Comprehensive Annual Financial Report 2020

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May 10, 2021 To the Honorable Mayor, City Council and Citizens of the City of Red Oak, Texas Submitted herewith is the Comprehensive Annual Financial Report (the “Annual Report”) of the City of Red Oak (the “City”) for the fiscal year ended September 30, 2020. Responsibility for the accuracy of the data and the completeness and fairness of the presentation, including disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects. The data is reported in a manner designed to present fairly the financial position and results of operations of the various funds of the City. To enable the reader to gain an understanding of the City’s financial activities, all necessary disclosures have been included. The Annual Report is prepared in accordance with generally accepted accounting principles (GAAP) in the United States of America established by the Governmental Accounting Standards Board (GASB). The Annual Report is presented in three sections: introductory, financial and statistical. The introductory section includes this transmittal letter, the City’s organizational chart, and a list of principal officials. The financial section includes the management’s discussion and analysis (MD&A), the government-wide and fund financial statements, notes to basic financial statements, required supplemental information, other supplemental information, as well as the independent auditor’s report on the basic financial statements. The Statistical section includes selected financial and demographic information which is presented on a multi-year basis. The MD&A is a narrative introduction, overview, and analysis to accompany the basic financial statements. The MD&A can be found immediately following the independent auditor’s report. This transmittal is designed to complement the MD&A and should be read in conjunction with it. THE REPORTING ENTITY The City was incorporated in 1849 under the general laws of the State of Texas. The City operates under a council-manager form of government. The City provides a full range of municipal services authorized by statute or charter. These services include police and fire protection, water and wastewater services, the construction and maintenance of streets, infrastructure and other related facilities, code enforcement, building inspections, parks and recreation, library, public improvements, planning and zoning, economic development, and general administrative services. The Annual Report includes all funds of the City. This report includes all government activities, organizations and functions for which the City is financially accountable. The criteria used in determining activities to be reported within the City’s basic financial statements are based upon and consistent with those set forth by the GASB. i
THE CITY The City of Red Oak (the “City” or “Red Oak”) is a political subdivision and municipal corporation of the State, duly organized and existing under the laws of the State, including the City’s Home Rule Charter. The City first adopted its Home Rule Charter in 1997. The City operates under a Council/Manager form of government with a City Council comprised of the Mayor and five Councilmembers. The Mayor and City Councilmembers are elected for staggered three-year terms. The City Manager is the chief administrative officer for the City. The 2000 Census population for the City was 5,235, The 2010 Census population for Red Oak was 10,769, and North Central Texas Council of Governments (NCTCOG) projects by the year 2030, Red Oak’s population will grow to 63,329. According to the U.S Census Bureau, as of September 30, 2020, the estimated population for Red Oak was determined to be 14,732. The City covers approximately 15.22 square miles. The City is located in northern Ellis County, 20 miles south of downtown Dallas and is served by a major interstate highway I-35E bisecting the City, and I-20 located nine miles north. Red Oak is also bisected by state highways 664 and 342 giving easy access in all directions. Red Oak is uniquely situated to provide easy accessibility to the entire North Texas area. The close proximity to job opportunities in Dallas, Fort Worth and the Mid-Cities continues to contribute to growth in the City. The City is a member of the Best-Southwest Communities, which also consists of Cedar Hill, Desoto, Duncanville and Lancaster. As a result of the exponential growth and development taking place in Red Oak and vicinity, the Texas Department of Transportation (TxDoT) is in the process of improving the public transportation network. Construction work has commenced on the improvements and widening to FM 664/Ovilla Road. These improvements and widening include the expansion of FM 664/Ovilla Road to six lanes extending from I-45 to at the City of Ferris to US 287 at its intersection with FM 64/Ovilla Road at the City of Waxahachie. In addition, an overpass will be constructed along I-45 to the south of Ferris which will facilitate the flow of traffic along FM 664/Ovilla Road. Also, the FM 664/Ovilla Road overpass located at I-35E will be reconstructed to improve traffic flows and increase the capacity of the overpass. This expansion and construction is necessary as current data shows that the intersection of FM 664 and I-35E in Red Oak is currently one of the busiest intersections in Ellis County. Due to the growth and development of the Red Oak vicinity and the related traffic congestion, the long anticipated South Loop 9 project will become a reality! To this end, TxDoT is in the process of acquiring the right-of-way (ROW) for constructing Phase 1 of the roadway which will directly connect I-45 with I-35E. The route for the South Loop 9 project will closely follow along the northern boundary line for Ellis County and the southern boundary line for Dallas County. Red Oak is a growing, thriving community with good challenges. The population is increasing and exceptional quality homes and developments are being built in Red Oak to accommodate this growth. In addition, due to the growth in the City and the surrounding area, retail development has been rising, and is expected to continue to do so. The median household income for 2020 is $79,448, which is continuing to rise. Per HomeFacts.com, Red Oak enjoys a low unemployment rate of 6.3% as compared to 8.8% in 2009. This unemployment rate is lower than both the State of Texas and the US unemployment rates. As the community grows, the need for City services continues to increase. Staffing levels have increased in many areas, including in the police, fire, public works, and finance departments. This growth in staffing has caused the need for expansion of City facilities. The City issued debt in Fiscal Year 2019. The City used part of the debt proceeds to purchase a future site for the Municipal Center to meet this need to accommodate growth. Growth within the city has caused property tax revenues to increase. In Fiscal Year 2020, General Fund property tax revenues increased by over $691,000 from the previous year. At the same time, sales taxes revenues increased in the General Fund by $432,852 because of growth in population and retail services available within the community. Growth in the city has also created the need for additional public infrastructure. More on this topic will be included in Management’s Discussion and Analysis, which starts on page 3. ii
Page 1 and 2: City of Red Oak, Texas Comprehensiv
Page 3 and 4: Required Supplementary Information
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Page 11 and 12: INDUSTRY During 2020, Compass Datac
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Page 24 and 25: Both of the government-wide financi
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Page 30 and 31: Capital Projects Capital project fu
Page 34 and 35: CITY OF RED OAK, TEXAS STATEMENT OF
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Page 56 and 57: VII. LONG-TERM DEBT Long-term debt
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Bonds payable currently outstanding
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Revenue Bonds - Governmental Activi
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The actuarial assumptions were deve
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The City reported $384,378 as defer
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OPEB Expense, Deferred Outflows, an
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CITY OF RED OAK, TEXAS SCHEDULE OF
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CITY OF RED OAK, TEXAS COMBINING BA
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CITY OF RED OAK, TEXAS NET POSITION
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CITY OF RED OAK, TEXAS FUND BALANCE
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CITY OF RED OAK, TEXAS RATIOS OF GE
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CITY OF RED OAK, TEXAS PLEDGE-REVEN
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CITY OF RED OAK, TEXAS FULL-TIME EQ
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CITY OF RED OAK, TEXAS OPERATING IN
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Compliance and Other Matters As par
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Comprehensive Annual Financial Report 2020

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