City of Port Arthur, Texas

CITY OF PORT ARTHUR, TEXAS

Comprehensive Annual Financial Report

For the Fiscal Year Ended September 30, 2015

Jerry W. Dale, CPA, CGFO Director of Finance

Harold R. Hankins, Comptroller CITY OF PORT ARTHUR, TEXAS For the Year Ended September 30, 2015

CONTENTS PAGE ...... Introductory Section (Unaudited) 1 ...... Letter of Transmittal I ...... City Officials V ...... Org Chart VI ...... Financial Section 1 ...... Independent Auditors' Report 1 ...... Management's Discussion and Analysis 4 ...... Basic Financial Statements ...... Basic Financial Statements ...... Government Wide Financial Statements ...... Statement of Net Position ...... Statement of Activities ...... Major Fund Financial Statements 13 ...... Governmental Funds 13 ...... Governmental Funds 13 ...... Balance Sheet 13 ...... Statement of Revenues, Expenditures and Changes in Fund Balances 14 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental ...... Funds to the Government-Wide Statement of Activities 15 Statement of Revenues, Expenditures and Changes in Fund Balance Budget (Budget Basis) and Actual ...... General Fund 16 ...... Transit System Fund 17 ...... Proprietary Funds ...... Proprietary Funds ...... Statement of Net Position 18 ...... Statement of Revenues, Expenditures and Changes in Fund Net Position 20 ...... Statement of Cash Flows 21 ...... Fiduciary Title 22 ...... Fiduciary Funds 23 ...... Statement of Fiduciary Net Position 23 ...... Statement of Changes in Fiduciary Net Position 24 ...... Notes 25 ...... Notes to the Basic Financial Statements 25 ...... Required Supplementary Information (Unaudited) CITY OF PORT ARTHUR, TEXAS For the Year Ended September 30, 2015

CONTENTS PAGE Required Supplementary ...... Information ...... Retiree Health Insurance Program 62 ...... Required Pension System Supplementary Information 62 ...... Port Arthur Firemen's Relief and Retirement Fund 62 ...... Texas Municipal Retirement System 62 ...... Port Arthur Firemen's Relief and Retirement Fund 63 ...... Notes to Required Supplementary Information 64 ...... Schedule of Funding Progress 65 ...... Comining and Individual Fund Statements and Schedules 68 ...... Combining Financial Statements- Non-Major Governmental Funds 68 Combining and Individual Fund Statements and ...... Schedules 68 ...... 68 ...... Combining Balance Sheet 68 ...... Combining Statement of Revenues, Expenditures and Changes in Fund Balances 72 ...... Schedules of Revenues, Expenditures and Changes in Fund Balances - 76 ...... Budget and Actual 76 ...... Debt Service Fund 76 ...... Library Special Fund 77 ...... Golf Course Fund 78 ...... Municipal Court Technology Fund 79 ...... Hotel Occupancy Tax Fund 80 ...... Police Special Fund 81 ...... Combining Financial Statements - Internal Service Funds 82 ...... Internal Service Funds 82 ...... Combining Statement of Net Position 82 ...... Combining Statement of Revenues, Expenses and Changes in Fund Net Position 83 ...... Combining Statement of Cash Flows 84 ...... Individual Fund Statements - Port Arthur Economic Development Coporation 85 ...... Component Unit 85 ...... Balance Sheet 85 ...... Statement of Revenue, Expenditures and Changes in Fund Balances 86 ...... General Operating Fund 87 CITY OF PORT ARTHUR, TEXAS For the Year Ended September 30, 2015

CONTENTS PAGE ...... Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 87 ...... Debt Service Fund 88 ...... Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 88 ...... Statistical Section (Unaudited) 90 ...... For the Year Ended September 30, 2014 Statistical Table of Contents 90 ...... Finacial Trends 90 ...... Net Position by Component 90 ...... Changes in Net Position 92 ...... Governmental Activities Tax Revenues by Source 96 ...... Fund Balances of Governmental Funds 97 ...... Changes in Fund Balances, Governmental Funds 99 ...... General Governmental Tax Revenues by Source 101 ...... Revenue Capacity 102 ...... Assessed Value and Estimated Actual Value of Taxable Property 102 ...... Property Tax Rates - Direct and Overlapping Governments 103 ...... Principal Property Tax Payers 105 ...... Principal Industrial Districts 106 ...... Property Tax Levies and Collections 107 ...... Industrial District Payments 108 ...... Debt Capacity 109 ...... Ratios of Outstanding Debt by Type 109 ...... Ratios of General Bonded Debt Outstanding 110 ...... Direct and Overlapping Governmental Activities Debt 111 ...... Debt Margin Information 112 ...... Demographic and Economic Information 114 ...... Demographic and Economic Statistics 114 ...... Principal Employers 115 ...... Operating Information 116 ...... Full-Time Equivalent City Government Employees by Function 116 ...... Operating Indicators by Function 117 ...... Capital Asset Statistics by Function 119 I II III IV City of Port Arthur, Texas City Officials

City Council

Deloris “Bobbie” Prince Mayor

Raymond Scott, Jr. District One

Tiffany L. Hamilton District Two

Morris Albright III District Three

Stephen A. Mosley District Four

Willie “Bae” Lewis, Jr. District Five

Osman Swati District Six

Derrick Freeman Position Seven

Kaprina Richardson Frank Mayor Pro-Tem/Position Eight

Appointed Officials

Brian McDougal City Manager

Sherri Bellard City Secretary

Valecia R. Tizeno City Attorney

Kermit Morrison Municipal Court Judge

V City of Port Arthur, Texas

Citizens/Residents

City Council

City Secretary City Attorney City Manager

Municipal Finance Court Human Resources

Development Services Elections Civic Center

Parks and Recreation

Library

Police

Fire

Health

Public Works

Civic Center

Pleasure Island

Hotel Tax Water Utilities Solid Waste Transit Hospital Insurance Library Special Workers Compensation Police Special Other Employee Benefits Commercial Traffic General Liability Golf Course Municipal Court Technology

VI Houston Ofﬁ ce 3411 Richmond Avenue Suite 500 Houston, Texas 77046 713.621.1515 Main

whitleypenn.com

REPORT OF INDEPENDENT AUDITORS To the Honorable Mayor and Members of City Council City of Port Arthur, Texas

Report on Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, the discretely presented component unit and remaining fund information of the City of Port Arthur, Texas (the “City”) as of and for the year ended September 30, 2015, 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. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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.

An Independent 1 Member of Dallas Fort Worth Houston To the Honorable Mayor and Members of the City Council City of Port Arthur, Texas

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of governmental activities, the business-type activities, each major fund, the discretely presented component unit and remaining fund information of the City, as of September 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof and the budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter As discussed in Note I.G. and Note V.F. to the financial statements, the City adopted the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, an amendment of GASB Statement No. 27 and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date for the year ending September 30, 2015. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and required pension system information and other postemployment benefits information on pages - 9 and 6 - 6 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 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 nonmajor fund financial statements and budgetary schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

2 To the Honorable Mayor and Members of the City Council City of Port Arthur, Texas

Other Information (continued) The combining and individual nonmajor fund financial statements and budgetary comparison schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the 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 nonmajor fund financial statements and budgetary schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 28, 2016, on our consideration of the City’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Houston, Texas December 28, 2016

3 CITY OF PORT ARTHUR, TEXAS Management's Discussion and Analysis

As management of the City of Port Arthur, Texas (City), we offer readers of the City’s financial statement this narrative overview and analysis of the financial activities of the City for the year ended September 30, 2015. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on page -v- of this report.

FINANCIAL HIGHLIGHTS The assets and deferred outflows of resources of the City of Port Arthur exceeded its liabilities at the close of the fiscal year by $187.5M.

 The City’s total Net Position increased by $55.6M, driven by an $88.2M increase from operations offset by prior period adjustments amounting to $32.6M. The prior period adjustments were mostly pension related resulting from the implementation of Governmental Accounting Board Statement No. 68. Of the total increase from operations, $25.9M was generated by governmnetal activities with the balance from business-type activities. The increase from business-type activities was the consequence of a developer contribution.

 As of the close of the fiscal year, the City of Port Arthur’s governmental funds reported combined ending fund balance of $72.1M. Over 23.6% of this total amount, $17.0M is unassigned and available for use within the City’s policies.

 At the end of the current fiscal year, unassigned balance in the General Fund was $17.0M, representing 115 days of the total General Fund expenditures, which is $7.0M in excess of the City’s General Fund balance policy requirement of 60 days plus $1.5M for extraordinary events.

OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the financial statements themselves.

Government-wide financial statements – The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to private-sector business.

The Statement of Net Position presents information on all of the City’s assets, deferred outflows, liabilities and deferred inflows with the difference between the four 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 is improving or deteriorating. That being said, the net position of the City increased $55.6 M in this fiscal year.

The Statement of Activities presents information showing how the City’s net position changed during the fiscal year. All changes in net position are reported when the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused compensated absences).

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, community development, public works, health and welfare, economic development, public transportation and culture and recreation. The business-type activities include the water and sewer utility and solid waste operations. The government-wide financial statements are found on pages 10 and 11 of this report.

Fund financial statements - A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities and objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. All of the funds of the City can be divided into two categories – governmental funds and proprietary funds.

Governmental Funds – Governmental funds are used to account for essentially the same functions reported as governmental

4 CITY OF PORT ARTHUR, TEXAS Management's Discussion and Analysis activities in the government-wide financial statements. However, unlike the government-wide financial statements, the governmental fund financial statements focus on current sources and uses of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near- term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities on the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds balance sheet and the governmental fund statements of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City maintains 32 governmental funds. Information is presented separately in the Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances for the General, Debt Service, GLO, and Transit System Fund which are considered to be major funds. Data from the other 28 funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in the report.

Proprietary Funds – The City maintains 2 types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for the water and sewer utility, solid waste operations and Pleasure Island. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for liability insurance, employee benefits, and equipment replacement activities. All internal service funds are combined into a single aggregated presentation on the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements are found beginning on pages 18 - 21 of this report.

Notes to the Financial Statements – The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

Other Information – In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s progress in funding its obligation to provide pension and other post employment benefits to its employees. Required supplementary information can be found beginning on pages 66 of this report. See section V.C. and V.D. in the notes to the financial statements, on pages of this report for additional information concerning the City’s retirement systems and other post employment benefits.

GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve, over time, as a useful indicator of the government’s financial position. In the case of the City of Port Arthur, Texas, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $187.5M as of September 30, 2015.

The largest portion of the City’s net position reflects investment in capital assets (e.g. land, building, equipment, improvements, and construction in progress), less any debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide service to citizens; consequently, these assets are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

5 CITY OF PORT ARTHUR, TEXAS Management's Discussion and Analysis

City of Port Arthur's net position

Governmental Activities Business-type Activities Total 2015 2014* 2015 2014* 2015 2014*

Current, other assets and deferred outflows $ 92,080,756 $ 73,375,520 $ 19,425,980 $ (16,566,658) $ 111,506,736 $ 56,808,862 Capital assets 84,090,769 74,232,005 143,332,746 105,107,288 227,423,515 179,339,293

Total assets and deferred outflows $ 176,171,525 $ 147,607,525 $ 162,758,726 $ 88,540,630 $ 338,930,251 $ 236,148,155

Long term liabilities and deferred inflows $ 116,937,279 $ 86,206,895 $ 23,219,406 $ 12,289,183 $ 140,156,685 $ 98,496,078 Other liabilities 5,141,285 6,127,993 6,150,040 948,250 11,291,325 5,736,585

Total liabilities and defered inflows $ 122,078,564 $ 92,334,888 $ 29,369,446 $ 13,237,433 $ 151,448,010 $ 104,232,663

Net Position Net investment in capital assets $ 20,370,442 $ 75,181,149 $ 149,596,148 $ 105,107,288 $ 114,200,188 $ 126,100,770 Restricted 5,408,143 7,798,750 17,849,732 1,034,218 23,257,875 8,832,968 Unrestricted 28,314,376 (26,367,607) (34,056,600) (30,838,306) 50,024,178 (3,018,246)

Total net position $ 54,092,961 $ 56,612,292 $ 133,389,280 $ 75,303,200 $ 187,482,241 $ 131,915,492

Analysis of City’s Operations – The following table provides a summary of the City’s operations for the year ended September 30, 2015. Governmental activities increased the City of Port Arthur’s net position by $25.9 million. The infusion of grant funded projects resulted in this increase in assets. Business-type activities increased the City’s net position by $62.3 million. The increase in the Water and Sewer Fund offset the decreases as well as the Solid Waste Fund and Pleasure Island.

*The City's 2014 net position has not been restated for implementation of GASB statement No. 68.

6 CITY OF PORT ARTHUR, TEXAS Management's Discussion and Analysis

City of Port Arthur's Changes in Net Position

Governmental Activities Business-type Activities Total 2015 2014* 2015 2014* 2015 2014* Revenues Program revenues Charges for services $ 3,400,367 $ 2,740,672 $ 25,899,065 $ 34,630,950 $ 29,299,432 $ 37,371,622 Operating grants 12,269,332 11,113,501 - - 12,269,332 11,113,501 Capital grants and contributions 995,654 791,267 70,296,368 - 71,292,022 791,267 General revenues Ad valorem taxes 18,520,422 16,706,210 - - 18,520,422 16,706,210 Industrial revenue 30,952,606 27,985,013 - - 30,952,606 27,985,013 Gross receipts taxes 8,682,192 8,698,423 - - 8,682,192 8,698,423 Sales tax 9,054,144 9,285,891 - - 9,054,144 9,285,891 Other taxes 1,568,219 1,173,992 - - 1,568,219 1,173,992 Investment earnings 23,297 21,425 31,994 4,211 55,291 25,636 Miscellaneous 2,066,485 2,058,955 - - 2,066,485 2,058,955 Total revenues $ 87,532,718 $ 80,575,349 $ 96,227,427 $ 34,635,161 $ 183,760,145 $ 115,210,510

Expenses General government $ 13,315,790 $ 16,227,479 $ - $ - $ 13,315,790 $ 16,227,479 Public safety 32,852,194 34,413,056 - - 32,852,194 34,413,056 Public works 8,305,490 10,316,945 - - 8,305,490 10,316,945 Community development 665,478 1,800,675 - - 665,478 1,800,675 Culture and recreation 4,984,372 5,419,551 - - 4,984,372 5,419,551 Health and welfare 3,727,255 3,997,619 - - 3,727,255 3,997,619 Public transportation 3,776,876 3,839,779 - - 3,776,876 3,839,779 Interest on long-term debt 2,022,798 2,202,363 - - 2,022,798 2,202,363 Water and sewer - - 18,442,439 17,719,228 18,442,439 17,719,228 Solid waste - - 6,281,592 6,901,861 6,281,592 6,901,861 Pleasure Island - - 1,230,784 1,303,032 1,230,784 1,303,032 Total expenses $ 69,650,253 $ 78,217,467 $ 25,954,815 $ 25,924,121 $ 95,605,068 $ 104,141,588 Increases (decreases) in net position before transfers 17,882,465 2,357,882 70,272,612 8,711,040 88,155,077 11,068,922 Transfers 7,970,332 8,455,917 (7,970,332) (8,455,917) - - Increases (decreases) in net position 25,852,797 10,813,799 62,302,280 255,123 88,155,077 11,068,922 Net position - beginning of year 56,612,292 49,483,788 75,303,200 55,545,543 131,915,492 105,029,331 Prior Period Adjustment (28,372,127) (3,685,295) (4,216,200) 19,502,534 (32,588,327) 15,817,239 Net position - end of year $ 54,092,962 $ 56,612,292 $ 133,389,280 $ 75,303,200 $ 187,482,242 $ 131,915,492

* The City has not restated 2014 activites as a result of implementing GASB statement No.68.

FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS Governmental Funds – The focus of the City of Port Arthur’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular,unassigned fund balance may serve as a useful measure of the government’s net resources available for spending at the end of the fiscal year.

At the end of the 2015 fiscal year, the City of Port Arthur’s governmental funds reported combined ending fund balances of $72.1M. Approximately 24% of this total amount or $17.0M consists of unassigned fund balances. The remainder of the balance is to indicate that it is not available for new spending. The most significant amount is a long-term advance to the Water & Sewer Funds, which it does not currently have sufficient liquidity to repay.

7 CITY OF PORT ARTHUR, TEXAS Management's Discussion and Analysis

In the General Fund, the City budgeted for an increased in fund balance of $1.8M. Due to actual revenues being more than projections by $6.2M and actual expenses being less than budgeted by $7.9M, the fund balance increased $14.1M in excess of bugdet before transfers. The primary revenue variances were provided in Industrial District Payments and Gross Receipts Tax which increased sharply in 2015 ($3.0M and $1.1M, respectively, more than budget). Expenses were under budget in most departments.

The CDBG/GLO IKE fund carries a significant receivable from the federal government. This is due to outstanding project reimbursements from Hurricane Ike.

General Fund Budgetary Highlights – The City Council approved budget amendments to the original appropriations. This change resulted in an increase of under 2% of the original operating appropriation.

Proprietary funds – The City’s proprietary fund statements provide the same type of information found on the government- wide statements, but in more detail. Net position in the proprietary funds increased $62M due to captial contributions. The water utility fund does not generate sufficient revenue to fund operations.

CAPITAL ASSETS The City of Port Arthur’s investment in capital assets for its governmental and business-type activities as of September 30, 2015, amounts to $227.42 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, equipment, improvements, infrastructure and construction in progress. Major capital assets during the current year included the following:

Capital Assets at Year-End

Governmental Activities Business-type Activities Total 2015 2014 2015 2014 2015 2014

Land $ 3,374,367 $ 3,374,367 $ 863,971 $ 863,971 $ 4,238,338 $ 4,238,338 Buildings 24,342,106 24,342,106 43,807,392 43,807,392 68,149,498 68,149,498 Improvements 17,913,316 16,337,513 - - 17,913,316 16,337,513 Infrastructure 276,247,240 267,163,161 161,517,003 133,000,607 437,764,243 400,163,768 Equipment 64,183,195 52,754,024 22,085,634 5,482,370 86,268,829 58,236,394 Construction in progress 5,270,336 8,069,055 9,850,300 11,567,912 15,120,636 19,636,967 Accumulated depreciation (307,239,791) (297,808,221) (94,791,554) (89,614,965) (402,031,345) (387,423,186)

Total $ 84,090,769 $ 74,232,005 $ 143,332,746 $ 105,107,287 $ 227,423,515 $ 179,339,292

Detailed information on capital asset activity can be found beginning on pages 34 in the Notes to the Financial Statements, Note IV. C.

8 CITY OF PORT ARTHUR, TEXAS Management's Discussion and Analysis

DEBT ADMINISTRATION The current rating of the City's debt is ‘A+’ by Standard and Poor’s and A1 by Moody’s Investors Service.

At the end of the current fiscal year, the City of Port Arthur had a total bonded debt of $61,645,000. More detailed information on long-term debt activity can be found on pages 40 - 42 in the Notes to the Financial Statements, Note IV.F.

Governmental Activities 2015 2014

General obligation bonds $ 42,365,000 $ 47,560,000 Certificates of obligation 19,280,000 10,775,000 Total $ 61,645,000 $ 58,335,000

ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The City of Port Arthur’s budget for fiscal year 2016 projected that industrial district revenue will be comparitive to 2015 revenues due to contractual agreements. Sales tax revenue is budgeted to reflect a 3% decrease from this year. The property tax rate remained the same as the prior year, $0.792 per $100 valuation. Property taxes are expected to remain steady.

REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City of Port Arthur’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report, or requests for additional financial information should be addressed to the Office of the Director of Finance, P.O. Box 1089, Port Arthur, Texas 77641- 1089.

9 BASIC FINANCIAL STATEMENTS CITY OF PORT ARTHUR, TEXAS Statement of Net Position Exhibit 1 September 30, 2015 Primary Government Component Unit Economic Governmental Business-Type Development Activities Activities Total Corporation Assets Cash, equity in pooled cash and investments $ 15,229,572 $ 2,017,564 $ 17,247,136 $ 7,959,391 Investments 5,329,093 17,849,732 23,178,825 1,679,360 Internal balances (6,003,732) 6,003,732 - - Receivables (net of allowances for doubtful accounts) Property taxes 3,534,176 - 3,534,176 - Accounts 2,898,253 4,728,738 7,626,991 930,991 Federal and state grants 18,502,813 - 18,502,813 - Restricted cash - 33,774,023 33,774,023 - Inventories 199,381 646,642 846,023 - Prepaid items 29,575 55,849 85,424 - Long-term interfund advance 46,668,000 (46,668,000) - - Capital Assets Land 3,374,367 863,971 4,238,338 5,757,632 Buildings 24,342,106 43,807,392 68,149,498 315,480 Improvements 17,913,316 - 17,913,316 - Infrastructure 276,247,240 161,517,003 437,764,243 - Equipment 64,183,195 22,085,634 86,268,829 69,082 Construction in progress 5,270,336 9,850,300 15,120,636 - Accumulated depreciation (307,239,791) (94,791,554) (402,031,345) (146,532) Total Assets 170,477,900 161,741,026 332,218,926 16,565,404 Deferred Outflows of Resources Deferred loss on refunding 823,878 - 823,878 43,136 Pension items 4,869,747 1,017,700 5,887,447 59,600 Total Deferred Outflows of Resources 5,693,625 1,017,700 6,711,325 102,736 Total Assets and Deferred Outflows $ 176,171,525 $162,758,726 $338,930,251 $ 16,668,140

Liabilities Wages payable $ 384,818 $ 91,985 $ 476,803 $ 4,310 Accounts payable and accrued liabilities 3,343,600 5,373,166 8,716,766 59,135 Other Liabilities 126,629 74,449 201,078 - Unearned revenue 1,286,238 610,440 1,896,678 - Noncurrent liabilities: Due Within One Year: Bonded debt 5,480,000 885,000 6,365,000 420,000 Capital leases 703,721 - 703,721 - Compensated absences 900,000 316,622 1,216,622 - Due in More Than One Year: Bonded debt 48,033,784 8,190,000 56,223,784 3,940,000 Capital leases 9,502,823 - 9,502,823 - Compensated absences 7,844,179 916,844 8,761,023 96,074 Net pension liability 30,211,102 4,880,500 35,091,602 285,700 Other post employment benefits 11,737,229 2,934,306 14,671,535 - Refundable deposits - 1,597,486 1,597,486 - Landfill postclosure liability - 3,350,148 3,350,148 - Long-term risk liability 1,977,510 - 1,977,510 - Total Liabilities 121,531,633 29,220,946 150,752,579 4,805,219 Deferred Inflows of Resources Pension items 546,931 148,500 695,431 8,700 Total Liabilities and Deferred Inflows of Resources 122,078,564 29,369,446 151,448,010 8,700 Net Position Net investment in capital assets 20,370,442 149,596,148 114,200,188 1,635,662 Restricted For: Debt Service 2,492,560 - 2,492,560 208,508 Capital projects 2,902,533 17,849,732 20,752,265 - Future Development - - - 1,000,000 Special Revenue 13,050 - 13,050 - Unrestricted 28,314,376 (34,056,600) 50,024,178 9,010,051 Total Net Position 54,092,961 133,389,280 187,482,241 11,854,221 Total Liabilities, Deferred Inflows, and Net Position $ 176,171,525 $162,758,726 $338,930,251 $ 16,668,140

See accompanying notes to the basic financial statements 10 CITY OF PORT ARTHUR, TEXAS Statement of Activities Exhibit 2 For the Year Ended September 30, 2015

Program Revenues

Operating Grants Charges for and Capital Grants and Program Activities Expenses Services Contributions Contributions Governmental Activities General government $ 13,315,790 $ 1,226,147 $ 7,457,913 $ - Culture and recreation 4,984,372 117,776 6,885 - Public safety 32,852,194 1,642,870 192,333 995,654 Community development 665,478 120,868 707,706 - Health and welfare 3,727,255 163,159 1,476,367 - Public transportation 3,776,876 129,547 2,428,128 - Public works 8,305,490 - - - Interest on long term debt 2,022,798 - - - Total Governmental Activities 69,650,253 3,400,367 12,269,332 995,654 Business-Type Activities Water and Sewer 18,442,439 18,199,669 - 70,296,368 Solid waste 6,281,592 6,747,251 - - Pleasure Island Commission 1,230,784 952,145 - - Total Business-Type Activities 25,954,815 25,899,065 - 70,296,368 Total Primary Government $ 95,605,068 $ 29,299,432 $ 12,269,332 $ 71,292,022 Component Units Economic Development Corp. $ 4,187,000 Total Component Units $ 4,187,000

General Revenue Property taxes Industrial district payments Gross receipts taxes Sales tax Other taxes Interest Miscellaneous Transfers Total General Revenues and Transfers Changes in Net Position Net Position, Beginning of Year Adjustments to Beginning Net Position

Net Position, End of Year

See accompanying notes to the basic financial statements 11 Exhibit 2

Net (Expenses) Revenue and Changes in Net Position Primary Government Component Units

Business-type Economic Governmental Activities Development Activities Totals Corporation

$ (4,631,730) $ - $ (4,631,730) $ - (4,859,711) - (4,859,711) - (30,021,337) - (30,021,337) - 163,096 - 163,096 - (2,087,729) - (2,087,729) - (1,219,201) - (1,219,201) - (8,305,490) - (8,305,490) - (2,022,798) - (2,022,798) - (52,984,900) - (52,984,900) -

- 70,053,598 70,053,598 - - 465,659 465,659 - - (278,639) (278,639) - - 70,240,618 70,240,618 - $ (52,984,900) $ 70,240,618 $ 17,255,718 $ -

4,187,000 $ 4,187,000

$ 18,520,422 $ - $ 18,520,422 $ - 30,952,606 - 30,952,606 - 8,682,192 - 8,682,192 - 9,054,144 - 9,054,144 4,593,706 1,568,219 - 1,568,219 - 23,297 31,994 55,291 12,996 2,066,485 - 2,066,485 603,205 7,970,332 (7,970,332) - - 78,837,697 (7,938,338) 70,899,359 5,209,907 25,852,797 62,302,280 88,155,077 1,022,907 56,612,292 75,303,200 131,915,492 11,078,114 (28,372,127) (4,216,200) (32,588,327) (246,800)

$ 54,092,962 $133,389,280 $187,482,242 $ 11,854,221

12 GOVERNMENTAL FUNDS CITY OF PORT ARTHUR, TEXAS Balance Sheet Exhibit 3 Governmantal Funds September 30, 2015

Debt Transit Non major Total General Service System Governmental Governmental Fund Fund GLO Fund Funds Funds Assets Cash $ 1,021,260 $ 1,519,197 $ - $ 500 $ 3,859,795 $ 6,400,752 Investments 326,408 974,470 - - 2,507,575 3,808,453 Due from other funds 16,208,258 - - - - 16,208,258 Receivables (net of allowance for doubtful accounts): Property Taxes 1,772,049 1,762,127 - - - 3,534,176 Accounts receivable 1,248,560 - - - 1,628,960 2,877,520 Federal & state grants receivable - - 5,901,648 4,827,338 7,773,827 18,502,813 Inventories 21,200 - - 178,181 - 199,381 Prepaid items 29,575 - - - - 29,575 Long-term interfund advance 44,214,357 - - - 2,453,643 46,668,000 Total Assets $ 64,841,667 $ 4,255,794 $ 5,901,648 $ 5,006,019 $ 18,223,800 $ 98,228,928 Liabilities Liabilities Wages payable $ 354,271 $ - $ - $ 15,830 $ 14,717 $ 384,818 Accounts payable 1,461,155 11,787 282,150 69,148 36,264 1,860,504 Due to other funds - - 5,619,498 4,888,839 8,486,385 18,994,722 Other liabilities 2,424 5,810 - - 118,395 126,629 Unearned revenues - - - - 1,286,238 1,286,238 Total Liabilities 1,817,850 17,597 5,901,648 4,973,817 9,941,999 22,652,911 Deferred Inflows of Resources Unavailable property taxes 1,759,390 1,745,637 - - - 3,505,027 Total Deferred Inflows of Resources 1,759,390 1,745,637 - - - 3,505,027 Fund Balance Nonspendable: Inventory 21,200 - - - - 21,200 Prepaid items 29,575 - - - - 29,575 Long-term interfund note 44,214,357 - - - 2,453,643 46,668,000 Restricted: Culture and recreation - - - - 1,419,243 1,419,243 Public safety - - - - 469,039 469,039 Public works - - - - 70,262 70,262 Community development - - - - 755,374 755,374 Debt service - 2,492,560 - - - 2,492,560 Capital Projects - - - - 2,902,533 2,902,533 Assigned: Culture and recreation - - - - 244,920 244,920 Community development - - - - 821,611 821,611 Special revenue - - - - 108,907 108,907 Unassigned, reported in: General fund 16,999,295 - - - - 16,999,295 Special revenue - - - 32,202 (963,731) (931,529) Total Fund Balances 61,264,427 2,492,560 - 32,202 8,281,801 72,070,990 Total Liabilities, Deferred Inflows, and Fund Balances $ 64,841,667 $ 4,255,794 $ 5,901,648 $ 5,006,019 $ 18,223,800 $ 98,228,928

Reconciliation to government-wide statement of net position Capital assets used in governmental activities are not financial resources, and therefore, are not reported in these funds. 66,417,331 Other long-term assets are not available to pay for current period expenditures and , therefore, are deferred in these funds. 3,505,027 Internal service funds are used by management to charge the costs of certain capital assets, employee benefits and risk management activities to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net position. 11,159,212 Long term liabilities are not due and payable in the current period, and therefore are not reported in these funds (73,171,313) Recogntion of the City's proportionate share of the net pension liability requiredy by GASB 68, and corresponding deferred resources inflows and outflows. (25,888,286) Net position of governmental activities $ 54,092,961 See accompanying notes to the basic financial statements 13 CITY OF PORT ARTHUR, TEXAS Statement of Revenues, Expenditures and Changes in Fund Balances Exhibit 4 Governmental Funds For the Year Ended September 30, 2015

Transit Non major Total Debt Service System Governmental Governmental General Fund Fund GLO Fund Funds Funds Revenues Taxes: Property $ 10,638,434 $ 7,291,726 $ - $ - $ - $ 17,930,160 Penalty and interest 408,886 - - - - 408,886 Industrial district payments 30,952,606 - - - - 30,952,606 Gross receipts taxes 8,682,192 - - - - 8,682,192 Sales 9,054,144 - - - - 9,054,144 Other taxes 161,055 - - - 1,407,164 1,568,219 Licenses and permits 1,161,799 - - - - 1,161,799 User fees 362,194 - - 129,551 4,025 495,770 Fines and forfeitures 1,568,137 - - - 115,865 1,684,002 Intergovernmental 95,967 - 7,457,913 2,084,063 3,604,934 13,242,877 Donations - - - - 11,060 11,060 Program revenue - - - - 69,849 69,849 Interest revenue 20,143 1,115 - - 2,038 23,296 Miscellaneous 1,402,067 650,193 - - 7,625 2,059,885 Total revenues $ 64,507,624 $ 7,943,034 $ 7,457,913 $ 2,213,614 $ 5,222,560 $ 87,344,745 Expenditures Current: General government 9,677,145 - 7,457,913 - 26,640 17,161,698 Culture and recreation 3,881,245 - - - 778,111 4,659,356 Public safety 30,770,744 - - - 1,212,482 31,983,226 Community development - - - - 766,161 766,161 Health and welfare 1,944,629 - - - 1,555,519 3,500,148 Public transportation - - - 3,441,702 344,066 3,785,768 Public works 7,929,082 - - - - 7,929,082 Capital outlay 9,429 - - - 495,388 504,817 Debt Service: Principal retirement - 5,765,000 - - - 5,765,000 Interest and fiscal charges - 2,021,462 - - - 2,021,462 Total expenditures 54,212,274 7,786,462 7,457,913 3,441,702 5,178,367 78,076,718 Excess (deficiency) of revenues over expenditures 10,295,350 156,572 - (1,228,088) 44,193 9,268,027 Other financing sources (uses) Transfers in 7,944,374 - - 1,285,638 206,084 9,436,096 Transfers out (2,791,722) (444,035) - (80,000) (100,000) (3,415,757) Total other financing sources (uses) 5,152,652 (444,035) - 1,205,638 106,084 6,020,339 Net changes in fund balances 15,448,002 (287,463) - (22,450) 150,277 15,288,366

Fund balance, beginning of year 44,565,546 2,780,023 - 54,652 7,883,600 55,283,821 Prior Period Adjustment 1,250,879 - - - 247,924 1,498,803 Fund balance, restated 45,816,425 2,780,023 - 54,652 8,131,524 56,782,624 Fund balance, end of year $ 61,264,427 $ 2,492,560 $ - $ 32,202 $ 8,281,801 $ 72,070,990

See accompanying notes to the basic financial statements 14 CITY OF PORT ARTHUR, TEXAS Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances Exhibit 5 of the Governmental Funds to the Statement of Activities For the Year Ended September 30, 2015

Amounts reported for governmental activities in the statement of activities are different because:

Net change in fund balances - total governmental funds $ 15,288,366

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. 1,412,947

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. 181,462

The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of issuance cost, premiums, discounts, and similar items when debt is first issued, whereas the amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.

Bond principal retired 5,765,000 Net gain on refunding of debt (1,336) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds.

Increase in long term accrued compensated absences 946,733 Changes associated with GASB 68 797,588 Change in other post employment benefits 1,157,422

Internal service funds are used by management to charge the costs of certain capital assets and employee benefits to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities.

Change in net position 485,623 Net amount allocated to business activities (181,009)

Change in net position of governmental activites $ 25,852,796

See accompanying notes to the basic financial statements 15 CITY OF PORT ARTHUR, TEXAS General Fund Exhibit 6 Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual For the Year Ended September 30, 2015

Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) Revenues Taxes: Property $ 10,590,000 $ 10,590,000 $ 10,638,434 $ 48,434 Penalty and interest 315,000 315,000 408,886 93,886 Industrial district payments 28,000,000 28,000,000 30,952,606 2,952,606 Gross receipts taxes 7,615,000 7,615,000 8,682,192 1,067,192 Sales 9,000,000 9,000,000 9,054,144 54,144 Other taxes 105,000 105,000 161,055 56,055 Licenses and permits 421,500 421,500 1,161,799 740,299 User fees 201,000 201,000 362,194 161,194 Fines and forfeitures 1,676,500 1,676,500 1,568,137 (108,363) Intergovernmental 90,000 90,000 95,967 5,967 Interest revenue 27,000 27,000 20,143 (6,857) Miscellaneous 174,000 174,000 1,322,067 1,148,067 Total revenues 58,215,000 58,215,000 64,427,624 6,212,624 Expenditures Current: General government: Administration 1,323,158 1,379,458 1,452,519 (73,061) City secretary 1,406,653 1,271,075 1,059,219 211,856 City attorney 784,807 803,296 714,081 89,215 Finance 3,728,945 3,984,649 3,221,835 762,814 Human resources 673,133 650,607 620,988 29,619 Planning 601,274 949,458 707,379 242,079 Neighborhood revitalization 497,823 711,495 272,959 438,536 Community services 1,904,459 1,961,609 1,628,165 333,444 Culture and recreation: Civic center 694,437 695,437 681,077 14,360 Parks and recreation 2,344,649 2,374,649 2,064,886 309,763 Library 1,256,805 1,256,805 1,135,282 121,523 Public safety: Police 19,509,016 19,620,343 18,887,143 733,200 Fire 12,289,002 12,303,586 11,883,601 419,985 Health and welfare 2,295,305 2,307,305 1,944,629 362,676 Public works 11,828,117 11,844,865 7,938,511 3,906,354 Total expenditures 61,137,583 62,114,637 54,212,274 7,902,363 Excess (deficiency) of revenues over expenditures (2,922,583) (3,899,637) 10,215,350 14,114,987 Other Financing Sources (Uses) Transfers in 8,521,435 8,521,435 8,024,374 (497,061) Transfers out (2,791,722) (2,791,722) (2,791,722) - Total other financing sources (uses) 5,729,713 5,729,713 5,232,652 (497,061) Excess (deficiency) of revenues and other sources over expenditures and other uses 2,807,130 1,830,076 15,448,002 13,617,926 Fund balance, beginning of year 40,935,214 36,291,376 44,565,546 8,274,170 Prior period adjustment - - 1,250,879 1,250,879 Fund balance, end of year $ 43,742,344 $ 38,121,452 $ 61,264,427 $ 23,142,975

See accompanying notes to the basic financial statements 16 CITY OF PORT ARTHUR, TEXAS Statement of Revenues, Expenditures and Changes in Fund Balances Exhibit 7 Budget and Actual Transit System Fund For the Year Ended September 30, 2015

Variance with Budgeted Amounts Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues: User fees $ 142,525 $ 142,525 $ 129,551 $ (12,974) Intergovernmental 7,952,360 7,952,360 2,084,063 (5,868,297) Miscellaneous 12,000 12,000 - (12,000)

Total revenues 8,106,885 8,106,885 2,213,614 (5,893,271)

Expenditures: Public transportation 9,170,391 9,170,391 3,441,702 5,728,689

Excess (deficiency) of revenues over expenditures (1,063,506) (1,063,506) (1,228,088) (164,582)

Other financing (uses): Transfers in 1,587,362 1,587,362 1,285,638 (301,724) Transfers out - - (80,000) (80,000)

Total other financing sources (uses) 1,587,362 1,587,362 1,205,638 (381,724)

Excess (deficiency) of revenues over expenditures and other financing uses $ 523,856 $ 523,856 (22,450) $ (546,306)

Fund balance, beginning of the year 54,652

Fund balance, end of year $ 32,202

See accompanying notes to the basic financial statements 17 PROPRIETARY FUNDS CITY OF PORT ARTHUR, TEXAS Statement of Net Position Exhibit 8 Proprietary Funds September 30, 2015 Governmental Business Type Activities-Enterprise Funds Activities- Pleasure Water and Solid Waste Island Internal Service Sewer Fund Commission Total Funds Assets Current assets: Cash $ 2,017,364 $ - $ 200 $ 2,017,564 $ 8,828,821 Investments 17,849,732 - - 17,849,732 1,520,640 Due from other funds - - - - 2,804,549 Receivables (net, where applicable, of allowance for doubtful accounts) Accounts receivable 3,668,888 1,031,198 28,652 4,728,738 20,734 Restricted cash 24,999,890 - - 24,999,890 - Cash held in construction escrow 8,774,133 - - 8,774,133 - Inventories 646,642 - - 646,642 - Prepaid items 44,410 - 11,439 55,849 - Total current assets 58,001,059 1,031,198 40,291 59,072,548 13,174,744 Noncurrent assets: Capital assets: Land 362,844 501,127 - 863,971 - Buildings 35,348,650 14,650 8,444,092 43,807,392 - Infrastructure 153,697,935 - 7,819,068 161,517,003 - Equipment 21,287,409 589,676 208,549 22,085,634 40,641,751 Construction in progress 9,850,300 - - 9,850,300 - Total capital assets 220,547,138 1,105,453 16,471,709 238,124,300 40,641,751 Accumulated depreciation (90,692,994) (436,012) (3,662,548) (94,791,554) (22,968,316) Capital assets, net of accumulated depreciation 129,854,144 669,441 12,809,161 143,332,746 17,673,435 Total Assets 187,855,203 1,700,639 12,849,452 202,405,294 30,848,179 Deferred Outflows of Resources Pension Items 695,100 282,900 39,700 1,017,700 - Total Assets and Deferred Outflow of Resources $ 188,550,303 $ 1,983,539 $ 12,889,152 $ 203,422,994 $ 30,848,179

See accompanying notes to the basic financial statements 18 CITY OF PORT ARTHUR, TEXAS Statement of Net Position Exhibit 7 Proprietary Funds September 30, 2015 Governmental Business Type Activities-Enterprise Funds Activities- Pleasure Water and Solid Waste Island Internal Service Sewer Fund Commission Total Funds Liabilities Current Liabilities Wages payable $ 65,818 $ 22,599 $ 3,568 $ 91,985 $ - Accounts payable 5,107,623 197,611 67,932 5,373,166 1,483,096 Due to other funds - - 16,681 16,681 1,404 Current portion of long term debt 885,000 - - 885,000 703,721 Compensated absences 174,040 73,506 69,076 316,622 - Unearned revenue - - 610,440 610,440 - Total current liabilities 6,232,481 293,716 767,697 7,293,894 2,188,221 Noncurrent liabilities: Refundable deposits 1,597,486 - - 1,597,486 - Other liabilities 74,449 - - 74,449 - Capital leases payable - - - - 9,502,823 Accrued landfill closure costs - 3,350,148 - 3,350,148 - Compensated absences 682,620 234,224 - 916,844 - Net pension liability 3,333,000 1,357,000 190,500 4,880,500 - Other post employment benefits 1,848,613 1,085,693 - 2,934,306 - Long-term debt 8,190,000 - - 8,190,000 1,977,510 Long-term interfund note payable 41,690,870 2,491,608 2,485,522 46,668,000 - Total non current liabilities 57,417,038 8,518,673 2,676,022 68,611,733 11,480,333 Total liabilities 63,649,519 8,812,389 3,443,719 75,905,627 13,668,554 Deferred Inflows of Resources Pension Items 101,400 41,300 5,800 148,500 - Total Liabilities and Deferred Inflows of Resources 63,750,919 8,853,689 3,449,519 76,054,127 13,668,554 Net Position Net investment in capital assets 120,779,144 669,441 10,323,639 131,772,224 7,466,891 Restricted for construction 24,999,890 - - 24,999,890 - Unrestricted (20,979,650) (7,539,591) (884,006) (29,403,247) 9,712,734 Total net position $ 124,799,384 $ (6,870,150) $ 9,439,633 $ 127,368,867 $ 17,179,625

Reconciliation to government-wide statement of net position: Adjustment to reflect the consolidation of internal service funds activities related to enterprise 6,020,413 funds Net Position of business-type activities $ 133,389,280

See accompanying notes to the basic financial statements 19 CITY OF PORT ARTHUR, TEXAS Statement of Revenues, Expenditures and Changes in Fund Net Position Exhibit 9 Proprietary Funds For the Year Ended September 30, 2015

Governmental Business-Type Activities-Enterprise Funds Activites- Pleasure Water and Solid Waste Island Internal Sewer Fund Commission Total Service Funds Operating Revenues Charges for services $ 18,199,671 $ 6,747,251 $ 952,144 $ 25,899,066 $ 14,297,654 Operating Expenses Personnel services 5,980,464 2,560,752 403,943 8,945,159 - Other operating expenses 7,024,201 3,443,801 795,593 11,263,595 308,147 Depreciation 5,188,640 1,676 31,248 5,221,564 1,372,579 Health and life insurance - - - - 9,763,512 Employee injury claims - - - - 820,165 Other employee benefits - - - - 1,006,166 Damage claims - - - - 2,430,161 Landfill closure costs - 212,895 - 212,895 - Loss on uncollectable accounts 129,277 62,468 - 191,745 - Total operating expenses 18,322,582 6,281,592 1,230,784 25,834,958 15,700,730

Income from operations (122,911) 465,659 (278,640) 64,108 (1,403,076)

Nonoperating revenues (expenses) Interest revenue 31,994 - - 31,994 4,311 Bond Issuance Cost (300,867) - - (300,867) - Interest expense - - - - (65,605) Total nonoperating revenues (expenses) (268,873) - - (268,873) (61,294)

Income before contributions and transfers (391,784) 465,659 (278,640) (204,765) (1,464,370) Other Non-Operating Increases (Decreases) Capital contributions 70,296,368 - - 70,296,368 - Transfers in - - - - 2,284,035 Transfers out (7,128,332) (802,000) (40,000) (7,970,332) (334,042)

Net contributions and transfers 63,168,036 (802,000) (40,000) 62,326,036 1,949,993

Change in net position 62,776,252 (336,341) (318,640) 62,121,271 485,623

Net position, beginning of year 64,902,532 (5,361,509) 9,922,773 16,694,002 Prior Period Adjustment (2,879,400) (1,172,300) (164,500) - Net position, end of year $ 124,799,384 $ (6,870,150) $ 9,439,633 $ 17,179,625

Reconciliation to government-wide statement of net position: Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 181,009 Increase (decrease) in net position of business-type activities $62,302,280

See accompanying notes to the basic financial statements 20 CITY OF PORT ARTHUR, TEXAS Statement of Cash Flows Exhibit 10 Proprietary Funds For the Year Ended September 30, 2015

Governmental Business-Type Activities-Enterprise Funds Activities- Pleasure Water and Solid Waste Island Internal Sewer Fund Commissioin Total Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 16,299,233 $ 6,627,224 $ 935,713 $ 23,862,170 $ 14,249,479 Payments to employees- (10,178,824) (3,017,431) (435,276) (13,631,531) (1,006,166) Payments to vendors 1,328,014 (3,335,204) (709,515) (2,716,705) (11,071,826) Net cash provided (used) by operating activities 7,448,423 274,589 (209,078) 7,513,934 2,171,487 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Advances from (to) other funds 5,136,760 689,390 16,681 5,842,831 5,107,908 Transfers from other funds - - - - 2,284,035 Transfers to other funds (7,128,332) (802,000) (40,000) (7,970,332) (334,042) Net cash provided (used) by noncapital financing activities (1,991,572) (112,610) (23,319) (2,127,501) 7,057,901 CASH FLOWS FROM CAPITAL AND RELATED ACTIVITIES Acquisition and construction of capital assets (43,284,984) (161,979) - (43,446,963) (10,190,526) Principal paid on capital debt - - - - (501,900) Capital grants 70,296,368 - - 70,296,368 - Net proceeds from issuance of debt 8,774,133 - - 8,774,133 8,661,828 Net cash (used) by capital and related financing activities 35,785,517 (161,979) - 35,623,538 (2,030,598) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments (16,815,514) - - (16,815,514) (1,080,826) Interest on cash and investments 31,994 - - 31,994 4,311 Net cash provided by investing activities (16,783,520) - - (16,783,520) (1,076,515) Net (increase) in cash 24,458,848 - (232,397) 24,226,451 6,122,275 Cash, beginning of year 11,332,539 - 232,597 11,565,136 2,706,546 Cash, end of year $ 35,791,387 $ - $ 200 $ 35,791,587 $ 8,828,821

Reconciliation of income from operations to net cash provided by operating activities: Income from operations $ (122,911) $ 465,659 $ (278,640) $ 64,108 $ (1,403,076) Adjustments to reconcile income from operations to net cash provided (used) by operating activities: Depreciation 5,188,640 1,676 31,248 5,221,564 1,372,579 Provision for doubtful accounts 129,277 62,468 - 191,745 - Change in assets and liabilities: (Increase) decrease in accounts receivable (1,983,192) (120,027) (16,431) (2,119,650) (31,373) (Increase) decrease in inventory (120,408) - - (120,408) - (Increase) decrease in prepaid expense 32,000 - - 32,000 148,000 Increase (decrease) in wages payable (406,767) (353,065) (22,674) (782,506) 124,718 Increase (decrease) in accounts payable 5,107,623 197,611 67,932 5,373,166 881,090 Increase (decrease) in other liabilities 3,333,000 - - 3,333,000 - Increase (decrease) in landfill closure costs - 212,895 - 212,895 - Increase (decreases) in pension items (3,537,160) (1,413,900) (198,400) (5,149,460) - Increase (decrease) in compensated absences (72,139) (28,666) (759) (101,564) - Increase (decrease) in deposits 82,754 - - 82,754 - Increase (decrease) in net pension benefit obligation (182,294) 1,357,000 190,500 1,365,206 - Increase (decrease) in unearned revenue - - 18,146 18,146 - Increase in long-term risk liability - (107,062) - (107,062) 1,079,549 Net cash provided (used) by operating activities $ 7,448,423 $ 274,589 $ (209,078) $ 7,513,934 $ 2,171,487

See accompanying notes to the basic financial statements 21 Fiduciary Fund Statement of Fiduciary Net Position Exhibit 11 Fiduciary Fund For the Year Ended September 30, 2015

OPEB TRUST Assets Receivables $ 600,000 Investments, at fair value 2,383,355 Total Assets $ 2,983,355 Net Position Held in trust for pension benefits $ 2,983,355 Total Net Position $ 2,983,355

See accompanying notes to the basic financial statements 23 CITY OF PORT ARTHUR, TEXAS Statement of Changes in Fiduciary Net Position Exhibit 12 Fiduciary Fund For the Year Ended September 30, 2015

OPEB TRUST Additions Contributions Employer $ 600,000 Investment Return Interest and dividends 31,026 Earnings-gain / (loss) (16,038) Total Investment Return 14,988 Net Increase 614,988 Net Assets, Beginning of Year 2,368,367 Net Assets, End of Year $ 2,983,355

See accompanying notes to the basic financial statements 24 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

I. Summary of Significant Accounting Policies

The financial statements of the City of Port Arthur, Texas (the “City”) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following represents the significant accounting policies used by the City.

A. REPORTING ENTITY

The City of Port Arthur, Texas (City) was incorporated under the laws of the State of Texas, May 30, 1898, and has operated under a Council-Manager form of government since March 8, 1932. As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Port Arthur (the primary government) and its component unit. The component unit discussed below is included in the City’s reporting entity because of the significance of its operational or financial relationships with the City. The discretely presented component unit is reported in a separate column in the government-wide financial statements (see note below for description) to emphasize that it is legally separate from the government.

Discretely presented component units The Port Arthur Section 4A Economic Development Corporation (EDC), an entity legally separate from the City, is governed by a nine member board of directors appointed by the City Council. The EDC is funded by a one half cent additional sales tax dedicated to economic development activities, which was approved by voters November 7, 1995 and implemented April 1, 1996. The budget, financial reports, and bonds of the EDC must be approved by the City Council.

The notes to the financial statements include disclosures pertaining to the City as the primary government and also the Port Arthur Section 4A Economic Development Corporation as a component unit. There is not a separately issued financial statement.

B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

The government-wide financial statements (i.e. the statement of net assets and the statement of changes in net assets) report information on all of the activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable.

The statement of activities demonstrates the degree to which the direct expenses of a given structure or segment, are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

25 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

I. Summary of Significant Accounting Policies (continued)

C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND BASIS OF PRESENTATION

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenue to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures as well as expenditures related to compensated absences and claims and judgments are recorded only when payment is due.

Property taxes, sales tax and franchise taxes, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government.

The City reports the following major governmental funds:  The general fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.  The debt service fund accounts for the resources accumulated and payments made for principal and interest on long- term general obligation debt of governmental funds.  The general land office grant accounts for Community Development Block Grant Disaster Recovery (CDBG-OR) funds received from the General Land Office.  The transit system fund accounts for the operations of the City's Bus Serivce. This fund is heavily subsidized by the Federal and State grants and contribution from the City's General Fund.

The City reports the following major proprietary funds:  The water and sewer fund accounts for the activities of the water and sewer utility of the City. This fund operates the water treatment and distribution functions, along with the wastewater collection and treatment.  The solid waste fund accounts for the activities of the solid waste function of the City. The fund operates the municipal landfill, along with the collection of residential and commercial garbage, trash and green waste.

Additionally, the City reports the following fund type:  Internal service funds account for general liability insurance, equipment replacement, and employee benefit costs. These costs are reimbursed, on a user cost basis, by departments. The internal service funds predominantly serve the governmental funds and are reported accordingly.

As a general rule the effect of inter-fund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges for administrative services between funds. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges

26 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

I. Summary of Significant Accounting Policies (continued)

C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND BASIS OF PRESENTATION (continued) provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s water and sewer and solid waste funds are from charges to customers for sales and services. Operating expenses from the enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first, and then unrestricted resources as they are needed.

D. ASSETS, LIABILITIES AND EQUITY

1. Deposits and Investments The City’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with maturities of three months or less. Statutes of the State of Texas and policies adopted by City Council authorize the City to invest in obligations of the U.S. Treasury, securities issued by U.S. government agencies, bankers’ acceptances, repurchase agreements, certificates of deposit, and local government investment pools. Investments are stated at fair value in all funds.

2. Property Taxes Receivable The City’s property taxes are levied annually, October 1, on the basis of assessed values as of January 1 of that calendar year, which are certified by the Jefferson County Appraisal District. Taxes are applicable to the fiscal year in which they are levied. They become delinquent on February 1 of the subsequent calendar year at which time the applicable property is subject to lien, and penalties and interest are assessed.

3. Receivables All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible.

4. Inter-fund Receivables and Payables Inter-fund receivables and payables arise from inter-fund transactions and are recorded by all funds affected in the period in which transactions are executed.

5. Inventories and Prepaid Items Inventories are valued at cost using the weighted average cost method. Payments made to vendors for services that will benefit future accounting periods are recorded as prepaid items.

6. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets (e.g. roads, bridges, sidewalks and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The government defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

27 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

I. Summary of Significant Accounting Policies (continued)

D. ASSETS, LIABILITIES AND EQUITY (continued)

6. Capital Assets (continued)

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the assets’ lives are not capitalized. Property, plant and equipment of the primary government are depreciated using the straight line method over the following estimated useful lives:

Type of Asset Life Buildings 20 - 55 years Improvements 20 - 60 years Equipment 2 - 10 years

7. Compensated Absences The City’s employees earn vacation and sick leave, which may be accumulated, subject to certain restrictions, until paid on termination. Employees may accumulate vacation, in excess of that earned in the current year, only with the approval of the City Manager. Upon termination, employees are paid for all unused vacation that has been accumulated. Accumulated vacation is expected to be liquidated with expendable available financial resources, and is reported as expenditure and a liability in the governmental or proprietary fund that will pay for it only when those absences have matured (i.e., unused reimbursable leave still outstanding following an employee’s resignation or retirement).

The limits for sick leave accumulation vary by hire date and position classification. Civil service employees (police officers and firefighters) may accumulate sick leave without limit. Upon termination, they are paid for a maximum of 140 days. Non- civil service employees accumulate sick leave up to their limit, which is based upon their hire date. For employees hired before May 31, 1989, the limit is 140 days. For employees hired after that date the limit is 90 days. This accumulated sick leave is not payable upon termination, for non-civil service employees, until they have completed five (5) years of service. For non-civil service employees hired after January 1, 1996, the accumulated sick leave will be paid at 50% of their unused, accumulated balance. After ten (10) years of service, these employees will be paid for 100% of their unused, accumulated balance, up to a maximum of 60 days. Accumulated sick leave, attributable to governmental funds, that is not expected to be liquidated with available financial resources are reported as long term liabilities on the statement of net assets. No expenditure is reported in the fund financial statements for these amounts. Those amounts attributable to proprietary funds are recorded as expenses and liabilities in those funds as the benefits accrue to the employee.

8. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, are amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Since all Bond Issues are general obligation, these transaction are reported within the Governmental Activities column of the government wide statement of net position. Bond issuance costs are reported as expenditures/expenses.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financial sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt 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.

28 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

I. Summary of Significant Accounting Policies (continued)

D. ASSETS, LIABILITIES AND EQUITY (continued)

9. Fund Equity Beginning with fiscal year 2011, the City of Port Arthur, Texas implemented GASB Statement No. 54 “Fund Balance Reporting and Governmental Fund type Definitions.” This Statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government’s fund balances more transparent. The following classifications describe the relative strength of the spending constraints:

Non-spendable fund balance – amounts that are not in spendable form or are required to be maintained intact. As such, the inventor and prepaid items have been properly classified in the Governmental Funds Balance Sheet.

Restricted fund balance – amounts that can be spent only for specific purposes because of local, state or federal laws, or externally imposed conditions by grantors or creditors.

Committed fund balance – amounts constrained to specific purposes by the City itself, using its highest level of decision – making authority, the City Council. To be reported as committed, amounts cannot be used for any other purposes unless the City takes the same highest level of action to remove or change the constraint. The City establishes, modifies, or rescinds fund balance commitments by passage of a resolution.

Assigned fund balance – balances that are ‘intended’ for a defined purpose. This is generally the purpose of certain special revenue funds. The Assignment can be expressed by the City Manager, or his designee, the Director of Finance. The City did have assigned fund balance as of September 30, 2015.

Unassigned fund balance – amounts that are available for any purpose. Fund balance that has not been restricted, committed, or assigned.

When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the City considers restricted fund to have been spent first. The City has adopted a policy stating which fund balance category is spent first when restricted, committed, assigned or unassigned fund balances are available.

E. DEFERRED OUTFLOWS/INFLOWS OF RESOURCES

In addition to assets, the statement of financial position 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 reporting period and thus, will not be recognized as an outflow of resources (expense) until that time. The City has two items that qualify for reporting in this category.

 Deferred outflows of resources for refunding - Reported in the government-wide statement of net position, this 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.

 Deferred outflows of resources for pension activities - Reported in the government wide financial statement of net position, this deferred outflow results three different events:

 Pension plan contributions made after the measurement date of the net pension liability - These deferred outflows of resources will be recognized as a reduction of the net pension liability in the next fiscal year.

 Differences between expected and actual actuarial experiences - These deferred outflows will be amortized over the 29 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

I. Summary of Significant Accounting Policies (continued)

E. DEFERRED OUTFLOWS/INFLOWS OF RESOURCES (continued) expected remaining service lives of all employees (active and inactive employees) that are provided with pensions through the pension plan.

 Differences between projected and actual earnings on pension plan investments - These deferred inflows will be amortized over a closed five year period.

In addition to liabilities, the statement of financial position 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 or fund balance that applies to a future reporting period and thus, will not be recognized as an inflow of resources (revenue) until that time. The City has two items that qualifies for reporting in this category.

 Deferred inflows of resources for unavailable revenues - Reported only in the governmental funds balance sheet, unavailable revenues from property taxes arise under the modified accrual basis of accounting. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

 Deferred outflows of resources for pension activities - Reported in the government wide financial statement of net position, this deferred outflow results from differences between expected and actual actuarial experiences - These deferred outflows will be amortized over the expected remaining service lives of all employees (active and inactive employees) that are provided with pensions through the pension plan.

F. Pensions

The City participates in two pension plans, the Port Arthur Firemen’s Relief and Retirement Fund (FRRF) and the Texas Municipal Retirement System (TMRS) to provide pension benefits for all full time employees. For purposes of measuring the net pension liabilities for these two plans, pension related deferred outflows and inflows of resources, and pension expense, City specific information about its Fiduciary Net Position and additions to/deductions from the City’s Fiduciary Net Position have been determined on the same basis as they are reported by the plans. 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 balances are obtained from through reports prepared for the City by TMRS consulting actuary, Gabriel Roeder Smith & Company, and by FRRF consulting actuary, John M. Crider , Jr. in compliance with Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions.

G. New Accounting Standards

In the current fiscal year, the City implemented the following new standards:

 GASB Statement 68, Accounting and Financial Reporting for Pensions (“GASB 68”) establishes accounting and financial reporting standards for pensions that are provided to the employees of state and local governmental employers through pension plans that are administered through trusts or similar arrangements that meet certain criteria. The Statement establishes standards for measuring and recognizing liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. Implementation is reflected in the financial statements, notes to the financial statements and required supplementary information.

30 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

I. Summary of Significant Accounting Policies (continued)

E. DEFERRED OUTFLOWS/INFLOWS OF RESOURCES (continued)

 GASB Statement 71, Pension Transition for Contributions Made Subsequent to the Measurement Date (“GASB 71”) amends the transition provisions of GASB 68. GASB 71 requires that, at transition, a government recognize a beginning deferred outflow of resources for its pension contributions made subsequent to the measurement date of the beginning net pension liability. Implementation is reflected in the financial statements and the notes to the financial statements.

II. Reconciliation of Governm ent-wide Financial Statem ents

Explanation of Reclassification Required on the Government-Wide Statement of Net Position When governmental activities report debt that financed the acquisition of capital assets that business-type activities report, that debt is not considered to be capital-related debt of the governmental activities. Such debt should not be part of the calculation of net assets invested in capital assets, net of related debt within that reporting unit. However, when the total reporting entity is presented as the reporting unit, the debt is related to the capital assets within that reporting unit. Thus reconciliation is necessary as follows:

Primary Government

Governmental Business-type Activities Activities Reclassification Total Net Position

Net investment in capital assets $ 20,370,442 $ 149,596,148 $ (55,766,402) $ 114,200,188 Restricted for: Debt service 2,492,560 - - 2,492,560 Capital projects 2,902,533 17,849,732 - 20,752,265 Special Revenue 13,050 - - 13,050 Unrestricted 28,314,376 (34,056,600) 55,766,402 50,024,178

Total net position $ 54,092,961 $ 133,389,280 $ - $ 187,482,241

Explanation of Certain Differences Between the Governmental Funds Balance Sheet and the Government-wide Statement of Net Position The governmental fund balance sheet includes reconciliation between fund balance – total governmental funds and net position-governmental activities as reported in the government-wide financial statement of net position. One element of that reconciliation explains, “long-term liabilities, including bonds payable are not due and payable in the current period and therefore are not reported in the funds.” The details of this $(73,171,313) difference are as follows:

Bonds payable $ (53,513,783) Other post employment benefit (11,737,229) Compensated absences (8,744,179) Deferred loss on refunding 823,878 Net adjustment related to long-term debt to reduce fund balance-total governmental funds to arrive at net position - governmental activities $ (73,171,313)

31 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

II. Reconciliation of Governm ent-wide Financial Statem ents (continued)

Explanation of Certain Differences Between the Governmental Funds Statement of Revenue, Expenditures and Changes in Fund Balance and the Government-wide Statement of Activities The governmental fund statement of revenue, expenditures and changes in fund balances includes reconciliation between net changes in fund balances – total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of the reconciliation explains, “Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.” The details of this 1,412,947 difference are as follows:

Capital outlay $ 9,471,939 Depreciation expense (8,058,992) Net adjustment related to capital assets to increase fund balances - total governmental funds to arrive at net position-governmental activities $ 1,412,947

III. Stewardship, Com pliance and Accountability

A. BUDGETARY INFORMATION Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) for the following governmental fund types of the primary government: the General Fund, the Debt Service Fund, the Library Special Fund, the Golf Course Fund, the Police Special Fund, Municipal Court Technology Fund, the Hotel Occupancy Tax Fund, and the Transit System Fund. The Capital Projects fund is budgeted on a project basis, rather than an annual basis. The remaining governmental type funds are not budgeted. Budgets for the Enterprise Funds and the Internal Service Funds are adopted on a basis not consistent with generally accepted accounting principles because the budget presents capital outlays as expenditures and there is no provision for depreciation expense. All operating funds of the Port Arthur Section 4A Economic Development Corporation have annual budgets adopted on a basis consistent with GAAP.

On or before August 31 of each year the City Manager presents the City Council with a proposed budget for the ensuing fiscal year. The Council holds public hearings and a final budget must be prepared and adopted by September 30. Budgets are appropriated by fund and department. The legal level of control is the department level. The City Council made three supplementary budgetary appropriations during the year. These ordinances reduced $500,000. in funding for construction at the landfill. The City’s department heads may make transfers of appropriations within department line items with the City Manager's approval. Transfers between departments require the approval of the City Council.

B. EXCESS OF EXPENDITURES OVER APPROPRIATIONS For the year ended September 30, 2015, expenditures exceeded appropriations in one department of the City of Port Arthur in the amount of $73,061. In the General Fund total expenditures were $7,902,363 less than the budget, as amended.

C. DEFICIT FUND EQUITY The following fund had deficit fund equity, or net assets, as of September 30, 2015:

Fund Amount Solid Waste Fund $ (6,870,150) Health Grant Fund $ (19,152)

32 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

IV. Detailed Notes on all Funds

A. CASH AND INVESTMENTS For the purposes of managing cash and investments, the funds of the Port Arthur Section 4A Economic Development Corporation (EDC) are pooled with those of the City. At year end, 100% of the bank balance was covered by federal depository insurance or by collateral held by the City’s agent in the City’s name at September 30,2015. At year end, the City’s cash and investment balances, including funds of the Port Arthur Section 4A Economic Development Corporation, were as follows: Average Fair Maturity Primary Investment Type Government EDC Value (days) Cash and high yield deposits $ 51,021,159 $ 7,959,391 $ 58,980,550 1 Certificates of Deposit 250,000 - 250,000 621 Money market 5,103,390 679,033 5,782,423 1 Federal agency coupon securities 2,000,000 - 2,000,000 341 Texas Local Government Investment Pool (Tex Pool) 15,593,119 1,000,327 16,593,446 48 TEXSTAR 232,316 - 232,316 46 Total fair value $ 74,199,984 $ 9,638,751 $ 83,838,735 Portfolio weighted average maturity 35

Interest rate risk. In accordance with its investment policy, the City manages its exposure to declines in fair values by limiting the weighted average maturity of its investment portfolio to less than 366 days for operating funds.

Credit risk. The State of Texas authorizes investment instruments allowed for local government funds. The City’s investment policy further restricts those authorized investments, maintaining safety and preservation of principal as the primary goal of the policy. The City’s investments include deposits in the Texas Local Government Investment Pool (TexPool). Under the TexPool Participation Agreement, administrative and investment services to TexPool are provided by Federated Investors Inc. through an agreement with the State of Texas Comptroller of Public Accounts. The State of Texas Comptroller of Public Accounts is the sole officer, director and shareholder of the Texas Treasury Safekeeping Trust Company authorized to operated TexPool. TexPool operates on a $1 net asset value basis. In order to maintain a stable $1 price of the fund, the pool will sell portfolio holdings if the ratio of market value of the portfolio divided by the book value of the portfolio is less that .995 or greater than 1.005. Tex Pool is rated AAAm by Standard and Poor’s.

Concentration of credit risk. The City’s investment policy limits investments from a specific issuer, and by investing in instruments of varying maturities.

Custodial credit risk. In the case of deposits, this is the risk that in the event of a bank failure, the government’s deposits may not be returned to it. The City does not have a deposit policy for custodial risk. As of September 30, 2015, none of the City’s deposits were subject to custodial credit risk.

For an investment, this is the risk that, in the event of the failure of counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City limits this risk by contracting with a third party custodian for securities. This bank holds the securities in the City’s name which are evidenced by safekeeping receipts of the institution.

33 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

IV. Detailed Notes on all Funds (continued)

B. RECEIVABLES

Receivables as of September 30, 2015 for the City’s individual major funds and non-major and internal service funds in the aggregate, including applicable allowances for uncollectible amounts, are as follows:

Debt Non-Major Internal Service Transit Proprietary Governmental Service General Fund Fund GLO Fund Fund Funds Fund Fund Total Receivables: Taxes $ 8,102,380 $ 2,095,857 $ - $ - $ - $ - $ - $ 10,198,237 Accounts 10,984,922 - - - 11,921,914 1,722,292 20,734 24,649,862 Federal and State Grants - - 5,901,648 4,827,338 - 7,773,827 - 18,502,813 Gross receivables 19,087,302 2,095,857 5,901,648 4,827,338 11,921,914 9,496,119 20,734 53,350,912 Less: allowance for uncollectibles (16,066,693) (333,730) - - (7,193,176) (93,333) - (23,686,932) Net Total Receivables $ 3,020,609 $ 1,762,127 $ 5,901,648 $ 4,827,338 $ 4,728,738 $ 9,402,786 $ 20,734 $ 29,663,980

C. CAPITAL ASSETS

Capital asset activity of the primary government for the year ended September 30, 2015 was as follows: Beginning Additions Reclassifications Disposals Ending Governmental activities Capital assets, not being depreciated Land $ 3,374,367 $ - $ - $ - $ 3,374,367 Construction in process 8,069,054 7,953,300 (10,659,882) (92,136) 5,270,336 Total capital assets not being depreciated 11,443,421 7,953,300 (10,659,882) (92,136) 8,644,703 Capital assets being depreciated Buildings 24,342,106 - - - 24,342,106 Improvements 16,337,513 - 1,575,803 - 17,913,316 Infrastructure 267,163,161 - 9,084,079 - 276,247,240 Equipment 52,754,024 11,801,304 - (372,133) 64,183,195 Total capital assets, being depreciated 360,596,804 11,801,304 10,659,882 (372,133) 382,685,857 Less accumulated depreciation for: Buildings (14,880,910) (489,873) - - (15,370,783) Improvements (7,625,447) (251,026) - - (7,876,473) Infrastructure (242,548,900) (7,984,593) - - (250,533,493) Equipment (32,752,963) (1,078,212) - 372,133 (33,459,042) Total accumulated depreciation (297,808,220) (9,803,704) - 372,133 (307,239,791) Total capital assets, being depreciated, net 62,788,584 1,997,600 10,659,882 - 75,446,066 Governmental activities, capital assets, net $ 74,232,005 $ 9,950,900 $ - $ (92,136) $ 84,090,769

34 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

IV. Detailed Notes on all Funds (continued)

C. CAPITAL ASSETS (continued)

Beginning Additions Reclassifications Disposals Ending Business type activities Capital assets, not being depreciated Land $ 863,971 $ - $ - $ - $ 863,971 Construction in process 11,567,912 43,135,070 (44,852,682) - 9,850,300 Total capital assets, not being depreciated 12,431,883 43,135,070 (44,852,682) - 10,714,271 Capital assets, being depreciated Buildings 43,807,392 - - - 43,807,392 Improvements 133,000,607 - 28,516,396 - 161,517,003 Equipment 5,482,370 311,953 16,336,286 (44,975) 22,085,634 Total capital assets, being depreciated 182,290,369 311,953 44,852,682 (44,975) 227,410,029 Less: accumulated depreciation for: Buildings (17,415,329) (1,014,733) - - (18,430,062) Improvements (63,945,383) (3,725,883) - - (67,671,266) Equipment (8,254,253) (480,948) - 44,975 (8,690,226) Total accumulated depreciation (89,614,965) (5,221,564) - 44,975 (94,791,554) Total capital assets, being depreciated, net 92,675,404 (4,909,611) 44,852,682 - 132,618,475 Business type activities, capital assets, net $ 105,107,287 $ 38,225,459 $ - $ - $ 143,332,746

Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental activities: General government $ 1,981,837 Culture and recreation 538,242 Public safety 3,693,411 Community Development 88,476 Health and welfare 404,197 Public transportation 437,180 Public works 915,649 Capital assets held by the government's internal service funds are charged to the various functions based on their usage of assets 1,744,712 Total depreciation expense - governmental activities $ 9,803,704 Business type activities: Water and sewer $ 5,188,640 Solid waste 1,676 Pleasure Island Commission 31,248 Total depreciation expense - business type activities $ 5,221,564

35 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

IV. Detailed Notes on all Funds (continued)

C. CAPITAL ASSETS (continued)

Construction commitments The primary government has active construction projects as of September 30, 2015. At year end, the City’s major commitments with contractors are as follows:

Contract Spent thru Remaining Project Amount 9/30/2015 Commitment Cheniere Project $ 15,265,037 $ 9,668,398 $ 5,650,639 Waste Water Improvement 1,028,560 507,300 521,260 10th St. Paving 689,908 632,534 56,564 18th St. Paving 2,870,580 700,348 2,170,232 Stand Pipe Tank 2,683,988 1,242,251 1,441,737 Blue Bonnet Ave. 1,528,486 1,157,078 371,408 19th Street Paving 647,809 687,295 - Drainage System-Equipment 913,390 525,432 387,958

Port Arthur Economic Development Corporation Activity for the capital assets of the Port Arthur Economic Development Corporation, for the year ended September 30, 2015, was as follows: Beginning Ending Balance Increase Decrease Balance Governmental activities Capital assets, not being depreciated Land $ 5,757,631 $ - $ - $ 5,757,631 Total capital assets, not being depreciated 5,757,631 - - 5,757,631 Capital assets being depreciated Building 315,480 - - 315,480 Equipment 52,174 16,908 - 69,082 Less: accumulated depreciation (127,488) (19,044) - (146,532) Total capital assets being depreciated 240,166 (2,136) - 238,030 Governmental activities, capital assets, net $ 5,997,797 $ (2,136) $ - $ 5,995,661

36 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

IV. Detailed Notes on all Funds (continued)

D. INTERFUND PAYABLES, RECEIVABLES AND TRANSFERS

Inter-fund balances resulted from a time lag between the dates that (1) inter-fund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. These balances also include the amount of working capital loans made from the general fund and debt service fund that are expected to be collected in the subsequent year. The composition of interfund balances as of September 30, 2015, is as follows:

Interfund Interfund Receivables Payables Governmental Fund Types: General fund $ 16,208,258 $ - GLO - 5,619,498 Transit - 4,888,839 Nonmajor funds - 8,486,385 Governmental total-current 16,208,258 18,994,722 General Fund - long-term 44,214,357 - Non- Major Fund 2,453,643 - Total Governmental Fund- Long Term 62,876,258 18,994,722 Proprietary Fund Types: Enterprise Funds Solid Waste Fund - - Pleasure Islands - 16,681 Internal Service Funds 2,804,549 1,404 Proprietary Funds total- current 2,804,549 18,085 Water and Sewer Fund - 41,690,870 Solid Waste Fund - 2,491,608 Pleasure Island - 2,485,522 Proprietary Funds - long term - 46,668,000 Total Proprietary Fund Types 2,804,549 46,686,085 Total Funds - current 19,012,807 19,012,807 Total Funds - long-term 46,668,000 46,668,000 Total Funds receivables and payables $ 65,680,807 $ 65,680,807

Inter-fund transfers are budgeted cost allocations and reimbursements between funds for items such as administrative and insurance reimbursements. Certain transfers also fund cash matches as required under grants.

The long-term interfund receivables have resulted from the Water and Sewer Fund's and the Solid Waste Fund's inability to reimburse the General Fund and the General Liability Fund for debt service payments and its proportionate share of general liability expenses, respectively. Although these amounts have accumulated over a number of years, management is confident that the interfund indebtedness will be repaid largely due to the implementation of an agreement between the City and Chenier dated December 21, 2011 in which the City will provide water to its facility at the rate of 3,500 gallons per minute, which when fully implemented will, at the rate established, provide additional revenues in the range of $9,000,000 in water revenues. Along with other measures, being taken by management, including a planned sold waste rate increase for the commercial category, better monitoring and administering of delinquent accounts, curing water leaks through pipe replacement, new water meters, and pursuing regionalization opportunities, these funds should be able to generate adequate resources to commence reimbursing the General Fund and General Liability Fund each year as well as beginning to liquidate the advances. City Management estimates that the agreement with Chenier will be fully implemented within fiscal year ending September 30, 2018.

37 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

IV. Detailed Notes on all Funds (continued)

D. INTERFUND PAYABLES, RECEIVABLES AND TRANSFERS (continued) Transfers In Transfers Out Governmental Fund Types: General fund $ 7,944,374 $ 2,791,722 Debt service fund - 444,035 Transit 1,285,638 80,000 Nonmajor funds 206,084 100,000 Governmental total 9,436,096 3,415,757

Proprietary Fund Type: Enterprise Funds Water and Sewer fund - 7,128,332 Solid Waste Fund - 802,000 Pleasure Island - 40,000 Enterprise Funds total - 7,970,332 Internal service funds 2,284,035 334,042 Proprietary funds total 2,284,035 8,304,374

Total interfund transfers $ 11,720,131 $ 11,720,131

E. LEASES The City has entered into lease agreements as lessee for financing the acquisition of equipment. These lease agreements qualify as capital leases for accounting purposes and have been recorded at the present value of the future minimum lease payments as of the inception in the internal service funds. The assets that are being acquired through capital leases are as follows:

Assets Police HVAC $ 895,573 Equipment 1,466,292 Fire Apparatus 449,144 Landfill Compactor 640,807 Water Fund Equipment 8,021,021 Total Cost $ 11,472,837 Accumulated Amortization (1,945,287) Net Book Value $ 9,527,550

38 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

IV. Detailed Notes on all Funds (continued)

E. LEASES (continued)

The future minimum lease payments and the net present value of these minimum lease payments as of September 30, 2015, were as follows: Year ending Fire Landfill Water Fund September 30 Police HVAC Equipment Apparatus Compactor Equipment Total

2016 $ 76,197 $ 315,751 $ 54,305 $ 138,858 $ 627,217 $ 1,212,328 2017 78,483 315,751 54,305 138,858 617,541 1,204,938 2018 80,838 - 54,305 138,858 636,067 910,068 2019 83,263 - - 138,858 655,149 877,270 2020 85,761 - - 81,000 674,804 841,565 2021 88,333 - - - 694,425 782,758 2022 90,983 - - - 714,604 805,587 2023 93,713 - - - 735,356 829,069 2024 96,524 - - - 756,708 853,232 2025 99,420 - - - 778,640 878,060 2026 91,579 - - - 801,204 892,783 2027 41,135 - - - 824,407 865,542 2028 - - - - 848,263 848,263 2029 - - - - 872,792 872,792 Total 1,006,229 631,502 162,915 636,432 10,237,177 12,674,255 Interest (172,214) (23,048) (11,091) (45,202) (2,216,156) (2,467,711) Net present value $ 834,015 $ 608,454 $ 151,824 $ 591,230 $ 8,021,021 $ 10,206,544

39 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

IV. Detailed Notes on all Funds (continued)

F. LONG-TERM DEBT General Obligation Debt. The City issues general obligation bonds and certificates of obligation to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. General obligation bonds are direct obligations and pledge the full faith and credit of the City. Total bonded debt of $58,335,000 is currently outstanding. The annual debt service requirements to maturity, for all bonds, are as follows:

Year Ended Total September 30 Principal Interest 2016 $ 6,365,000 $ 1,912,583 2017 6,585,000 1,722,830 2018 6,790,000 1,533,693 2019 7,005,000 1,323,267 2020 7,265,000 1,091,353 2021-2025 20,295,000 2,780,212 2026-2030 7,340,000 564,859 Total $ 61,645,000 $ 10,928,797

40 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

IV. Detailed Notes on all Funds (continued)

F. LONG-TERM DEBT (continued)

At September 30, 2015, bonds payable consisted of the following individual issues:

2015A Contribution Tax & Revenue Certificates of Obligation, $6,995,000, 0.00% to 1.500%, $680,000 to $730,000 annually to 2025. $ 6,995,000

2015B Contribution Tax & Reveune Certificates of Obligation, $2,080,000, 0.00% to 1.450%, $205,000 to $215,000 annually to 2025 2,080,000

Total Business-Type activity $ 9,075,000

2013 General Obligation Refunding Bonds, $8,395,00, 3.250% to 4.0%, $1,440,000 to $1,145,000 annually to 2020 5,470,000

2012 General Obligation Refunding Bonds. $9,595,000. 2.0% to 4.0%. $1,855,000 to $980,000 annually to 2022: $238,000 of which is funded by the City of Port Arthur Section 4A Economic Development Corporation 6,170,000

2012 Certificates of Obligation, $3,230,000, 4.05%, $110,000 to $330,000 annually to 2027 2,830,000

2011 General Obligation Refunding Bonds, $9,530,000, 2.0% to 4.0%, 320,000 to $2,200,000 annually to 2022 4,025,000

2010 General Obligation Bonds, $8,000,000, 3.0% to 4.3%, $275,000 to $600,000, annually to 2030 6,540,000

2008 General Obligation Bonds, $9,000,000, 3.5% to 5.0%, $170,000 to $665,000 annually to 2028; $3,000,000 of which is funded by City of Port Arthur Section 4A Economic Development Corporation 6,770,000

2007 Certificates of Obligation, $10,000,000, 4.05%, $330,00 to $715,000 annually to 2028 7,375,000

2006 General Obligation Refunding Series, $8,585,000, 4.0%, $0 to $1,540,000 annually to 2022 7,510,000

2005 General Obligation Refunding Series, $11,280,000, 3.25% to 5.0%, $0 to $1,125,000 annually to 2021 5,880,000

Total Governmental $ 52,570,000

41 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

IV. Detailed Notes on all Funds (continued)

F. LONG-TERM DEBT (continued) Changes in long-term liabilities

Beginning Ending Due within 1 Balance Additions Reductions Balance Year Governmental activities: Bonds payable General obligation bonds $ 47,560,000 $ - $ (5,195,000) $ 42,365,000 $ 4,880,000 Certificates of obligation 10,775,000 - (570,000) 10,205,000 600,000 Premium on issuance 1,067,797 - (123,930) 943,867 - Total bonds payable 59,402,797 - (5,888,930) 53,513,867 5,480,000

Capital leases 1,981,005 8,661,828 (436,289) 10,206,544 703,721

Compensated absences 9,690,911 1,827,095 (2,773,828) 8,744,178 900,000 Governmental activities Long-Term Liabilities $ 71,074,713 $ 10,488,923 $ (9,099,047) $ 72,464,589 $ 7,083,721

Business-type activities: Certificate of Obligation $ - $ 9,075,000 $ - $ 9,075,000 $ 885,000 Compensated abences 1,335,030 281,622 (383,186) 1,233,466 316,622 Business-type activities Long-Term Liabilities $ 1,335,030 $ 9,356,622 $ (383,186) $ 10,308,466 $ 1,201,622

Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for governmental activities. At the year end, $10,206,544 of capital lease obligations is included in the above amounts. Also, for the governmental activities, claims and judgments and compensated absences are generally liquidated by the General Fund. Compensated absences due within one year, is estimated to be approximately equivalent to the value of the accrued vacation at year end.

Arbitrage Rebate Liability The Tax Reform Act of 1986 established regulations for the rebate to the federal government of arbitrage earnings on certain local government bond issued after December 31, 1985, and all local governmental bonds issued after August 31, 1986. Issuing governments must calculate any rebate due and remit the amount due at least every five years. As of September 30, 2015, there is no estimated liability for arbitrage rebate. The debt service and residual balances in the capital project funds have typically been used to liquidate the arbitrage liability in previous years.

Port Arthur Economic Development Corporation The Port Arthur Economic Development (EDC) issued a sales tax revenue bond, Series 2003 to provide funds for the development of infrastructure related to development projects. This issue, $ 8.05 million, pledged the sales tax revenue of the EDC. The issue is payable at $220,000 to $570,000, 3% to 5%, to 2024, the balance outstanding at September 30, 2015 is $4,360,000.

The EDC funds 2.5% of the City’s 2012 Refunding General Obligation, and 33% of the debt service for the 2008 General Obligation Bond and 30% of the Debt Service for the 2011 General Obligation Refunding Bond.

42 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

IV. Detailed Notes on all Funds (continued)

F. LONG-TERM DEBT (continued)

*Move Certificate of Obliation to Business- Type Activity.

V. Other Inform ation

A. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the City maintains a limited risk management program. Claims in excess of the self-insured retention amounts are covered through third-party limited-coverage insurance policies. The City also maintains a limited risk management program for workers’ compensation. Premiums are paid into the Employee Benefit Fund and the General Liability Fund by all other funds and are available to pay claims, claim reserves and administrative costs, and insurance premiums. These inter-fund premiums are recorded as revenue in the Employee Benefit Fund and the General Liability Fund as they are Internal Service Funds. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Worker's General Compensation Liability Total

Estimated liability, 9/30/12 9/30/12 $ 685,658 $ 387,153 $ 1,072,811 fiscal 2013 claims incurred 559,402 399,389 958,791 fiscal 2013 claims paid (602,242) (190,555) (792,797) Estimated liability, 9/30/13 $ 642,818 $ 595,987 $ 1,238,805 fiscal 2014 claims incurred 1,117,297 919,881 2,037,178 fiscal 2014 claims paid (1,301,433) (1,076,589) (2,378,022) Estimated liability, 9/30/14 $ 458,682 $ 439,279 $ 897,961 fiscal 2015 claims incurred 820,165 2,430,161 3,250,326 fiscal 2015 claims paid (764,609) (1,406,168) (2,170,777) Estimated liability, 9/30/15 $ 514,238 $ 1,463,272 $ 1,977,510

Liabilities of the funds are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNRs). The result of the process to estimate the claims liability is not an exact amount as it depends on many complex factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly claims are reevaluated periodically to consider the effects of inflation, recent claims trends (including frequency and amount of pay-outs), and other economic and social factors. The estimate of claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims. Estimated recoveries, for example from salvage or subrogation, are another component of the claims liability estimate. An excess coverage insurance policy covers claims in excess of $300,000. Settlements have not exceeded coverages for each of the past three fiscal years.

B. CONTINGENT LIABILITIES The City is defendant in various lawsuits arising in the ordinary course of its municipal and enterprise activities. In the opinion of City management, the outcome of all pending litigation will not materially affect the financial position of the City. Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial.

43 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

B. CONTINGENT LIABILITIES (continued) In Ocotber 2014 the City was advised by another taxpayer with a direct pay permit that it had incorrectly reported use tax to the City as far back as 2011 for purchases of equipment first used or stored at its property located outside the city limits of the City. The actual amount is not currently known. Prior to reallocation the Texas Comptroller must complete an audit, which has not commenced at this time. As indicated any repayment would be at the 67% by the City and 33% by the Economic Development Corporation.

* This ties to page 83 Exhibit B-2.

C. OTHER POSTEMPLOYMENT BENEFITS

Retiree Health Insurance Program Program Description In addition to the pension benefits described in Note D that follows, as required by state law, the City makes available healthcare benefits to all employees who retire from the City and who are eligible to receive benefits from a City sponsored retirement program (Texas Municipal Retirement System, or the Port Arthur Firemen’s Relief and Retirement Fund) through a single-employer defined benefit healthcare plan. This Program provides lifetime health insurance for eligible retirees, their spouses and dependents through the City's group health insurance plan, which covers both active and retired participants. Benefit provisions are established by management.

Employees retiring on or before December 31, 2010 are allowed to remain in the health insurance plan at approximately 30% of the expected under age 65 cost or approximately 75% of the expected over age 65 and over costs. These costs (a.k.a. retiree contribution rates) are calculated separately for retirees not eligible for Medicare (under age 65) and retirees eligible for Medicare (age 65 and over). Employees retiring on or after January 1, 2011 contribute a tiered percentage of the retiree contribution rates based upon their years of City service at retirement. The percentage ranges from 50% for retirees with at least 30 years of City service to 100% for retirees with less than 20 years of City service. Employees hired on or after November 1, 2010 are required to contribute 100% of the retiree contribution rates upon retirement.

For financial reporting purposes, the Retiree Health Insurance Program is accounted for in the Employee Benefit Fund, an internal service fund with regard to City and employee contributions, retiree health costs (including cliams, premiums, etc). In addition, the City also provides an annual contribution of $600,000 to an OPEB Trust Fund, which is accounted for as a Fiduciary Fund.

Funding Policy

The gross premium rates effective November 1, 2014 were $956 per month for retirees under the age of 65 and $491 per month for those 65 and older.

Current retirees over age 65 and older contribute $188 per month effective November 1, 2014 or approximately 75% of the expected cost. Current retirees under the age of 65 contribute $238 per month effective November 1, 2014 or approximately 30% of their expected cost.

Those who retire on or after January 1, 2011 contribute a percentage ranging approximately from 50% to 100% of their expected costs. Effective November 1, 2014, the expected cost was $260 per month for retirees age 65 and over and between $439 - $875 per month for retirees under age 65.

Retirees hired on or after November 1, 2010 contribute $875 per month. 44 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

C. OTHER POSTEMPLOYMENT BENEFITS (continued)

Costs for retiree spouses and dependents are also similarly subsidized, in part, by the City. For fiscal year 2014, the City financed this program on a pay-as-you-go basis. As of September 30, 2015 the City had 186 retirees, including 55 spouses and 14 dependents participating in this plan. In fiscal year 2015, the Program incurred actual retiree costs of $3,266,903 and contributed $600,000 to the OPEB Trust offset by retiree contributions of $682,526 and early retiree drug subsidy of $79,998 for a net cost to the City of $3,104,379. General funds have been used in prior years to liquidate the net other postemployment benefit obligation.

Annual OPEB Cost and Net OPEB Obligation The City's annual other postemployment benefit (OPEB) cost (expense) for the Retiree Health Insurance Program is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover benefits earned each year (i.e. normal costs) and an amortization of the unfunded actuarial liability (UAAL). The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation.

9/30/2011 9/30/2012 9/30/2013 09/30/2014 9/30/2015

Annual required contribution (ARC) $ 1,719,683 $ 1,329,361 $ 1,368,850 $ 1,648,451 $ 1,697,905 Interest on Net OPEB obligation 758,582 746,243 752,066 1,144,054 1,128,282 Adjustment to ARC (769,214) (785,843) (816,778) (1,184,921) (1,168,586) Annual OPEB cost (expense) $ 1,709,051 $ 1,289,761 $ 1,304,138 $ 1,607,584 $ 1,657,601 Contributions made (1,794,664) (1,849,226) (2,443,713) (1,832,893) (3,104,379) Change in OPEB obligation $ (85,613) $ (559,465) $ (1,139,575) $ (225,309) $ (1,446,778) Net OPEB - beginning of year 18,128,275 18,042,662 17,483,197 16,343,622 16,118,313 Net OPEB - end of year $ 18,042,662 $ 17,483,197 $ 16,343,622 $ 16,118,313 $ 14,671,535

Fiscal year Annual OPEB Percentage Net OPEB ended Cost OPEB Cost Obligation Contributed 9/30/2012 $ 1,289,761 151.05 % $ 17,483,197 9/30/2013 $ 1,304,138 149.39 % $ 16,343,622 2023 $ 1,607,584 114.02 % $ 16,118,313 9/30/2015 $ 1,657,601 187.28 % $ 14,671,535

Actuarial UAAL as a Actuarial Actuarial Accrued Percentage Valuation Value of Liability Funded Unfunded Covered of Covered Date Assets (AAL) Ratio AAL (UAAL) Payroll Payroll 12/31/2009 $ - $ 32,067,950 0.0 $ 32,067,950 $ 34,170,556 93.85% 12/31/2010 32,689,469 0.0% 32,689,469 28,134,567 116.19% 12/312013 1,751,976 19,970,527 8.8% 18,218,551 29,365,597 62.04%

45 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

C. OTHER POSTEMPLOYMENT BENEFITS (continued)

Actuarial valuations on an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the October 1, 2009 actuarial valuation, the Projected Unit Credit actuarial cost method was used. The actuarial assumptions used included a 4% discount rate, 4% expected long-term investment return and annual healthcare trend rates of 10% initially declining ½% annually to an ultimate rate of 5% after 10 years. The initial UAAL and subsequent unanticipated changes in UAAL are being amortized with the level dollar method, over closed 30-year periods in amounts that increase 3% per year (assumed payroll growth rate). Beginning with this fiscal year 2014 the discount rate and expected long-term investment return were both changed to 7%.

Supplemental Death Benefit The City also participates in the cost sharing multiple-employer defined benefit group-term life insurance plan operated by the Texas Municipal Retirement System (TMRS) known as the Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance, to provide group-term life insurance coverage to both current and retired employees. The city may terminate coverage under and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1.

The death benefit for active employees provides a lump-sum payment approximately equal to the employee’s annual salary (calculated based on the employee’s actual earnings, for the 12-month period preceding the month of death); retired employees are insured for $7,500; this coverage is an “other postemployment benefit,” or OPEB.

Plan Year 2014 Plan Year 2015 The City offers supplemental death to: Active employees Yes Yes Retirees Yes Yes

The City contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation. The rate is equal to the cost of providing one-year term life insurance. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year; the intent is not to pre-fund retiree term life insurance during employees’ entire careers.

46 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

C. OTHER POSTEMPLOYMENT BENEFITS (continued)

The city’s contributions to the TMRS SDBF for the years 2015, and 2013 were $61,795, $54,444 and $51,264 respectively, which equaled the required contributions each year.

Schedule of Contributions and Rates (Retiree-only portion of the rate)

Plan/ Annual Actual Actual Calendar Required Contribution % of ARC Contribution Year Contribution Made (Rate) Contributed Made (ARC) 2013 0.08% 0.08% 100% $ 20,481 2014 0.07% 0.07% 100% 20,457 2015 0.08% 0.08% 100% 23,493

47 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

D. EMPLOYEE RETIREMENT SYSTEMS

Plan Description and Provisions

TMRS

The City participates as one of 860 plans in the nontraditional, joint contributory, hybrid defined benefit pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple-employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the System with a six-member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS’s defined benefit pension plan is a tax-qualified plan under Section 401 (a) of the Internal Revenue Code. TMRS issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.com.

All eligible employees of the City not covered by the FRRF are required to participate in TMRS.

FRRF

The Port Arthur Firemen's Relief and Retirement Fund (FRRF) is established effective October 28, 1941, under the authority of the Texas Local Fire Fighter's Retirement Act (TLFFRA). The fund is administered by a Board of Trustees. The Board is made up of three members elected from and by fund members, two representatives of the City of Port Arthur, Texas, and two citizen members.

All fire fighters of the City of Port Arthur, Texas, are members of the FRRF

The following table summarizes the participants in each plan: Port Arthur Texas Firemen's Municipal Retirement Retirement and Relief System Fund (TMRS) (FRRF) Retirees and beneficiaries currently receiving benefits 419 72 Terminated empolyees entitled to but not receiving benefits 96 3 Active Empolyees 543 105 Total Participants 1,058 180

48 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

D. EMPLOYEE RETIREMENT SYSTEMS (continued)

Benefits Provided

TMRS

At retirement, the benefit is calculated as if the sum of the employee’s contributions, with interest, and the city- financed monetary credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven actuarially equivalent payments options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member’s deposits and interest.

On the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are 200% of the employee's accumulated contributions.

A summary of plan provisions for the City are as follows:

Plan Year 2015 Employee deposit rate 5%

Matching ratio (city to employee) 2 to 1

Years required for vesting 5 20 years at any age, 10 years at age Service retirement eligibility 60 and above (expressed as age/years of service)

100% Updated Service Credit Repeating, 70% of CPI Annuity Increase (to retirees) Repeating Supplement death benefit-employees and retirees Yes

FRRF

The FRRF provides retirement, death, disability, and termination benefits. A member is eligible for service retirement upon completion of 20 years of service and attainment of age 50. A member who retires under the service retirement provisions of the fund will receive a monthly benefit equal to the sum of a. and b., below, where:

49 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

D. EMPLOYEE RETIREMENT SYSTEMS (continued)

 equals 2.70 percent of the member's average monthly salary multiplied by his number of years of service not in excess of 20 years, and  equals $125.00 per month for each year of service in excess of 20.

Service retirement benefits are payable for the member's lifetime. In the event the member's death precedes that of his spouse, two-thirds of the member's pension will be continued to the spouse for her lifetime.

In lieu of the monthly service retirement benefit described above, a member who has both attained age 53 and completed 20 years of service may elect to receive his benefits under the DROP program

Early Retirement Benefits

A member is eligible for early retirement upon completion of 20 years of service. The member who retires under the early retirement provisions of the fund will receive a monthly benefit equal to the product of (a) and (b), where: a) Equals the service retirement benefit that the member has accrued as of his early retirement date, and; b) Equals the factor from the table, below, based on the member’s age at date of early retirement.

Early Retirement Reduction Factors Age Percentage 38 36.92% 39 40.01% 40 43.38% 41 47.04% 42 51.04% 43 55.39% 44 60.15% 45 65.36% 46 71.06% 47 77.30% 48 84.16% 49 91.70% Early retirement benefits are payable for the member’s lifetime. In the event the member’s death precedes that of his spouse, two-thirds of the member’s pension will be continued to the member’s spouse for such spouse’s lifetime.

Disability Benefits

An active member who becomes disabled as defined in the plan will receive a monthly disability benefit. However, if the member is eligible for a service retirement benefit, he will receive the service retirement benefit to which he is entitled instead of a disability benefit. Disability benefits are payable in the same form as service retirement benefits. However, disability benefits stop if a member recovers to the point he no longer meets the definition of disability under the fund.

50 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

D. EMPLOYEE RETIREMENT SYSTEMS (continued)

Amount of Disability Benefit

The benefit payable to members who retire with non-job related injuries or illnesses, who have less than one year of service will equal the minimum disability benefit required under the Texas Local Fire Fighters' Retirement Act.

The amount of disability benefit payable to all other members who retire under the disability provisions of the fund will equal the greatest of (a), (b), or (c) below, based on the member's average monthly salary on the date he terminated service due to disability:

Equals 54 percent of his average monthly salary; Equals the member's early retirement benefit, provided the member is otherwise entitled to such benefit; and Equals the member’s normal service retirement benefit, provided the member is otherwise entitled to such benefit

A member's disability benefit will commence 60 days following the date on which his regular salary, including vacation, sick leave, and any extended sick leave benefits have lapsed. Upon commencement of disability benefits, a member will receive a lump sum payment equal to the two disability checks that were missed during the 60-day waiting period.

Death Benefits

If a member dies while in active service, the member's spouse will receive an immediate monthly benefit, payable for as long as she is living and does not remarry. In order for a member's spouse to be eligible for the fund's death benefit, such spouse must have been married to the member prior to the earlier of the member's date of retirement or his date of termination of service and must be married to the member at the time of the member's death.

Amount of the Spouse's Death Benefit

The amount of monthly benefit payable to the deceased member's spouse will equal the sum of (a) two thirds of the standard retirement benefit, based on the member's average monthly salary as of the date of his death, plus (b) two- thirds of any additional service benefit to which the deceased member was entitled as of the date of his death.

Amount of the Spouse's Death Benefit Upon Remarriage

The benefit payable upon remarriage to the widow of a deceased member depends on the number of years of service the member had completed as of his date of death. If the member had not completed 10 years of service as of his date of death, no further payments will be made to the member's spouse if she remarries. If the member had completed at least 10 years of service but had not completed 20 years of service as of his date of death and the member's widow remarries prior to the date that the member would have reached his normal retirement date, the monthly widow's benefit will stop. A monthly benbenefit equal to two-third's of the member's vested termination benefit as of his date of death will resume on the date the member would have reached his normal retirement date. If the member had completed at least 20 years of service as of his date of death but not reached normal retirement date, the benefit payable to his widow after her remarriage will equal two-thirds of the early retirement benefit to which the member was entitled at his date of death.

51 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

D. EMPLOYEE RETIREMENT SYSTEMS (continued)

If the member had reached his normal retirement date as of the date of his death, the benefit payable to his widow will continue unchanged if his widow remarries.

Orphan's Benefit

In addition to the above spouse's benefit, each unmarried child of the member will receive a monthly benefit of $227. Orphan benefits continue until the child reaches age 18. However, benefits are continued until age 22 for a child who is a full-time student. Orphan benefits are continued for life to disabled children.

Maximum Family Benefit

The total of all benefits paid as a result of the death of an active fund member may not exceed the disability or retirement benefit such member had earned as of the date of his death. The total of all benefits paid as a result of the death of a retired member may not exceed the retirement benefit the member was receiving as of the date of his death. Benefits are reduced pro rata, if necessary, in order to satisfy these limitations.

Termination Benefits

Members with at Least Ten Years of Service A fund member who terminates employment after completing at least 10 years of service, but prior to the date he becomes eligible for service retirement, will be entitled to receive a monthly benefit starting on the date he would have both attained age 50 and completed 20 years of service had he remained in active service with the fire department. Such member's monthly benefit will equal the monthly service retirement benefit he had accrued on the date he separated from service with the fire department. A fund member who terminates employment prior to completing ten years of service will be entitled to the return of the excess of his contributions to the fund over the amount of any benefits he has received from the fund. Such refund will not include any interest on the member's contributions.

Cashout Benefit

A fund member who retires or whose service is terminated may elect, at the time of his retirement, to receive the return of the excess of the sum of (a) his contributions to the fund plus (b) the contributions made by the City of Port Arthur on his behalf on or before May 10, 1992, over the amount of any benefits he has received from the fund. Such refund will be in lieu of the retirement, disability, or termination benefit that the member would otherwise be entitled to receive under the fund. Such refund will not include any interest on the member's or the City's contributions.

The Deferred Retirement Option Plan (DROP)

A member is eligible to elect the DROP benefit if he retires after both completing 20 years of service and attaining age 53. The monthly retirement benefit of a member who elects the DROP will be calculated as if the member had retired on the later of (i) the date he was first eligible to elect the DROP or (ii) the date which is 36 months prior to his actual retirement date. This date is referred to as the member's DROP eligibility date.

Amount of Monthly Retirement Income to DROP Participants

52 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

D. EMPLOYEE RETIREMENT SYSTEMS (continued)

The amount of monthly retirement income that is payable to a member who retires after electing the DROP will equal the monthly service retirement benefit that the member had earned under the fund as of his DROP eligibility date. The benefit formula used, however, will be the service retirement formula in effect on the member's date of retirement.

Upon retirement, the member will receive—in addition to his monthly retirement benefit—a DROP payment equal to the sum of: a) the amount of monthly contributions that the member has made to the fund since his DROP eligibility date, plus b) the total of the monthly retirement benefits the member would have received between the time he entered the DROP and the time he retired under the plan.

The spouse of an active member who dies while eligible for the DROP benefit may elect to receive the DROP benefit to which the deceased member was entitled and two-thirds of the reduced monthly retirement benefit which the deceased member would have received had such member retired under the DROP on his date of death.

Long-Term Expected Rate of Return

TMRS The long-term expected rate of return on pension plan investments is 7.0%. The pension plan’s policy in regard to the allocation of invested assets is established and may be amended by the TMRS Board of Trustees. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short-term and long-term funding needs of TMRS.

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. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

FRRF

Invest Policy Target Alloc Gross Alpa Adjusted to Long-Term Weighted Avg Provided By Expected Real Expected Real Active Weighted Actual Alloc Rate of Return Rate of Return Management Average Gross (2) (3) (4) (5) Alpha Cash and short-term fixed income 0.08 % - % - % - % - % Fixed Income Total Bond Market Fund 38.10 % 3.00 % 1.14 % - % - % High Yield - % 5.00 % - % - % - % Equities and Real Estate Investment Trust Total Stock Market Index Fund 20.00 % 6.90 % 1.38 % - % - % Windsor Fund 10.08 % 7.45 % 0.75 % 0.75 % 0.0756 %

53 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

D. EMPLOYEE RETIREMENT SYSTEMS (continued) Invest Policy Target Alloc Gross Alpa Adjusted to Long-Term Weighted Avg Provided By Expected Real Expected Real Active Weighted Actual Alloc Rate of Return Rate of Return Management Average Gross (2) (3) (4) (5) Alpha PRIMECAP Fund Admiral Share 10.06 % 5.95 % 0.60 % 0.75 % 0.0755 % FTSE All- World ex US Index 16.46 % 5.80 % 0.95 % - % - % Vanguard REIT Index 5.22 % 7.75 % 0.40 % - % - % Total 100.00 % - % 5.22 % - % 0.1511 %

Discount Rate

TMRS

Projected benefit payments are required to be discounted to their actuarial present values using a single discount rate that reflects (1) a long-term expected rate of return on pension plan investments (to the extent that the plan’s fiduciary net position is projected to be sufficient to pay benefits) and (2) tax-exempt municipal bond rate based on an index of 20-year general obligation bonds with an average AA credit rating as of the measurement date (to the extent that the plan’s projected fiduciary net position is not sufficient to pay benefits).

For the purpose of this valuation, the expected rate of return on pension plan investments is 6.75%; the municipal bond rate is 3.57% (based on the weekly rate closest to but not later than the measurement date of the 20-Year Bond Buyer Index as published by the Federal Reserve). A single discount rate of 6.75% was used to measure the total pension liability as of December 31, 2015. This single discount rate was based on the expected rate of return on pension plan investments of 6.75%. Based on the stated assumptions and the projection of cash flows, the City’s fiduciary net position and future contributions were sufficient to finance the future benefit payments of the current plan members for all projection years. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of the projected benefit payments to determine the total pension liability for the City. The projection of cash flows used to determine the single discount rate for the City assumed that the funding policy adopted by the TMRS Board will remain in effect for all future years. 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).

The discount rate used to measure the Total Pension Liability for TMRS was 7.0%. The projection of cash flows used to determine the discount rate assumed that employee contributions will remain at the current 7% 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 plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability.

54 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

D. EMPLOYEE RETIREMENT SYSTEMS (continued)

Actuarial Assumptions

The Total Pension Liability as of the December 31, 2014 measurement date was determined using the following actuarial assumptions:

TMRS FRRF Valuation Date 12/31/2014 1/1/2014 Actuarial Cost Method Entry Age Normal Entry Age Amortization Method Level percentage of pay, open Level percentage of pay, open Remaining Amortization 17.0 years 23.2 years Period as of valuation date Asset Valuation Method 5 year smoothed market value 5 year smoothed market value with a 20 % of market value with a 20 % of market value corridor corridor Inflation 3.0% per year 3.0% per year Salary Increases 3.50% to 12.00% including 5.10% to 8.50% including inflation inflation Investment Rate of Return 7.0%, net of pension plan 8.00% investment,expense, including inflation

TMRS Salary increases were based on a service-related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality Table, with male rates multiplied by 109% and female rates multiplied by 103%. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For disabled annuitants, the gender-distinct RP2000 Disabled Retiree Mortality Table is used, with slight adjustments.

Actuarial assumptions used in the December 31, 2014, valuation were based on the results of actuarial experience studies. This experience study was for the period January 1, 2006 through December 31, 2009, first used in the December 31, 2010 valuation. Healthy post-retirement mortality rates and annuity purchase rates were updated based on a Mortality Experience Investigation Study covering 2009 through 2011, and dated December 31, 2013. These assumptions were first used in the December 31, 2013 valuation, along with a change to the Entry Age Normal (EAN) actuarial cost method. Assumptions are reviewed annually. No additional changes were made for the 2014 valuation.

FRRF Experience-based table of rates that are specific to the FRRF. Employee and healthy annuitant combined rates form the RP-2000 Mortality Table, projected to 2015 using Scale AA, with separate rates for males and females.

Funded Status and Funding Progress - In October 2013, the TMRS Board approved actuarial changes in (a) the funding mehtod from Projected Unit Credit to Entry Age Normal, (b) the post-retirement mortality assumptions used in calculating liabilities.

55 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

D. EMPLOYEE RETIREMENT SYSTEMS (continued)

Changes in the Net Pension Liability

The City of Port Arthur Firemen's Relief and City of Port Arthur TMRS Retirement Fund Total Total Pension Fiduciary Net Net Pension Total Pension Fiduciary Net Net Position Net Position Liability Position Liability Liability Position Liability Liability Balance at Beginning of Year 169,660,299 146,386,372 23,273,927 54,959,181 42,934,035 12,025,146 35,299,073 Service Cost 3,333,511 - 3,333,511 1,135,274 - 1,135,274 4,468,785 interest on total pension liability effect of economic/ demographic 11,730,055 - 11,730,055 4,361,915 - 4,361,915 16,091,970 gains or losses (893,480) - (893,480) - - - (893,480) benefit payments (7,509,671) (7,509,671) - (3,141,024) (3,141,024) - - administrative expenses - (94,618) 94,618 - (45,014) 45,014 139,632 member contributions - 1,526,337 (1,526,337) - 1,040,193 (1,040,193) (2,566,530) Net investment income - 8,373,560 (8,373,560) - 3,101,018 (3,101,018) (11,474,578) Employer contributions - 4,490,591 (4,490,591) - 1,196,979 (1,196,979) (5,687,570) Balance at end of year 176,320,714 153,172,571 23,148,143 57,315,346 45,086,187 12,229,159 35,377,302

Sensitivity of the Net Pension Liability

The following presents the net pension liability of the City, calculated using the current single rate assumption for each plan 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 or 1-percentage-point higher than the current rate:

Current Single Rate 1% Decrease Assumption 1% Increase 6.00 % 7.00 % 8.00 % TMRS 47,013,817 23,148,143 3,441,185 7.00 % 8.00 % 9.00 % FRRF $ 14,841,218 $ 12,229,159 $ 7,441,168

Pension Plan Fiduciary Net Position

Detailed information about the TMRS pension plan’s Fiduciary Net Position is available in a separately-issued TMRS financial report. That report may be obtained on the Internet at www.tmrs.com.

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

56 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

D. EMPLOYEE RETIREMENT SYSTEMS (continued)

For the year ended September 30, 2015, the City recognized the following pension expense: TMRS FRRF Total Service Cost $ 3,333,511 $ 1,135,274 $ 4,468,785 Interest on Total Pension Liability 11,730,055 4,361,915 16,091,970 Administrative expenses 94,618 45,014 139,632 Member contributions (1,526,337) (1,040,193) (2,566,530) Expected investment return net of investment expenses (10,247,046) (3,396,768) (13,643,814) Recognition of deferred inflow/outflows of resources (189,349) - (189,349) 5 year amortization of differences between actual and expected return on investments 374,697 59,150 433,847 $ 3,570,149 $ 1,164,392 $ 4,734,541

At September 30, 2015, the City reported deferred outflows and inflows of resources related to pensions from the following sources: TMRS FRRF Deferred Outflows Deferred Inflows Deferred Outflows Deferred Inflows of Resources Resources of Resources of Resources Total Differences between expected and actual experience $ - $ 704,131 $ - $ - $ (704,131) Differences between projected and actual earnings 1,498,789 - 236,600 - 1,735,389 Employers contribution subsequent to measurement date 3,328,541 - 883,117 - 4,211,658 $ 4,827,330 $ 704,131 $ 1,119,717 $ - $ 5,242,916

Deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date of $4,211,658 will be recognized as a reduction of the net pension liability for the measurement year ending December 31, 2015 (i.e. recognized in the City’s financial statements September 30, 2016). Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows:

Fiscal Year TMRS FRRF Total 2016 $ (185,348) $ (59,150) $ (244,498) 2017 (185,348) (59,150) (244,498) 2018 (238,614) (59,150) (297,764) 2019 - (59,150) (59,150) $ (609,310) $ (236,600) $ (845,910)

57 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

D. EMPLOYEE RETIREMENT SYSTEMS (continued)

Contributions

TMRS 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 consulting actuary, using the Entry Age Normal (EAN) actuarial cost method. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.Employees for the City were required to contribute 5% of their annual gross earnings during the fiscal year. For fiscal year 2015, the City made contributions of 14.71% for the months in 2014 and 14.20% for the months in 2015.

FRRF Firefighters contribute to the fund at a rate of 13.00 percent of pay. For fiscal year 2015, the City made contributions of 14.95% for the months in 2014 and 14.45% for the months in 2015.

Net Pension Liability

The City’s Net Pension Liability (NPL) was measured as of December 31, 2014, and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of December 31, 2014 for TMRS and January 1, 2014 for FRRF

E. LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS State and federal laws and regulations require that the City place a final cover on its landfill when closed and perform certain maintenance and monitoring functions at the landfill site for thirty years after closure. In addition to operating expenses related to current activities of the landfill, an expense provision and related liability are being recognized based on the future closure and post-closure care costs that will be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and post-closure care costs is based on the amount of the landfill used during the year.

The estimated liability for landfill closure and post-closure care cost has a balance of $3,350,148 as of September 30, 2015, which is based on 28.94% usage (filled) of the landfill. It is estimated that an additional $8,225,812 will be recognized as closure and post-closure care expenses between the date of the balance sheet and the date the landfill is expected to be filled to capacity (2035). The estimated total current cost of the landfill closure and post-closure care $11,575,900 based on the amount that would be paid if all equipment, facilities, and services required to close, monitor, and maintain the landfill were acquired as of September 30, 2015. However, the actual cost of closure and post-closure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. The City was required by state and federal laws and regulations to meet financial assurance regulations by April 9, 1997, with updates annually. The City met these requirements and is in full compliance with the financial assurance requirement.

F. RESTATEMENT OF BEGINNING EQUITY

During the year ended September 30, 2014, City management made adjustments to prior period ending equity balances to reflect corrections of errors in prior year financial statements. These corrections are detailed below:

58 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

F. RESTATEMENT OF BEGINNING EQUITY (continued)

 Franchise Tax Accrual –Gross Receipts Tax Revenue (Electric Company Franchise Tax Portion) – This revenue is collected by the local electric company for kwhs used by any of its customers located within the City’s boundaries during any given quarter. There is approximately a 3 month period between the underlying usage and the gross receipts tax revenue being transmitted to the City. As such it is appropriate for the City to accrue the first month of such remittance during the subsequent fiscal year as revenue and receivable. This adjustment affects the governmental activities and general fund reporting units.

 Hotel Occupacy Tax Accural –This revenue is collected by the hotels located within the City from its guests, who are not exempted by state law during any given month. These hotels report the activity and amount of tax due, remitting to the City the following month. As such it is appropriate for the City to accrue amounts remitted after the fiscal year end for activity occurring during the fiscal year as revenue and receivable. This adjustment affects the governmental activities and hotel occupancy tax fund reporting units.

 Implementation of GASB 68 –The implementation of GASB Statements No. 68 and No. 71 required restatement of beginning net position for the elimination of the previously reported net pension asset, the recording of the beginning net pension liability and the beginning deferred outflow for contributions made after the measurement date.

Prospectively applying this change results in the adjustment below:

Statement of Revenues, Expenses and Governemnt-wide Statement of Activities Changes in Net Position- Proprietary Funds Economic Hotel Governmental Business-type Development Water and Pleasure Occupancy Activities Activities Corporation Sewer Solid Waste Island General Fund Tax Fund Net position at September 30, 2014, as previously reported $ 56,612,292 $ 75,303,200 $ 11,078,114 $ 64,902,532 $ (5,361,509) $ 9,922,773 $212,457,402 $ - Franchise Tax accrual 1,250,879 - - - - - 1,250,879 - Hotel Occupacy Tax Accrual 247,924 ------247,924 Recording of net pension liability as od September 30, 2014 (30,104,773) (4,907,100) (287,200) (3,351,200) (1,364,400) (191,500) (40,206,173) - Deferral for pension contributions made after measurement date 3,418,894 690,900 40,400 471,800 192,100 27,000 4,841,094 - Removal of net pension contribution asset as previously reported (3,185,053) - - - - - (3,185,053) - Net position as of September 2014 as restated $ 28,240,163 $ 71,087,000 $ 10,831,314 $ 62,023,132 $ (6,533,809) $ 9,758,273 $175,158,149 $ 247,924

59 CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2015

V. Other Inform ation (continued)

G. SUBSEQUENT EVENTS

In the City election, held on May 7, 2.016, the voters approved reducing the City’s sales tax for economic development to 3/8% as permitted under the provisions of Chapter 504, Type A Corporations of the Texas Local Government Code and adopted 1/8% City sales tax for Municipal Street Maintenance under Chapter 327 of the Texas Tax Code. Both changes will become effective October 1, 2016 for four years unless a City election results in a reauthorization for an additional four years.

In June 2016 the City acquired six (6) Refuse Vehicles at a total cost of $1,754,199. The purchase was financed through a capital lease agreement over a 5-year period at an interest rate of 2.034%. The annual lease payment amounts to $369,689, beginning February 15, 2017. The lease provides for an option to purchase at the end of the lease for $1. These vehicles will be used to collect solid waste from residences in the City and accounted for in the Solid Waste Fund.

Industrial District Agreement (IDA) 2016 Taxable Values, used to determine the IDA Revenue in the General Fund for the fiscal year ending September 30, 2017, declined significantly compared to the prior year—from $9.9B to $7.7B, a drop of $2.2B or 22% overall. Of that amount, four companies account for $1.2B of the decline with one of those companies representing the largest portion at $900M. It appears that IDA Revenues for fiscal year ending 2017 may decline by approximately $3M or 10%.

Pursuant to TMRS policy of conducting experience studies every four years, the TMRS Board at their July 31, 2015 meeting determined that they would be changing certain actuarial assumptions including reducing the long term expected rate of return from the current 7% to 6.75% and changing the inflation assumption from 3% to 2.5%. Reduction of expected investment return and related discount rate will increase projected pension liabilities. Reducing the inflation assumption reduces liabilities as future annuity levels and future cost of living adjustments are not projected to be a large as originally projected. While the actual impact on the City’s valuation for December 31, 2015 is not known the City does expect some downward pressure on its funded status and upward pressure on its 2017 actuarially determined contribution (ADC) due to this change.

In December of 2016, the City of Port Arthur undertook a refunding bond transaction in order to achieve debt service savings. The City Refunding all of the outstanding General Obligation Refunding Bonds, Series 2005 in the amount of $4,125,000 and a portion of the General Obligation Refunding Bonds, Series 2006 in the amount of $3,965,000. The transaction priced on Monday, December 12, 2016 and based on the pricing results produces gross debt service savings of $395,050.00 and Net Present Value savings of $370,212.21, which represents 4.57% of the refunded bonds par amount. Pending approval of the Texas Attorney General and funds being delivered by the underwriter, Raymond James, the $7,975,000 General Obligation Refunding Bonds, Series 2016 are expected to close on December 29, 2016.

Regarding a net receivable, amounting to $2.6M, within the General Fund for reimbursement from FEMA for disaster relief relating to Hurricane IKE (2008), the City prepared an appeal to be delivered to the appropriate regional office of FEMA, Region 6. The appeal, upon its recommendation, was delivered to the Texas Department of Emergency Management (TDEM), reviewed without exception and advised that TDEM would take the responsibility of timely delivery to FEMA with an endorsement from TDEM. On December 20, 2016, a representative of TDEM advised that representative(s) at a higher level had halted the appeal from being timely delivered to FEMA. The City is in the process of requesting its State Representative to arrange a meeting with the Governor’s Office in order to have the appeal delivered to FEMA with an endorsement. No additional allowance for uncollectability has been recorded. The City will continue to monitor.

60 REQUIRED SUPPLEMENTARY INFORMATION CITY OF PORT ARTHUR, TEXAS REQUIRED PENSION SYSTEM SUPPLEMENTARY INFORMATION Exhibit 13 Schedule of Changes in Net Pension Liability and Related Ratios For the Year Ended September 30, 2015

City of Port Arthur Firemen's Relief City of Port and Retirement Arthur TMRS Fund Total pension liability: Service cost $ 3,333,511 $ 1,135,274 Interest 11,730,055 4,361,915 Difference between expected and actual experience (893,480) - Benefit payments, including refunds of employee contributions (7,509,671) (3,141,024) Net change in total pension liability 6,660,415 2,356,165 Total pension liability - beginning 169,660,299 54,959,181 Total pension liability - ending (a) $ 176,320,714 $ 57,315,346

Plan fiduciary net position: Contributions - employer 4,490,591 1,196,979 Contributions - employee 1,526,337 1,040,193 Net investment income 8,373,560 3,101,018 Benefit payments, including refunds of employee contributions (7,509,671) (3,141,024) Administrative expense (94,618) (45,014) Net change in plan fiduciary net position 6,786,199 2,152,152 Plan fiduciary net position - beginning 146,386,372 42,934,035 Plan fiduciary net position - ending (b) $ 153,172,571 $ 45,086,187

Net pension liability - ending (a) - (b) $ 23,148,143 $ 12,229,159

Plan fiduciary net position as a percentage of total pension liability 86.87 % 78.66 %

Covered employee payroll $ 30,517,749 $ 8,006,548

Net pension liability as a percentage of covered employee payroll 75.85 % 152.74 %

Annual money-weighted rate of return 5.85 % 7.31 %

The amounts presented are for each measurement year, which end the preceding December 31 of City's fiscal year end. Net pension liability is calculated using a new methodology and will be presented prospectively in accordance with GASB 68. Ten years of data should be presented in this schedule but data was unavailable prior to 2014.

62 City of Port Arthur, Texas Exhibit 14 TEXAS MUNICIPAL RETIREMENT SYSTEM (UNAUDITED) Schedule of Contributions Last Ten Fiscal Years

2014 2015 Actuarially determined contribution $ 4,445,153 $ 4,481,542 Contribution in relation to the actually determined contribution (4,445,153) (4,481,542) Covered employee payroll 30,223,984 31,264,119 Contributions as a percentage of covered employee payroll 14.71 % 14.33 %

CITY OF PORT ARTHUR, TEXAS PORT ARTHUR FIREMEN'S RELIEF AND RETIREMENT FUND (UNAUDITED) Schedule of Contributions Last Fiscal Year

2015 Contractually determined contribution $ 1,144,180 Contribution in relation to the Contractually determined contribution (1,144,180) Covered employee payroll 7,847,599 ontributions as a percentage of covered employee payroll 14.58 %

63 CITY OF PORT ARTHUR, TEXAS REQUIRED SUPPLEMENTARY INFORMATION Exhibit 15 FOR THE YEAR ENDED SEPTEMBER 30, 2015

PORT ARTHUR FIREMEN'S RELIEF & RETIREMENT FUND NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION

The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial evaluation follows: FRRF TMRS Valuation date January 1, 2014 December 31, 2013 Actuarial cost method Entry Age Normal Entry Age Normal Amortization method Level Precentage of Payroll, Closed Level Precentage of Payroll,Closed Remaining amortization period 15 years 30 years 10 years smoothed market; 15% soft 10 years smoothed market, 15% soft Asset valuation method corridor corridor Inflation 3.00% 2.5% Salary Increase 3.50% to 12.00% including inflation 3.50% to 10.5% including inflation Investment Rate of Return 7.00% 6.75% Retirement Age Experience-based table of rates that are Experience-based table of rates that are specific to the City's plan of benefits. specific to the City's plan of benefits. Last updated for the 2010 valuation Last updated for the 2015 valuation pursuant to an experience study of the pursuant to an experience study of the period 2005-2009. period 2010 - 2014

Mortality RP2000 Combined Mortality Table with RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 109% and female rates multiplied by 103% and projected on a multiplied by 103% and projected on a fully generational basis with scale BB. fully generational basis with scale BB

Other Information: There were no benefit changes during the year.

64 CITY OF PORT ARTHUR, TEXAS REQUIRED SUPPLEMENTARY INFORMATION Exhibit 16 FUNDING PROGRAMS FOR OTHER POST EMPLOYMENT BENEFITS (OPEB) FOR THE YEAR ENDED SEPTEMBER 30, 2015

RETIREE HEALTH INSURANCE PROGRAM ANALYSIS OF FUNDING PROGRESS

UAAL as a Actuarial Actuarial Unfunded Annual Percentage of Value of Accrued Percentage AAL Covered Covered Valuation Date Assets Discount Rate Liability (AAL) Funded (UAAL) Payroll Payroll 12/31/2009 - 4% 32,067,950 N/A 32,067,950 34,170,556 93.8 12/31/2010 - 4% 32,689,469 - % 32,689,469 28,134,567 116.2% 12/31/2013 1,751,976 N/A% 19,970,527 8.77 % 18,218,551 29,365,597 62.0%

65 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Special Revenue Funds Special Revenue Funds are used to account for resources which may be used only for purposes specified by law or City Council. A brief description of each fund reported as a Special Revenue Fund follows:

Health Grants Fund Accounts for grants received from the State of Texas to provide health care services.

Library Special Fund Accounts for donations received by the City's public library. These revenues are set aside for the library's use.

Library Grant Fund Accounts for various State and local grants received by the Public Library.

Golf Course Fund Accounts for funds derived from the operation of the Babe Zaharias public golf course. These funds are designated for improvements to this golf course, and for operations at the Palms on Pleasure Island Course.

Municipal Court Technology Fund Accounts for funds received from a portion of municipal court fines dedicated, by State law, to technology acquisition for the court.

CDBG Rita Supplement Fund Accounts for revenues received through the Federal Community Development Block Grant program specifically for Hurricane Rita recovery activities.

CDBG / TDHCA Ike Fund Accounts for revenues received from the Federal Community Development Block Grant program through the Texas Department of Housing and Community Affairs, specifically for Hurricane Ike housing recovery activities.

Capital Project Fund: To account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays including the aquistion or construction of capital facilities or other capital assets.

ARRA CDBG Fund Accounts for supplemental Community Development Block Grant funding received from the American Recovery and Reinvestment Act of 2009 (ARRA).

HOME Grant Fund Accounts for grants received from the federal government, passed through the State of Texas, under the HOME program.

TCEQ SEP Fund Accounts for funds received from industry for Supplemental Environmental Projects (SEP) through the Texas Commission of Environmental Quality (TCEQ).

Job Training Fund Accounts for funds received from the National Institute of Environmental Health, Katrina and Rita Brownsfield Minority Worker Training Program.

Revolving Loan Fund Accounts for the proceeds from repayments of loans made from Community Development Block Grant Funds and City Revolving Loan Fund contributions. These funds are restricted for additional loans to stimulate job development by the small business sector of the City’s economy. Non-Major Governmental Funds

Literacy Support Fund Accounts for donations received by the Port Arthur Literacy Support Program.

Police Special Fund Accounts for assets seized by the City's police department as the result of drug enforcement arrests. These assets are forfeited to the City to be used to fund specific types of expenditures for the police department.

Law Enforcement Grants Fund Accounts for federal funds received under the Local Law Enforcement Block Grant.

Housing Programs Fund Accounts for funds designated by the City of Port Arthur and the Port Arthur Housing Finance Corporation. These funds are used to finance programs providing affordable housing in the City.

Social Services Block Grant Fund Accounts for the funds received under the Social Services Block Grant program for Hurricane Rita recovery projects.

ARRA Energy Grant Accounts for funds received from the American Recovery and Reinvestment Act of 2009(ARRA) through the Department of Energy.

Federal Emergency Management Agency Accounts for funds received from the United States Department of Homeland Security’s Federal Emergency Management Agency for response and recovery to hurricane disasters Rita and Ike.

CDBG Accounts for revenues received from the Federal Community Development Block Grant program.

Neighborhood Stabilization Fund Accounts for funds received from the Department of Housing and Urban Development through the Texas Department of Housing and Rural Affairs for community stabilization efforts.

Weed and Seed Fund Accounts for funds received through the United States Department of Justice Weed and Seed program.

Hotel Occupancy Tax Fund Accounts for the hotel occupancy tax revenue received by the City.

Downtown Renaissance District Accounts for funds dedicated to downtown redevelopment activities

Assessment Projects Fund Accounts for special assessments levied on property owners.

Library Trust Fund Accounts for trust revenues received and related interest income.

ARRA Transit Grant Accounts for funds received from the American Recovery and Reinvestment Act of 2009 (ARRA) for Transit projects. CITY OF PORT ARTHUR, TEXAS Combining Balance Sheet A-1 Non-Major Governmental Funds September 30, 2015

Special Revenue Funds Municipal Health Library Library Golf Court Grants Special Grants Course Technology Fund Fund Fund Fund Fund Assets Cash $ - $ 132,282 $ 22,039 $ 79,355 $ 173,181 Investments - - - - - Accounts receivable - - - - - Federal & state grants receivable 1,130,454 - - - - Long-term interfund advance - - - - -

Total assets $ 1,130,454 $ 132,282 $ 22,039 $ 79,355 $ 173,181

Liabilities and Fund Balances

Liabilities Wages payable $ 11,257 $ - $ - $ - $ - Accounts payable 11,858 - - - - Due to other funds 1,126,491 - - - - Other liabilities - - - - - Unearned Revenue - - - - -

Total liabilities 1,149,606 - - - - Fund balances (deficit): Nonspendable: Long term interfund note payable - - - - - Restricted: Culture and recreation - - 22,039 - - Public safety - - - - 173,181 Public works - - - - - Community development - - - - - Capital projects - - - - - Assigned: Culture and recreation - 132,282 - 79,355 - Community development - - - - - Special revenue - - - - - Unassigned (19,152) - - - -

Total fund balances (19,152) 132,282 22,039 79,355 173,181

Total Liabilities and Fund Balances $ 1,130,454 $ 132,282 $ 22,039 $ 79,355 $ 173,181

68 A-1

Special Revenue Funds

Job Literacy Police CDBG Rita CDBG IKE Capital ARRA Home Grant TCEQ SEP Training Revolving Support Special Supplement Fund Projects CDBG Fund Fund Fund Fund Loan Fund Fund Fund

$ - $ - $ 759,849 $ - $ 111,055 $ 1,698 $ 53,007 $ 160,454 $ 7,609 $ 339,164 - - 2,436,174 ------131,219 - - 148,402 - - 111,211 29,773 562,972 528 337,874 - - - - 23,691 ------

$ 111,211 $ 29,773 $ 3,758,995 $ 528 $ 580,148 $ 1,698 $ 53,007 $ 308,856 $ 7,609 $ 362,855

$ - $ - $ - $ - $ 196 $ - $ - $ - $ - $ - - - - - (744) - - - - 5,804 101,954 29,773 856,462 528 ------118,395 - - - - 131,065 - - 181,630 - -

101,954 29,773 856,462 528 130,517 - - 181,630 - 124,199

------

------238,656 - - - - - 1,698 ------2,902,533 ------

------7,609 - - - - - 449,631 - 53,007 127,226 - - 9,257 ------

9,257 - 2,902,533 - 449,631 1,698 53,007 127,226 7,609 238,656

$ 111,211 $ 29,773 $ 3,758,995 $ 528 $ 580,148 $ 1,698 $ 53,007 $ 308,856 $ 7,609 $ 362,855

69 A-1

Law Housing Social ARRA Enforcement Programs Services Energy Grants Fund Fund Block Grant Grant Assets Cash $ - $ 286,531 $ 310,245 $ - Investments - - - 71,401 Accounts receivable - 35,798 4,548 - Federal & state grants receivable 951,778 - - - Long-term interfund advance - - - -

Total assets $ 951,778 $ 322,329 $ 314,793 $ 71,401

Liabilities and Fund Balances

Liabilities Wages payable $ - $ - $ - $ - Accounts payable - 971 - - Due to other funds 896,090 - 4,479 2,837 Other liabilities - - - - Unearned Revenue - 51,843 - -

Total liabilities 896,090 52,814 4,479 2,837 Fund balances (deficit): Nonspendable: Long term interfund note payable - - - - Restricted: Culture and recreation - - - - Public safety 55,688 - - - Public works - - - 68,564 Community development - 269,515 310,314 - Capital projects - - - - Assigned: Culture and recreation - - - - Community development - - - - Special revenue - - - - Unassigned - - - -

Total fund balances 55,688 269,515 310,314 68,564

Total Liabilities and Fund Balances $ 951,778 $ 322,329 $ 314,793 $ 71,401

continued on next page 70 A-1

Special Revenue Funds

Neighbor Hotel Downtown Assessment Library ARRA Total Nonmajor -hood Weed & Occupancy Renaissanc Projects Trust Transit Governmental CDBG Stabilization Seed Fund Tax Fund e Board Fund Fund Grant FEMA Funds

$ - $ - $ 1,514 $ 1,172,543 $ 191,747 $ 17,115 $ 25,674 $ 14,734 $ - $ 3,859,796 ------2,507,575 1,015,668 - - 224,661 - 68,664 - - - 1,628,960 18,825 1,081,145 - - - - - (14,734) 3,540,309 7,773,826 ------2,453,643 2,453,643

$ 1,034,493 $ 1,081,145 $ 1,514 $ 1,397,204 $ 191,747 $ 85,779 $ 25,674 $ - $ 5,993,952 $ 18,223,800

$ 3,264 $ - $ - $ - $ - $ - $ - $ - $ - $ 14,717 15,884 2,491 ------36,264 79,774 903,109 ------4,484,888 8,486,385 ------118,395 921,700 ------1,286,238

1,020,622 905,600 ------4,484,888 9,941,999

------2,453,643 2,453,643

- - - 1,397,204 - - - - - 1,419,243 - - 1,514 ------469,039 ------70,262 - 175,545 ------755,374 ------2,902,533

------25,674 - - 244,920 - - - - 191,747 - - - - 821,611 13,871 - - - - 85,779 - - - 108,907 ------(944,579) (963,731)

13,871 175,545 1,514 1,397,204 191,747 85,779 25,674 - 1,509,064 8,281,801

$ 1,034,493 $ 1,081,145 $ 1,514 $ 1,397,204 $ 191,747 $ 85,779 $ 25,674 $ - $ 5,993,952 $ 18,223,800

71 CITY OF PORT ARTHUR, TEXAS Combining Statement of Revenues, Expenditures and Changes in Fund Balances A-2 Nonmajor Governmental Funds Special Revenue For the Year Ended September 30, 2015

Special Revenue Funds Municipal Health Library Library Golf Court Grants Special Grants Course Technology Fund Fund Fund Fund Fund Revenues Other taxes $ - $ - $ - $ - $ - User fees - - - - - Fines and forfeitures - - - - 43,666 Intergovernmental 1,476,367 - - - - Donations - 4,722 2,163 - - Program revenue - - - - - Interest revenue - 43 - 26 54 Miscellaneous - - - - - Total revenues 1,476,367 4,765 2,163 26 43,720

Expenditures Current: General government - - - - - Culture and recreation - - - - - Public safety - - - - - Community development - - - - - Health and welfare 1,555,519 - - - - Public transportation - - - - - Capital outlay - - - - - Total expenditures 1,555,519 - - - -

Excess (deficiency) of revenues over expenditures (79,152) 4,765 2,163 26 43,720

Other financing sources (uses): Transfers in 60,000 - - - - Transfers out - - - - - 60,000 - - - -

Net change in fund balances (19,152) 4,765 2,163 26 43,720

Fund balances beginning of year - 127,517 19,876 79,329 129,461

Prior Period Adjustment - - - - - Fund balances end of year $ (19,152) $ 132,282 $ 22,039 $ 79,355 $ 173,181

72 A-2

Special Revenue Funds

ARRA Job Literacy Police CDBG Rita CDBG IKE Capital CDBG Home TCEQ SEP Training Revolving Support Special Supplement Fund Projects Fund Grant Fund Fund Fund Loan Fund Fund Fund

$ - $ - $ - $ - $ - $ - $ - $ - $ - $ ------58,919 - - - - 153,126 - - - - 23,689 ------4,175 - - - - 12,015 ------1,048 - - - - 52 2 112 ------1,800 - - - - 1,048 - 165,141 - - 1,852 2 86,895

------110,376 - - - - 165,380 - - 22 ------495,388 ------495,388 - 165,380 - - 22 - 110,376

- - (494,340) - (239) - - 1,830 2 (23,481)

- - 97,084 ------97,084 ------

- - (397,256) - (239) - - 1,830 2 (23,481)

9,257 - 3,299,789 - 449,870 1,698 53,007 125,396 7,607 262,137

------$ 9,257 $ - $ 2,902,533 $ - $ 449,631 $ 1,698 $ 53,007 $ 127,226 $ 7,609 $ 238,656

73 A-2

Law Housing Social ARRA Enforcement Programs Services Energy Grants Fund Fund Block Grant Grant Revenues Other taxes $ - $ - $ - $ - User fees - - - - Fines and forfeitures - - - - Intergovernmental 1,053,106 - - - Donations - - - - Program revenue - 4,282 - - Interest revenue - 92 103 43 Miscellaneous - - - 5,825 Total revenues 1,053,106 4,374 103 5,868

Expenditures Current: General government - - - - Culture and recreation - - - - Public safety 1,102,106 - - - Community development - 14,061 - - Health and welfare - - - - Public transportation - - - - Capital outlay - - - - Total expenditures 1,102,106 14,061 - -

Excess (deficiency) of revenues over expenditures (49,000) (9,687) 103 5,868

Other financing sources (uses): Transfers in 49,000 - - - Transfers out - - - - 49,000 - - -

Net change in fund balances - (9,687) 103 5,868

Fund balances beginning of year 55,688 279,202 310,211 62,696

Prior Period Adjustment - - - - Fund balances end of year $ 55,688 $ 269,515 $ 310,314 $ 68,564

continued on next page 74 A-2

Special Revenue Funds Total Neighbor Hotel Downtown Assessment Library ARRA Nonmajor -hood Weed & Occupancy Renaissance Projects Trust Transit Governmental CDBG Stabilization Seed Fund Tax Fund Board Fund Fund Grant FEMA Funds

$ - $ - $ - $ 1,407,164 $ - $ - $ - $ - $ - $ 1,407,164 - - - - - 4,025 - - - 4,025 - - - 13,280 - - - - - 115,865 471,223 56,717 - - - - - 344,066 26,640 3,604,934 ------11,060 53,552 ------69,849 - - - 347 64 43 9 - - 2,038 ------7,625 524,775 56,717 - 1,420,791 64 4,068 9 344,066 26,640 5,222,560

------26,640 26,640 - - - 778,111 - - - - - 778,111 ------1,212,482 529,982 56,716 ------766,161 ------1,555,519 ------344,066 - 344,066 ------495,388 529,982 56,716 - 778,111 - - - 344,066 26,640 5,178,367

(5,207) 1 - 642,680 64 4,068 9 - - 44,193

------206,084 - - - (100,000) - - - - - (100,000) - - - (100,000) - - - - - 106,084

(5,207) 1 - 542,680 64 4,068 9 - - 150,277

19,078 175,544 1,514 606,600 191,683 81,711 25,665 - 1,509,064 7,883,600

- - - 247,924 - - - - - 247,924 $ 13,871 $ 175,545 $ 1,514 $ 1,397,204 $ 191,747 $ 85,779 $ 25,674 $ - $ 1,509,064 $ 8,281,801

75 CITY OF PORT ARTHUR, TEXAS Schedule of Revenues, Expenditures and Changes in Fund Balances A - 3 Budget and Actual Debt Service Fund For the Year Ended September 30, 2015

Variance with Budgeted Amounts Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues Taxes: Property $ 7,359,000 $ 7,359,000 $ 7,291,726 $ (67,274) Interest revenue 1,500 1,500 1,115 (385) Miscellaneous - 650,193 650,193 -

Total revenues 7,360,500 8,010,693 7,943,034 (67,659)

Expenditures Debt service: Principal retirement 6,209,035 5,765,000 5,765,000 - Interest and fiscal charges 2,020,387 2,020,387 2,021,462 (1,075)

Total expenditures 8,229,422 7,785,387 7,786,462 (1,075)

Excess (deficiency) of revenues over expenditures (868,922) 225,306 156,572 (68,734)

Other financing sources (uses) Transfers out - (444,035) (444,035) -

Net changes in fund balances $ (868,922) $ (218,729) (287,463) $ (68,734)

Fund balance, beginning of the year 2,780,023

Fund balance, end of year $ 2,492,560

76 CITY OF PORT ARTHUR, TEXAS Schedule of Revenues, Expenditures and Changes in Fund Balances A - 4 Budget and Actual Library Special Fund For the Year Ended September 30, 2015

Variance with Budgeted Amounts Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues: Donations $ 1,000 $ 1,000 $ 4,722 $ 3,722 Interest revenue 75 75 43 (32)

Total revenues 1,075 1,075 4,765 3,690

Expenditures: Current: Culture and recreation - - - -

Total expenditures - - - -

Excess (deficiency) of revenues over expenditures $ 1,075 $ 1,075 4,765 $ 3,690

Fund balance, beginning of the year 127,517

Fund balance, end of year $ 132,282

77 CITY OF PORT ARTHUR, TEXAS Schedule of Revenues, Expenditures and Changes in Fund Balances A - 5 Budget and Actual Golf Course Fund For the Year Ended September 30, 2015

Variance with Budgeted Amounts Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues: User fees $ 4,000 $ 4,000 $ - $ (4,000) Interest revenue 40 40 26 (14)

Total revenues 4,040 4,040 26 (4,014)

Expenditures: Current: Culture and recreation 50,000 50,000 - 50,000

Total expenditures 50,000 50,000 - 50,000

Excess (deficiency) of revenues over expenditures (45,960) (45,960) 26 45,986

Other financing sources: Transfers in - - - -

Net changes in fund balances $ (45,960) $ (45,960) 26 $ 45,986

Fund balance, beginning of the year 79,329

Fund balance, end of year $ 79,355

78 CITY OF PORT ARTHUR, TEXAS Schedule of Revenues, Expenditures and Changes in Fund Balances A - 6 Budget and Actual Municipal Court Technology Fund For the Year Ended September 30, 2015

Variance with Budgeted Amounts Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues: Fines and forfeitures $ 41,500 $ 41,500 $ 43,666 $ 2,166 Interest revenue 100 100 54 (46)

Total revenues 41,600 41,600 43,720 2,120

Expenditures: Current: General government 150,000 150,000 - 150,000

Total expenditures 150,000 150,000 - 150,000

Excess (deficiency) of revenues over expenditures (108,400) (108,400) 43,720 152,120

Other financing (uses):

Total other financing (uses) - - - -

Excess (deficiency) of revenues over expenditures $ (108,400) $ (108,400) 43,720 $ 152,120

Fund balance, beginning of the year 129,461

Fund balance, end of year $ 173,181

79 CITY OF PORT ARTHUR, TEXAS Schedule of Revenues, Expenditures and Changes in Fund Balances A - 7 Budget and Actual Hotel Occupancy Tax Fund For the Year Ended September 30, 2015

Variance with Budgeted Amounts Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues: Other taxes $ 860,000 $ 860,000 $ 1,407,164 $ 547,164 Fines and forfeitures 1,000 1,000 13,280 12,280 Interest revenue 200 200 347 147

Total revenues 861,200 861,200 1,420,791 559,591

Expenditures: Current: Culture and recreation 864,136 864,136 778,111 86,025

Total expenditures 864,136 864,136 778,111 86,025

Excess (deficiency) of revenues over expenditures (2,936) (2,936) 642,680 645,616

Other financing (uses): Transfers out (100,000) - (100,000) (100,000)

Total other financing (uses) (100,000) - (100,000) (100,000)

Excess (deficiency) of revenues over expenditures and other uses $ (102,936) $ (2,936) 542,680 $ 545,616

Fund balance, beginning of the year 606,600

Prior Period Adjustment 247,924 Fund balance, end of year $ 1,397,204

80 CITY OF PORT ARTHUR, TEXAS Schedule of Revenues, Expenditures and Changes in Fund Balances A - 8 Budget and Actual Police Special Fund For the Year Ended September 30, 2015

Variance with Budgeted Amounts Actual Final Budget GAAP Positive Original Final Basis (Negative) Revenues Fines and forfeitures $ 8,500 $ 8,500 $ 58,919 $ 50,419 Donations - - 4,175 4,175 Interest revenue 133 133 112 (21) Intergovernmental Revenue - - 23,689 23,689

Total revenues 8,633 8,633 86,895 78,262

Expenditures Public safety - - 110,376 (110,376)

Excess (deficiency) of revenues over expenditures $ 8,633 $ 8,633 (23,481) $ (32,114)

Fund balance, beginning of the year 262,137

Fund balance, end of year $ 238,656

81 INTERNAL SERVICE FUNDS CITY OF PORT ARTHUR, TEXAS Internal Service Funds B - 1 Combining Statement of Net Position September 30, 2015

Equipment General Employee Replacement Liability Fund Benefits Fund Fund Total Assets Current assets Cash $ 628,531 $ 7,159,071 $ 1,041,219 $ 8,828,821 Investments - 1,359,725 160,915 1,520,640 Due from other funds 2,804,549 - - 2,804,549 Accounts receivable - 20,734 - 20,734 Total current assets 3,433,080 8,539,530 1,202,134 13,174,744

Non current assets Capital assets Equipment - - 40,641,751 40,641,751 Total - - 40,641,751 40,641,751 Accumulated depreciation - - (22,968,316) (22,968,316) Total capital assets, net of accumulated depreciation - - 17,673,435 17,673,435

Total assets $ 3,433,080 $ 8,539,530 $ 18,875,569 $ 30,848,179 Liabilities Current Liabilities Due to other funds $ - $ - $ 1,404 $ 1,404 Accounts payable 1,951 1,481,145 - 1,483,096 Current portion of long term debt - - 703,721 703,721 Total current liabilities 1,951 1,481,145 705,125 2,188,221

Noncurrent Liabilities Capital leases payable - - 9,502,823 9,502,823 Long-term debt 1,463,272 514,238 - 1,977,510 Total noncurrent liabilities 1,463,272 514,238 9,502,823 11,480,333

Total liabilities 1,465,223 1,995,383 10,207,948 13,668,554

Net Position Net Investment in Capital Assets - - 7,466,891 7,466,891 Unrestricted 1,967,857 6,544,147 1,200,730 9,712,734 Total Net Position $ 1,967,857 $ 6,544,147 $ 8,667,621 $ 17,179,625

82 CITY OF PORT ARTHUR, TEXAS Internal Service Funds B - 2 Combining Statement of Revenues, Expenses and Changes in Fund Net Position For the Year Ended September 30, 2015

Equipment General Employee Replacement Liability Fund Benefits Fund Fund Total Operating revenues: Charges for services $ 6,600 $ 11,480,554 $ 2,810,500 $ 14,297,654

Operating expenses: Other operating expenses - - 308,147 308,147 Depreciation - - 1,372,579 1,372,579 Health and life insurance - 9,763,512 - 9,763,512 Employee injury claims - 820,165 - 820,165 Other employee benefits - 1,006,166 - 1,006,166 Damage claims 2,430,161 - - 2,430,161

Total operating expenses 2,430,161 11,589,843 1,680,726 15,700,730

Income (loss) from operations (2,423,561) (109,289) 1,129,774 (1,403,076)

Nonoperating revenues (expenses) Interest revenue 594 2,905 812 4,311 Interest expense - - (65,605) (65,605)

Total nonoperating revenues (expenses) 594 2,905 (64,793) (61,294)

Income (loss) before transfers (2,422,967) (106,384) 1,064,981 (1,464,370)

Transfers in 1,840,000 - 444,035 2,284,035 Transfers out - (334,042) - (334,042)

Change in net assets (582,967) (440,426) 1,509,016 485,623

Net assets, beginning of year, 2,550,824 6,984,573 7,158,605 16,694,002

Net assets, end of year $ 1,967,857 $ 6,544,147 $ 8,667,621 $ 17,179,625

83 CITY OF PORT ARTHUR, TEXAS Internal Service Funds B - 3 Combining Statement of Cash Flows For the Year Ended September 30, 2015

Equipment General Employee Replacement Liability Benefits Fund Fund Total CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $ 6,600 $ 11,432,379 $ 2,810,500 $ 14,249,479 Payments to employees - (1,006,166) - (1,006,166) Payments to suppliers (1,404,217) (9,484,180) (183,429) (11,071,826) Net cash provided by operating activities (1,397,617) 942,033 2,627,071 2,171,487 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Advances from (to) other funds 151,298 4,956,610 - 5,107,908 Transfers from other funds 1,840,000 - 444,035 2,284,035 Transfers to other funds - (334,042) - (334,042) Net cash provided by noncapital financing activities 1,991,298 4,622,568 444,035 7,057,901 CASH FLOWS FROM CAPITAL AND RELATED ACTIVITIES Acquisition and construction of capital assets - - (10,190,526) (10,190,526) Principal paid on capital debt - - (501,900) (501,900) Proceeds from sale of issuance of debt - - 8,661,828 8,661,828 Net cash by capital and related financing activities - - (2,030,598) (2,030,598) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments - (1,080,725) (101) (1,080,826) Interest on cash and investments 594 2,905 812 4,311 Net cash provided by investing activities 594 (1,077,820) 711 (1,076,515)

Net (decrease) in cash and cash investments 594,275 4,486,781 1,041,219 6,122,275

Cash, beginning of year 34,256 2,672,290 - 2,706,546 Cash, end of year $ 628,531 $ 7,159,071 $ 1,041,219 $ 8,828,821

Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Income (Loss) from operations $ (2,423,561) $ (109,289) $ 1,129,774 $ (1,403,076) Adjustments to reconcile income (loss) from operations to net cash provided (used) by operating activities: Depreciation - - 1,372,579 1,372,579 Change in assets and liabilities (Increase) Decrease in accounts receivable - (31,373) - (31,373) Increase (decrease) in prepaid expense - 148,000 - 148,000 Increase (decrease) in wages payable - - 124,718 124,718 Increase (decrease) in accounts payable 1,951 879,139 - 881,090 Increase (decrease) in long term risk liability 1,023,993 55,556 - 1,079,549

Net cash provided (used) by operating activities $ (1,397,617) $ 942,033 $ 2,627,071 $ 2,171,487

84 COMPONENT UNIT

PORT ARTHUR ECONOMIC DEVELOPMENT CORPORATION CITY OF PORT ARTHUR, TEXAS Component Unit C - 1 Port Arthur Economic Development Corporation Balance Sheet September 30, 2015

Economic Development EDC Debt Corp Service Total Assets

Cash $ 7,959,391 $ - $ 7,959,391 Investments 1,000,327 679,033 1,679,360 Accounts receivable 930,992 - 930,992 Due from other funds 470,525 - 470,525 Total assets $ 10,361,235 $ 679,033 $ 11,040,268

Liabilities and Fund Balances

Liabilities Wages payable $ 4,310 $ - $ 4,310 Accounts payable 59,135 - 59,135 Due to other funds - 470,525 470,525 Deferred Inflows of Resources Unavailable property taxes 134,754 - 134,754 Total liabilities and deferred inflows 198,199 470,525 668,724

Fund balances Restricted for: Future development 1,000,000 - 1,000,000 Debt service - 208,508 208,508 Unassigned, reported in: General fund 9,163,036 - 9,163,036

Total fund balances 10,163,036 208,508 10,371,544

Total liabilities and fund balances $ 10,361,235 $ 679,033

Reconciliation to government wide statement of net assets: Capital assets used in governmental are not financial resources, and, therefore, are not reported in these funds 5,995,660 Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in these funds 134,754 The net effects of the inclusion of net pension obligation and corresonding deferred outflows and inflows according to GASB 68. (234,800) Long term liabilities are not due and payable in the current period, and therefore are not reported in these (4,412,937) Net assets of governmental activities $ 11,854,221

85 CITY OF PORT ARTHUR, TEXAS Component Unit C - 2 Port Arthur Economic Development Corporation Statement of Revenue, Expenditures and Changes in Fund Balances For the Year Ended September 30, 2015

Economic Development EDC Debt Corp Service Total Revenues Taxes: Sales $ 4,593,706 $ - $ 4,593,706 Interest revenue 12,758 238 12,996 Loan repayments 733 - 733 Business park 39,597 - 39,597 Miscellaneous 562,875 - 562,875

Total revenues 5,209,669 238 5,209,907

Expenditures: Current: Economic development 4,073,164 - 4,073,164 Debt Service: Principal retirement - 420,000 420,000 Interest and fiscal charges - 123,664 123,664

Total expenditures 4,073,164 543,664 4,616,828

Excess of revenue over expenditures before transfers 1,136,505 (543,426) 593,079 Other Sources and Uses of Funds Transfer In - 577,283 577,283 Transfer Out (577,283) - (577,283) Total Other Sources and Uses of Funds $ (577,283) $ 577,283 $ -

Net Changes in Fund Balance 559,222 33,857 593,079

Fund balances, begining of year 9,603,814 174,651 9,778,465 Fund balances, end of year $ 10,163,036 $ 208,508 $ 10,371,544

Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay as expenditure. However, in the statement of activities, the cost of those assets are allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. (2,136) The net effect of including the net pension obligation in accordance with GASB 68 12,000 The repayment of the principal of long-term debt consumes the current financial resources of governmental funds, however has no effect on net assets. 419,964 Change in net assets $ 1,022,907

86 CITY OF PORT ARTHUR, TEXAS Component Unit C - 3 Port Arthur Economic Development Corporation General Operating Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual For the Year Ended September 30, 2015

Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Taxes: Sales $ 5,500,000 $ 5,500,000 $ 4,593,706 $ (906,294) Interest revenue 4,000 4,000 12,758 8,758 Loan repayments - - 733 733 Business park revenues (30,000) - 39,597 39,597 Miscellaneous 12,000 12,000 562,875 550,875

Total revenues 5,486,000 5,516,000 5,209,669 (306,331)

Expenditures: Current: General government: Personnel services 503,511 503,511 543,359 (39,848) Supplies 23,596 23,596 29,579 (5,983) Contractual services 670,111 670,111 1,160,431 (490,320) Capital outlay 2,500 - 33,339 (33,339) Development projects 5,259,500 5,259,500 2,306,456 2,953,044 Debt Service 1,544,962 1,544,962 - 1,544,962 Total expenditures 8,004,180 8,001,680 4,073,164 3,928,516 Excess (deficiency) of revenues over expenditures (2,518,180) (2,485,680) 1,136,505 3,622,185 Other financing sources (uses): Transfers out - - (577,283) (577,283) Total other financing sources (uses) - - (577,283) (577,283) Excess (deficiency) of revenues and other sources over expenditures and other uses $ (2,518,180) $ (2,485,680) $ 559,222 $ 3,622,185 Fund balance, beginning of the year 9,603,814

Fund balance, end of year $ 10,163,036

87 CITY OF PORT ARTHUR, TEXAS Component Unit C - 4 Port Arthur Economic Development Corporation Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual For the Year Ended September 30, 2015

Variance with Budgeted Amounts Final Budget Actual Positive Original Final Amounts (Negative) Revenues: Taxes: Sales $ 575,233 $ 575,233 $ - $ (575,233) Interest revenue - - 238 238

Total revenues 575,233 575,233 238 (574,995)

Expenditures: Debt service: Principal retirement 370,000 370,000 420,000 (50,000) Interest and fiscal charges 205,233 205,233 123,664 81,569

Total expenditures 575,233 575,233 543,664 31,569

Excess of revenues over expenditures - - (543,426) (543,426) Other Sources and Uses of Funds Transfer In - - 577,283 577,283 Total Other Sources and Uses of Funds $ - $ - $ 577,283 $ 577,283 Fund balance, beginning of year 174,651

Fund balance, end of year $ 208,508

88 CITY OF PORT ARTHUR, TEXAS Comprehensive Annual Financial Report For the Year Ended September 30, 2015 Statistical Table of Contents

Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time.

Net Position by Component Schedule 1

Changes in Net Position Schedule 2

Governmental Activities Tax Revenue by Source Schedule 3

Fund Balances of Governmental Funds Schedule 4

Changes in Fund Balances of Governmental Funds Schedule 5

General Governmental Tax Revenues by Source Schedule 6

Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue sources.

Assessed Value and Estimated Actual Value of Taxable Property Schedule 7

Property Tax Rates - Direct and Overlapping Governments Schedule 8

Principal Property Taxpayers Schedule 9

Principal Industrial Districts Schedule 10

Property Tax Levies and Collections Schedule 11

Industrial District Payments Schedule 12

Debt Capacity These schedules contain information to help the reader assess the affordability of the City's current level of outstanding debt and the City's ability to issue additional debt in the future.

Ratios of Outstanding Debt by Type Schedule 13

Ratios of General Bonded Debt Outstanding Schedule 14

Direct and Overlapping Governmental Activities Debt Schedule 15

Legal Debt Margin Information Schedule 16 CITY OF PORT ARTHUR, TEXAS Comprehensive Annual Financial Report For the Year Ended September 30, 2015 Statistical Table of Contents

Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place.

Demographic and Economic Statistics Schedule 17

Principal Employers Schedule 18

Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the government provides and the activities it performs.

Full Time Equivalent City Employees by Function Schedule 19

Operating Indicators by Function Schedule 20

Capital Assets by Function Schedule 21 CITY OF PORT ARTHUR, TEXAS Net Assets by Component Schedule 1 Last Eight Fiscal Years (accrual basis of accounting)

2008 2009 2010 2011 Governmental activities Net investment in capial assets $ (16,787,610) $ 57,871,638 $ 52,886,404 $ 41,646,196 Restricted 14,529,546 10,073,955 12,159,977 7,950,939 Unrestricted 18,325,406 (65,869,037) (57,237,045) (32,449,632) Total governmental activities net assets $ 16,067,342 $ 2,076,556 $ 7,809,336 $ 17,147,503

Business-type activities Net investment in capital assets $ 84,578,549 $ 82,251,758 $ 86,587,387 $ 92,962,928 Restricted 13,721,708 12,748,482 10,896,172 9,254,080 Unrestricted (17,758,037) (23,262,102) (27,739,568) (30,859,522) Total business-type activities net assets $ 80,542,220 $ 71,738,138 $ 69,743,991 $ 71,357,486

Primary government Net investment in capital assets $ 67,790,939 $ 140,123,396 $ 139,473,791 $ 134,609,124 Restricted 28,251,254 22,822,437 23,056,149 17,205,019 Unrestricted 567,369 (89,131,139) (84,976,613) (63,309,154) Total primary government net assets $ 96,609,562 $ 73,814,694 $ 77,553,327 $ 88,504,989

90 Schedule 1

Fiscal Year 2012 2013 2014 2015

$ 44,019,665 $ 70,725,206 $ 75,181,149 $ 20,370,442 9,746,790 8,508,466 7,798,750 5,408,143 (25,882,121) (29,749,884) (26,367,607) 28,314,376 $ 27,884,334 $ 49,483,788 $ 56,612,292 $ 54,092,961

$ 91,606,103 $ 92,403,253 $ 105,107,288 $ 149,596,148 2,264,490 191 1,034,218 17,849,732 (31,112,816) (36,857,901) (30,838,306) (34,056,600) $ 62,757,777 $ 55,545,543 $ 75,303,200 $ 133,389,280

$ 139,473,791 $ 134,609,124 $ 135,625,768 $ 114,200,188 23,056,149 17,205,019 12,011,280 23,257,875 (56,994,937) (666,607,785) (3,018,246) 50,024,178 $ 105,535,003 $ (514,793,642) $ 144,618,802 $ 187,482,241

91 CITY OF PORT ARTHUR, TEXAS Changes in Net Assets Schedule 2 Last Nine Fiscal Years (accrual basis of accounting)

2007 2008 2009 2010 Expenses Governmental activities: General government $ 15,620,967 $ 13,332,504 $ 21,411,497 $ 13,639,715 Public safety 22,822,830 25,025,968 32,421,145 29,371,645 Public works 11,859,564 14,038,090 14,588,581 14,006,598 Community development 1,453,406 1,543,713 1,490,108 3,201,371 Culture and recreation 5,824,415 4,351,668 5,361,406 4,968,703 Health and welfare 2,106,857 4,349,172 2,723,071 2,905,668 Public transportation 2,122,404 2,361,839 2,563,463 3,061,791 Capital projects - - - - Interest on long-term debt 2,753,310 2,944,208 3,421,325 3,294,557 Total governmental activites expenses 64,563,753 67,947,162 83,980,596 74,450,048

Business-type activities: Water and sewer 14,081,351 15,767,793 16,965,508 17,579,403 Solid waste 6,798,600 6,934,443 9,685,522 8,422,715 Pleasure Island - - - - Total business-type activities expenses 20,879,951 22,702,236 26,651,030 26,002,118 Total primary government expenses 85,443,704 90,649,398 110,631,626 100,452,166

Program Revenues Governmental activities: Charges for services: General government 1,178,285 692,713 915,882 728,594 Public safety 1,307,213 1,378,647 1,778,882 1,793,753 Community development 443,473 (92,746) 144,867 155,726 Culture and recreation 75,477 105,849 120,472 338,417 Health and welfare 207,120 211,292 195,722 - Public transportation 130,319 127,961 120,483 124,657 Operating grants and contributions 9,666,676 11,074,206 19,279,958 9,858,174 Capital grants and contributions 80,551 - 34,800 1,172,641 Total governmental activities program revenues 13,089,114 13,497,922 22,591,066 14,171,962

Business-type activities: Charges for services: Water and sewer 15,216,011 15,262,727 15,543,061 16,931,852 Solid waste 6,698,486 7,056,561 10,667,345 7,653,032 Pleasure Island - - - - Operating grants and contributions 234,871 - - - Capital grants and contributions - - - 6,850,178 Total business-type activities program revenues 22,149,368 22,319,288 26,210,406 31,435,062 Total primary government program revenues 35,238,482 35,817,210 48,801,472 45,607,024

92 Fiscal Year 2011 2012 2013 2014 2015

$ 13,672,278 $ 15,902,905 $ 12,547,014 $ 16,227,479 $ 13,315,790 28,627,623 30,144,145 30,748,546 34,413,056 32,852,194 15,838,978 14,491,965 10,520,425 10,316,945 8,305,490 3,213,649 2,215,032 2,532,416 1,800,675 665,478 4,649,682 4,883,482 5,147,253 5,419,551 4,984,372 3,767,992 3,874,145 3,553,002 3,997,619 3,727,255 2,819,228 2,909,723 2,822,978 3,839,779 3,776,876 - 702,591 1,101,493 - - 3,052,972 2,665,004 2,691,000 2,202,363 2,022,798 75,642,402 77,788,992 71,664,127 78,217,467 69,650,253

16,125,058 16,916,350 16,755,617 17,719,228 18,442,439 6,683,056 6,520,595 6,587,588 6,901,861 6,281,592 - - - 1,303,032 1,230,784 22,808,114 23,436,945 23,343,205 25,924,121 25,954,815 98,450,516 101,225,937 95,007,332 104,141,588 95,605,068

665,108 635,571 480,907 574,850 1,226,147 2,343,485 2,262,516 1,635,950 1,560,484 1,642,870 365,573 409,752 273,463 239,862 120,868 114,721 97,006 114,839 85,762 117,776 170,333 157,612 143,639 146,036 163,159 128,066 131,574 142,426 133,678 129,547 15,661,881 - 7,797,771 11,113,501 12,269,332 - - 640,195 791,267 995,654 19,449,167 3,694,031 11,229,190 14,645,440 16,665,353

18,072,757 15,495,321 14,792,396 27,452,872 18,199,669 7,426,041 7,334,967 6,940,071 6,449,487 6,747,251 - - - 728,591 952,145 - - - - - 7,520,035 710,595 - - 70,296,368 33,018,833 23,540,883 21,732,467 34,630,950 96,195,433 52,468,000 27,234,914 32,961,657 49,276,390 112,860,786

93 CITY OF PORT ARTHUR, TEXAS Changes in Net Assets Last Eight Fiscal Years (continued) (accrual basis of accounting) Changes in Net Assets Schedule 2 Last Eight Fiscal Years (accrual basis of accounting)

2007 2008 2009 2010 Net (Expense) Governmental activities $ (51,474,639) $ (54,449,240) $ (61,389,530) $ (60,278,086) Business-type activities 1,269,417 (382,948) (440,624) 5,432,944

Total primary government net expenses (50,205,222) (54,832,188) (61,830,154) (54,845,142)

General Revenues and Other Changes in Net Assets Governmental activities: Taxes Property Taxes 11,424,235 13,139,237 15,329,768 16,082,423 Industrial district payments 15,259,988 16,238,958 14,605,507 26,520,879 Gross receipts 3,933,880 4,251,127 4,439,957 4,414,729 Sales taxes 7,288,008 8,248,052 9,801,361 8,108,987 Other taxes 793,620 1,083,948 1,115,410 985,368 Investment earnings 1,221,857 692,378 240,344 379,046 Miscellaneous 3,885,701 2,192,092 1,999,733 1,940,243 Transfers 7,224,926 (4,003,613) 6,651,553 7,487,001 Total governmental activities 51,032,215 41,842,179 54,183,633 65,918,676

Business-type activities: Investment earnings 107,236 349,468 108,582 53,355 Miscellaneous 5,652 42,429 - 6,555 Transfers (7,224,926) 4,003,613 (6,651,553) (7,487,001) Total business-type activities (7,112,038) 4,395,510 (6,542,971) (7,427,091)

Total primary government general revenues and other changes in net assets 43,920,177 46,237,689 47,640,662 58,491,585

Change in Net Assets Governmental activities (442,424) (12,607,061) (7,205,897) 5,640,590 Business-type activities 45,189,594 4,012,562 (6,983,595) (1,994,147)

Total Primary Government $ 44,747,170 $ (8,594,499) $ (14,189,492) $ 3,646,443

94 Fiscal Year 2011 2012 2013 2014 2015

$ (56,193,235) $ (74,094,961) $ (60,434,937) $ (63,572,027) $ (52,984,900) 10,210,719 103,938 (1,610,738) 8,706,829 70,240,618

(45,982,516) (73,991,023) (62,045,675) (54,865,198) 17,255,718

16,758,589 17,204,061 17,484,418 16,706,210 18,520,422 24,302,981 22,724,949 27,007,228 27,985,013 30,952,606 4,996,761 6,673,504 6,504,986 8,698,423 8,682,192 8,330,199 11,881,873 11,644,684 9,285,891 9,054,144 1,109,479 1,106,276 1,064,818 1,173,992 1,568,219 256,516 96,046 43,450 21,425 23,297 1,039,621 1,738,772 1,284,470 2,058,955 2,066,485 8,614,912 8,715,735 9,736,585 8,455,917 7,970,332 65,409,058 70,141,216 74,770,639 74,385,826 78,837,697

17,688 12,088 6,020 4,211 31,994 - - 21,139 - - (8,614,912) (8,715,735) (9,143,865) (8,455,917) (7,970,332) (8,597,224) (8,703,647) (9,116,706) (8,451,706) (7,938,338)

56,811,834 61,437,569 65,653,933 65,934,120 70,899,359

9,215,823 (3,953,745) 14,335,702 10,813,799 25,852,797 1,613,495 (8,599,709) (10,727,444) 255,123 62,302,280

$ 10,829,318 $ (12,553,454) $ 3,608,258 $ 11,068,922 $ 88,155,077

95 CITY OF PORT ARTHUR, TEXAS Governmental Activities Tax Revenues by Source Schedule 3 Governmental Funds Last Nine Fiscal Years (accrual basis of accounting)

Industrial Gross Hotel Property District Receipts Occupancy Penalties & Fiscal Year Taxes Payments Taxes Sales Tax Taxes Interest Total 2007 $ 11,118,394 $ 15,259,988 $ 3,933,880 $ 7,288,008 $ 712,663 $ 305,841 $ 38,618,774 2008 12,803,551 16,238,958 4,251,127 8,248,052 990,764 335,686 42,868,138 2009 15,003,724 14,605,507 4,439,957 9,801,361 997,171 326,044 45,173,764 2010 15,772,539 26,520,879 4,414,729 8,108,987 985,368 309,884 56,112,386 2011 16,378,046 24,302,981 4,996,761 8,330,199 961,091 361,309 55,330,387 2012 16,824,630 22,724,949 6,673,504 11,881,873 1,106,276 379,432 59,590,664 2013 16,950,628 27,007,228 6,504,986 11,644,684 1,064,818 366,893 63,539,237 2014 16,706,210 27,985,013 8,698,423 9,285,891 1,173,992 390,134 64,239,663 2015 18,520,422 30,952,606 8,682,192 9,054,144 1,568,219 408,886 $ 69,186,469

96 CITY OF PORT ARTHUR, TEXAS Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting)

2006 2007 2008 2009 General Fund Reserved $ 54,376 $ 33,104 $ 30,962 $ 28,561 Unreserved 10,899,509 11,875,374 14,477,134 11,387,958 Nonspendable: Inventory - - - - Prepaid items - - - - Long-term interfund advance - - - - Unassigned - - - - Total general fund $ 10,953,885 $ 11,908,478 $ 14,508,096 $ 11,416,519

All Other Governmental Funds Reserved, reported in: Special revenue funds $ - $ 386,650 $ - $ - Capital projects funds 2,097,248 2,346,951 10,831,709 6,020,546 Debt service funds 4,078,397 4,821,810 3,697,837 4,053,409 Unreserved, reported in: Special Revenue Funds 2,311,065 - 3,351 2,211,515 Nonspendable: Prepaid items - - - - Inventory - - - - Community Development - - - - Restricted: Long-term interfund note - - - - Culture and recreation - - - - Public safety - - - - Public works - - - - Debt service funds - - - - Capital projects - - - - Assigned: Culture and recreation - - - - Community development - - - - Special Revenue - - - - Unassigned - - - - Total all other governmental funds $ 8,486,710 $ 7,555,411 $ 14,532,897 $ 12,285,470

Total governmental funds $ 19,440,595 $ 19,463,889 $ 29,040,993 $ 23,701,989

97 Schedule 4

Fiscal Year 2010 2011 2012 2013 2014 2015

$ 128,709 $ - $ - $ - $ - $ - 16,107,851 - - - - -

- 45,239 35,144 11,183 19,549 21,200 - 39,293 48,570 87,863 51,350 29,575 - - - - 37,772,204 44,214,357 - 21,776,856 29,765,864 36,132,801 6,722,443 16,999,295 $ 16,236,560 $ 21,861,388 $ 29,849,578 $ 36,231,847 $ 44,565,546 $ 61,264,427

$ - $ - $ - $ - $ - $ - 8,951,450 - - - - - 3,208,527 - - - - -

1,678,856 - - - - -

- 1,550,000 1,550,000 ------236,587 ------764,957 755,374

- - - - - 2,453,643 - 13,922 16,317 17,591 626,476 1,419,243 - 102,940 105,727 251,848 448,800 469,039 - 1,695 1,696 1,698 1,573,460 70,262 - 2,684,021 2,998,133 3,110,101 2,780,023 2,492,560 - 5,266,918 6,748,657 4,021,112 3,299,789 2,902,533

- 400,827 520,350 675,570 240,118 244,920 - 707,279 1,047,507 2,449,197 819,956 821,611 - - - - 164,698 108,907 - (378,542) (1,733,743) (1,256,565) - (931,529) $ 13,838,833 $ 10,349,060 $ 11,254,644 $ 9,507,139 $ 10,718,277 $ 10,806,563

$ 30,075,393 $ 32,210,448 $ 41,104,222 $ 45,738,986 $ 55,283,823 $ 72,070,990

98 CITY OF PORT ARTHUR, TEXAS Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting)

Fiscal Year 2006 2007 2008 2009 Revenues Taxes $ 23,007,397 $ 23,323,221 $ 26,534,916 $ 30,592,466 Industrial district payments 14,898,245 15,259,988 16,238,958 14,605,507 Licenses, fees, and permits 668,483 1,152,675 679,444 868,612 User fees 492,619 474,310 489,141 521,730 Fines and penalties 798,962 1,271,429 1,347,877 1,747,157 Intergovernmental 15,129,686 9,666,577 11,064,309 19,279,958 Investment earnings 827,537 926,542 531,776 201,293 Other revenues 7,360,537 5,088,475 2,096,949 2,080,210 Total revenues 63,183,466 57,163,217 58,983,370 69,896,933 Expenditures General Government 20,035,929 15,178,668 12,958,322 21,851,794 Public safety 20,312,025 22,951,494 23,347,832 25,633,260 Community development 1,404,831 3,077,736 1,503,913 1,581,240 Culture and recreation 2,879,934 3,892,484 3,920,103 4,591,672 Health and welfare 1,890,588 2,121,923 4,334,973 2,652,941 Public transportation 1,728,129 1,778,597 1,808,289 1,857,396 Public works 5,905,021 6,871,788 7,018,114 7,749,763 Capital outlay 3,978,598 184,686 1,572,125 6,362,702 Debt service Principal 3,815,000 3,410,000 3,290,000 4,275,000 Interest and fiscal charges 2,956,278 2,682,620 2,881,939 3,362,396 Total Expenditures 64,906,333 62,149,996 62,635,610 79,918,164

Excess (deficiency) of revenues over (under) expenditures (1,722,867) (4,986,779) (3,652,240) (10,021,231) Other Financing Sources (Uses) Bonds issued - 8,514,181 9,000,000 - Payment of refunding bonds - (8,351,347) - - Bond issuance cost - (137,511) - - Transfers in 7,621,520 9,597,019 8,362,563 9,782,085 Transfers out (2,999,216) (4,612,629) (4,132,859) (5,099,858) Total other financing sources 4,622,304 5,009,713 13,229,704 4,682,227

Net Change in Fund Balances $ 2,899,437 $ 22,934 $ 9,577,464 $ (5,339,004)

Debt Service as a Percentage of Non-Capital Expenditures 12.50% 10.90% 11.24% 11.59%

99 Schedule 5

Fiscal Year 2010 2011 2012 2013 2014 2015

$ 29,448,938 $ 31,130,790 $ 36,747,739 $ 36,518,267 $ 36,986,998 $ 37,643,601 26,520,879 24,302,981 22,724,949 27,007,228 27,985,013 30,952,606 702,347 433,615 540,328 391,933 528,533 1,161,799 489,321 695,237 451,459 513,504 477,195 495,770 1,793,753 2,365,894 2,310,066 1,699,172 1,598,085 1,684,002 11,060,266 15,552,645 14,668,439 8,972,166 11,329,092 13,242,877 314,485 216,009 84,484 34,571 21,425 23,296 2,085,663 1,477,158 1,787,890 1,310,742 2,771,491 2,140,794 72,415,652 76,174,329 79,315,354 76,447,583 81,697,832 87,344,745

13,243,057 13,457,671 15,868,009 12,080,592 16,049,129 17,161,698 28,914,842 29,081,034 30,628,453 30,119,375 32,349,380 31,983,226 3,008,202 2,976,039 1,926,631 2,429,961 1,650,549 766,161 4,579,614 4,503,245 4,674,883 4,978,370 4,930,258 4,659,356 2,862,270 3,767,932 3,862,778 3,530,007 3,554,082 3,500,148 3,242,534 2,307,311 2,367,019 3,779,613 3,502,439 3,785,768 8,224,026 9,973,875 8,439,277 8,897,520 9,493,363 7,929,082 7,553,541 4,057,424 4,945,752 3,959,238 1,628,492 504,817

5,414,884 6,085,000 5,935,000 6,285,000 6,615,000 5,765,000 3,252,051 3,026,995 2,652,594 2,578,177 2,201,027 2,021,462 80,295,021 79,236,526 81,300,396 78,637,853 81,973,719 78,076,718

(7,879,369) (3,062,197) (1,985,042) (2,190,270) (275,887) 9,268,027

8,092,240 9,906,922 13,365,525 8,395,000 - - - (10,061,993) (10,108,176) (8,380,537) ------10,191,957 13,481,240 13,087,500 13,204,610 11,230,035 9,436,096 (4,943,382) (8,128,917) (5,466,033) (5,260,508) (3,807,385) (3,415,757) 13,340,815 5,197,252 10,878,816 7,958,565 7,422,650 6,020,339

$ 5,461,446 $ 2,135,055 $ 8,893,774 $ 5,768,295 $ 7,146,763 $ 15,288,366

13.53% 13.79% 12.67% 12.98% 12.05% 11.16%

100 CITY OF PORT ARTHUR, TEXAS General Governmental Tax Revenues by Source Schedule 6 Last Ten Fiscal Years (modified accrual basis of accounting)

Industrial Gross Hotel Property District Receipts Occupancy Penalties & Fiscal Year Taxes Payments Taxes Sales Tax Taxes Interest Total 2006 $ 11,924,508 $ 14,898,245 $ 2,059,024 $ 6,939,254 $ 605,375 $ 258,558 36,684,964 2007 10,988,432 15,259,988 3,933,880 7,288,008 793,620 319,281 38,583,209 2008 12,616,103 16,238,958 4,251,127 8,248,052 990,764 335,686 42,680,690 2009 14,909,694 14,605,507 4,439,957 9,801,361 997,171 326,044 45,079,734 2010 15,604,285 26,520,879 4,414,729 8,108,987 858,192 335,569 55,842,641 2011 16,313,807 24,302,981 4,996,761 8,330,199 961,091 395,487 55,300,326 2012 16,706,654 19,244,949 6,673,504 11,881,873 1,106,276 379,432 55,992,688 2013 16,950,628 27,007,228 6,504,986 11,644,684 1,064,818 366,893 63,539,237 2014 17,438,558 27,985,013 8,698,423 9,285,891 1,173,992 390,134 64,972,011 2015 17,930,160 30,952,606 8,682,192 9,054,144 1,568,219 408,886 68,596,207

101 CITY OF PORT ARTHUR, TEXAS Assessed Value and Estimated Actual Value of Taxable Property Schedule 7 Last Ten Fiscal Years

Taxable Assessed Value as a Percentage of Residential Commercial Total Taxable Estimated Actual Actual Taxable Fiscal Year Property Property Assessed Value Total Tax Rate Taxable Value Value 2006 $ 526,306,321 $ 1,001,079,529 $ 1,527,385,850 $0.775 $ 1,527,385,850 100% 2007 462,014,658 968,998,287 1,431,012,945 0.775 1,431,012,945 100% 2008 613,616,150 1,117,679,965 1,731,296,115 0.775 1,731,296,115 100% 2009 721,579,294 1,249,334,573 1,970,913,867 0.775 1,970,913,867 100% 2010 757,766,082 1,292,473,250 2,050,239,332 0.775 2,050,239,332 100% 2011 830,454,527 1,307,918,658 2,138,373,185 0.760 2,138,373,185 100% 2012 826,928,315 1,355,343,013 2,182,271,328 0.760 2,182,271,328 100% 2013 832,455,009 1,371,381,594 2,203,836,603 0.792 2,203,836,603 100% 2014 832,855,239 1,461,166,645 2,294,021,884 0.792 2,294,021,884 100% 2015 844,194,214 1,494,200,282 2,338,394,496 0.792 2,338,394,496 100%

Source: Jefferson and Orange County Appraisal Districts

Notes: Property in Jefferson and Orange Counties are assessed once every two years on average. The counties assess property at 100 percent of actual values for commercial, industrial, and residential property. Estimated actual taxable value is calculated by dividing taxable assessed value by those percentages. Tax rates are per $100 at assessed value.

102 CITY OF PORT ARTHUR, TEXAS Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per $100 of assessed value)

City Direct Rates Overlapping Rates General Maintenance & Obligation Total Direct Port Arthur Nederland Port Neches - Fiscal Year Operation Debt Service Rate I.S.D. I.S.D. Groves I.S.D. 2006 $ 0.286644 $ 0.488356 $ 0.775 $ 1.681 $ 1.550 $ 1.619000 2007 0.309200 0.465800 0.775 1.484 1.380 1.478300 2008 0.465599 0.294401 0.760 1.278 1.120 1.192500 2009 0.357990 0.402010 0.760 1.311 1.120 1.284000 2010 0.387469 0.404531 0.792 1.370 1.215 1.454950 2011 0.374208 0.417792 0.792 1.368 1.110 1.437000 2012 0.398509 0.393491 0.792 1.353 1.105 1.388070 2013 0.385989 0.406011 0.792 1.353 1.120 1.434000 2014 0.417949 0.374051 0.792 1.353 1.145 1.444410 2015 0.499866 0.292134 0.792 1.353 1.160 1.444410

Source: Jefferson County Appraisal District

Note: Overlapping rates are those of local and county governments that apply to property owners within the City of Port Arthur. Not all overlapping rates apply to all city property owners.

103 Schedule 8

Overlapping Rates

Sabine Pass Sabine Pass Port Arthur Jefferson Jefferson I.S.D. Port Authority Navigation Dist County DD#7 County $ 1.675 $ 0.183709 $ 0.128150 $ 0.179063 $ 0.4250 1.542 0.268104 0.128150 0.160000 0.4000 1.177 0.257650 0.128150 0.145809 0.3900 1.177 0.204479 0.128150 0.139650 0.3650 1.116 0.199886 0.128150 0.138977 0.3650 1.140 0.145685 0.128150 0.140949 0.3650 1.140 0.189927 0.128150 0.140949 0.3650 1.175 0.229600 0.164725 0.149917 0.3650 1.184 0.256673 0.214372 0.170602 0.3650 1.199 0.263551 0.156644 0.165305 0.3650

104 CITY OF PORT ARTHUR, TEXAS Principal Property Tax Payers Schedule 9 Current Year and Nine Years Ago

2015 2006 Percentage Percentage of of Total City Total City Taxable Taxable Taxable Taxable Assessed Taxpayer Assessed Value Rank Assessed Value Assessed Value Rank Value

Entergy $ 201,876,995 1 8.630 % $ 28,190,880 5 1.846 % Enterprise Texas Pipeline 117,838,020 2 5.040 % - - % MPT of Port Arthur LLC 51,200,080 3 2.190 % - - % Total Petrochemicals 46,352,210 4 1.980 % - - % Wal Mart Stores East Inc. #651 32,851,650 5 1.400 % 34,032,990 4 2.228 % KMTEX Inc. 28,885,980 6 1.240 % - - % GG&A Central Mall Partners 28,071,040 7 1.200 % 36,760,830 1 2.407 % Medical Center of SETX 23,427,900 8 1.000 % - - % Motiva Refinery 23,147,570 9 0.990 % - - % Willow Lake Apartments LTD 20,125,630 10 0.860 % - - % Southeast Texas Hospital LP - - % 36,565,560 2 2.394 % Noble Energy Inc. - - % 35,169,400 3 2.303 % Horizon Vessels, Inc. - - % 18,492,010 6 1.211 % Lowe's - - % 11,923,980 8 0.781 % Southwestern Bell - - % 13,025,390 7 0.853 % Centana Energy Marketing - - % 11,477,340 9 0.751 % Target Stores Inc. #T-158 - - % 11,078,640 10 0.725 %

573,777,075 24.530 % 236,717,020 15.499 %

Source : Jefferson County Appraisal District 105 CITY OF PORT ARTHUR, TEXAS Principal Industrial Districts Schedule 10 Current Year and Nine Years Ago

2015 2006 Percentage of Total Percentage of Industrial Taxable Total Industrial Taxable District Industry Assessed Value Rank District Values Assessed Value Rank Values

Port Arthur Coker - - % 354,623,600 4 9.44 % Sabina/Total/BASF - 256,597,990 7 6.83 % Motiva (formerly Star Enterprises) 5,707,287,200 1 52.44 % 632,097,380 2 16.82 % Valero (formerly Premcor Refining) 2,070,149,910 2 19.02 % 486,950,050 3 12.96 % TOTAL (formerly American Petrofina) 844,430,070 3 7.76 % 340,398,100 5 9.06 % ExxonMobil Golden Pass LNG 493,874,770 4 4.54 % BASF/Fina Joint Venture 422,262,030 5 3.88 % 823,287,350 1 21.91 % Praxair 296,967,180 6 2.73 % 70,570,620 10 1.88 % Chevron-Phillips 296,836,760 7 2.73 % 314,449,990 6 8.37 % Flint Hills Resources (formerly Huntsman) 219,111,480 8 2.01 % 228,833,360 8 6.09 % Air Products 200,716,330 9 1.84 % - - % Chevron, USA 118,173,320 10 1.09 % Sandoz/BASF 106,077,052 11 0.97 % 89,074,100 9 2.37 % Oxbow Calcining 61,390,530 12 0.56 % - - % Veolia 27,602,350 13 0.25 % - - % GT OmniPort 14,632,620 14 0.14 % - - PA Steam Energy 2,364,930 15 0.03 % - - Colonial Pipeline 1,088,790 16 0.01 % - - Sunco Logistics 62,500 17 - % - - %

10,883,027,822 100.00 % 3,596,882,540 95.73 %

Source : Jefferson County Appraisal District 106 CITY OF PORT ARTHUR, TEXAS Property Tax Levies and Collections Schedule 11 Last Ten Fiscal Years

Collected within the Taxes Levied Fiscal Year of the Levy Collection in Total Collections to Date for the Percentage Subsequent Percentage Fiscal Year Fiscal Year Amount of Levy Years Amount of Levy 2006 $ 11,860,231 $ 11,322,307 95.5 % $ 400,471 $ 11,722,778 98.8 % 2007 11,112,672 10,672,169 96.0 % 327,158 10,999,327 99.0 % 2008 13,028,647 12,645,882 97.1 % 247,172 12,893,054 99.0 % 2009 15,214,119 14,610,056 96.0 % 414,754 15,024,810 98.8 % 2010 15,991,143 15,151,502 94.7 % 561,486 15,712,988 98.3 % 2011 16,561,114 15,922,066 96.1 % 317,410 16,239,476 98.1 % 2012 16,921,335 16,075,227 95.0 % 491,289 16,566,516 97.9 % 2013 17,186,373 16,473,887 95.9 % 312,992 16,786,879 97.7 % 2014 17,936,488 16,945,511 94.5 % 472,218 17,417,729 97.1 % 2015 18,282,043 17,498,940 95.7 % - 17,498,940 95.7 %

Source : Jefferson County Appraisal District 107 CITY OF PORT ARTHUR, TEXAS Industrial District Payments Schedule 12 Last Ten Fiscal Years

Total Payments Total Payments Percent Amount Fiscal Year Due Collected Collected Outstanding 2006 $ 14,898,255 $ 14,898,255 100% $ - 2007 15,259,988 15,259,988 100% - 2008 16,238,958 16,238,958 100% - 2009 14,605,507 14,605,507 100% - 2010 23,040,879 23,040,879 100% - 2011 20,822,981 20,822,981 100% - 2012 22,724,949 22,724,949 100% - 2013 27,019,847 27,019,847 100% - 2014 27,985,013 27,985,013 100% - 2015 30,952,606 30,952,606 100% -

Source : Jefferson County Appraisal District 108 CITY OF PORT ARTHUR, TEXAS Ratios of Outstanding Debt by Type Schedule 13 Last Ten Fiscal Years

Business-Type Governmental Activities Activities General Percentage Fiscal Obligation Certificates Certificates of Total Primary of Personal Year Bonds of Obligation Capital Leases Obligation Government Income1 Per Capita1 2006 $ 35,890,000 $33,190,000 $ 990,094 - $ 70,070,094 $ 8.55 $ 1,213 2007 42,075,000 24,215,000 1,756,033 - 68,046,033 8.31 1,178 2008 48,835,000 33,165,000 1,655,776 - 83,655,776 10.21 1,448 2009 45,980,000 31,745,000 1,286,830 - 79,011,830 9.65 1,368 2010 50,750,000 29,560,000 801,460 - 81,111,460 9.90 1,404 2011 53,575,000 20,565,000 401,994 - 74,541,994 9.10 1,291 2012 59,335,000 11,820,000 1,754,619 - 72,909,619 8.90 1,262 2013 53,630,000 11,320,000 1,431,849 - 66,381,849 6.54 1,229 2014 47,560,000 10,775,000 1,981,005 - 60,316,005 6.16 1,109 2015 42,365,000 10,205,000 10,216,510 9,075,000 71,861,510 $ 7.34 1,299

Details regarding the City's outstanding debt can be found in the notes to the financial statements.

1 See the Schedule of Demographic and Economic Statistics (Schedule 17) for personal income and population data.

109 CITY OF PORT ARTHUR, TEXAS Ratios of General Bonded Debt Outstanding Schedule 14 Last Ten Fiscal Years

General Bonded Debt Outstanding General As a Percentage of Obligation Certificate of Actual Taxable Fiscal Year Bonds Obligation Total Value of Property Per Capita 2006 $ 35,890,000 $ 33,190,000 $ 69,080,000 4.52% $ 1,196 2007 42,075,000 24,215,000 66,290,000 4.63% 1,147 2008 48,835,000 33,165,000 82,000,000 4.74% 1,419 2009 45,980,000 31,745,000 77,725,000 3.94% 1,345 2010 50,750,000 29,560,000 80,310,000 3.92% 1,390 2011 53,575,000 20,565,000 74,140,000 2.94% 1,283 2012 59,335,000 11,820,000 71,155,000 3.26% 1,232 2013 53,630,000 11,320,000 64,950,000 2.95% 1,203 2014 47,560,000 10,775,000 58,335,000 2.54% 1,069 2015 42,365,000 19,280,000 61,645,000 2.62% 1,114

Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

See Schedule 7 for property value data. Population data can be found in Schedule 17.

110 CITY OF PORT ARTHUR, TEXAS Direct and Overlapping Governmental Activities Debt Schedule 15 As of September 30, 2015

Estimated Estimated Share of Percentage Direct and Debt Outstanding Applicable Overlapping Debt Overlapping debt:

Port Arthur Independent School District $ 328,870,000 27.14 % $ 89,255,318

Jefferson County 40,660,000 8.92 % 3,626,872

Jefferson County Drainage District #7 19,080,000 12.57 % 2,398,356

Port of Port Arthur Navigation District 29,120,000 19.30 % 5,620,160

Nederland Independent School District 32,170,000 8.15 % 2,621,855

Port Neches - Groves Independent School District 106,262,532 4.59 % 4,877,450

Sabine Pass Independent School District 21,414,485 9.46 % 2,025,810

Sabine Pass Port Authority 810,000 11.33 % 91,773 Subtotal, overlapping debt $ 110,517,594 Direct debt: City of Port Arthur 61,645,000 100.00 % 61,645,000

Total, Direct and Overlapping Debt $ 172,162,594

Total Direct and Overlapping Debt per Capita $ 3,156

The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of each governmental unit's taxable assessed value that is within the City's boundaries and dividing it by the governmental unit's total taxable assessed value.

Estimate of overlapping percentages are provided by the Municipal Advisory Council of Texas

111 CITY OF PORT ARTHUR, TEXAS Debt Margin Information Last Ten Fiscal Years

Debt Margin Calculation for Fiscal Year 2015 Assessed value plus industrial district value 13,199,274,130 Debt Limit (10% of assessed value) 1,319,927,413

Debt applicable to limit: General obligation bonds 61,645,000 Other debt 10,206,544 Less: Amount set aside for repayment of general obligation debt (6,124,937) Total net debt applicable to limit 65,726,607

Debt Margin $ 1,254,200,806

2006 2007 2008 2009 2010

Debt Limit $ 528,470,070 $ 728,339,922 $ 790,629,481 $ 836,028,026 $ 826,894,052

Total net debt applicable to limit 65,991,697 63,224,223 79,957,939 74,908,421 77,902,933

Debt margin $ 462,478,373 $ 665,115,699 $ 710,671,542 $ 761,119,605 $ 748,991,119

Total net debt applicable to the limit as a percentage of debt limit 12.49 % 8.68 % 10.11 % 8.96 % 9.42 %

There is no debt limit established by law; therefore, the limit is governed by the City's ability to levy and collect taxes to service the debt. The Attorney General of the State of Texas will not approve more than $1.00 of the tax rate for debt service. The City's maximum legal tax rate is $2.00 per $100 valuation assessed at 100% of the market value. Ten percent (10%) of the assessed value has been applied as a "rule of thumb" procedure.

112 Schedule 16

2011 2012 2013 2014 2015

$ 850,790,868 $ 851,077,290 $ 857,605,060 $ 1,314,168,637 $ 1,319,927,413

71,857,973 69,911,486 63,383,716 57,535,982 65,726,607

$ 778,932,895 $ 781,165,804 $ 794,221,344 $ 1,256,632,655 $ 1,254,200,806

8.68 % 8.21 % 7.39 % 4.38 % 4.98 %

113 CITY OF PORT ARTHUR, TEXAS Demographic and Economic Statistics Schedule 17 Last Ten Fiscal Years

Education Median Level in Calendar Income per Median Personal Years of School Unemployment Year Population(1) household (1) Age (1) Income (1) Schooling (2) Enrollment (2) Rate (3) 2006 $ 57,775 $ 26,455 35.1 $ 14,183 12.1 8,442 7.6 % 2007 57,775 26,455 34.6 14,183 12.1 7,922 7.2 % 2008 57,529 26,455 36.0 16,895 12.1 9,097 9.4 % 2009 53,989 27,150 35.4 16,895 12.1 9,261 10.7 % 2010 53,818 31,043 35.6 16,895 12.1 9,238 14.5 % 2011 53,818 31,043 35.6 16,895 12.1 9,107 14.8 % 2012 53,937 32,178 35.6 16,895 12.1 9,099 17.1 % 2013 54,010 33,456 35.6 18,787 12.1 8,992 16.3 % 2014 54,548 31,315 35.2 17,859 12.1 8,982 13.7 % 2015 54,548 31,315 35.2 17,859 12.1 8,982 12.7 %

1) U.S. Census Bureau 2) Texas Education Agency 3) Texas Workforce Commission

114 CITY OF PORT ARTHUR, TEXAS Principal Employers Schedule 18 Current Year and Nine Years Ago

2015 2006 Percentage Percentage of of Total City Total City Employer Employees Rank Employment Employees Rank Employment

Port Arthur Independent School District 1,340 1 $ 5.90 1,309 1 $ 5.61 Motiva Enterprises (Formerly Star) 1,300 2 5.57 900 3 3.85 Huntman 1,250 3 5.35 1,100 2 4.71 Christus St. Mary Hospital* 900 4 3.85 800 4 3.43 Valero Refining (formerly Clark) 825 5 3.53 750 7 3.21 City of Port Arthur 675 6 2.89 631 8 2.70 Wal-Mart Supercenters (2locations) 650 7 2.78 816 6 3.49 The Medical Center of Southeast 562 8 2.41 825 5 3.53 Total Petrochemicals 500 9 $ 2.14 450 10 $ 1.93 Echo Maintenance 500 10 $ 5.90 - $ -

Source: Greater Port Arthur Chamber of Commerce

115 CITY OF PORT ARTHUR, TEXAS Full-Time Equivalent City Government Employees by Function/Program Schedule 19 Last Ten Fiscal Years

Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

General government 66 90 89 90 109 93 93 93 94 71 Culture and recreation 33 34 34 36 37 34 33 35 35 34 Public Safety Police 146 152 155 155 165 165 165 165 165 168 Fire 107 107 107 107 107 107 107 107 107 107 Community development 10 10 12 12 ------Health and welfare 30 33 33 30 39 46 41 46 48 41 Public works 63 67 67 69 73 75 75 76 75 76 Public transportation 24 25 25 25 25 27 27 27 28 27 Water utilities 97 85 85 85 85 84 83 83 85 85 Solid waste 45 47 49 50 51 49 43 44 44 44 Equipment services 11 12 12 12 12 - - - - -

Total 632 662 668 671 703 680 667 676 681 653

Source: City of Port Arthur annual budgets

116 CITY OF PORT ARTHUR, TEXAS Operating Indicators by Function/Program Last Ten Fiscal Years

2006 2007 2008 2009 General government Building permits issued Commercial Construction 217 160 21 10 Residential Construction 61 174 136 531 Police Calls for service 56,681 59,633 63,366 62,249 Fire Fires 551 517 544 475 Rescue, EMC 5,667 5,811 6,295 6,084 Other Calls 1,665 2,394 1,696 1,387 Landfill Compacted refuse disposed (cubic yards) 156,921 171,896 194,568 194,568 Non-compacted refuse disposed (cubic yards) 390,544 513,933 559,872 559,872 Other public works Street resurfacing (miles) 5 6 6 6 Drainage regrading (miles) 4 15 19 19 Library Volumes in collection 137,575 159,436 159,440 159,729 Library cards in force 10,862 11,319 8,384 9,113 Water and Sewer Meters in service 17,492 17,895 18,025 18,156 Water calls 6,129 3,816 4,061 4,345 Average daily production (millions of gallons) 14 13 13 13 Peak daily production (millions of gallons) 16 15 19 16 Wastewater Sewer calls 8,660 7,373 6,627 7,603 Transit Total route miles 328,495 333,327 246,208 365,650 Passengers 116,828 99,923 98,862 119,083

Sources: Various city departments.

117 Schedule 20

Fiscal Year 2010 2011 2012 2013 2014 2015

69 89 82 13 93 475 768 862 223 54 194 1,511

59,790 63,899 59,208 58,703 56,834 58,199

427 410 424 380 328 355 6,299 6,481 6,270 6,235 6,664 7,120 1,567 1,612 1,588 1,578 1,753 1,810

208,967 232,629 226,888 219,508 208,996 206,016 660,081 417,984 384,880 325,087 225,355 222,300

10 3 3 5 2 3 30 31 25 31 23 18

163,886 174,404 179,029 184,779 188,728 158,144 10,364 11,437 11,147 13,150 13,047 14,582

18,174 19,023 4,448 22,477 17,728 17,334 5,109 5,796 16 1,663 3,732 2,533

14 17 16 17 15 14

20 20 20 18 18 19

8,363 8,139 5,397 6,182 9,291 6,060

373,436 365,693 350,169 378,205 382,639 384,385 115,625 127,683 128,327 142,411 124,712 143,922

118 CITY OF PORT ARTHUR, TEXAS Capital Asset Statistics by Function Last Ten Fiscal Years

Fiscal Year 2006 2007 2008 2009 Public Safety Police Stations 1 1 1 1 Fires Stations 7 7 7 8 Hydrants 2,014 2,015 2,026 2,128 Streets Streets (miles) 342 342 342 342 Sidewalks (miles) 126 126 126 126 Drainage Storm Sewers (miles) 181 181 181 181 Libraries Number of libraries 1 1 1 1 Parks and Recreation Acreage 515 515 515 515 Golf Course 2 2 2 2 Swimming Pools 3 3 3 3 Playgrounds 33 33 33 33 Recreation center 1 1 1 1 Water and Sewer Water mains (miles) 371 371 371 350 Sanitary sewer mains (miles) 282 282 282 354

Sources: Various city departments.

119 Schedule 21

Fiscal Year 2010 2011 2012 2013 2014 2015

1 1 1 1 1 1

8 7 7 7 7 7 2,162 2,165 2,174 2,182 2,110 2,210

343 349 352 352 350 350 126 126 127 127 205 208

182 185 280 - 283 283

1 1 1 1 1 1

515 515 516 516 516 516 2 2 2 2 2 2 3 3 3 3 3 3 33 33 33 13 18 18 1 1 1 1 1 1

353 381 360 350 350 350 356 356 330 330 330 330

120