 256,373 98,630 862,888 942,596 229,245 124,154,744 144,767,319 172,824,662 153,075,312 150,936,004 184,674,740 (551,307) (16,435,141) (42,694,913) (17,293,379) (12,186,434) (42,142,781) 1,372,023 500,000 1,000,000 1,450,000 2,000,000 2,250,000 16,145,000 27,295,000 8,615,000 77,350,000 70,665,000 11,450,000 223,248 1,317,881 - 6,161,887 6,369,020 1,094,690 (16,083,357) (20,616,784) (8,509,756) (11,682,994) (48,205,991) (12,309,895) 27,752,457 34,447,300 49,547,722 32,984,237 27,070,865 30,552,126 (24,696,147) (31,379,109) (46,363,263) (31,683,342) (23,330,865) (26,942,126) 4,713,224 11,564,288 4,289,703 74,579,788 34,568,029 6,094,795 $ 4,161,917 $ (4,870,853) $ (38,405,210) $ 57,286,409 $ 22,381,595 $ (36,047,986) $ 23,932,697 $ 41,282,292 $ 67,059,226 $ 38,644,877 $ 35,385,140 $ 65,116,395 19.8% 19.2% 18.6% 19.0% 19.5% 19.3% 153 CITY OF ROUND ROCK,TEXAS ACTUAL AND TAXABLE ASSESSED VALUE OF PROPERTY LAST TEN FISCAL YEARS Actual Assessed Value Less: Total Fiscal Real Personal Tax Exempt Taxable Assessed Total Direct Year Property Property Total Property Valuation Tax Rate 2007 5,929,650,836 783,793,471 6,713,444,307 198,475,704 6,514,968,603 0.3711 2008 6,954,733,744 852,374,495 7,807,108,239 303,674,692 7,503,433,547 0.3652 2009 7,623,482,042 957,142,673 8,580,624,715 386,156,997 8,194,467,718 0.3652 2010 7,843,041,122 880,412,269 8,723,453,391 401,156,676 8,322,296,715 0.3966 2011 7,581,182,068 831,489,169 8,412,671,237 395,522,799 8,017,148,438 0.4173 2012 7,654,036,144 850,976,608 8,505,012,752 408,354,355 8,096,658,397 0.4232 2013 7,837,387,397 947,316,007 8,784,703,404 493,653,067 8,291,050,337 0.4204 2014 8,195,046,631 1,062,520,327 9,257,566,958 567,914,523 8,689,652,435 0.4195 2015 9,193,035,124 1,030,331,518 10,223,366,642 589,210,216 9,634,156,426 0.4146 2016 10,040,964,402 1,018,628,138 11,059,592,540 567,506,618 10,492,085,922 0.4147 Source: Williamson Central Appraisal District/Travis Central Appraisal District Note - Property in the City is assessed each year. Property is assessed at actual value; therefore, the assessed values are equal to actual value. Tax rates are per$100 of assessed value. 154 CITY OF ROUND ROCK, TEXAS PROPERTY TAX RATES -DIRECT AND OVERLAPPING GOVERNMENTS PER$100 OF ASSESSED VALUE LAST TEN FISCAL YEARS City Direct Rates Overlapping Rates Round Rock Total Independent Direct and Fiscal Operating Debt Service Total School Williamson' Special Overlapping Year Rate Rate Direct District County Districts Rates 2007 0.2164 0.1547 0.3711 1.6406 0.4997 0.0200 2.5314 2008 0.1960 0.1692 0.3652 1.3238 0.4891 0.0200 2.1981 2009 0.2171 0.1481 0.3652 1.3324 0.4683 0.1154 2.2813 2010 0.2491 0.1475 0.3966 1.3800 0.4900 0.1146 2.3812 2011 0.2665 0.1508 0.4173 1.3800 0.4900 0.1151 2.4024 2012 0.2751 0.1481 0.4232 1.3350 0.4877 0.1148 2.3607 2013 0.2830 0.1373 0.4203 1.3800 0.4890 0.1151 2.4044 2014 0.2800 0.1395 0.4195 1.3674 0.4890 0.1149 2.3908 2015 0.2628 0.1518 0.4146 1.3375 0.4865 0.1142 2.3528 2016 0.2545 0.1602 0.4147 1.3325 0.4815 0.1205 2.3492 Source: Williamson County Tax Office 155 CITY OF ROUND ROCK, TEXAS PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO 2016 2007 %of Total %of Total Net Net Net Net Assessed Assessed Assessed Assessed Name of Taxpayer Valuation Rank Valuation Valuation Rank Valuation Dell Computer Holdings,LP $ 298,169,512 1 2.842% $ 194,498,569 1 2.985% CPG Round Rock,LP/Round Rock Premium Outlets 138,431,301 2 1.319 27,979,206 9 0.429 Dell Computer Corp. 91,256,835 3 0.870 61,470,057 4 0.944 Baltgem Development Corp./La Frontera Village 77,884,064 4 0.742 89,922,556 2 1.380 CMF 15 Portfolio,LLC/Colonial Grand Apartments 68,819,574 5 0.656 - - Columbia/St.David Healthcare 66,533,660 6 0.634 54,099,616 5 0.830 Fisher-Rosemount Systems,Inc./ Emerson Process Management 49,000,000 7 0.467 - - Baev-LaSalle Round Rock University Blvd,LLC 48,382,842 8 0.461 - - Las Brisas Luxury Apartment Homes, LLP 43,921,785 9 0.419 - - Oncor Electric Delivery Co. 43,815,195 10 0.418 - - 2800 La Frontera#I A,LTD - - 29,697,634 8 0.456 Toppan Photomasks,Inc. - - 64,471,351 3 0.990 TXU Electric Delivery Co. - - 40,319,229 6 0.619 Drever,Limestone,LP - - 33,440,000 7 0.513 Warner Ranch Associates - - 26,616,320 10 0.409 $ 926,214,768 8.828% $ 622,514,538 9.555% Source: Williamson Central Appraisal District 156 CITY OF ROUND ROCK, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Collected within the Taxes Levied Fiscal Year of the Levy Collections Total Collections to Date Fiscal for the Percentage in Subsequent Percentage Year Fiscal Year Amount Of Levy Years Amount Of Levy 2007 24,021,335 23,862,022 99.34 498 23,862,520 99.34 2008 27,220,757 27,194,031 99.90 1,831 27,195,862 99.91 2009 29,931,048 29,745,017 99.38 4,814 29,749,831 99.39 2010 33,001,196 32,822,350 99.46 5,278 32,827,628 99.47 2011 33,469,184 33,330,239 99.58 7,742 33,337,981 99.61 2012 34,255,559 34,161,567 99.73 11,404 34,172,971 99.76 2013 34,865,783 34,717,536 99.57 8,891 34,726,427 99.60 2014 36,452,223 36,281,479 99.53 14,220 36,295,699 99.57 2015 39,792,302 39,697,745 99.76 41,829 39,739,574 99.87 2016 44,063,923 43,894,949 99.62 - 43,894,949 99.62 157 CITY OF ROUND ROCK, TEXAS TAXABLE SALES BY CATEGORY LAST TEN CALENDAR YEARS Retail Wholesale Year Trade Manufacturing Services Trade Utilities 2006 1,25 8,059,039 1,160,498,511 284,336,638 150,829,580 19,557,192 2007 1,164,629,997 1,451,958,775 307,961,994 145,020,854 19,249,383 2008 1,169,189,726 1,075,483,223 331,119,293 179,784,677 16,648,480 2009 1,101,311,223 990,398,877 324,328,200 145,345,009 16,322,477 2010 1,070,089,059 1,111,487,638 331,304,579 117,424,010 17,788,882 2011 1,107,089,059 1,095,938,383 346,422,899 85,234,762 22,224,004 2012 1,228,352,605 985,127,289 381,294,220 99,025,592 26,448,906 2013 1,399,874,606 1,103,790,424 402,483,896 131,162,463 29,351,784 2014 1,529,469,558 1,061,444,585 432,758,149 128,755,561 34,412,553 2015 1,556,013,209 951,496,554 476,798,645 123,940,513 41,822,044 $ 12,584,078,081 $ 10,987,624,259 $ 3,618,808,513 $ 1,306,523,021 $ 243,825,705 Source: Texas Comptroller of Public Accounts Note: Sales information is not available on a fiscal year basis. Also, due to State of Texas confidentiality rules, names of sales tax payers are not available. The categories presented provide alternative information indicative of sales tax revenue sources. 158 City Direct State Finance, Sales Tax Sales Tax Over- Construction Insurance Total Rate Rate lapping $ $ $ 26,679,606 1,410,360 2,901,370,926 2.00 6.25 8.25 47,674,780 1,793,374 3,138,289,157 2.00 6.25 8.25 46,245,654 1,639,355 2,820,110,408 2.00 6.25 8.25 30,440,097 2,160,587 2,610,306,560 2.00 6.25 8.25 46,023,961 2,114,837 2,696,232,966 2.00 6.25 8.25 61,286,941 3,006,901 2,721,803,690 2.00 6.25 8.25 70,736,973 2,846,478 2,793,832,063 2.00 6.25 8.25 90,125,307 2,368,176 3,159,156,656 2.00 6.25 8.25 95,799,482 2,497,918 3,285,137,806 2.00 6.25 8.25 110,293,477 2,600,258 3,262,964,700 2.00 6.25 8.25 $ 625,306,278 $ 22,438,244 $ 29,389,204,932 159 CITY OF ROUND ROCK, TEXAS HOTEL TAXPAYERS SEPTEMBER 30,2016 Total Collections Hotel Motel Year Ended Hotel Motel Occupancy September 30, Number of %of Total Taxpayer Occupancy Tax Venue Tax 2016 Rooms Collections Austin Marriott North $ 692,403 $ 197,830 $ 890,231 295 16.5% Homewood Suites 341,247 97,499 438,746 115 8.1% Hilton Garden Inn 240,615 68,747 309,362 122 5.7% Residence Inn 233,899 66,828 300,727 96 5.6% Hampton Inn 226,481 64,709 291,190 93 5.4% Courtyard by Marriott 218,589 62,454 281,043 113 5.2% Home 2 Suites 216,244 61,784 278,028 91 5.1% Holiday Inn 198,077 56,593 254,670 116 4.7% Springhill Suites 192,677 55,051 247,728 104 4.6% Holiday Inn Express N 145,814 41,660 187,474 91 3.5% La Quinta Inn 139,857 39,959 179,816 116 3.3% Wingate Inn 131,258 37,500 168,758 100 3.1% Red Roof Inn 127,021 36,292 163,313 100 3.0% Baymont Inn 121,904 34,830 156,734 96 2.9% Best Western Executive Inn 104,533 29,867 134,400 64 2.5% Sleep Inn 103,359 29,531 132,890 74 2.5% Staybridge Suites 93,737 26,782 120,519 81 2.2% Microtel Inn&Suites 92,500 26,429 118,929 100 2.2% Candlewood Suites 86,658 24,759 111,417 98 2.1% Motel 82,975 23,707 106,682 59 1.9% Comfort Suites 79,864 22,818 102,682 63 1.9% Country Inn&Suites 73,965 21,133 95,098 63 1.8% Days Inn&Suites 65,668 18,762 84,430 48 1.6% Extended Stay America#6197 64,335 18,382 82,717 104 1.5% Extended Stay America#6030 60,783 17,367 78,150 138 1.4% Value Place 58,294 16,655 74,949 121 1.4% Holiday Inn Express S 7,519 2,148 9,667 109 0.2% VRBO Homes 4,900 1,400 6,300 16 0.1% Provident Crossing Retirement 791 226 1,017 2 0.0% $ 4,205,967 $ 1,201,702 $ 5,407,667 2,788 100% 160 CITY OF ROUND ROCK,TEXAS HOTEL OCCUPANCY TAX COLLECTION HISTORY BY QUARTER LAST TEN FISCAL YEARS Fiscal Year Ended 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 9-30 Oct.—Dec. Jan.—Mar. Apr.—June July—Sept. Total 2007 $ 594,826 $ 695,452 $ 729,813 $ 818,598 $ 2,838,689 2008 669,345 749,897 806,813 713,297 2,939,352 2009 609,608 589,006 640,846 554,685 2,394,145 2010 504,062 582,719 661,356 543,189 2,291,326 2011 684,430 678,090 716,629 604,897 2,684,046 2012 610,280 835,331 1,004,705 802,227 3,252,543 2013 964,181 1,091,350 1,152,982 932,407 4,140,920 2014 1,071,926 1,217,483 1,271,649 1,085,150 4,646,208 2015 1,114,213 1,274,209 1,437,121 1,258,012 5,083,555 2016 1,214,093 1,354,383 1,570,064 1,269,127 5,407,667 161 CITY OF ROUND ROCK, TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Business-Type Governmental Activities Activities General Total Percentage Fiscal Obligation Certificates of Other Debt Revenue Primary of Personal Per Year Bonds Obligation Obligations Bonds Government Income Capita 2007 124,960,000 16,120,000 60,994,604 355,000 202,429,604 7.53 2,188 2008 120,060,000 15,300,000 73,598,054 8,290,000 217,248,054 7.67 2,258 2009 115,725,000 14,475,000 69,270,163 11,555,000 211,025,163 7.10 2,121 2010 110,470,000 13,530,000 65,830,308 91,166,635 280,996,943 9.16 2,788 2011 105,980,000 12,965,000 60,691,660 89,888,648 269,525,308 8.63 2,655 2012 101,185,000 12,380,000 62,571,173 87,765,660 263,901,833 8.27 2,574 2013 96,340,000 11,770,000 56,131,110 85,392,673 249,633,783 7.56 2,380 2014 155,780,000 11,135,000 55,963,734 90,799,894 313,678,628 9.12 2,903 2015 154,925,000 29,675,000 56,701,818 87,827,948 329,129,766 10.00 2,970 2016 149,540,000 27,095,000 52,746,502 89,364,624 318,746,126 6.43 2,797 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. See the Schedule of Demographic and Economic Statistics for personal income and population data. 162 CITY OF ROUND ROCK, TEXAS RATIOS OF NET GENERAL BONDED DEBT OUTSTANDING TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS Amount Ratio Available of Net Fiscal Net (2) in Bonded Net Year Assessed Gross Debt Net Debt to Bonded Ended (t) Value Bonded Service Bonded Assessed Debt Per 9-30 Population (in thousands) Debt Fund Debt Value Capita 2007 92,500 6,514,969 138,226,097 3,058,395 135,167,702 2.07 1,461 2008 96,200 7,503,434 132,716,787 3,431,063 129,285,724 1.72 1,344 2009 99,500 8,194,468 127,721,445 2,887,281 124,834,164 1.52 1,255 2010 100,800 8,322,297 123,017,131 1,944,761 121,072,370 1.45 . 1,201 2011 101,500 8,017,148 118,122,822 2,238,270 115,884,552 1.45 1,142 2012 102,515 8,096,658 114,268,570 2,301,340 111,967,230 1.38 1,092 2013 104,900 8,291,050 108,241,436 2,415,427 105,826,009 1.28 1,009 2014 108,050 8,689,652 172,890,871 2,278,062 170,612,809 1.96 1,579 2015 110,800 9,634,156 181,245,000 2,351,780 178,893,220 1.86 1,615 2016 113,968 10,492,086 173,280,000 2,749,645 170,530,355 1.63 1,496 Note: Includes Certificates of Obligation and General Obligation Bonds net of related premiums and discounts. (1) Source: Planning Department,City of Round Rock (2) Gross bonded debt does not include self-supporting debt funded by enterprise funds. Gross self-supporting debt totaled$3,355,000 at September 30, 2016. 163 ,..-_ >e.SS 164 CITY OF ROUND ROCK,TEXAS COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBT SEPTEMBER 30,2016 Total ** Estimated General Estimated Share of Debt Percentage Overlapping Name of Governmental Unit Outstanding Applicable Debt Debt repaid with property taxes- Williamson County $ 931,599,942* 20.85% $ 194,238,588 Round Rock Independent School District 756,435,000* 35.24% 266,567,694 Travis County 707,826,497* 0.22% 1,557,218 Georgetown ISD 322,145,000* 0.21% 676,505 Austin Community College 304,153,659* 5.90% 17,945,066 Travis County Healthcare District 11,355,000* 0.22% 24,981 Subtotal, overlapping debt 481,010,052 City direct debt 229,381,502 Total direct and overlapping debt $ 710,391,554 * Gross Debt as of September 30, 2016 ** The percentage of overlapping debt applicable is estimated using taxable assessed property values. Source: City of Round Rock Finance Department and Texas Municipal Reports Note: Overlapping governments are those that coincide, at least in part,with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Round Rock, Texas. This process recognizes that, when considering the government's ability to issue and repay long-term debt,the entire debt borne by the residents and businesses should be taken into account. However,this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 165 CITY OF ROUND ROCK,TEXAS LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 2007 2008 2009 2010 Debt limit $ 1,167,845,500 $ 1,345,033,513 $ 1,468,905,352 $ 1,491,819,433 Total net debt applicable to limit 132,491,172 126,786,525 122,512,295 117,540,239 Legal debt margin $ 1,035,354,328 $ 1,218,246,988 $ 1,346,393,057 $ 1,374,279,194 Total net debt applicable to the limit as a percentage of debt limit 11.34% 9.43% 8.34% 7.88% Legal Debt Margin Calculation for Fiscal Year 2016 Total assessed value $ 10,492,085,922 Debt limit-Maximum serviceable at permitted allocation of$1.50 per$100 of assessed value $ 1,786,728,268 Amount of debt applicable to debt limit: Total General Obligation Debt $ 176,635,000 Less: Amount available in Debt Service Fund (2,749,645) Amounts considered self-supporting (3,355,000) Total net debt applicable to debt limit 170,530,355 Legal debt margin $ 1,616,197,913 There is no direct debt limitation in the City Charter or under state law. The City operates under a Home Rule Charter(Article XI, Section 5, Texas Constitution), approved by voters in August, 1977,that limits the maximum tax rate, for all City purposes,to $2.50 per$100 assessed valuation. Administratively, the Attorney General of the State of Texas will permit allocation of$1.50 of the$2.50 maximum tax rate for general obligation debt service. Assuming the maximum tax rate for debt service of $1.50 on January 1, 2015, assessed valuation of $10,492,085,922 at 100%collection,tax revenue of$157,381,289 would be produced. This revenue could service the debt on$1,786,728,268 issued as 20-year serial bonds at 5.50%(with level debt service payment). 166 2011 2012 2013 2014 2015 2016 $ 1,437,119,854 $ 1,451,372,470 $ 1,486,218,341 $ 1,557,670,054 $ 1,640,628,922 $ 1,786,728,268 112,406,730 107,568,660 101,824,573 161,006,938 178,893,220 170,530,355 $ 1,324,713,124 $ 1,343,803,810 $ 1,384,393,768 $ 1,396,663,116 $ 1,461,735,702 $ 1,616,197,913 7.82% 7.41% 6.85% 10.34% 10.90% 9.54% 167 CITY OF ROUND ROCK, TEXAS SCHEDULE OF REVENUE BOND COVERAGE LAST TEN FISCAL YEARS Net (2) Revenue Debt Service cls Direct Available Requirements Revenue Fiscal Gross Operating for Debt Principal and Bond Year Revenue Expenses Service Interest Coverage 2007 31,921,522 21,369,755 10,551,767 5,966 1,768.65 2008 36,629,189 24,736,819 11,892,370 153,666 77.39 2009 39,095,039 27,356,759 11,738,280 568,400 20.65 2010 39,240,390 22,243,281 16,997,109 4,007,882 4.24 2011 46,215,387 21,880,865 24,334,522 5,081,298 4.79 2012 44,098,633 21,274,247 22,824,386 5,893,953 3.87 2013 44,479,457 25,401,579 19,077,878 6,101,113 3.13 2014 45,103,137 27,132,654 17,970,483 6,347,632 2.83 2015 46,761,990 27,348,975 19,413,015 6,894,788 2.82 2016 49,865,320 28,718,593 21,146,727 5,994,842 3.53 (1) Water and Sewer Fund operating and non-operating revenues. (2) Water and Sewer Fund operating expenses, excluding depreciation. 168 CITY OF ROUND ROCK,TEXAS DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (4) Per (2) (3) (2) Fiscal Personal Capita Median School Unemployment Year Population Income Income Age Enrollment Rate 2007 92,500 2,686,755,000 29,046 31.0 40,342 3.5 2008 96,200 2,831,069,800 29,429 31.2 41,489 4.2 2009 99,500 2,971,866,000 29,868 31.2 41,867 6.4 2010 100,800 3,066,033,600 30,417 31.4 42,683 6.2 2011 101,500 3,122,749,000 30,766 31.6 44,331 6.1 2012 102,515 3,190,164,285 31,119 32.0 45,000 5.9 2013 104,900 3,301,727,500 31,475 32.0 45,361 5.0 2014 108,050 3,439,879,800 31,836 31.7 45,924 4.2 2015 110,800 4,314,330,400 38,938 33.5 47,093 3.2 2016 113,968 4,957,380,064 43,498 33.9 47,580 3.3 Sources: (1) Planning Department, City of Round Rock (2) Round Rock Chamber of Commerce (3) Round Rock Independent School District (4) U.S. Dept. of Commerce / Bureau of Economic Development; data is for Williamson County, which is representative of the City; data for City not available. 169 CITY OF ROUND ROCK, TEXAS PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 2016 2007 %of Total %of Total City City Name of Employer Employees Rank Employment Employees Rank Employment Dell, Inc. 11,000 1 18.09 10,000 1 20.59 Round Rock Independent School District 5,800 2 9.54 5,175 2 10.65 Sears TeleServe 1,500 3 2.47 1,300 3 2.68 City of Round Rock,Texas 918 4 1.51 793 4 1.63 Emerson Process Management 875 5 1.44 - - Round Rock Premium Outlets 800 6 1.32 - - Scott&White Healthcare 750 7 1.23 - - Round Rock Medical Center 689 8 1.13 710 5 1.46 Liquidation Channel 600 9 0.99 - - Wayne,a GE Energy Business 550 10 0.90 55.0 7 1.13 Texas Guaranteed Student Loan 485 11 0.80 670 6 1.38 Seton Medical Center Williamson 450 12 0.74 - - Field Asset Services 440 13 0.72 - - Michael Angelo's Gourmet Foods 370 14 0.61 350 9 0.72 Chasco Constructors 300 15 0.49 - - TECO Westinghouse Motor Co. 300 15 0.49 - - Toppan Photomask 250 16 0.41 368 8 0.76 Classic Automotive - - 349 10 0.72 26,077 42.88% 20,265 41.72% Source: City of Round Rock Finance Department/Round Rock Chamber of Commerce 170 CITY OF ROUND ROCK,TEXAS FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Function: General government 163 176 173 176 164 164 164 171 174 180 Public safety- Police- Officers 135 146 151 152 152 154 153 160 167 168 Civilians 58 62 61 61 67 67 68 64 67 72 Fire- Firefighters&officers 119 124 124 124 124 124 124 129 129 132 Civilians 5 5 5 5 5 5 6 8 8 8 Public works- Street&Drainage 48 48 48 48 48 48 55 55 54 59 Shop 15 15 15 15 15 15 15 16 18 19 Culture& Recreation- Library 29 29 29 29 29 29 30 31 31 31 Parks&Recreation 93 95 97 98 94 94 91 91 91 106 Water 93 95 96 97 91 91 91 93 95 93 Sewer 35 36 36 35 35 35 35 35 35 35 Total 793 831 835 840 824 826 832 853 869 903 Source: City of Round Rock Finance Department 171 CITY OF ROUND ROCK, TEXAS OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 2007 2008 2009 2010 Function: Police- Arrests 3,754 3,749 3,908 4,328 Accident reports 1,990 1,997 1,646 1,877 Index crimes reported 2,512 2,449 2,960 3,154 Crimes per thousand residents 27.90 30.10 30.30 31.30 Officers per thousand of population 1.46 1.52 1.52 1.48 Fire- Incident volume 7,463 7,690 8,000 8,500 Priority calls answered 4,592 5,656 5,800 6,000 Non-emergency calls answered 2,871 2,034 2,200 2,500 Priority calls-response less than 6 minutes 73% 64% 65% 65% Public Works- Street- Street resurfacing(lane miles) 130 135 137 137 Potholes repaired annually 4,000 4,000 4,000 4,000 Signals maintained 57 59 59 59 Shop- Work orders 5,418 5,618 6,330 6,930 Number of departments served 18 19 19 19 Culture and Recreation- Library- Number of items circulated 725,370 762,926 780,000 810,000 Number of card holders 44,820 49,829 51,000 53,000 Number of library visits 306,000 311,000 310,000 320,000 Parks& Recreation- Total park acres maintained 1,610 1,610 1,757 1,780 Number of athletic fields maintained 38 38 43 45 Number of trees planted 500 818 877 350 Number of recreation enrollees 371,201 402,548 401,000 401,000 Water- New connections 1,181 572 254 356 Line maintenance work orders 4,400 4,400 4,226 4,044 Average monthly consumption 432,101,000 552,610,000 589,159,550 466,096,342 Sewer- Average monthly treatment 298,038,200 296,208,875 301,433,205 327,351,600 Line feet reviewed for infiltration&inflow 152,515 161,291 156,934 114,176 Source: City of Round Rock Finance Department 172 2011 2012 2013 2014 2015 2016 4,521 6,715 6,182 5,773 4,600 4,476 2,747 4,485 4,845 6,383 2,249 2,370 3,154 2,777 2,632 2,338 2,329 2,383 31.30 27.10 25.10 21.70 22.00 22.50 1.48 1.49 1.46 1.42 1.53 1.43 8,141 8,350 8,749 9,027 95928 9,346 5,916 3,475 3,728 3,713 2,780 3,735 2,225 4,875 5,021 5,314 7,148 5,611 65% 60% 60% 63% 56% 61% 45 60 80 80 40 60 4,000 4,000 4,000 4,000 1,500 400 68 76 79 83 84 83 4,609 5,336 4,447 4,178 4,399 4,761 19 19 19 19 19 19 854,000 903,219 940,135 975,291 972,094 1,080,312 59,000 55,336 81,620 74,192 995822 77,818 292,000 294,768 323,384 3095167 388,625 391,256 1,935 2,035 2,035 2,045 2,045 2,045 46 49 49 49 49 49 345 558 163 165 110 195 420,000 420,000 487,455 4905704 577,140 615,000 335 313 442 360 402 80 3,185 3,279 5,500 6,734 3,317 3,512 655,615,475 5605281,041 549,154,150 491,936,100 505,251,158 536,082,308 475,482,100 457,967,400 409,000,000 394,000,000 385,611,068 416,357,161 317,789 361,784 377,783 459,128 187,464 189,418 173 CITY OF ROUND ROCK,TEXAS CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS 2007 2008 2009 2010 Function: Police- Number of stations 1 1 1 1 Number of units 186 189 195 199 Fire- Number of stations 6 7 7 7 Number of fire trucks 11 11 14 15 Public Works- Street- Lane miles 1,036 1,124 1,124 1,137 Drainage miles 92 100 100 100 Number of street lights 5,034 5,075 5,103 5,104 Number of traffic signals 57 59 59 59 Shop- Repair facilities 1 1 1 1 Number of bays 19 19 19 19 Culture and Recreation- Library- Number of library books 147,000 180,397 185,000 185,000 Number of library facilities 1 1 1 1 Parks&Recreation- Total park acres 1,610 1,610 1,855 2,119 Number of athletic fields 38 38 44 46 Number of parks 53 53 60 84 Number of tennis courts 23 23 23 23 Number of pools 5 5 5 5 Water- Number of miles of water lines 481 487 503 591 Pumping stations 14 14 15 15 Tanks 18 18 19 20 Treatment capacity (millions of gallons/day) 48 48 48 52 Sewer- Number of miles of sewer mains 376 392 400 417 Wastewater lift stations 11 12 12 12 Source: City of Round Rock Finance Department 174 2011 2012 2013 2014 2015 2016 1 1 1 1 1 1 199 199 201 229 240 259 7 7 7 7 7 7 16 16 16 14 16 15 1,200 1,200 1,250 1,250 1,250 1,200 100 100 150 150 150 150 5,119 5,312 6,000 6,800 5,400 5,433 68 76 79 83 84 83 1 1 1 1 1 1 19 19 19 19 19 13 183,000 195,000 150,211 154,278 156,277 257,667 1 1 1 1 1 1 2,274 2,035 2,035 2,035 2,035 2,035 47 49 49 49 49 49 85 62 62 62 62 62 23 23 23 25 25 25 4 4 4 4 4 4 584 585 587 601 608 615 15 15 14 14 15 15 20 20 20 20 22 22 52 52 52 52 52 52 422 422 424 432 424 427 12 12 12 12 12 12 175 CITY OF ROUND ROCK,TEXAS TOP TEN WATER CUSTOMERS SEPTEMBER 30,2016 %of Total Water Water Consumption Consumption Name of Customer Type of Business in Gallons in Gallons Fern Bluff Municipal Utility District Municipal Utility District 288,233,700 4.481% Williamson County Municipal Utility District# I I Municipal Utility District 186,435,100 2.898 Williamson County Municipal Utility District# 10 Municipal Utility District 162,463,900 2.526 Chandler Creek Municipal Utility District Municipal Utility District 151,933,700 2.362 Vista Oaks Municipal Utility District Municipal Utility District 123,890,800 1.926 Paloma Lake Municipal Utility District#1 Municipal Utility District 92,812,000 1.443 Dell, Inc. Electronic Equipment 81,235,700 1.263 Round Rock Independent School District Public Schools 81,189,100 1.262 Walsh Ranch Municipal Utility District Municipal Utility District 51,930,000 0.807 Michael Angelo's Food Production 48,003,000 0.746 1,268,127,000 19.714% Source: City of Round Rock Finance Department 176 CITY OF ROUND ROCK,TEXAS WATER AND SEWER RETAIL RATES SEPTEMBER 30,2016 Water rates for retail customers inside the city limits are as follows: Volume Rate Monthly Service Charge Non peak billing periods: Meter Size Base Monthly Water $2.49 per 1,000 gallons of water used by all customers Serving Customer Service Charge Peak billing periods: Four block structure for use in excess of predetermined amounts set by meter size- Block 1: Base rate times 125% Block 2: Base rate times 150% Block 3: Base rate times 175% Block 4: Base rate times 200% $ 5/8 inch 14.69 3/4 inch 20.46 1 inch 32.30 1 1/2 inch 61.89 2 inch 97.40 3 inch 180.27 4 inch 298.66 6 inch 931.10 8 inch 1,627.45 10 inch 2,555.91 12 inch 3,136.21 Sewer rates for retail customers inside the city limits are as follows: Volume Rate Monthly Service Charge $3.39 per 1,000 gallons of water used by all customers * Meter Size Base Monthly Sewer Serving Customer Service Charge 5/8 inch 13.27 3/4 inch 17.31 1 inch 24.82 1 1/2 inch 45.26 2 inch 69.79 3 inch 127.01 4 inch 208.75 6 inch 615.27 8 inch 1,073.67 10 inch 1,684.85 12 inch 2,066.84 * Sewer customers'volume is measured as the rate per 1,000 gallons of the lesser of a three-month winter average or actual water use. Source: City of Round Rock Finance Department 177 •� `mow e �,�•�•..........•••� �+ 178 SINGLE AUDIT SECTION QUNa...!.. 180 CITY OF ROUND ROCK,TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS SEPTEMBER 30,2016 Pass- Grant or Through to Federal Grantor/Pass-Through Grantor CFDA Identifying Non-State Expenditures Program Title Number Number Entities Direct Total Institute of Museum and Library Services Passed-Through from Texas State Library and Archives Commission Grants to States 45.310 LS-00-15-0044-15 $ -$ 17,732 $ 17,732 Total Institute of Museum and Library Services - 17,732 17,732 U.S.Department of Homeland Security Passed-Through from Texas Department of Public Safety PA-06-TX-4223- Disaster Grants-Public Assistance 97.036 PW01499 - 221,065 22,065 PA-06-TX-4223- Disaster Grants-Public Assistance 97.036 PW01351 - 12,260 12,260 Total Disaster Grants-Public Assistance - 34,325 34,325 Homeland Security Grant Program 97.067 EMW-2014-SS-00029 - 5,042 5,042 Total U.S.Department of Homeland Security - 39,367 39,367 Community Development Block Grants/Entitlement Grants Cluster U.S.Department of Housing&Urban Development Community Development Block Grants/ Entitlement Grants-2013 14.218 B 12MC480514 - 7,943 7,943 Community Development Block Grants/ Entitlement Grants-2014 14.218 B13MC480514 - 34,249 34,249 Community Development Block Grants/ Entitlement Grants-2015 14.218 B 14MC480514 36,248 24,650 60,898 Community Development Block Grants/ Entitlement Grants-2016 14.218 B15MC480514 85,586 153,538 239,124 Total Community Development Block Grants/Entitlement Grants Cluster 121,834 220,380 342,214 Total U.S.Department of Housing&Urban Development 121,834 220,383 342,214 U.S.Department of Justice Equitable Sharing Program 16.922 TX2460500 - 494,375 494,375 Total U.S.Department of Justice 494,375 494,375 U.S.Department of Transportation Federal Transit-Formula Grants 20.507 TX-90-Y001-00 - 335,636 335,636 Passed-Through from the Texas Department of Transportation Recreational Trails Program 20.219 CSJ#0914-05-161 - 11,882 11,882 CSJ#0914-05-164/ Highway Planning and Construction 20.205 0914-05-165 - 13,943 13,943 Passed-Through from Capitol Metropolitan Transportation Authority Job Access and Reverse Commute Program 20.516 TX-37-X065-01 - 14222 14,222 Total U.S.Department of Transportation - 375,683 375,683 U.S.Department of Treasury Equitable Sharing Program 21.000 N/A - 184,626 184,626 Total U.S.Department of Treasury - 184,626 184,626 Total Expenditures of Federal Awards $ 121,834 $ 1,332,163 $ 1,453,997 181 CITY OF ROUND ROCK, TEXAS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED SEPTEMBER 30,2016 1. BASIS OF PRESENTATION The Schedule of Expenditures of Federal Awards presents the activity of all applicable federal awards of the City of Round Rock, Texas. The City's reporting entity is defined in the notes of the basic financial statements. Federal financial assistance received directly from federal agencies as well as federal financial assistance passed through other governmental agencies is included on the Schedule of Expenditures of Federal Awards. The information on this schedule is presented in accordance with the requirements of Uniform Guidance, Audits of States, Local Governments and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements. 2. BASIS OF ACCOUNTING The Schedule of Expenditures of Federal Awards is prepared on the modified accrual basis of accounting. Expenditures are recognized when the related fund liability is incurred. Federal grants are considered to be earned to the extent of expenditures made under the provision of the grant and,accordingly,when such funds are received they are recorded as deferred revenue until earned. 3. INDIRECT COST RATE The City of Round Rock has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. 182 BROCKWAY roi GERSBACH LJFRANKLIN & NIEMEIER,P.C. CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and Members of the City Council City of Round Rock, Texas We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund information of the City of Round Rock, Texas (the City), as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated January 27,2017. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies,in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 183 3520 SW H.K.DODGEN LOOP a TEMPLE,TEXAS 76504 n 254.773.9907 M Pax 254.773.1570 VVWW.TEMPLECPA.COM INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS (CONTINUED) Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Temple, exas January 27, 2017 184 BROCKWAY GERSBACH Lij FRANKLIN & NIEMEIER,P.C. CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the Honorable Mayor and Members of the City Council City of Round Rock,Texas Report on Compliance for Each Major Federal Program We have audited the City of Round Rock, Texas' (the City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended September 30, 2016. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditors'Responsibility Our responsibility is to express an opinion on compliance for each of the City's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However,our audit does not provide a legal determination of the City's compliance. Opinion on Each Major Federal Program In our opinion, the City of Round Rock, Texas, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30,2016. 185 3520 SW H.K.DODGEN LOOP © TEMPLE,TEXAS 76504 - 254.773.9907 © FAX 254.773.1570 • INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE (CONTINUED) Report on Internal Control over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions,to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected,on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly,this report is not suitable for any other purpose. Temple,Texas January 27,2017 186 CITY OF ROUND ROCK,TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30,2016 Section I-Summary of Auditors' Results Financial Statements Type of auditors' report issued: Unmodified Internal control over financial reporting: Material weakness(es)identified? yes X no Significant deficiency(ies)identified that are not considered to be material weaknesses? yes X none reported Noncompliance material to financial statements noted? yes X no Federal Awards Internal control over major programs: Material weakness(es) identified? yes X no Significant deficiency(ies)identified that are not considered to be material weaknesses? yes X none reported Type of auditors' report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with 2CFR 200.516(a)? yes X no Identification of major programs: CFDA Number(s) Name of Federal Program or Cluster 14.218 Community Development Block Grants Dollar threshold used to distinguish between type A and type B programs: $750,000 Auditee qualified as low-risk auditee? X yes no Section II-Financial Statement Findings None Section III—Federal Award Findings and Questioned Costs None 187