ACC 410 Review the comprehensive annual financial report (CAFR).

Fo r t h e F i s c a l Ye a r e n d e d S e p te m b e r 3 0, 2 0 1 7

C i t y o f Au st i n , Texa s Co m p re h e n s i ve A n n u a l F i n a n c i a l Re p o r t

F ro n t cove r p h o to g ra p hy p rov i d e d by S h u t te r sto c k .co m a n d p u rc h a s e d by t h e C i t y o f Au st i n A b ove p h o to g ra p hy p rov i d e d by S h u t te r sto c k .co m a n d p u rc h a s e d by t h e C i t y o f Au st i n

Comprehensive Annual Financial Report

City of Austin, Texas For the year ended September 30, 2017 Prepared by: Controller’s Office Elaine Hart, CPA Chief Financial Officer Greg Canally Deputy Chief Financial Officer Diana Thomas, CPA

Controller Members of the Government Finance Officers Association of the United States and Canada

City Council

Steve Adler Mayor

Term expires January 2019

Kathie Tovo Mayor Pro Tem (District 9)

Term expires January 2019

Council Members District Term expiration Ora Houston 1 January 2019 Delia Garza 2 January 2021 Sabino “Pio” Renteria 3 January 2019 Gregorio “Greg” Casar 4 January 2021 Ann Kitchen 5 January 2019 Jimmy Flannigan 6 January 2021 Leslie Pool 7 January 2021

Ellen Troxclair 8 January 2019

Alison Alter 10 January 2021

Spencer Cronk City Manager

Exhibit Page

Letter of Transmittal -- i City Organization Chart -- xi Certificate of Achievement -- xii

Independent Auditors' Report -- 1 Management's Discussion and Analysis (Unaudited) -- 4 Basic Financial Statements Government-wide Financial Statements:

Statement of Net Position A-1 18 Statement of Activities A-2 20

Fund Financial Statements: Governmental Funds Balance Sheet B-1 22 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position B-1.1 23 Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances B-2 24 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and

Changes in Fund Balances to the Statement of Activities B-2.1 25 Proprietary Funds Statement of Net Position C-1 26 Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position C-2 32 Proprietary Funds Statement of Cash Flows C-3 34 Fiduciary Funds Statement of Fiduciary Net Position D-1 40 Fiduciary Funds Statement of Changes in Fiduciary Net Position D-2 41

Notes to Basic Financial Statements: Note 1 Summary of Significant Accounting Policies -- 42 Note 2 Pooled Investments and Cash -- 55 Note 3 Investments and Deposits -- 56 Note 4 Property Taxes -- 61 Note 5 Capital Assets and Infrastructure -- 62 Note 6 Debt and Non-Debt Liabilities -- 70 Note 7 Retirement Plans -- 89 Note 8 Other Postemployment Benefits -- 96 Note 9 Derivative Instruments -- 98 Note 10 Deficits in Fund Balances and Net Position -- 103 Note 11 Interfund Balances and Transfers -- 104 Note 12 Selected Revenues -- 105 Note 13 Tax Abatements -- 106 Note 14 Commitments and Contingencies -- 107 Note 15 Litigation -- 112 Note 16 Conduit Debt -- 112 Note 17 Segment Information - Convention Center -- 113 Note 18 Subsequent Events -- 114

Required Supplementary Information (RSI) (Unaudited) General Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balances--Budget

and Actual-Budget Basis RSI 116 Notes to Required Supplementary Information (RSI-1) - Budget Basis Reporting RSI 117 Retirement Plans-Trend Information RSI 118 Other Postemployment Benefits-Trend Information RSI 122

CITY OF AUSTIN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT

Year Ended September 30, 2017

TABLE OF CONTENTS

INTRODUCTION (Unaudited)

FINANCIAL SECTION

Exhibit Page FINANCIAL SECTION, Continued

Combining and Individual Fund Financial Statements and Schedules General Fund

Schedule of Revenues - Budget and Actual-Budget Basis E-1 123 Schedule of Expenditures - Budget and Actual-Budget Basis E-2 124 Schedule of Transfers - Budget and Actual-Budget Basis E-3 126

Nonmajor Governmental Funds Combining Balance Sheet E-4 128 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances E-5 129

Special Revenue Funds Combining Balance Sheet E-6 131 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances E-7 132 Combining Balance Sheet - All Special Revenue Grants E-8 133 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – All Special Revenue Grants E-9 134 Combining Schedule of Expenditures - All Special Revenue Grants E-10 135 Other - Combining Balance Sheet E-11 136 Other - Combining Statement of Revenues, Expenditures, and Changes in Fund Balances E-12 142 Other - Combining Schedule of Revenues, Expenditures, and Transfers - Budget and Actual-Budget Basis E-13 148

Debt Service Funds Combining Balance Sheet E-14 154 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances E-15 155 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual-Budget Basis E-16 156

Capital Projects Funds Combining Balance Sheet E-17 158 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances E-18 164

Permanent Funds Combining Balance Sheet E-19 172 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances E-20 173

Nonmajor Enterprise Funds Combining Statement of Net Position F-1 176 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position F-2 180 Combining Statement of Cash Flows F-3 182

Internal Service Funds Combining Statement of Net Position G-1 188 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position G-2 190 Combining Statement of Cash Flows G-3 192

Fiduciary Funds Private-purpose Trust Funds Combining Statement of Fiduciary Net Position H-1 197 Combining Statement of Changes in Fiduciary Net Position H-2 198 Agency Funds Combining Statement of Changes in Assets and Liabilities H-3 199

Year Ended September 30, 2017

TABLE OF CONTENTS (continued)

CITY OF AUSTIN, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT

Exhibit Page FINANCIAL SECTION, Continued

Discretely Presented Component Units Combining Statement of Net Position I-1 201 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position I-2 202 Combining Statement of Cash Flows I-3 203

Supplemental Schedules Budgetary General Fund - Supplementary Schedule of Revenues, Expenditures, and Changes in Fund Balances--Budget and Actual-Budget Basis J-1 205 Enterprise Related Grants - Combining Balance Sheet J-2 210 Enterprise Related Grants - Combining Schedule of Expenditures J-3 211 Schedule of General Obligation Bonds Authorized and Unissued J-4 212 Schedule of Revenue Bonds Authorized, Deauthorized and Unissued J-5 213

STATISTICAL SECTION (Unaudited)

Table Page Financial Trends

Net Position by Component - Last Ten Fiscal Years 1 215 Changes in Net Position - Last Ten Fiscal Years 2 216 Program Revenues by Function/Program - Last Ten Fiscal Years 3 218 Fund Balances, Governmental Funds - Last Ten Fiscal Years 4 219 Changes in Fund Balances, Governmental Funds - Last Ten Fiscal Years 5 220

Revenue Capacity Tax Revenues By Source, Governmental Funds - Last Ten Fiscal Years 6 221 Property Appraised Value, Taxable Value, Tax Rates, Tax Levies, and Tax

Collections - Last Ten Fiscal Years 7 222 Assessed Taxable Property Value by Class - Last Ten Fiscal Years 8 223 Property Taxes and Tax Levies for Direct and Overlapping Governments

With Applicable Percentages Over 10% - Last Ten Fiscal Years 9 224 Principal Property Taxpayers - Current Year and Nine Years Ago 10 225 Direct and Overlapping Sales Tax Rates - Last Ten Fiscal Years 11 226 Taxable Sales by Category - Last Ten Fiscal Years 12 227

Debt Capacity Ratios of Outstanding Debt by Type - Last Ten Fiscal Years 13 228 Ratios of Net General Bonded Debt Outstanding - Last Ten Fiscal Years 14 229 Direct and Overlapping Governmental Activities Debt 15 230 Legal Debt Margin Information - Last Ten Fiscal Years 16 231 Pledged-Revenue Coverage - Last Ten Fiscal Years 17 232

Demographic and Economic Information Demographic and Economic Statistics - Last Ten Fiscal Years 18 233 Principal Employers - Current Year and Nine Years Ago 19 234

Operating Information Full-time Equivalent Employees by Function/Program - Last Ten Fiscal Years 20 235 Operating Indicators by Function/Program - Last Ten Fiscal Years 21 236 Capital Asset Statistics by Function/Program - Last Ten Fiscal Years 22 239

COMPREHENSIVE ANNUAL FINANCIAL REPORT

TABLE OF CONTENTS (continued)

Year Ended September 30, 2017

CITY OF AUSTIN, TEXAS

This page intentionally blank.

INTRODUCTION

i

City Hall 301 West 2nd St., P.O. Box 1088, Austin, Texas 78767

March 1, 2018 Honorable Mayor, Mayor Pro Tem and Councilmembers, and Citizens of Austin City of Austin, Texas We are pleased to submit to you the Comprehensive Annual Financial Report (CAFR) of the City of Austin, Texas for the fiscal year ended September 30, 2017. The CAFR is provided to give detailed information about the financial position and activities of the City to citizens, City Council, City staff, and other readers. City management is responsible for both the accuracy of the presented data and the completeness and fairness of the presentations, including all disclosures. We believe the data, as presented, is accurate in all material respects and is presented in a manner which fairly sets forth the financial position and results of operations of the City. These financial statements have been prepared by the Controller's Office in accordance with generally accepted accounting principles (GAAP) for local governments. The basic financial statements and related notes have been audited by the independent firm of Certified Public Accountants, Deloitte & Touche LLP. This audit satisfies Article VII, Section 16 of the City Charter, which requires an annual audit of all accounts of the City by an independent Certified Public Accountant. Grant awards are being audited under the provisions of the Single Audit Act of 1996, as amended, and the State of Texas Uniform Grants Management Standards. The Single Audit reports will be issued separately. Management’s discussion and analysis (MD&A) immediately follows the independent auditors’ report. It provides a narrative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is intended to complement the MD&A and should be read in conjunction with it. AUSTIN’S GOVERNMENT AND THE REPORTING ENTITY General Information The City of Austin, chartered in 1839, has a Council-Manager form of government with a Mayor who is elected at large and ten Councilmembers who are elected by geographic district. The elected officials serve four-year staggered terms subject to a maximum of two consecutive terms. The City Manager, appointed by the City Council, is responsible to the Council for the management of all City employees, except Council appointees, and for the administration of all City affairs.

Austin, the capital of Texas, is the fourth largest city in the state (behind Houston, San Antonio, and Dallas) and the eleventh largest in the nation with a September 2017 population of 946,080 according to the City’s estimates. Over the past ten years, Austin’s population increased by approximately 26.8% or 199,975 residents. The City’s demographer predicts that Austin will surpass the 1 million mark by 2020. With a population of over two million people, the Austin metro is the fastest growing metro of its size in the U.S. Geographically, Austin consists of approximately 325 square miles. The current estimated median household income for Austin residents is $56,849 according to Nielsen Site Reports. Austin’s per capita income is estimated to be $53,908.

750,000

800,000

850,000

900,000

950,000

2013 2014 2015 2016 2017

841,649 878,002

899,119 925,491

946,080

City of Austin Population (as of September 30)

ii

Austin is nationally recognized as a great place to live due in part to its diverse and eclectic population, as well as its promotion of a year-round outdoor active lifestyle. Austin draws its special character from its physical setting along the Balcones Escarpment, a city wedged between coastal plains and dramatic cliffs, canyons, and juniper- carpeted rolling hills; it exists as a physical and cultural oasis where talented, entrepreneurial, hard-working people are drawn from all over the world. Austin’s quality of life has become its biggest economic development engine, and the City’s diverse demographic structure serves to support and enrich its quality of life. The City of Austin is fortunate to offer a host of broad-ranged educational opportunities for those individuals with a desire to learn. Austin is a highly educated city, with 48% of adults twenty-five years or older holding a bachelor’s or advanced degree, compared to 28% for Texas and 30% for the U.S. as a whole. Higher education is a significant aspect of life in the Austin area which is host to six universities, a robust community college system, and numerous other institutions of higher learning. The University of Texas at Austin (UT), a world-class center of education and research, is the 7th largest public university in terms of undergraduate enrollment. In the 2018 U.S. News & World Report Best Colleges survey, the university was ranked 18th among public universities and its business programs were ranked 5th among national universities, both public and private. Reporting Entity This CAFR includes all funds of the City, including those organizations required to be included because the City is financially accountable for them. The City provides a full range of services, including general government; public safety; transportation, planning, and sustainability; public health; public recreation and culture; urban growth management; electric; water; wastewater; airport; convention; and other enterprise services. In addition, the financial statements include these separate legal entities (and, the fund where reported if different from the entity name): the Austin Housing Finance Corporation (Housing Assistance Fund), the Urban Renewal Agency, the Austin Industrial Development Corporation, the Mueller Local Government Corporation, and the Austin-Bergstrom International Airport (ABIA) Development Corporation. These entities are reported as governmental activities. Additionally, the financial statements include Austin-Bergstrom Landhost Enterprises, Inc., Austin Convention Enterprises, Inc., and Waller Creek Local Government Corporation. These separate legal entities are reported as discrete component units on the government-wide statements. THE ECONOMIC OUTLOOK AND MAJOR INITIATIVES Local Economy The Austin metropolitan area is consistently recognized among the most inventive, creative, wired, educated, fit, and loved cities in which to live and work. The overall economic activity of the Austin MSA is growing at a brisk rate, 7.4% in 2017 per the Business Cycle Index by the Federal Reserve Bank of Dallas. Austin was ranked as the 2017 Top Metro for Economic Growth Potential by Business Facilities 13th annual rankings report. The report cites Austin as one of the most dynamic and diverse metro economies in the nation and states that Austin “is a thriving cosmopolitan city that has it all including a highly skilled workforce with a demographic up-arrow that points to sustainable growth for years to come.” Real gross domestic product (GDP) increased in the Austin–Round Rock metropolitan area by 4.9% compared to the U.S. average of 1.7%, per the latest report by the Bureau of Economic Analysis based on 2016 data. Growth in the metro area was led by the professional and business services sector. While the Austin economy has diversified over the last decade, the technology industry continues to play a large role in the City’s economic expansion. Various semiconductor companies and leading chip designers with 10,000 to 15,000 jobs call Austin home along with Apple’s 6,000 employees in the metro area. Just south east of downtown, Oracle recently opened their new corporate waterfront campus, a five-story 500,000- square foot facility that will initially house 3,000 tech workers. Oracle also purchased a new 295-unit apartment complex right next to their new corporate campus for use by their employees. Oracle has plans for expansion and recently purchased 6 acres just south of its corporate campus.

iii

Going forward, Austin economic consulting firm, Texas Perspectives, projects the creation of 32,500 jobs in 2018 with personal income expanding in the 6% range. In the real estate area, according to Emerging Trends in Real Estate 2018 published by PricewaterhouseCoopers US and the Urban Land Institute, Austin held the second spot as the top market to watch in 2018. This report is the compilation of interviews and surveys of over 2,000 real estate professionals across all segments of the industry. Some of Austin’s strengths cited in the report include the attractiveness of the market to millennials and the presence of a research university. Nationwide trends identified by the report include the effect of generation Z on future retail and work space, housing shortages, senior housing, and the strength of multifamily markets. Texas Economy – In 2017 the Texas economy expanded due to the energy sector’s increase in oil prices, manufacturing, professional and business sectors, and in the last quarter of the year, the reconstruction efforts on the Texas coast due to Hurricane Harvey. This economic expansion helped the statewide unemployment rate fall to a record low of 3.8% in 2017 with total new non-farm jobs exceeding 278,000. The state added 9% more jobs in energy and 2.8% more in manufacturing. Although unemployment levels have decreased to an all-time low, employee compensation remained stagnant as private hourly earnings have increased 1.1% statewide. Texas hourly wages overall are below the national average by $0.40, although Texas manufacturing jobs paid a 10.5% premium in hourly earnings compared to the national average. With a gross state product of almost $1.6 trillion, the Texas economy is the second largest in the U.S. The long- term outlook for the State remains positive. According to the Real Estate Center at Texas A&M University, in 2017 the Texas Leading Economic Index, which measures future directional changes in the business cycle, rose 2.8% after faltering the two previous years. Further, the Texas Consumer Confidence Index jumped 19.6% reflecting this optimism. Employment – Austin area employment growth continued to be solid in 2017. In December 2017, Austin’s unemployment rate of 2.7% was well below the state and national unemployment rates of 3.9% and 4.1%, respectively. 2017 saw a 3.0% growth in job creation despite a tightening labor market in certain fields. Austin has a high demand for skilled workers as seen in the manufacturing sector where Austin manufacturers continue to move from traditional to advanced manufacturing requiring specific highly technical skills. High tech companies are continuing to expand their presence in Austin, including Oracle, Google, Apple, Facebook, and Amazon. Due to the demand for skilled labor, wages across the metro area increased for a fifth straight year. Job growth in the Austin MSA was ranked sixth along with several other cities when comparing activity in the top 50 metro areas per the U.S. Bureau of Labor statistics. Austin added more than 27,300 net new jobs in 2017.

Sales Taxes – Consumer spending growth (as measured by sales tax collections) reflects Austin’s population and economic growth. Since 2009, sales tax revenue steadily increased. Fiscal year 2017 experienced a 2.9% increase over fiscal year 2016, which was a 4.2% increase over 2015. Lower‐than anticipated growth in fiscal year 2017, despite a continued population influx, evidences the effects of minor gains in real income growth, but it also reflects the growing competitive challenge presented by the expansion of retail developments in Austin’s neighboring communities. Total personal income in the metro area grew 4.5% in 2017 up from 0.9% in 2016.

Tourism - Austin continues to be a destination for both business and recreational activities. Austin is known around the world as the “Live Music Capital of the World” with over 250 live music venues. Per the Downtown Austin Alliance, Austin has over 25.6 million visitors a year with a $7 billion annual economic impact from visitor spending.

 ‐

 100,000

 200,000

 300,000

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

176,198  189,464  204,029  212,634  218,790 

Sales Tax Receipts ($ in thousands)

iv

Austin is home to a number of popular annual festivals and events many of which bring in visitors from around the world. The Austin Business Journal reports the following official 2017 attendance numbers for the top five events in Austin: (1) Austin City Limits Music Festival held at Zilker Park in the fall had the largest attendance with 450,000 people over two weekends, (2) South by Southwest (SXSW) held in March had 421,900 attendees, (3) Annual Trail of Lights in December had over 400,000 visitors, (4) Formula 1 United States Grand Prix held at the Circuit of Americas just southeast of Austin in October had 269,889 attendees, and (5) Rodeo Austin held at the Travis County Expo Center in March had 263,000 visitors. Other major festivals and events impacting the tourism economy include University of Texas athletic events, Austin Film Festival, Texas Book Festival, RTX Austin Animation & Gaming Experience, and the Statesman Capitol 10K. Austin Bergstrom International Airport (ABIA) set new annual passenger traffic records in each of the last eight years. In 2017, passenger traffic reached 13.9 million, an 11.5% increase compared to 2016. With its live music, barbequed brisket, and breakfast tacos, ABIA was ranked fifth Best Domestic Airport in the 2017 Travel & Leisure readers’ poll. As a result of increased business and tourism travel, ABIA is seeing tremendous growth in international enplanements. As of the end of 2017, ABIA had seven direct international flights. With an increase in international boardings of over 800% between 2012 and 2016, ABIA had the second fastest international growth rate for a medium size U.S. airport. ABIA had multiple expansion projects in 2017 to increase the capacity for global traffic. A new customs and border protection facility at the terminal east has doubled the number of people that can be processed from 200 to 400 per hour. In April 2017, ABIA opened a new $12 million, 30,000 square feet south terminal with 3 new gates. Construction continues on a nine-gate terminal and apron expansion which is expected to be complete in 2019. This expansion will accommodate approximately 4 million additional passengers annually. Another major undertaking is the parking garage and administration building at ABIA. Construction of the 6,000-space garage is underway and should be completed in late 2018. The administration building is in the design phase with a completion scheduled for 2019. With the increase in passenger traffic, a new baggage handling system is in the planning phase to centralize the baggage system and increase capacity. The rate of increase in hotel occupancy tax revenues slowed somewhat from an increase of 7.6% in 2016 to an increase of 4.9% in 2017. While the rate of increase slowed from the last several years, the current growth rate is still a healthy one. Austin has the highest revenue-per-available-room and occupancy rates in the state. High occupancy rates have spurred construction of new hotels across the Austin metro area in the last few years. The Austin Convention and Visitors Bureau estimates that there are over 10,000 hotel rooms within 8 blocks of the Convention Center and 35,000 rooms in the Austin area. In recent years 4,000 hotel rooms have been added to the metro area along with about 2,000 short term rental options. Currently more than 2,000 additional rooms are under construction downtown including a 1,048 room Fairmont Hotel, which is located adjacent to the Austin Convention Center and is slated to open in 2018. With the additional hotel inventory, Austin can accommodate an increase in both number and size of events hosted. The additional inventory is also having a positive impact on the City’s convention center. Medical School – The partnership between the University of Texas at Austin, Ascension Seton Healthcare Family, (Seton), and Central Health is progressing as the Dell Medical School has now been in operation since June 2016 when it accepted its first class. The associated teaching hospital, Dell Seton Medical Center at The University of Texas opened in May 2017. This 211-bed cutting-edge hospital and Level 1 Trauma Center is built, owned, and operated by Seton. The medical school and medical center anchor a new healthcare innovation zone in downtown Austin which is expected to spur growth in the life sciences sector of the economy. The innovation hub will pair science and technology entities and serve as an anchor for healthcare businesses.

5,000

10,000

15,000

2013 2014 2015 2016 2017

10,018 10,719 11,898 12,437 

13,889 

ABIA Passenger Totals (in thousands)

v

In 2017, several bio and life-sciences sector companies have relocated to Austin including Merck who is opening an IT Hub with offices on the medical school campus. In addition, the Association of British Healthcare Industries has established an innovation hub at the medical school to offer companies in the United Kingdom the opportunity to locate at this world-class facility. Central Health is in the process of redeveloping the grounds of the former Brackenridge hospital into a medical and commercial district with up to 3.7 million square feet of offices, medical facilities, shops, and residences, all adjacent to the medical school campus. Real Estate - All sectors of the real estate market are performing well. The Austin residential market is still strong

with an increase in sales of 2.5% in 2017 over 2016. As of December 2017, the median price of an Austin home increased to an all-time high of $362,000, a 27% increase from the previous year of $284,000. Austin’s housing market is experiencing an inventory shortage of homes in the $200,000 to $300,000 price range as is the case across the state. Austin homebuilders are adding “value” lines and smaller homes to capture that market share. More than half of new home construction starts during 2017 were priced below $300,000 according to Metrostudy. Homebuilders are starting more homes than they have in the past ten years but are encountering longer construction timelines with permitting delays and labor shortages as a result of natural disasters such as Hurricane Harvey.

Housing in Downtown Austin has grown in popularity. There are now approximately 8,900 units for lease or purchase in downtown Austin with more condo and apartment developments in various phases of planning and construction. The tallest current residential condo property is The Austonian condo tower with 56 stories and 188 units. The Independent, a 58-story condo, currently under construction, is slated for completion in 2019. The National Low-Income Housing Coalition reports housing rental rates are high in Travis County which are at the upper end of housing costs in the state. Recent years have seen aggressive construction of new apartment units in the area, and as a result, Austin apartment renters have started to see rent prices level off as supply begins to catch up with demand. Apartment rents have increased on average 1.4% in 2017 compared to an annual average of 5.8% for the previous five years. This slow growth in apartment rental rates could be short lived as the planned construction of new apartments may not be able to keep up with the expected job growth in the metro area. Commercial real estate continues to grow in Austin as indicated by the number of cranes in the City skyline. The Austin metro area has seen the overall commercial vacancy rate drop to a 16-year low of 8.8%. This has impacted both rental rates and new construction. Class A office space rent averaged $39.09 per square foot in 2017 up from $36.95 per square foot in 2016 according to Cushman & Wakefield’s Austin office. At the end of 2017, there was about 2.7 million square feet of new office space under construction in the Austin metro area. The demand for Class A office space in the central business district (CBD) has been particularly high as more companies are expanding their presence in the downtown area. As a result, Austin has the most expensive commercial CBD rental rates in the state of Texas and is 5th in the nation, behind only Boston, San Francisco, New York City, and Washington DC. Rents for Class A space in this area averaged more than $54 per square foot at the end of 2017. The largest multi-tenant office buildings in downtown Austin are the Frost Bank Tower, One Congress Plaza, One American Center, and the 500 West 2nd - all with greater than 500,000 square feet of rentable space. There are plans for several new mixed use high rise buildings in downtown Austin to meet this demand. Developers are planning what would be Austin’s tallest building at over 60 stories with more than 500,000 square feet of office space and 300 luxury apartments at 600 Guadalupe. At 308 Guadalupe, one of the largest undeveloped lots in the CBD, a vertical mixed-use center with about 10% of the housing set up as low- and moderate-income residences is in the planning phase.

0

100,000

200,000

300,000

2013 2014 2015 2016 2017

223,890 242,500 263,900 284,000

362,000

Austin‐Round Rock MSA Median Single‐Family Home Prices

Median Single‐Family Home Prices

vi

Recognition – Austin continues to be recognized by others for being a leader in numerous areas such as job opportunities, creative economy, and business opportunities:

#5 Best Cities for Startups - Innovation that Matters 2017 US Chamber of Commerce

October 2017

#5 Top Metros for Talent Attraction EMSI

June 2017

#3 Top City for Small Business in 2017

Biz2Credit. April 2017

#1 Best Places for Veterans to Live

WalletHub November 2017

#3 Where Tech Salaries go Furthest, 2017

Indeed September 2017

#3 City Creating the Most Tech Jobs in 2017

New Geography/Forbes. March 2017

#2 Startup Activity Index Kauffman Foundation

May 2017

#7 Best City for Jobs New Economy/Forbes

May 2017

#7 Best Foodie City in America WalletHub

October 2017 Major Initiatives The City has a long-term vision of Austin being the most livable community in the country. The City has a highly dedicated and exceptional workforce to support City Council’s policies and initiatives. City staff is committed to creating a work environment that fosters creative thinking and innovation throughout the organization, thereby better positioning the workforce to more effectively respond to new challenges as well as new opportunities. City employees take enormous pride in their work. In 2017, Forbes recognized the City of Austin as the 9th overall best employer in the United States in its list of America’s Best Employers. The list ranks both the public and private sectors. Austin was the highest ranked governmental employer in this survey. Imagine Austin Austin residents share a sense of community pride and a determination that the City’s vision is not just a slogan, but a reality for everyone who lives here. Imagine Austin, a comprehensive plan for the City’s future, sets a context to guide decision-makers for the next 30 years. The plan adheres to 6 core principles established in collaboration with Austin citizens: (1) Grow as a compact, connected city, (2) Integrate nature into the city, (3) Provide paths to prosperity for all, (4) Develop as an affordable and healthy community, (5) Sustainably manage water, energy, and other environmental resources, and (6) Think creatively and work together. The plan’s success is monitored annually with performance metrics and will be formally assessed at least every five years. During the development of both the annual and capital improvement budgets, Imagine Austin is a consideration in how resources are allocated. Strategic Plan In addition to Imagine Austin, in the spring of 2017 the City Council selected six strategic outcomes to help develop and guide City policies, initiatives, and budget development. The six strategic outcomes are:

 Mobility - getting us where we want to go, when we want to get there, safely and cost effectively;  Economic Opportunity and Affordability - having economic opportunities and resources that enable us to

thrive in our community;  Safety - being safe in our home, at work, and in our community;  Health - enjoying a sustainable environment and a healthy life, physically and mentally;  Cultural and Learning Opportunities - being enriched by Austin’s unique civic, cultural, ethnic, and learning

opportunities; and  Government that Works for All of Us - believing that city government works effectively and collaboratively

for all of us--that is equitable, ethical and innovative.

vii

Mobility - In November 2016, Austinites approved a $720 million general obligation bond proposition to fund transportation and mobility improvements. Approximately two-thirds of the funding will be devoted to corridor improvement projects with the remainder earmarked for regional and local improvements including bicycle and pedestrian facilities and safety. The capital spending plan for 2018 includes $60.4 million for mobility projects including improvements to the FM620/RM2222 intersection, design for corridor improvements, safety improvements at several intersections, and infrastructure improvements for the Safe Routes to Schools program. Progress continues on several joint interchange projects along Interstate 35 with the Texas Department of Transportation, one of the City’s regional partners. In addition to projects, the City is updating its transportation plan to expand the vision of the Imagine Austin plan into actionable mobility-related goals to guide future transportation investments. Economic Opportunity and Affordability - Affordability is a prime consideration as the City makes decisions that impact the citizens who live here and the businesses that operate here. Whether setting taxes or utility rates, taking actions that provide affordable housing, or providing services and programs to the underprivileged members of the community, affordability is always part of the discussion. For 2018 there were no base rate increases for five of the City’s seven rate assessing enterprise departments. Notably, for the first time in more than a decade, Austin Water customers will experience no rate increase. Housing affordability is increasingly an issue in a region where housing costs have been rising at a brisk pace and the impact is felt the most by those in the service, music, and creative areas. Since 2006, the median sales price of a home increased almost 63% gradually pricing more and more families out of the home buying market. In April 2017, the City Council passed the Strategic Housing Blueprint which calls for an additional 60,000 affordable housing units to be created by both public and private development in Austin by 2027. The 2018 budget includes more than $20 million for housing development, home repair services, and permanent supportive housing in Neighborhood Housing and Community Development. Notable projects include a 50-unit permanent supportive housing facility, a 125-unit affordable apartment complex, and $3 million to renovate an independent living facility for seniors and people with disabilities. Safety – In addition to the traffic safety enhancements previously mentioned, in 2018 funding is provided for additional positions in Austin Code for enforcement. In addition, all of the public safety departments received additional funding for either positions or enhancements. Watershed Protection is continuing to buyout properties in sections of town that have a high risk of flooding. Health – Funding was provided for adding staff to the aquatics program to comply with new Texas legal requirements for pool safety, for a new joint-use recreation and community center to be developed in the Montopolis neighborhood, and for the operation of a new sobriety center. Fleet Services is in the first phases of installing charging stations for the City’s growing fleet of electric vehicles. In addition, several departments received awards for their sustainability efforts:

 Watershed Protection Department was awarded the prestigious MS4 award in November 2017 for having the best, large city Municipal Separate Storm Sewer System.

 The City of Austin ranked fifth in the nation among local government purchasers of energy produced by renewable sources per the U.S. Environmental Protection Agency (EPA). In 2017 Austin Energy purchased an additional 200 megawatts (MW) of wind power and the output of a 150-megawatt solar power plant bringing total wind and solar power under contract to 1,300 MW and 792 MW respectively.

 In April 2017, the EPA awarded Austin Energy its 11th ENERGY STAR Partner of the Year Energy Efficiency Program Delivery Award for 2017 for the utility’s Home Performance with ENERGY STAR® program which will allow Austin Energy to save 1,535 megawatt hours of electricity annually.

Cultural and Learning Opportunities - The City’s world class new central library opened in October 2017. The new library overlooks Shoal Creek and Lady Bird Lake and is a main attraction in the redeveloped Seaholm district. Among other things, this “library for the future” features flexible and blended spaces, state-of-the-art technology, sustainable features, and community gathering places. Government that Works - CodeNEXT, a major revision of the City’s land development code which determines how land can be used throughout the City, is in the final stages of being completed. After publishing several drafts and receiving input from all interested parties, a third draft was recently released. A final recommendation from the land use commissions is anticipated in the spring and final adoption of the plan is expected in 2018.

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The City established a new Equity Office to build and sustain a culture of equity across the City, help the City remain engaged with residents, meet community needs effectively, and minimize unintended consequences and biases in its decision making. Austin 3-1-1 achieved ISO standard certification, becoming the first 3-1-1 center in the nation to be ISO 9001:2015 certified. ISO, the International Organization for Standardization, is a world-renowned and recognized international body that standardizes how businesses and organizations manage information and processes based on quality management principles. FINANCIAL INFORMATION Internal Controls City management is responsible for establishing, implementing, and maintaining a framework of internal controls designed to ensure that City assets are protected from loss, theft, or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with GAAP. The system of internal control is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of control should not exceed the benefits likely to be derived, and the evaluation of costs and benefits requires estimates and judgments by management. Financial Policies The City adopted a comprehensive set of Financial Policies to ensure that the City’s financial resources are managed in a prudent manner and to provide a foundation for financial sustainability. Compliance with these policies is reviewed annually as part of the budget process. The policies and results of the review are published in the Approved Budget document. An important element of the policies dictates that current revenue will be sufficient to support current expenditures (defined as “structural balance”). Assigned and unassigned fund balances in excess of what is required shall normally be used to fund capital items. The City maintains the goal of a structurally balanced budget to achieve long-term financial stability for the Austin community. Long-term Financial Planning Austin leaders are continually looking towards and planning for the future. A key City financial policy requires annual preparation of a five-year financial forecast projecting revenues and expenditures for all operating funds. This forecast is used as a tool to develop the following year's operating budget. In addition, the City annually prepares a five-year Capital Improvement Project (CIP) Plan that outlines all capital projects in progress, those that will be implemented in the five-year horizon, and related funding sources. A second plan covering a 10-year planning horizon, the Long-Range CIP Strategic Plan, is also updated annually. This plan provides a data-driven approach to planning for how the City’s future capital improvements support the way Austin functions and grows. Such an approach assists in aligning the City’s CIP investments with the Imagine Austin Comprehensive Plan and the Council’s new strategic priorities as the City strives to strike a balance between ongoing capital needs necessary to maintain services for a rapidly growing community and strategic investments that support community priorities. City departments prepare a number of other long- and mid- range service plans that provide input into decisions made in the planning and budgeting process. These plans range from annexation to clean energy and climate protection to strategic mobility planning. A brief summary of these planning documents can be found in the Integrated Planning section of Volume 2 of the City’s approved budget. Maintaining sound financial and economic development policies within the City organization allows for a high level of services to the community. Because of consistent adherence to our financial policies and the area’s healthy economy, the City’s bond ratings for General Obligation bonds continue to be “AAA” for all three bond rating agencies, Moody’s (Aaa), Standard & Poor’s and Fitch Investors. Austin Energy’s ratings were upgraded by two of the three rating agencies. Moody’s ratings are now Aa3 and Standard & Poor’s are now AA Stable. Both agencies cited continuing advancement in financial performance even while base revenue has been reduced. Fitch ratings remained constant at AA- Stable. Finally, Standard & Poor’s increased their rating for the Convention Center’s revenue bonds and subordinate bonds from AA- to AA and A to A+, respectively.

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Budgetary Control The annual operating budget is proposed by the City Manager and approved by the City Council after public discussion. Annual budgets are legally required for the General Fund, debt service funds, and certain special revenue funds. While not legally required, annual budgets are also adopted for the enterprise and internal service funds. Annual updates to the Capital Improvements Program budgets follow a similar process. Multi-year budgets are adopted for capital projects and grant funds. Throughout the year, primary responsibility for fiscal analysis of budget to actual expense or revenue and overall program fiscal standing rests with the department operating the program. The City Manager is authorized to transfer appropriation balances within a fund and department of the City. The City Council must approve amendments to the budget and transfers of appropriations from one fund and department to another. As demonstrated by the statements and schedules included in the 2017 CAFR, the City continues to meet its responsibility for sound financial management. Budgetary Information The 2018 Budget was developed in a manner true to the City’s unwavering commitment to openness, transparency, and public engagement. The City’s Budget is organized around activities and services. The budget development process integrates collaborative approach to the City’s finances with business planning, performance measurement, and resident input, thereby elevating budget discussions to meaningful conversations about outcomes that impact our residents. This budget cycle set aside $5 million to address new strategic priorities of the City Council. Input was gathered and evaluated to address the many issues, concerns, and priorities identified by Austin’s citizens, employees, boards and commissions, and Councilmembers. The result was a budget built around the ideals of livability, affordability, and inclusivity that dictate the operations of Austin’s city government. The structurally balanced fiscal year 2018 Approved Budget totals $3.9 billion and includes $1 billion for the General Fund, providing for the continuation of high-quality public safety, health, library, parks, water, energy, infrastructure, development, and other services to the citizens of Austin. Austin budgeted revenue comes from utility charges (49%), various taxes (including property) (24%), charges for services and goods (14%), and other revenue such as interest, fees, and transfers (13%). The 2018 budget was approved with a 0.3 cent increase to the property tax rate, from 44.18 to 44.48 cents per $100 of taxable value. The City’s largest enterprise department, Austin Energy, is the eighth largest municipal-owned electric utility in the United States in terms of customers served. Austin Energy serves more than 465,000 customers within a service territory of approximately 437 square miles in the Greater Austin area. The approved budget for fiscal year 2018 is $1.4 billion in annual revenues, including transfers. The utility has a diverse generation mix that includes nuclear, coal, natural gas, and an increasing portfolio of renewable energy sources such as solar and wind. The City’s second largest enterprise activity is the Austin Water Utility, which provides water and wastewater services to more than one million retail and wholesale customers spanning more than 540 square miles within Austin and surrounding areas. The fiscal year 2018 budget projects revenues and transfers in of $624 million. For the first time in several years, the utility has a zero‐percent rate increase for water and wastewater services for 2018. Growth in revenue is the result of projected customer growth and higher water consumption projections. AWARDS The Government Finance Officers Association of the United States and Canada (GFOA) awards a Certificate of Achievement for Excellence in Financial Reporting to a governmental unit that publishes a Comprehensive Annual Financial Report that meets the GFOA program standards. The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its 2016 CAFR. The City has received this award for 10 consecutive years. The certificate is valid for a period of one year only. City management believes that this 2017 CAFR conforms to the Certificate of Achievement Program requirements, and we are submitting it to the GFOA for review. The City also received the GFOA Distinguished Budget Presentation award for the 2017 budget as well as a 2017 Certificate of Excellence in Performance Measurement from the ICMA.

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ACKNOWLEDGMENTS

The preparation of this report could not have been accomplished without the dedicated services of the entire staff of the Controller's Office. Other departments and offices of the City have also contributed directly or indirectly to the preparation of this report: the Budget Office, Treasury Office, the Office of the City Auditor, the financial staff at Austin Energy and other financial staff throughout the City. We would like to express our appreciation to all who assisted in this effort.

We acknowledge the thorough, professional, and timely manner in which our independent auditor, Deloitte & Touche LLP, conducted the audit. Finally, we acknowledge the Mayor and Councilmembers who have consistently supported the City's goal of excellence in all aspects of financial management. Their support is greatly appreciated.

Elaine Hart, CPA Chief Financial Officer

Diana Thomas, CPA Controller

Economic Development

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City Auditor

City Clerk

Municipal Court

Municipal Court Judge

Planning & Zoning

Watershed Protection

Labor Relations

Telecommunications & Regulatory Affairs

Support Services Development Services

Assistant City Manager

Aviation

Development Services

Mayor and City Council

Assistant City ManagerAssistant City Manager

Public SafetyInfrastructure Services

Austin Energy

Law

Equity

Police Monitor

Performance Management

Purchasing

Treasury

Austin Residents

City Manager

Downtown Community Court

Austin/Travis County Emergency Medical

Services

Financial Services

Chief Financial Officer

Budget

Capital Contracting

Capital Planning

Controller

Homeland Security & Emergency Management

Administrative Services

Chief of Staff

Communications & Public Information

Intergovernmental Relations

Small & Minority Business Resources

Real Estate Services

Community Services

Assistant City Manager

Animal Services

Austin Parks & Recreation

Austin Public Health

Austin Public Library

Austin Code

Austin Police

Austin Fire

Sustainability

Innovation

Neighborhood Housing & Community Development

Public Works

Assistant City Manager

Austin Convention Center

Building Services

Communications & Technology Management

Fleet Services

Human Resources

Austin Resource Recovery

Corridor Program Implementation

Austin Water

Austin Transportation

City of Austin, Texas

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The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Austin, Texas for its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2016. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. City management believes that this 2017 CAFR conforms to the Certificate of Achievement Program requirements, and we are submitting it to GFOA for their review.

FINANCIAL SECTION

INDEPENDENT AUDITORS’ REPORT

The Honorable Mayor and Members of the City Council, City of Austin, Texas

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Austin, Texas (the “City”), as of and for the year ended September 30, 2017, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of discretely presented component units which represent 100% of the assets, net position, and revenues of the discretely presented component units. Those statements were audited by other auditors whose reports, one of which (Austin Bergstrom Landhost Enterprises) contains an emphasis of matter paragraph related to a going concern issue, have been furnished to us, and our opinion, insofar as it relates to the amounts included for the discretely presented component units, is based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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.

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Austin, Texas, as of September 30, 2017, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, the General Fund—Schedule of Revenues, Expenditures, and Changes in Fund Balances—Budget and Actual—Budget Basis, the Retirement Plans—Trend Information, and the Other Postemployment Benefits—Trend Information, as listed in the table of contents, 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 and the other auditors 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 combining and individual nonmajor fund financial statements and supplemental schedules and the introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements and supplemental 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 by us and other auditors. In our opinion, based on our audit, the procedures performed as described above, and the reports of the other auditors, the

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combining and individual nonmajor fund financial statements and supplemental 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 it.

March 1, 2018

Management’s Discussion and Analysis City of Austin, Texas September 30, 2017 2/26/2018 2:58 PM

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The Management’s Discussion and Analysis (MD&A) section of the City of Austin’s (the City) Comprehensive Annual Financial Report presents a narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2017. The financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for local governments as prescribed by the Governmental Accounting Standards Board (GASB). The City has implemented GASB Statements No. 1 through No. 74, No. 76 through No. 80, and No. 82. FINANCIAL HIGHLIGHTS Government-wide financial statements The assets of the City exceeded its liabilities at the end of the fiscal year 2017, resulting in $4.4 billion of net position. Net position associated with governmental activities is approximately $0.5 billion, or 10.3% of total net position, while the net position associated with business-type activities is approximately $4.0 billion, or 89.7% of the total net position of the City. The largest portion of net position consists of net investment in capital assets, which is $4.1 billion, or 91.8% of total net position. The City’s unrestricted net position is a deficit of $478.3 million. Unrestricted net position for governmental activities is a deficit of $1.4 billion, while unrestricted net position for business-type activities is approximately $915.8 million, or 23.0% of total business- type net position. The deficit in governmental unrestricted net position is largely due to the net pension liability of $1.2 billion and other postemployment benefits payable of $631.2 million. During fiscal year 2017, total net position for the City of Austin increased $121.0 million or 2.8%. Of this amount, governmental activities decreased $177.6 million, or 28.1% from the previous year and business-type activities increased $298.5 million, or 8.1%. Total revenues for the City increased $111.6 million; revenues for governmental activities increased $25.2 million; revenues for business-type activities increased $86.4 million. Total expenses for the City increased $213.5 million; expenses for governmental activities increased $92.5 million; expenses for business-type activities increased $121.0 million. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements, consisting of three components:

 government-wide financial statements,  fund financial statements, and  notes to the financial statements.

This report also contains required supplementary information in addition to the basic financial statements. a -- 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 comparable to a private-sector business. The two government-wide financial statements are, as follows:  The Statement of Net Position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and

deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Austin is improving or deteriorating.

 The Statement of Activities presents information showing how the City’s net position changed during the most recent fiscal

year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods, such as revenues for uncollected taxes and expenses for future general obligation debt payments. The statement includes the annual depreciation for infrastructure and governmental assets.

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government; public safety; transportation, planning and sustainability; public health; public recreation and culture; and urban growth management. The business-type activities include electric, water, wastewater, airport, convention, environmental and health services, public recreation, and urban growth management.

Management’s Discussion and Analysis City of Austin, Texas September 30, 2017 2/26/2018 2:58 PM (Continued)

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OVERVIEW OF THE FINANCIAL STATEMENTS, continued The government-wide financial statements include the City as well as blended component units: the Austin Housing Finance Corporation (AHFC), the Austin Industrial Development Corporation (AIDC), Mueller Local Government Corporation (MLGC), Austin-Bergstrom International Airport (ABIA) Development Corporation, and the Urban Renewal Agency (URA). The operations of AHFC, AIDC, MLGC, ABIA, and URA are included within the governmental activities of the government-wide financial statements. AHFC is reported as the Housing Assistance Fund. Although legally separate from the City, these component units are blended with the City because of their governance or financial relationships to the City. The government-wide financial statements also include three discretely presented component units: Austin-Bergstrom Landhost Enterprises, Inc. (ABLE), Austin Convention Enterprises, Inc. (ACE), and Waller Creek Local Government Corporation (WCLGC). These entities are legally separate entities that do not meet the GASB reporting requirements for inclusion as part of the City’s operations; therefore, data from these units are shown separately from data of the City. More information on these entities can be found in Note 1, including how to get a copy of separately audited financial statements for ACE and ABLE. WCLGC activities are recorded in the City’s financial system and City staff prepares the financial reports for this entity. b -- Fund financial statements The fund financial statements are designed to report information about groupings of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into the following three categories: governmental, proprietary, and fiduciary funds. Within the governmental and proprietary categories, the emphasis is on the major funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. Most of the City’s basic services are reported in governmental funds. These funds focus on current sources and uses of liquid resources and on the balances of available resources at the end of the fiscal year. This information may be useful in determining what financial resources are available in the near term to finance the City’s future obligations. Because the focus of governmental fund level statements 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 in the government-wide statements. In addition to the governmental funds balance sheet and statement of revenues, expenditures, and changes in fund balance, separate statements are provided that reconcile between the government-wide and fund level financial statements. The City’s General Fund is reported as a major fund and information is presented separately in the governmental fund balance sheet and statement of revenues, expenditures, and changes in fund balances. In addition, the City maintains several individual governmental funds organized according to their type (special revenue, debt service, capital projects, and permanent funds). Data from these governmental funds are combined into a single column labeled nonmajor governmental funds. Individual fund data for the funds is provided in the form of combining statements in the supplementary section of this report. Proprietary funds. Proprietary funds are generally used to account for services for which the City charges customers – either outside customers or internal units or departments of the City. Proprietary fund statements provide the same type of information shown in the government-wide financial statements, only in more detail. The City maintains the following two types of proprietary funds:

 Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for the operations of three of the City’s major funds, Austin EnergyTM, Austin Water Utility, and Austin-Bergstrom International Airport (Airport), as well as the nonmajor enterprise funds.

 Internal Service funds are used to report activities that provide supplies and services for many City programs and

activities. The City’s internal service funds include: Capital Projects Management; Combined Transportation, Emergency and Communications Center (CTECC); Employee Benefits; Fleet Maintenance; Information Systems; Liability Reserve; Support Services; Wireless Communication; and Workers’ Compensation. Because these services predominantly benefit governmental operations rather than business-type functions, they have been included in governmental activities in the government-wide financial statements.

Management’s Discussion and Analysis City of Austin, Texas September 30, 2017 2/26/2018 2:58 PM (Continued)

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OVERVIEW OF THE FINANCIAL STATEMENTS, continued The nonmajor enterprise funds and the internal service funds are combined into separately aggregated presentations in the proprietary fund financial statements. Individual fund data for the funds are provided in the form of combining statements in the supplementary section of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside City government. Since the resources of fiduciary funds are not available to support the City’s own programs, they are not reflected in the government- wide financial statements. The accounting policies applied to fiduciary funds are much like those used for proprietary funds. Comparison of government-wide and fund financial components. The following chart compares how the City’s funds are included in the government-wide and fund financial statements:

Fund Types/Other Government-wide Fund Financials General Fund Governmental Governmental - Major Special revenue funds Governmental Governmental - Nonmajor Debt service funds Governmental Governmental - Nonmajor Capital projects funds Governmental Governmental - Nonmajor Permanent funds Governmental Governmental - Nonmajor Internal service funds Governmental Proprietary Governmental capital assets, including

infrastructure assets Governmental Excluded

Governmental liabilities not expected to be liquidated with available expendable financial resources

Governmental Excluded

Austin Energy Business-type Proprietary - Major Austin Water Utility Business-type Proprietary - Major Airport Business-type Proprietary - Major Convention Business-type Proprietary – Nonmajor Environmental and health services Business-type Proprietary – Nonmajor Public recreation Business-type Proprietary – Nonmajor Urban growth management Business-type Proprietary – Nonmajor Fiduciary funds Excluded Fiduciary Discrete component units Discrete component units Excluded

Basis of reporting -- The government-wide statements and fund-level proprietary statements are reported using the flow of economic resources measurement focus and the full accrual basis of accounting. The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. c -- Notes to the financial statements The notes to the financial statements provide additional information that is essential to fully understanding the data provided in the government-wide and fund financial statements. d -- Other information The Required Supplementary Information (RSI) section immediately follows the basic financial statements and related notes section of this report. The City adopts an annual appropriated budget for the General Fund plus nine separately budgeted activities, all of which comprise the General Fund for GAAP reporting. RSI provides a comparison of revenues, expenditures and other financing sources and uses to budget and demonstrates budgetary compliance. In addition, trend information related to the City’s retirement and other postemployment benefits plans is presented in RSI. Following the RSI are other statements and schedules, including the combining statements for nonmajor governmental and enterprise funds, internal service funds, and fiduciary funds.

Management’s Discussion and Analysis City of Austin, Texas September 30, 2017 2/26/2018 2:58 PM (Continued)

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FINANCIAL ANALYSIS OF THE GOVERNMENT-WIDE STATEMENTS

a -- Net position The following table reflects a summary statement of net position compared to prior year:

2017 2016 2017 2016 2017 2016

Current assets 658,456$ 620,994 1,662,516 1,451,381 2,320,972 2,072,375

Capital assets 2,949,094 2,898,442 7,909,044 7,692,806 10,858,138 10,591,248

Other noncurrent assets 161,139 138,151 2,139,577 1,797,435 2,300,716 1,935,586

Total assets 3,768,689 3,657,587 11,711,137 10,941,622 15,479,826 14,599,209

Deferred outflows of resources 359,842 393,054 342,671 413,338 702,513 806,392

Current liabilities 361,031 333,146 532,870 532,423 893,901 865,569

Noncurrent liabilities 3,305,919 3,077,582 6,328,919 6,002,049 9,634,838 9,079,631

Total liabilities 3,666,950 3,410,728 6,861,789 6,534,472 10,528,739 9,945,200

Deferred inflows of resources 6,228 7,009 1,215,205 1,142,181 1,221,433 1,149,190

Net position:

Net investment in capital assets 1,709,146 1,719,704 2,358,240 2,250,698 4,067,386 3,970,402

Restricted 140,299 124,695 702,749 690,459 843,048 815,154

Unrestricted (deficit) (1,394,092) (1,211,495) 915,825 737,150 (478,267) (474,345)

Total net position 455,353$ 632,904 3,976,814 3,678,307 4,432,167 4,311,211

(in thousands) as of September 30

Condensed Statement of Net Position

Governmental Activities

Business-Type Activities Total

In the current fiscal year, total assets increased $880.6 million and deferred outflows of the City decreased by $103.9 million. Total liabilities increased $583.5 million and deferred inflows increased by $72.2 million. Governmental-type total assets increased by $111.1 million and business-type increased by $769.5 million, while governmental-type liabilities increased by $256.2 million and business-type increased by $327.3 million. The most significant increase in governmental total assets resulted from an increase in capital assets of $50.7 million as the City continues to build out projects from the 2012 bond program. Factors in the increase of governmental-type liabilities include increases in bonds payable of $60.3 million, related primarily to the 2012 and 2016 bond programs along with increases in the net pension liability of $78.1 million and other postemployment benefits payable of $93.3 million. The most significant factor in the increase of business-type total assets is related to growth in capital assets of $216.2 million or 28.1% of the increase in business-type total assets. The primary factors in the increase in business-type total liabilities of $327.3 million include an increase in long term debt of $298.8 million and an increase in other postemployment benefits of $54.4 million.

As noted earlier, net position may serve as a useful indicator of a government’s financial position. For the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $4.4 billion at the end of the current fiscal year. However, the largest portion of the City’s net position is represented in the net investment in capital assets (e.g. land, buildings, and equipment offset by related debt), which is $4.1 billion, or 91.8% of the total amount of the City’s net position. The City uses these capital assets to provide services to citizens. Capital assets are generally not highly liquid; consequently, they are not considered future available resources. Although the City’s investment in its 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 liquidated for these liabilities.

An additional portion, $843.0 million of the City’s net position, represents resources that are subject to external restrictions on how they may be used in the future. The remaining balance is a deficit of $478.3 million of unrestricted net position. Unrestricted net position decreased $3.9 million in the current fiscal year. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position for business- type activities. However, governmental activities as well as the government as a whole report a deficit of $1.4 billion and $478.3 million for unrestricted net position, respectively.

Management’s Discussion and Analysis City of Austin, Texas September 30, 2017 2/26/2018 2:58 PM (Continued)

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FINANCIAL ANALYSIS OF THE GOVERNMENT-WIDE STATEMENTS, continued b -- Changes in net position

2017 2016 2017 2016 2017 2016

Program revenues: Charges for services 176,640$ 182,045 2,500,259 2,411,212 2,676,899 2,593,257 Operating grants and contributions 45,162 47,430 861 739 46,023 48,169 Capital grants and contributions 90,256 95,486 137,464 144,139 227,720 239,625 General revenues: Property tax 554,631 507,485 -- -- 554,631 507,485 Sales tax 218,790 212,634 -- -- 218,790 212,634 Franchise fees and gross receipts tax 151,670 147,773 -- -- 151,670 147,773 Interest and other 26,950 41,708 14,801 10,936 41,751 52,644 Special item - land sale -- 4,309 -- -- -- 4,309 Total revenues 1,264,099 1,238,870 2,653,385 2,567,026 3,917,484 3,805,896

Program expenses: General government 192,231 177,302 -- -- 192,231 177,302 Public safety 719,032 657,846 -- -- 719,032 657,846 Transportation, planning, and sustainability 72,517 66,739 -- -- 72,517 66,739 Public health 119,278 100,195 -- -- 119,278 100,195 Public recreation and culture 161,226 147,191 -- -- 161,226 147,191 Urban growth management 156,180 179,081 -- -- 156,180 179,081 Interest on debt 61,879 61,500 -- -- 61,879 61,500 Electric -- -- 1,277,623 1,226,585 1,277,623 1,226,585 Water -- -- 281,787 244,907 281,787 244,907 Wastewater -- -- 219,609 237,450 219,609 237,450 Airport -- -- 158,863 135,860 158,863 135,860 Convention -- -- 75,377 63,796 75,377 63,796 Environmental and health services -- -- 108,658 102,994 108,658 102,994 Public recreation -- -- 8,736 8,266 8,736 8,266 Urban growth management -- -- 183,532 173,360 183,532 173,360

Total expenses 1,482,343 1,389,854 2,314,185 2,193,218 3,796,528 3,583,072

Excess (deficiency) before transfers (218,244) (150,984) 339,200 373,808 120,956 222,824 Transfers 40,693 121,838 (40,693) (121,838) -- --

Increase (decrease) in net position (177,551) (29,146) 298,507 251,970 120,956 222,824

Beginning net position, as previously reported 632,904 662,050 3,678,307 3,426,337 4,311,211 4,088,387

Ending net position 455,353$ 632,904 3,976,814 3,678,307 4,432,167 4,311,211

Condensed Statement of Changes in Net Position September 30 (in thousands)

Governmental Activities

Business-Type Activities Total

Total net position of the City increased by $121.0 million in the current fiscal year. Governmental net position decreased by $177.6 million. The decrease is attributable to expenses exceeding revenues by $218.2 million before transfers from other funds of $40.7 million. Business-type net position increased by $298.5 million due to revenues exceeding expenses by $339.2 million before transfers to other funds of $40.7 million.

Management’s Discussion and Analysis City of Austin, Texas September 30, 2017 2/26/2018 2:58 PM (Continued)

9

FINANCIAL ANALYSIS OF THE GOVERNMENT-WIDE STATEMENTS, continued c -- Program revenues and expenses -- governmental activities Governmental activities decreased the City’s net position by $177.6 million in fiscal year 2017, a 28.1% decrease of governmental net position from the previous year. Key factors for the change from fiscal year 2016 to 2017 are as follows:

 The City’s property tax revenue increased by $47.1 million from the previous year due to an increase in assessed property values of $15 billion, while the property tax rate per $100 of valuation decreased from 0.4589 to 0.4418.

 Sales tax collections and franchise fees for the year were $6.2 million and $3.9 million, respectively, more than the prior year as result of the continued improvement in the Austin economy.

 Increases in pension expense and other postemployment benefit expense are the primary drivers for increased expenses in public safety ($61.2 million) and public health ($19.1 million). Public safety expenses included an additional $32 million in pension expense and $19 million in other postemployment benefit expenses with the remainder primarily due to salary and fringe benefit increases as a result of the addition of 141 full time equivalents (FTE). Public health expenses included an additional $6 million in pension expenses and $5 million in other postemployment benefits expenses with the remainder primarily due to increases in social service contracts.

 Indian Hills Public Improvement District and Whisper Valley Public Improvement District paid off special assessment subordinate bonds in 2016 in the amount of $14.9 million and $1.3 million respectively, which is the primary reason for the decrease in expense in urban growth management of $22.9 million in 2017.

The chart below illustrates the City’s governmental expense and revenues by function: general government; public safety; transportation, planning and sustainability; public health; public recreation and culture; urban growth management; and interest on debt.

Government-wide Program Expenses and Revenues – Governmental Activities (in thousands)

$0 $25,000 $50,000 $75,000

$100,000 $125,000 $150,000 $175,000 $200,000 $225,000 $250,000 $275,000 $300,000 $325,000 $350,000 $375,000 $400,000 $425,000 $450,000 $475,000 $500,000 $525,000 $550,000 $575,000 $600,000 $625,000 $650,000 $675,000 $700,000 $725,000 $750,000 $775,000

General government

Public safety Transportation, planning and sustainability

Public health Public recreation and culture

Urban growth management

Interest on debt

Expense

Program Revenue

Management’s Discussion and Analysis City of Austin, Texas September 30, 2017 2/26/2018 2:58 PM (Continued)

10

FINANCIAL ANALYSIS OF THE GOVERNMENT-WIDE STATEMENTS, continued General revenues such as property taxes, sales taxes, and franchise fees are not shown by program, but are used to support all governmental activities. Property taxes are the largest source of governmental revenues, followed by sales taxes and charges for goods and services.

Government-wide Revenues by Source -- Governmental Activities

Charges f or Services

14%

Operating Grants and

Contributions 4%

Capital Grants and

Contributions 7%

Property tax 44%

Sales tax 17%

Franchise f ees and gross

receipts tax 12%

Other 2%

d -- Program revenues and expenses -- business-type activities Business-type activities increased the City’s net position by approximately $298.5 million, accounting for a 6.9% increase in the City’s total net position. Key factors include:

 Austin Energy net position increased approximately $21.7 million. Operating revenues decreased primarily due to the base rate reduction offset by increased power supply and regulatory revenue. Operating expenses increased primarily due to transmission and power supply costs.

 Austin Water Utility net position increased approximately $123.3 million. Revenues increased 5.3% largely due to a combined utility rate increase of 3.0% for fiscal year 2017. Expenses increased by 3.9% due to an increase in operating and maintenance costs.

 Airport net position increased approximately $38.8 million. Revenues increased 18.6% due to an increase in passenger traffic and higher rental and landing fees. Passenger traffic increased 8.0% over the previous year. Expenses increased 16.9% due to an increase in operating and maintenance costs and interest expense on debt service.

 Convention Center net position increased approximately $41.4 million. Revenues and transfers from the Hotel Occupancy and Vehicle Rental Tax Funds increased 9.7% due to additional hotels put in service causing an increase in total room nights as well as growth of large events. Expenses increased 18.1% due to an increase in operating costs, pension expense, and other postemployment benefits.

 Environmental and health services activities is comprised of the Austin Resource Recovery nonmajor enterprise fund. Net position increased approximately $11.0 million. Revenues increased by 5.8% due mainly to an increase in the Clean Community Fee of $0.40 per residential account and $1.75 per commercial customer account and an increase to the base customer charge of $1.00. Expenses increased by 5.5% due mainly to an increase in operations and support services costs.

 Urban growth management activities are comprised of the Drainage and Transportation nonmajor enterprise funds. Net position increased by approximately $63.6 million. Drainage revenues and transfers increased 36.3% primarily due to a $50 million transfer for home buyouts. Drainage expenses remained relatively flat. Transportation revenues increased approximately 23.2% primarily due to an increase in the Transportation User Fee of $1.75 per single-family home as well as an increase in the number of hours charged for parking in the downtown area. Transportation expenses increased 15.3% due to an increase in operations and support services costs.

Management’s Discussion and Analysis City of Austin, Texas September 30, 2017 2/26/2018 2:58 PM (Continued)

11

FINANCIAL ANALYSIS OF THE GOVERNMENT-WIDE STATEMENTS, continued As shown in the following chart, Austin Energy (electric), with expenses of $1.3 billion is the City’s largest business-type activity, followed by water with $281.8 million, wastewater with $219.6 million, urban growth management with $183.5 million, airport with $158.9 million, environmental and health services with $108.7 million, convention with $75.4 million, and public recreation with $8.7 million. For the fiscal year, operating revenues exceeded operating expenses for all business-type activities except convention and public recreation.

Government-wide Expenses and Program Revenues -- Business-type Activities (Excludes General Revenues and Transfers)

(in thousands)

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000

$1,100,000

$1,200,000

$1,300,000

$1,400,000

$1,500,000

Electric Water Wastewater Airport Convention Environmental and health services

Public recreation

Urban growth management

Expense

Program Revenue

For all business-type activities, charges for services provide the largest percentage of revenues (94.23%), followed by capital grants and contributions (5.18%), interest and other revenues (0.56%), and operating grants and contributions (0.03%).

Government-wide Revenue by Source – Business-type Activities

Charges f or Services

94%

Operating Grants and

Contributions 0%

Capital Grants and

Contributions 5%

Interest and other 1%

Management’s Discussion and Analysis City of Austin, Texas September 30, 2017 2/28/2018 3:39 PM (Continued)

12

FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUND LEVEL STATEMENTS In comparison to the government-wide statements, the fund-level statements focus on the key funds of the City. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. a -- Governmental funds The City reports the following types of governmental funds: the general fund, special revenue funds, debt service funds, capital projects funds, and permanent funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and available resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available at the end of the fiscal year. At the end of the fiscal year, the City of Austin’s governmental funds reported combined ending fund balances of $512.4 million, an increase of $28.5 million from the previous year. Approximately $1.8 million is nonspendable, $214.6 million is restricted, $40.7 million is committed, $139.3 million is assigned, and $116.1 million is unassigned. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the General Fund reported nonspendable fund balance of $0.7 million, assigned fund balance of $29.6 million, and unassigned fund balance of $141.5 million. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 14.5% of total General Fund expenditures of $976.0 million, and total fund balance represents 17.6% of expenditures. The City’s financial policies provide that surplus fund balance be identified for budget stabilization. This amount is a component of unassigned fund balance. The fund balance identified for budget stabilization was $76.0 million. The balance identified for budget stabilization may be appropriated to fund capital or other one- time expenditures in the subsequent fiscal year, but such appropriation will not normally exceed one-third of the total identified amount, with the other two-thirds identified for budget stabilization in future years. The fund balance of the General Fund increased $10.8 million during the fiscal year. Significant differences from the previous year include:

 Property tax revenues increased $33.0 million due to an increase in assessed property values.  Licenses, permits, and inspections increased $13.6 million, and sales tax revenues increased by $6.2 million.

General Fund expenditures increased $43.8 million, due primarily to increases in the following areas: public safety ($16.2 million), general government ($9.5 million), public health ($8.1 million), public recreation and culture ($6.9 million), and urban growth management ($3.4 million). These increases are primarily due to a 2.5% general wage increase for non-sworn employees and a 2% general wage increase for sworn Police, Fire, and EMS employees, the addition of 195 FTE’s, and increases in contractual expenditures. b -- Proprietary funds The City’s proprietary funds provide the same type of information found in the business-type activities of the government-wide financial statements, but in more detail. Overall, net position of the City’s enterprise funds increased by $286.4 million before consolidation of the internal service funds activities. Factors that contributed to the increase in net position are discussed in the business-type activities section of the government-wide section. OTHER INFORMATION a -- General Fund budgetary highlights The original revenue budget of the General Fund was not amended during fiscal year 2017. The original expenditure budget of the General Fund was amended during fiscal year 2017 to increase expenditures for the addition of one full time position to the Fire department for assignment at the Airport. Airport will reimburse the Fire department for the cost of this position, budgeted at $83,000. The net impact to the General Fund was $0 with the addition of the one FTE. The expenditure budget was also increased by $3.5 million for overtime in the Fire department due to staffing shortages. This amount was appropriated from the Budget Stabilization Reserve. During the year, actual budget basis revenues were $4.5 million more than budgeted. Licenses, permits and inspections were $10.3 million more than budgeted due to higher fees, and larger than anticipated inspection volume. This was offset partly by $5.4 million in lower than budgeted sales tax collections.

Management’s Discussion and Analysis City of Austin, Texas September 30, 2017 2/28/2018 3:39 PM (Continued)

13

OTHER INFORMATION, continued Actual budget-basis expenditures were $13.0 million less than budgeted. All departments were under budget. Police and EMS were under budget by $3.5 million and $1.8 million, respectively, due primarily to salary savings from regular position vacancies. Fire was under budget by $1.5 million largely due to lower than expected equipment replacement and maintenance costs. Library was under budget by $1.9 million largely due to salary and contractual expense savings caused by the delayed opening of the new central library. Other urban growth management was $2.1 million under budget due primarily to lower contractual expenses as a result of agreements not realized. The total budget-basis fund balance at year-end was $174.9 million. b -- Capital assets The City’s capital assets for governmental and business-type activities as of September 30, 2017, total $10.9 billion (net of accumulated depreciation and amortization). Capital assets include buildings and improvements, equipment, vehicles, electric plant, non-electric plant, nuclear fuel, water rights, infrastructure, land, construction in progress, and plant held for future use. The total increase in the City’s capital assets for the current fiscal year was $266.9 million, with an increase of 1.8% for governmental activities and an increase of 2.8% for business-type activities. Additional information on capital assets can be found in Note 5. Capital asset balances are as follows:

2017 2016 2017 2016 2017 2016

Building and improvements 651$ 551 1,916 1,776 2,567 2,327 Plant and equipment 65 74 2,348 2,321 2,413 2,395 Vehicles 52 50 76 81 128 131 Electric plant -- -- 2,198 2,222 2,198 2,222 Non-electric plant -- -- 141 144 141 144 Nuclear fuel -- -- 43 47 43 47 Water rights -- -- 82 83 82 83 Infrastructure 1,658 1,581 -- -- 1,658 1,581 Land and improvements 379 374 676 651 1,055 1,025 Construction in progress 116 241 402 341 518 582 Plant held for future use -- -- 23 23 23 23 Other assets not depreciated 28 27 4 4 32 31

Total net capital assets 2,949$ 2,898 7,909 7,693 10,858 10,591

Business-Type Activities Total

Capital Assets, Net of Accumulated Depreciation and Amortization

(in millions)

Governmental Activities

Major capital asset events during the current fiscal year include the following:

 Governmental capital assets increased $50.7 million primarily due to additions of new facilities and improvements to existing facilities. Significant additions and improvements were also made including acquisitions of parkland, upgrades to information technology equipment, pedestrian facility improvements, and street reconstructions across the City. The construction on the new Central Library was completed during the fiscal year.

 Business-type activities purchased, constructed or received capital asset contributions of $216.2 million. Asset additions

included continued work on the airport terminal and apron expansion projects. Additionally, the Drainage Fund continued to acquire properties at risk of flooding in Onion Creek.

Management’s Discussion and Analysis City of Austin, Texas September 30, 2017 2/26/2018 2:58 PM (Continued)

14

OTHER INFORMATION, continued c -- Debt administration At the end of the current fiscal year, the City reported $6.6 billion in outstanding debt. The table below reflects the outstanding debt at September 30. Additional information can be found in Note 6.

2017 2016 2017 2016 2017 2016

General obligation bonds and other tax supported debt, net 1,436$ 1,376 116 136 1,552 1,512 Commercial paper notes, net -- -- 146 130 146 130 Revenue bonds, net -- -- 4,881 4,579 4,881 4,579 Capital lease obligations -- -- 1 1 1 1 Total 1,436$ 1,376 5,144 4,846 6,580 6,222

Outstanding Debt General Obligation and Revenue Debt

(in millions) Governmental

Activities Business-Type

Activities Total

During fiscal year 2017, the City’s total outstanding debt increased by $358.6 million. The City issued new debt, used cash to defease debt and refinanced portions of existing debt to achieve lower borrowing costs. Debt issues include the following:

 Bond debt for governmental activities increased by $60.3 million. The resulting net increase is a combination of the issuance of $185.6 million in new debt to be used primarily for facility improvements, streets and mobility, drainage improvements, watershed home buyouts, central library, parks and recreation, capital equipment, transportation projects, affordable housing and the Seaholm garage, offset by the refunding portion of the issuance of $63.6 million and debt payments during the year.

 Outstanding debt for business-type functions increased by $298.3 million. The City issued $101.6 of Electric Utility

System separate lien revenue refunding bonds to refund separate lien debt, $20.4 million in Water and Wastewater System revenue bonds, $311.1 million in Water and Wastewater System separate lien revenue refunding bonds to refund separate lien debt and tax-exempt commercial paper, $315.0 million in Airport System revenue bonds, $29.1 million of Convention Center revenue refunding bonds to refund prior lien debt, all of which was offset by debt payments during the year and the cash defeasance of $19.7 million in Water and Wastewater separate lien revenue bonds.

Management’s Discussion and Analysis City of Austin, Texas September 30, 2017 2/28/2018 3:40 PM (Continued)

15

OTHER INFORMATION, continued During the year, Austin Energy separate lien revenue bonds received favorable bond rating upgrades from Moody’s Investors Service and Standard & Poor’s from A1 to Aa3 and AA- to AA, respectively. In addition, Convention Center revenue bonds and subordinate revenue bonds received positive bond rating upgrades from Standard & Poor’s from AA- to AA and A to A+, respectively. The City’s commercial paper ratings are related to the ratings of the liquidity providers associated with those obligations; commercial paper ratings were unchanged in the current fiscal year. All other bond ratings were unchanged. Ratings of the City’s obligations for various debt instruments at September 30, 2017 and 2016 were as follows:

Debt

Moody’s Investors

Service, Inc. Standard & Poor’s Fitch, Inc.

2017 2016 2017 2016 2017 2016

General obligation bonds and other tax supported debt Aaa Aaa AAA AAA AAA AAA Commercial paper notes - tax exempt P-1 P-1 A-1 A-1 F1 F1 Commercial paper notes - taxable P-1 P-1 A-1 A-1 F1 F1 Utility revenue bonds - prior lien Aa1 Aa1 AA+ AA+ AA AA Utility revenue bonds - subordinate lien Aa2 Aa2 AA AA AA- AA- Utility revenue bonds - separate lien: Austin Energy Aa3 A1 AA AA- AA- AA- Austin Water Utility Aa2 Aa2 AA AA AA- AA- Airport system revenue bonds A1 A1 A A NUR (1) NUR (1) Convention Center revenue bonds Aa3 Aa3 AA AA- NUR (1) NUR (1) Convention Center revenue bonds - subordinate A1 A1 A+ A NUR (1) NUR (1)

(1) No underlying rating d -- Economic factors and next year’s budget and rates Austin’s diverse economic base and national reputation as a great place to work and live continues to attract new employers and talented individuals to the area. The Austin metro area is the fastest growing metro in the US for its size. Over the past 10 years, Austin’s population has increased by approximately 26.8% or nearly 200,000 residents, with projections of the City surpassing the 1 million mark by the year 2020. Both the Austin and the Texas economies continue to expand at rates above the national economy. Job growth in the Austin MSA was ranked sixth along with several other cities when comparing activity in the top 50 metro areas per the US Bureau of Labor statistics. Austin added more than 27,300 net new jobs in 2017. The unemployment rate for the Austin-Round Rock MSA reached a low of 2.7%, while the state unemployment rate fell to 3.9% in 2017; the national unemployment was 4.1%. The City’s primary economic drivers which in the past have included the technology industry, business startups and growth of entrepreneurial business, and tourism, continue to diversify with the opening of the Dell Seton Medical Center. The medical center includes a medical school, teaching hospital, and innovation zone that is expected to foster health care research and development. All of these factors are expected to continue to generate job growth. All sectors of the real estate market continue to perform well. The Austin residential market experienced an increase in sales of 2.5% in 2017 over 2016, with housing in the downtown area growing in popularity. In 2017, sales tax revenue increased 2.9% over the previous year, compared to a 4.2% increase in 2016 and 7.7% increase in 2015, an indicator that the economy is slowing to more normal and sustainable levels. For 2018, the rate of growth in sales tax collections is expected to be 3%. Overall, the Austin economy is expected to continue to grow at a steady pace barring any events at the national or international level that would have an adverse impact.

Management’s Discussion and Analysis City of Austin, Texas September 30, 2017 3/1/2018 3:51 PM (Continued)

16

OTHER INFORMATION, continued The City’s fiscal year 2018 budget was developed in a manner true to City Management’s unwavering commitment to openness, transparency, and public engagement; a process that has been refined over time and centered this year on heightened levels of collaboration between the community, city staff, management, and the City Council. The overriding goal of the 2018 budget process was to align department budgets to Council’s priorities with particular focus on the Council’s six strategic outcomes for the City: Mobility, Economic Opportunity and Affordability, Safety, Health, Cultural and Learning Opportunities, and Government that Works. Each year during the budget process, the Austin City Council adopts a comprehensive set of financial policies that provide the foundation for long-range financial sustainability. These financial policies are directly aligned with the Council’s underlying goals of budget stability, maintaining affordability, investing in future economic development, infrastructure needs, and quality of life. These policies are also crucial in maintaining the City’s favorable bond ratings; the City had ratings upgrades for three separate debt instruments in 2017. City management continues to monitor the economy and take corrective actions when necessary to help mitigate any unfavorable economic events. The taxable property values within the City increased by 11.2% in 2017 for fiscal year 2018. The property tax rate for fiscal year 2018 is 44.48 cents per $100 valuation, up from 44.18 cents per $100 valuation in 2017. The tax rate consists of 33.93 cents for the General Fund and 10.55 cents for debt service. Each 1 cent of the 2017 (fiscal year 2018) property tax rate is equivalent to $13,942,501 of tax levy, as compared to $12,371,655 in the previous year. Austin Energy’s 2018 base rates also remain unchanged from the prior fiscal year due to a cost of service study that was completed and approved by the City Council in August 2016. For the past several years, Austin Water has been working to strengthen its financial position and reduce the need for annual rate increases; subsequently, the utility submitted its Fiscal Year 2018 budget with a zero percent rate increase. e -- Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Controller’s Office of the City of Austin, P.O. Box 2920, Austin, Texas 78768, or (512) 974-2600 or on the web at: https://www.austintexas.gov.

BASIC FINANCIAL STATEMENTS

17

Statement of Net Position City of Austin, Texas September 30, 2017 Exhibit A-1 (In thousands) 02/23 2:10p

Governmental Activities

Business-type Activities Total (†)

Component Units

ASSETS Current assets:

Cash 64$ 62 126 4,225 Pooled investments and cash 507,854 934,013 1,441,867 -- Pooled investments and cash - restricted -- 121,347 121,347 -- Total pooled investments and cash 507,854 1,055,360 1,563,214 -- Investments - restricted 23,694 157,207 180,901 -- Cash held by trustee -- 668 668 -- Cash held by trustee - restricted 9,724 475 10,199 -- Working capital advances -- 3,659 3,659 -- Property taxes receivable, net of allowance $4,980 11,595 -- 11,595 -- Accounts receivable, net of allowance $301,629 100,244 221,464 321,708 3,910 Receivables from other governments 15,705 697 16,402 -- Receivables from other governments - restricted -- 5,978 5,978 -- Notes receivable, net of allowance of $14,968 24,117 -- 24,117 -- Internal balances (46,671) 46,671 -- -- Inventories, at cost 2,324 82,617 84,941 961 Real property held for resale 5,675 -- 5,675 -- Regulatory assets, net of accumulated amortization -- 52,885 52,885 -- Prepaid expenses 1,025 17,518 18,543 628 Other receivables - restricted -- 3,754 3,754 -- Other assets 3,106 13,501 16,607 --

Total current assets 658,456 1,662,516 2,320,972 9,724 Noncurrent assets:

Cash - restricted -- 4,951 4,951 3,000 Pooled investments and cash - restricted 156,174 808,580 964,754 -- Investments - restricted -- 311,624 311,624 63,717 Investments held by trustee - restricted 1,773 215,523 217,296 2,168 Cash held by trustee - restricted 1,823 -- 1,823 353 Interest receivable - restricted -- 467 467 -- Depreciable capital assets, net 2,425,918 6,802,945 9,228,863 179,043 Nondepreciable capital assets 523,176 1,106,099 1,629,275 15,554 Derivative instruments - energy risk management -- 1,863 1,863 -- Regulatory assets, net of accumulated amortization -- 763,717 763,717 -- Other receivables - restricted -- 12,343 12,343 -- Other long-term assets 1,369 20,509 21,878 5,111

Total noncurrent assets 3,110,233 10,048,621 13,158,854 268,946 Total assets 3,768,689 11,711,137 15,479,826 278,670

DEFERRED OUTFLOWS OF RESOURCES 359,842$ 342,671 702,513 16,669

(†) After internal receivables and payables have been eliminated. (Continued)

The accompanying notes are an integral part of the financial statements.

18

Statement of Net Position City of Austin, Texas September 30, 2017 Exhibit A-1 (In thousands) 02/23 2:10p (Continued)

Governmental Activities

Business-type Activities Total (†)

Component Units

LIABILITIES Current liabilities:

Accounts payable 41,893$ 93,127 135,020 8,113 Accounts and retainage payable from restricted assets 21,996 54,413 76,409 -- Accrued payroll 32,321 18,068 50,389 267 Accrued compensated absences 61,301 26,060 87,361 -- Due to other governments 477 3,352 3,829 -- Claims payable 26,353 2,412 28,765 -- Accrued interest payable from restricted assets 10 118,713 118,723 7,712 Interest payable on other debt 8,688 872 9,560 -- Bonds payable 60,579 14,608 75,187 66,764 Bonds payable from restricted assets 23,765 132,272 156,037 -- Capital lease obligations payable -- 54 54 7 Customer and escrow deposits payable from restricted assets 71,479 52,634 124,113 -- Accrued landfill closure and postclosure costs -- 2,794 2,794 -- Decommissioning liability payable from restricted assets -- 6,662 6,662 -- Other liabilities 12,169 5,968 18,137 5,725 Other liabilities payable from restricted assets -- 861 861 --

Total current liabilities 361,031 532,870 893,901 88,588 Noncurrent liabilities, net of current portion:

Accrued compensated absences 78,364 287 78,651 -- Claims payable 22,743 221 22,964 -- Capital appreciation bond interest payable -- 26,661 26,661 -- Commercial paper notes payable, net of discount -- 146,097 146,097 -- Bonds payable, net of discount and inclusive of premium 1,351,684 4,849,878 6,201,562 229,955 Net pension liability 1,203,405 656,565 1,859,970 -- Other postemployment benefits payable 631,176 380,161 1,011,337 -- Capital lease obligations payable -- 935 935 -- Accrued landfill closure and postclosure costs -- 9,899 9,899 -- Decommissioning liability payable from restricted assets -- 159,284 159,284 -- Derivative instruments - energy risk management -- 14,960 14,960 -- Derivative instruments - interest rate swaps -- 46,959 46,959 -- Other liabilities 18,547 33,714 52,261 -- Other liabilities payable from restricted assets -- 3,298 3,298 3,000

Total noncurrent liabilities 3,305,919 6,328,919 9,634,838 232,955 Total liabilities 3,666,950 6,861,789 10,528,739 321,543

DEFERRED INFLOWS OF RESOURCES 6,228 1,215,205 1,221,433 --

NET POSITION Net investment in capital assets 1,709,146 2,358,240 4,067,386 (60,485) Restricted for:

Bond reserve -- 45,130 45,130 -- Capital projects 48,467 246,856 295,323 1,000 Debt service 15,077 53,601 68,678 28,795 Housing activities 27,354 -- 27,354 -- Operating reserve -- 57,102 57,102 -- Passenger facility charges -- 90,044 90,044 -- Perpetual care:

Expendable 1 -- 1 -- Nonexpendable 1,070 -- 1,070 --

Renewal and replacement -- 23,298 23,298 -- Strategic reserve -- 186,718 186,718 -- Tourism 19,676 -- 19,676 -- Other purposes 28,654 -- 28,654 --

Unrestricted (deficit) (1,394,092) 915,825 (478,267) 4,486 Total net position 455,353$ 3,976,814 4,432,167 (26,204)

(†) After internal receivables and payables have been eliminated.

The accompanying notes are an integral part of the financial statements.

19

YesNo Statement of Activities City of Austin, Texas YesFor the year ended September 30, 2017 Exhibit A-2

(In thousands) 02/15 4:00p

Program Revenues Comp

Functions/Programs Expenses Governmental

Activities Business-type

Activities Total Component

Units

Governmental activities General government 192,231$ 21,345 454 7,223 (163,209) -- (163,209) -- Public safety 719,032 57,728 7,209 -- (654,095) -- (654,095) -- Transportation, planning, and sustainability 72,517 1,698 659 72,808 2,648 -- 2,648 -- Public health 119,278 12,374 20,490 170 (86,244) -- (86,244) -- Public recreation and culture 161,226 11,251 1,805 9,994 (138,176) -- (138,176) -- Urban growth management 156,180 72,244 14,545 61 (69,330) -- (69,330) -- Interest on debt 61,879 -- -- -- (61,879) -- (61,879) --

Total governmental activities 1,482,343 176,640 45,162 90,256 (1,170,285) -- (1,170,285) --

Business-type activities Electric 1,277,623 1,362,132 34 43,981 -- 128,524 128,524 -- Water 281,787 324,562 -- 44,944 -- 87,719 87,719 -- Wastewater 219,609 274,518 -- 29,742 -- 84,651 84,651 -- Airport 158,863 178,433 585 14,751 -- 34,906 34,906 -- Convention 75,377 40,196 -- -- -- (35,181) (35,181) -- Environmental and health services 108,658 109,274 242 30 -- 888 888 -- Public recreation 8,736 6,705 -- 290 -- (1,741) (1,741) -- Urban growth management 183,532 204,439 -- 3,726 -- 24,633 24,633 --

Total business-type activities 2,314,185 2,500,259 861 137,464 -- 324,399 324,399 -- Total primary government 3,796,528$ 2,676,899 46,023 227,720 (1,170,285) 324,399 (845,886) --

Component Units 89,609 95,753 -- -- -- -- -- 6,144

General revenues: Property tax 554,631 -- 554,631 -- Sales tax 218,790 -- 218,790 -- Franchise fees and gross receipts tax 151,670 -- 151,670 -- Interest and other 26,950 14,801 41,751 22 Transfers-internal activities 40,693 (40,693) -- -- Total general revenues and transfers 992,734 (25,892) 966,842 22 Change in net position (177,551) 298,507 120,956 6,166 Beginning net position, as previously reported 632,904 3,678,307 4,311,211 (32,370) Ending net position 455,353$ 3,976,814 4,432,167 (26,204)

The accompanying notes are an integral part of the financial statements.

2 0

Net (Expense) Revenue and Changes in Net Position

Primary GovernmentOperating Grants and

Contributions

Capital Grants and

Contributions Charges for

Services

21

YeGovernmental Funds City of Austin, Texas NoBalance Sheet Exhibit B-1 YeSeptember 30, 2017

(In thousands) 02/15 4:02p No 2016

General Fund

Nonmajor Governmental

Funds

Total Governmental

Funds

Total Gove rnme

ASSETS Cash 53$ -- 53 59 Pooled investments and cash 170,879 335,784 506,663 ##### Investments -- 23,694 23,694 ##### Cash held by trustee - restricted -- 9,582 9,582 5,362 Investments held by trustee - restricted -- 1,773 1,773 -- Property taxes receivable, net of allowance 7,959 3,636 11,595 ##### Accounts receivable, net of allowance 61,541 28,503 90,044 ##### Receivables from other governments 1,589 12,029 13,618 ##### Notes receivable, net of allowance 175 23,942 24,117 ##### Due from other funds -- 11,443 11,443 ##### Advances to other funds -- 19,096 19,096 2,585 Inventories, at cost 28 -- 28 597 Real property held for resale -- 5,675 5,675 6,911 Prepaid items 699 -- 699 177 Other assets 58 3,048 3,106 1,036 Total assets 242,981 478,205 721,186 #####

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES

LIABILITIES Accounts payable 21,458 24,184 45,642 ##### Accrued payroll 26,126 123 26,249 ##### Accrued compensated absences 462 -- 462 876 Due to other funds 241 11,412 11,653 ##### Due to other governments 465 9 474 -- Unearned revenue -- 2,973 2,973 ##### Advances from other funds 654 18,266 18,920 2,658 Deposits and other liabilities 5,687 73,788 79,475 #####

Total liabilities 55,093 130,755 185,848 #####

DEFERRED INFLOWS OF RESOURCES 16,074 6,823 22,897

FUND BALANCES Nonspendable:

Inventories and prepaid items 727 -- 727 774 Permanent funds -- 1,070 1,070 1,040

Restricted -- 214,582 214,582 ##### Committed -- 40,652 40,652 ##### Assigned 29,618 109,692 139,310 ##### Unassigned 141,469 (25,369) 116,100 #####

Total fund balances 171,814 340,627 512,441 #####

Total liabilities, deferred inflows of resources, and fund balances 242,981$ 478,205 721,186 #####

The accompanying notes are an integral part of the financial statements.

22

YeGovernmental Funds City of Austin, Texas NoReconciliation of the Governmental Funds Balance Sheet Exhibit B-1.1 Ye to the Statement of Net Position

September 30, 2017 (In thousands) 02/16 9:20a

Total fund balances - Governmental funds $ 512,441

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

Capital assets used in governmental activities are not financial resources, and therefore, are not reported in the funds.

Governmental capital assets 4,632,260 Less: accumulated depreciation (1,742,047)

2,890,213 Other long-term assets and certain revenues are not available as current-period resources and are not reported in the funds.

Other assets 1,369 1,369

Deferred outflows represent the consumption of net position that are applicable to a future reporting period.

Pensions 337,178 Loss on debt refundings 22,557

359,735 Long-term liabilities are not payable in the current period and are not reported in the funds.

Compensated absences (130,035) Interest payable (8,688) Bonds and other tax supported debt payable, net (1,432,879) Net pension liability (1,203,405) Other postemployment benefits payable (631,176) Other liabilities (15,317)

(3,421,500) Deferred inflows represent an acquisition of net position that is applicable to a future reporting period.

Unavailable revenue Property taxes and interest 11,777 Accounts and other taxes receivable 11,121 Deferred gain on service concession agreement (1,173) Pensions (5,055)

16,670

Internal service funds are used by management to charge the costs of capital project management, combined emergency communication center, employee benefits, fleet maintenance, information systems, liability reserve, support services, wireless communication, and workers' compensation to individual funds.

Certain assets, deferred outflows of resources, liabilities and deferred inflows of resources of the internal service funds are included in governmental activities in the statement of net position. 96,425

Total net position - Governmental activities 455,353$

The accompanying notes are an integral part of the financial statements.

23

YeGovernmental Funds City of Austin, Texas NoStatement of Revenues, Expenditures, and Changes in Fund Balances Exhibit B-2 YeFor the year ended September 30, 2017

(In thousands) 02/16 9:22a

2016

General Fund

Nonmajor Governmental

Funds

Total Governmental

Funds

Total Governmental

Funds REVENUES Property taxes 416,540$ 137,871 554,411 419,965 Sales taxes 218,790 -- 218,790 176,198 Franchise fees and other taxes 47,645 104,025 151,670 114,039 Fines, forfeitures and penalties 13,117 4,511 17,628 21,128 Licenses, permits and inspections 61,076 374 61,450 28,669 Charges for services/goods 59,362 22,006 81,368 63,568 Intergovernmental -- 59,572 59,572 76,085 Property owners' participation and contributions -- 14,659 14,659 10,167 Interest and other 15,754 11,296 27,050 24,345 Total revenues 832,284 354,314 1,186,598 934,164 EXPENDITURES Current:

General government 126,645 2,063 128,708 84,504 Public safety 585,250 8,156 593,406 497,371 Transportation, planning and sustainability 421 4,704 5,125 16,007 Public health 80,487 20,538 101,025 69,418 Public recreation and culture 112,728 13,871 126,599 92,282 Urban growth management 70,491 57,491 127,982 97,840

Debt service: Principal -- 87,367 87,367 69,625 Interest -- 61,862 61,862 48,199 Fees and commissions -- 13 13 17

Capital outlay-capital project funds -- 130,783 130,783 214,294 Total expenditures 976,022 386,848 1,362,870 1,189,557 Deficiency of revenues over

expenditures (143,738) (32,534) (176,272) (255,393) OTHER FINANCING SOURCES (USES)

Issuance of tax supported debt -- 130,665 130,665 131,499 Issuance of refunding bonds -- 54,970 54,970 -- Bond premiums -- 35,430 35,430 8,452 Payment to refunding bond escrow agent -- (68,744) (68,744) -- Transfers in 166,688 55,852 222,540 209,161 Transfers out (12,125) (157,942) (170,067) (99,667)

Total other financing sources (uses) 154,563 50,231 204,794 249,445

Net change in fund balances 10,825 17,697 28,522 (5,948) Fund balances at beginning of year 160,989 322,930 483,919 370,191 Fund balances at end of year 171,814$ 340,627 512,441 364,243

The accompanying notes are an integral part of the financial statements.

24

YeGovernmental Funds City of Austin, Texas NoReconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Exhibit B-2.1 Ye Changes in Fund Balances to the Statement of Activities

For the year ended September 30, 2017 (In thousands) 02/15 4:02p

NeNet change in fund balances - Governmental funds $ 28,522

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.

Capital outlay 108,801 Depreciation expense (124,393) Loss on disposal of capital assets (3,104)

(18,696)

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

Property taxes 220 Charges for services (1,524) Interest and other 179 Capital asset contributions 66,755

65,630

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

Issuance of long-term debt (130,665) Principal repayment on long-term debt 87,367 Issuance of refunding bonds (54,970) Refunding bond premiums (35,430) Payment to refunding bond escrow agent 68,744

(64,954)

Some expenses reported in the statement of activities do not require the use of current financial resources, and therefore, are not reported as expenditures in governmental funds.

Compensated absences (2,708) Pensions (111,858) Other postemployment benefits (93,336) Interest and other 12,820

(195,082)

A portion of the net revenue (expense) of the internal service funds is reported with the governmental activities. 7,029

Change in net position - Governmental activities (177,551)$

The accompanying notes are an integral part of the financial statements.

25

Y Proprietary Funds N Statement of Net Position Y September 30, 2017

(In thousands) 02/23 3:13p

Austin Energy Austin Water

Utility Airport

ASSETS Current assets:

Cash 22$ 5 3 Pooled investments and cash 398,583 187,932 7,514 Pooled investments and cash - restricted 36,904 52,101 19,172 Total pooled investments and cash 435,487 240,033 26,686 Investments - restricted 45,568 67,982 32,494 Cash held by trustee -- 668 -- Cash held by trustee - restricted -- 475 -- Working capital advances 3,659 -- -- Accounts receivable, net of allowance 125,605 70,370 5,462 Receivables from other governments -- 68 1 Receivables from other governments - restricted 5,022 -- 867 Due from other funds 3,473 301 -- Inventories, at cost 76,326 1,937 1,835 Regulatory assets, net of accumulated amortization 4,821 48,064 -- Prepaid expenses 17,222 42 86 Other receivables - restricted 4 -- 3,722 Other assets 12,377 -- 1,124

Total current assets 729,586 429,945 72,280 Noncurrent assets:

Cash - restricted 4,951 -- -- Pooled investments and cash - restricted 60,961 93,020 637,597 Advances to other funds 15,341 2,104 -- Advances to other funds - restricted -- -- 52 Investments - restricted 200,308 58,421 39,590 Investments held by trustee - restricted 213,923 1,600 -- Interest receivable - restricted 467 -- -- Depreciable capital assets, net 2,388,829 3,172,595 875,820 Nondepreciable capital assets 211,985 448,944 132,896 Derivative instruments - energy risk management 1,863 -- -- Regulatory assets, net of accumulated amortization 516,001 247,716 -- Other receivables - restricted 8,459 483 3,401 Other long-term assets 1,380 -- 19,129

Total noncurrent assets 3,624,468 4,024,883 1,708,485 Total assets 4,354,054 4,454,828 1,780,765

DEFERRED OUTFLOWS OF RESOURCES 114,289$ 118,244 40,621

The accompanying notes are an integral part of the financial statements.

26

Business-Type Activities

City of Austin, Texas Exhibit C-1

02/23 3:13p

No

Nonmajor Enterprise

Funds Total

ASSETS Current assets:

Cash 32 62 11 Pooled investments and cash 339,984 934,013 152,918 Pooled investments and cash - restricted 13,170 121,347 -- Total pooled investments and cash 353,154 1,055,360 152,918 Investments - restricted 11,163 157,207 -- Cash held by trustee -- 668 -- Cash held by trustee - restricted -- 475 1,965 Working capital advances -- 3,659 -- Accounts receivable, net of allowance 20,027 221,464 10,200 Receivables from other governments 628 697 2,087 Receivables from other governments - restricted 89 5,978 -- Due from other funds 1,700 5,474 -- Inventories, at cost 2,519 82,617 2,296 Regulatory assets, net of accumulated amortization -- 52,885 -- Prepaid expenses 168 17,518 326 Other receivables - restricted 28 3,754 -- Other assets -- 13,501 --

Total current assets 389,508 1,621,319 169,803 Noncurrent assets:

Cash - restricted -- 4,951 -- Pooled investments and cash - restricted 17,002 808,580 4,447 Advances to other funds -- 17,445 7 Advances to other funds - restricted 311 363 -- Investments - restricted 13,305 311,624 -- Investments held by trustee - restricted -- 215,523 -- Interest receivable - restricted -- 467 -- Depreciable capital assets, net 365,701 6,802,945 58,239 Nondepreciable capital assets 312,274 1,106,099 642 Derivative instruments - energy risk management -- 1,863 -- Regulatory assets, net of accumulated amortization -- 763,717 -- Other receivables - restricted -- 12,343 -- Other long-term assets -- 20,509 --

Total noncurrent assets 708,593 10,066,429 63,335 Total assets 1,098,101 11,687,748 233,138

DEFERRED OUTFLOWS OF RESOURCES 69,517 342,671 107

The accompanying notes are an integral part of the financial statements. (Continued)

Governmental Activities-

Internal Service Funds

27

Business-Type Activities

Proprietary Funds Statement of Net Position September 30, 2017 (In thousands) 02/23 1:53p

Austin Energy Austin Water

Utility Airport

LIABILITIES Current liabilities:

Accounts payable 82,662$ 3,680 2,097 Accounts and retainage payable from restricted assets 10,839 18,831 19,759 Accrued payroll 7,323 3,810 1,361 Accrued compensated absences 10,570 5,632 2,194 Claims payable 2,060 351 1 Due to other funds -- -- 162 Due to other funds payable from restricted assets -- 3,101 -- Due to other governments 3,347 -- 5 Accrued interest payable from restricted assets 23,275 82,842 11,697 Interest payable on other debt 211 106 -- Bonds payable -- -- 21 Bonds payable from restricted assets 35,086 60,487 23,744 Capital lease obligations payable 54 -- -- Customer and escrow deposits payable from restricted assets 30,241 14,483 1,351 Accrued landfill closure and postclosure costs -- -- -- Decommissioning liability payable from restricted assets 6,662 -- -- Other liabilities 921 2,630 1,822 Other liabilities payable from restricted assets 473 -- --

Total current liabilities 213,724 195,953 64,214 Noncurrent liabilities, net of current portion:

Accrued compensated absences -- 2 -- Claims payable 10 211 -- Advances from other funds -- 680 506 Advances from other funds payable from restricted assets -- 13,926 -- Capital appreciation bond interest payable 691 25,970 -- Commercial paper notes payable, net of discount 146,097 -- -- Bonds payable, net of discount and inclusive of premium 1,261,092 2,507,406 857,654 Net pension liability 273,451 146,090 46,242 Other postemployment benefits payable 148,262 95,976 26,194 Capital lease obligations payable 935 -- -- Accrued landfill closure and postclosure costs -- -- -- Decommissioning liability payable from restricted assets 159,284 -- -- Derivative instruments - energy risk management 14,960 -- -- Derivative instruments - interest rate swaps -- 15,509 21,535 Other liabilities 32,647 1,067 -- Other liabilities payable from restricted assets 3,298 -- --

Total noncurrent liabilities 2,040,727 2,806,837 952,131 Total liabilities 2,254,451 3,002,790 1,016,345

DEFERRED INFLOWS OF RESOURCES 366,324$ 659,475 189,161

The accompanying notes are an integral part of the financial statements.

Business-Type Activities

28

City of Austin, Texas Exhibit C-1

02/23 1:53p (Continued)

Nonmajor Enterprise

Funds Total

LIABILITIES Current liabilities:

Accounts payable 4,688 93,127 18,249 Accounts and retainage payable from restricted assets 4,984 54,413 -- Accrued payroll 5,574 18,068 6,072 Accrued compensated absences 7,664 26,060 9,003 Claims payable -- 2,412 26,353 Due to other funds 2,001 2,163 -- Due to other funds payable from restricted assets -- 3,101 -- Due to other governments -- 3,352 3 Accrued interest payable from restricted assets 899 118,713 10 Interest payable on other debt 555 872 -- Bonds payable 14,587 14,608 374 Bonds payable from restricted assets 12,955 132,272 -- Capital lease obligations payable -- 54 -- Customer and escrow deposits payable from restricted assets 6,559 52,634 1,758 Accrued landfill closure and postclosure costs 2,794 2,794 -- Decommissioning liability payable from restricted assets -- 6,662 -- Other liabilities 595 5,968 2,670 Other liabilities payable from restricted assets 388 861 --

Total current liabilities 64,243 538,134 64,492 Noncurrent liabilities, net of current portion:

Accrued compensated absences 285 287 165 Claims payable -- 221 22,743 Advances from other funds 2,879 4,065 -- Advances from other funds payable from restricted assets -- 13,926 -- Capital appreciation bond interest payable -- 26,661 -- Commercial paper notes payable, net of discount -- 146,097 -- Bonds payable, net of discount and inclusive of premium 223,726 4,849,878 2,775 Net pension liability 190,782 656,565 -- Other postemployment benefits payable 109,729 380,161 -- Capital lease obligations payable -- 935 -- Accrued landfill closure and postclosure costs 9,899 9,899 -- Decommissioning liability payable from restricted assets -- 159,284 -- Derivative instruments - energy risk management -- 14,960 -- Derivative instruments - interest rate swaps 9,915 46,959 -- Other liabilities -- 33,714 -- Other liabilities payable from restricted assets -- 3,298 --

Total noncurrent liabilities 547,215 6,346,910 25,683 Total liabilities 611,458 6,885,044 90,175

DEFERRED INFLOWS OF RESOURCES 245 1,215,205 1

The accompanying notes are an integral part of the financial statements. (Continued)

Business-Type Activities

29

Governmental Activities-

Internal Service Funds

Proprietary Funds Statement of Net Position September 30, 2017 (In thousands) 02/16 9:24a

Austin Energy Austin Water

Utility Airport

NET POSITION Net investment in capital assets 987,437$ 562,673 359,464 Restricted for:

Bond reserve 10,268 21,832 2,719 Capital projects 26,558 37,269 171,176 Debt service 22,292 -- 20,849 Operating reserve -- 37,651 14,874 Passenger facility charges -- -- 90,044 Renewal and replacement 12,386 -- 10,000 Strategic reserve 186,718 -- --

Unrestricted 601,909 251,382 (53,246) Total net position 1,847,568$ 910,807 615,880

Reconciliation to government-wide Statement of Net Position

Adjustment to consolidate internal service activities 20,138 11,557 4,055

Total net position - Business-type activities 1,867,706$ 922,364 619,935

The accompanying notes are an integral part of the financial statements.

30

Business-Type Activities

City of Austin, Texas Exhibit C-1

02/16 9:24a (Continued)

Nonmajor Enterprise

Funds Total

NET POSITION Net investment in capital assets 448,666 2,358,240 55,732 Restricted for:

Bond reserve 10,311 45,130 -- Capital projects 11,853 246,856 4,447 Debt service 10,460 53,601 -- Operating reserve 4,577 57,102 -- Passenger facility charges -- 90,044 -- Renewal and replacement 912 23,298 -- Strategic reserve -- 186,718 --

Unrestricted 69,136 869,181 82,890 Total net position 555,915 3,930,170 143,069

Reconciliation to government-wide Statement of Net Position

Adjustment to consolidate internal service activities 10,894 46,644

Total net position - Business-type activities 566,809 3,976,814

The accompanying notes are an integral part of the financial statements.

31

Business-Type Activities Governmental Activities-

Internal Service Funds

Y Proprietary Funds N Statement of Revenues, Expenses, and Changes in Fund Net Position Y For the year ended September 30, 2017

(In thousands) 02/23 3:13p

Austin Energy Austin Water

Utility Airport OPERATING REVENUES

Utility services 1,362,132$ 599,080 -- User fees and rentals -- -- 149,333 Billings to departments -- -- -- Employee contributions -- -- -- Operating revenues from other governments -- -- -- Other operating revenues -- -- --

Total operating revenues 1,362,132 599,080 149,333

OPERATING EXPENSES Operating expenses before depreciation 1,063,029 259,730 102,885 Depreciation and amortization 162,930 121,521 26,667

Total operating expenses 1,225,959 381,251 129,552

Operating income (loss) 136,173 217,829 19,781

NONOPERATING REVENUES (EXPENSES) Interest and other revenues 6,771 2,172 3,907 Interest on revenue bonds and other debt (59,261) (104,589) (30,058) Interest capitalized during construction -- -- 1,893 Passenger facility charges -- -- 29,100 Cost (recovered) to be recovered in future years 15,228 (19,897) -- Other nonoperating revenue (expense) (12,922) 1,482 (1,859)

Total nonoperating revenues (expenses) (50,184) (120,832) 2,983

Income (loss) before contributions and transfers 85,989 96,997 22,764

Capital contributions 43,981 74,686 14,751 Transfers in 2,122 13 -- Transfers out (115,582) (51,215) (33)

Change in net position 16,510 120,481 37,482

Total net position, beginning 1,831,058 790,326 578,398 Total net position, ending 1,847,568$ 910,807 615,880

Reconciliation to government-wide Statement of Activities

Change in net position 16,510 120,481 37,482

Adjustment to consolidate internal service activities 5,164 2,773 1,298

Change in net position - Business-type activities 21,674$ 123,254 38,780

The accompanying notes are an integral part of the financial statements.

32

Business-Type Activities

City of Austin, Texas Exhibit C-2

02/23 3:13p

No Nonmajor Enterprise

Funds Total 2016 Total

OPERATING REVENUES Utility services -- 1,961,212 -- ###### User fees and rentals 360,614 509,947 -- ###### Billings to departments -- -- 435,349 Employee contributions -- -- 44,224 Operating revenues from other governments -- -- 4,410 Other operating revenues -- -- 13,307 3,278

Total operating revenues 360,614 2,471,159 497,290 ######

OPERATING EXPENSES Operating expenses before depreciation 340,354 1,765,998 447,796 ###### Depreciation and amortization 28,774 339,892 11,599 ######

Total operating expenses 369,128 2,105,890 459,395 ######

Operating income (loss) (8,514) 365,269 37,895 ######

NONOPERATING REVENUES (EXPENSES) Interest and other revenues 1,951 14,801 19 71,129 Interest on revenue bonds and other debt (9,288) (203,196) (136) ###### Interest capitalized during construction 1,003 2,896 -- 1,853 Passenger facility charges -- 29,100 -- 9,408 Cost (recovered) to be recovered in future years -- (4,669) -- Other nonoperating revenue (expense) (6,464) (19,763) (6,483) (4,104)

Total nonoperating revenues (expenses) (12,798) (180,831) (6,600)

Income (loss) before contributions and transfers (21,312) 184,438 31,295 ######

Capital contributions 4,046 137,464 4,812 -- Transfers in 139,200 141,335 2,929 25,109 Transfers out (10,053) (176,883) (19,854) ######

Change in net position 111,881 286,354 19,182 ######

Total net position, beginning 444,034 3,643,816 123,887 -- Total net position, ending 555,915 3,930,170 143,069 ######

Reconciliation to government-wide Statement of Activities

Change in net position 111,881 286,354

Adjustment to consolidate internal service activities 2,918 12,153

Change in net position - Business-type activities 114,799 298,507

The accompanying notes are an integral part of the financial statements.

Governmental Activities-

Internal Service Funds

33

Business-Type Activities

YeProprietary Funds N Statement of Cash Flows YeFor the year ended September 30, 2017

(In thousands) 02/23 4:00p

Austin Energy Austin Water

Utility Airport CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 1,393,118$ 587,403 141,806 Cash received from other funds 30,641 8,671 -- Cash payments to suppliers for goods and services (789,476) (51,546) (28,931) Cash payments to other funds (51,509) (69,979) (26,603) Cash payments to employees for services (204,609) (108,576) (39,106) Cash payments to claimants/beneficiaries (144) (283) -- Taxes collected and remitted to other governments (41,880) -- --

Net cash provided by operating activities 336,141 365,690 47,166

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Transfers in 1,036 -- -- Transfers out (115,495) (46,905) -- Collections from other sources -- 668 -- Loans to other funds (459) -- (1) Loans from other funds -- -- -- Loan repayments to other funds -- (297) (178) Loan repayments from other funds 339 301 -- Collections from other governments 2,880 1,673 940 Net cash provided (used) by noncapital

financing activities (111,699) (44,560) 761

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Proceeds from the sale of commercial paper notes 58,351 82,830 -- Proceeds from the sale of general obligation bonds

and other tax supported debt -- -- -- Proceeds from the sale of revenue bonds -- 20,430 314,965 Principal paid on long-term debt (44,625) (103,299) (21,964) Proceeds from the sale of capital assets 1,527 -- -- Interest paid on revenue bonds and other debt (60,613) (141,519) (26,027) Passenger facility charges -- -- 25,378 Acquisition and construction of capital assets (159,586) (148,355) (116,503) Contributions from state and federal governments -- 116 14,350 Contributions in aid of construction 43,981 29,948 401 Bond issuance costs (983) (2,246) (2,545) Bond premiums 12,320 62,394 44,459 Cash paid for bond defeasance -- (21,317) -- Bonds issued for advanced refundings of debt 101,570 311,100 -- Cash paid for bond refunding escrow (114,060) (249,582) -- Cash paid to payoff commercial paper -- (125,000) -- Cash paid for nuclear fuel inventory (13,671) -- -- Net cash provided (used) by capital and related

financing activities (175,789)$ (284,500) 232,514

The accompanying notes are an integral part of the financial statements.

34

Business-Type Activities

City of Austin, Texas Exhibit C-3

02/23 4:00p

No Nonmajor Enterprise

Funds Total 2016 Total

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 356,747 2,479,074 58,265 1,092,020 Cash received from other funds 3,646 42,958 435,349 Cash payments to suppliers for goods and services (76,545) (946,498) (75,708) (388,202) Cash payments to other funds (66,086) (214,177) (24,052) Cash payments to employees for services (159,349) (511,640) (171,679) (187,490) Cash payments to claimants/beneficiaries -- (427) (171,635) -- Taxes collected and remitted to other governments -- (41,880) -- (16,981)

Net cash provided by operating activities 58,413 807,410 50,540 502,132

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Transfers in 128,310 129,346 2,370 25,109 Transfers out (3,298) (165,698) (18,670) (86,315) Collections from other sources -- 668 -- 139 Loans to other funds (3) (463) -- -- Loans from other funds 118 118 -- -- Loan repayments to other funds (333) (808) -- -- Loan repayments from other funds 94 734 -- 21 Collections from other governments 810 6,303 -- Net cash provided (used) by noncapital

financing activities 125,698 (29,800) (16,300) (62,081)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Proceeds from the sale of commercial paper notes -- 141,181 -- 170,150 Proceeds from the sale of general obligation bonds

and other tax supported debt (119) (119) -- 7,695 Proceeds from the sale of revenue bonds -- 335,395 -- -- Principal paid on long-term debt (26,871) (196,759) (485) (134,063) Proceeds from the sale of capital assets -- 1,527 -- 930 Interest paid on revenue bonds and other debt (9,856) (238,015) (154) (201,280) Passenger facility charges -- 25,378 -- 9,408 Acquisition and construction of capital assets (55,540) (479,984) (8,425) (356,196) Contributions from state and federal governments 30 14,496 -- 10,931 Contributions in aid of construction 3,094 77,424 -- 16,595 Bond issuance costs (130) (5,904) -- -- Bond premiums -- 119,173 -- 241 Cash paid for bond defeasance -- (21,317) -- -- Bonds issued for advanced refundings of debt 29,080 441,750 -- 100,000 Cash paid for bond refunding escrow (28,924) (392,566) -- (99,205) Cash paid to payoff commercial paper -- (125,000) -- Cash paid for nuclear fuel inventory -- (13,671) -- (6,682) Net cash provided (used) by capital and related

financing activities (89,236) (317,011) (9,064) (542,906)

The accompanying notes are an integral part of the financial statements. (Continued)

Governmental Activities-

Internal Service Funds

35

Business-Type Activities

Proprietary Funds Statement of Cash Flows For the year ended September 30, 2017 (In thousands) 02/23 2:06p

Austin Energy Austin Water

Utility Airport CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investment securities (208,793)$ (209,973) (81,184) Proceeds from sale and maturities of investment

securities 213,719 248,753 49,301 Interest on investments 4,891 2,172 3,671

Net cash provided (used) by investing activities 9,817 40,952 (28,212)

Net increase (decrease) in cash and cash equivalents 58,470 77,582 252,229 Cash and cash equivalents, beginning 442,951 256,619 412,057 Cash and cash equivalents, ending 501,421 334,201 664,286

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES:

Operating income (loss) 136,173 217,829 19,781 Adjustments to reconcile operating income to net cash

provided by operating activities: Depreciation and amortization 162,930 121,521 26,667 Change in assets and liabilities:

Increase in working capital advances (1,677) -- -- (Increase) decrease in accounts receivable 19,264 (3,585) (3,215) Increase (decrease) in allowance for doubtful accounts 213 (824) 191 Increase in receivables from other governments -- -- -- Decrease in due from other funds -- -- -- (Increase) decrease in inventory 3,183 404 (20) (Increase) decrease in prepaid expenses and

other assets 6,948 (20) (57) Increase in deferred outflows related

to operations 17,485 9,479 2,513 Decrease in advances to other funds -- -- -- Decrease in other long-term assets 18,450 -- -- Increase (decrease) in accounts payable 10,472 (734) (387) Increase in accrued payroll and compensated

absences 1,063 429 424 Increase (decrease) in claims payable 2,070 562 -- Decrease in due to other governments -- -- -- Decrease in due to other funds -- -- -- Increase in net pension liability 7,093 3,933 1,974 Increase in other postemployment benefits payable 19,847 12,726 4,259 Increase (decrease) in other liabilities (26,518) 2,567 (461) Increase in customer deposits 727 1,403 591 Decrease in deferred inflows related

to operations (41,582) -- (5,094)

Total adjustments 199,968 147,861 27,385 Net cash provided by operating activities 336,141$ 365,690 47,166

The accompanying notes are an integral part of the financial statements.

36

Business-Type Activities

City of Austin, Texas Exhibit C-3

02/23 2:06p (Continued)

Nonmajor Enterprise

Funds Total 2016 Total

CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investment securities (18,747) (518,697) -- -- Proceeds from sale and maturities of investment

securities 18,262 530,035 -- -- Interest on investments 1,951 12,685 20 --

Net cash provided (used) by investing activities 1,466 24,023 20 --

Net increase (decrease) in cash and cash equivalents 96,341 484,622 25,196 (102,855) Cash and cash equivalents, beginning 273,847 1,385,474 134,145 Cash and cash equivalents, ending 370,188 1,870,096 159,341 (102,855)

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES:

Operating income (loss) (8,514) 365,269 37,895 389,833 Adjustments to reconcile operating income to net cash

provided by operating activities: Depreciation and amortization 28,774 339,892 11,599 Change in assets and liabilities:

Increase in working capital advances -- (1,677) -- (Increase) decrease in accounts receivable (539) 11,925 (958) Increase (decrease) in allowance for doubtful accounts (328) (748) -- Increase in receivables from other governments -- -- (1,747) Decrease in due from other funds -- -- 1,005 (Increase) decrease in inventory 526 4,093 (459) (Increase) decrease in prepaid expenses and

other assets (48) 6,823 216 Increase in deferred outflows related

to operations 10,541 40,018 24 Decrease in advances to other funds -- -- 35 Decrease in other long-term assets -- 18,450 -- Increase (decrease) in accounts payable (907) 8,444 1,823 Increase in accrued payroll and compensated

absences 1,298 3,214 666 Increase (decrease) in claims payable -- 2,632 (242) Decrease in due to other governments -- -- (1) Decrease in due to other funds -- -- (1,005) Increase in net pension liability 8,720 21,720 -- Increase in other postemployment benefits payable 17,585 54,417 -- Increase (decrease) in other liabilities 657 (23,755) 214 Increase in customer deposits 648 3,369 1,475 Decrease in deferred inflows related

to operations -- (46,676) --

Total adjustments 66,927 442,141 12,645 -- Net cash provided by operating activities 58,413 807,410 50,540 389,833

The accompanying notes are an integral part of the financial statements. (Continued)

37

Governmental Activities-

Internal Service Funds

Business-Type Activities

Proprietary Funds Statement of Cash Flows For the year ended September 30, 2017 (In thousands) 02/23 2:06p

Austin Energy Austin Water

Utility Airport NONCASH INVESTING, CAPITAL AND FINANCING

ACTIVITIES: Capital appreciation bonds interest accreted (260)$ (7,644) -- Capital assets contributed from other funds -- 104 -- Capital assets contributed to other funds (160) -- -- Capital assets acquired through service concession arrangements -- -- 27,490 Contributed facilities -- 44,518 -- Increase in the fair value of investments (3,006) -- -- Amortization of bond (discounts) premiums 6,783 15,255 2,617 Amortization of deferred gain (loss) on refundings (5,332) (5,575) (890) Gain (loss) on disposal of assets (8,051) (14) (33) Costs (recovered) to be recovered 15,228 (19,897) -- Transfers from other funds 1,086 13 -- Transfers to other funds (87) (4,310) (33) Capitalized interest -- -- 1,893

The accompanying notes are an integral part of the financial statements.

38

Business-Type Activities

City of Austin, Texas Exhibit C-3

02/23 2:06p (Continued)

Nonmajor Enterprise

Funds Total 2016 Total

NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES:

Capital appreciation bonds interest accreted -- (7,904) -- Capital assets contributed from other funds 922 1,026 11,587 Capital assets contributed to other funds (6,011) (6,171) (399) Capital assets acquired through service concession arrangements -- 27,490 -- Contributed facilities -- 44,518 -- Increase in the fair value of investments -- (3,006) -- Amortization of bond (discounts) premiums 1,823 26,478 41 Amortization of deferred gain (loss) on refundings (1,849) (13,646) (24) Gain (loss) on disposal of assets (828) (8,926) (22) Costs (recovered) to be recovered -- (4,669) -- Transfers from other funds 10,890 11,989 559 Transfers to other funds (6,755) (11,185) (1,184) Capitalized interest 1,003 2,896 --

The accompanying notes are an integral part of the financial statements.

39

Governmental Activities-

Internal Service Funds

Business-Type Activities

Y Fiduciary Funds City of Austin, Texas N Statement of Fiduciary Net Position Exhibit D-1 Y September 30, 2017

(In thousands) 02/15 11:39a

Private-purpose Trust Agency

June 2016 Pvt Purpose

June 2016 Agency

ASSETS Pooled investments and cash 2,085$ 2,098 2,074 2,349 Investments held by trustee -- 3,863 0 Other assets 200 -- 192 --

Total assets 2,285 5,961 2,266 2,349

LIABILITIES Accounts payable -- 55 -- 1 Due to other governments -- 1,469 -- 1,744 Deposits and other liabilities 1,469 4,437 1,252 604

Total liabilities 1,469 5,961 1,252 2,349

NET POSITION Held in trust 816 1,014

Total net position 816$ 1,014

The accompanying notes are an integral part of the financial statements.

40

Y Fiduciary Funds City of Austin, Texas N Statement of Changes in Fiduciary Net Position Exhibit D-2 Y For the year ended September 30, 2017

(In thousands) 02/15 11:39a

Private-Purpose Trust

June 2016 Pvt Purpose

2016 Total

ADDITIONS Contributions 1,744$ 1,048 1,190 Interest and other 15 7 1

Total additions 1,759 1,055 1,191

DEDUCTIONS Benefit payments 1,655 1,072 1,166

Total deductions 1,655 1,072 1,166

Net additions (deductions) 104 (17) 25

Total net position, beginning 712 1,031 709

Total net position, ending 816$ 1,014 734

The accompanying notes are an integral part of the financial statements.

41

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017

42

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Austin, Texas (the City) is a municipal corporation incorporated under Article XI, Section 5 of the Constitution of the State of Texas (Home Rule Amendment). The City operates under a Council-Manager form of government. The City Council is composed of a Mayor who is elected at large and ten Councilmembers who are elected by geographic district, all of whom serve four-year staggered terms subject to a maximum of two consecutive terms. A petition signed by 5% of the registered voters waives the term limit for a member of the City Council. The City’s major activities or programs include general government; public safety; transportation, planning, and sustainability; public health; public recreation and culture; and urban growth management. In addition, the City owns and operates certain major enterprise activities including an electric utility, water and wastewater utility, airport, and non-major enterprise activities including convention, environmental and health services, public recreation, and urban growth management activities. These activities are included in the accompanying financial statements. The City of Austin’s charter requires an annual audit by an independent certified public accountant. These financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for local governments as prescribed by the Governmental Accounting Standards Board (GASB). The City has implemented GASB Statements No. 1 through No. 74, No. 76 through No. 80, and No. 82. In fiscal year 2017, the City implemented the following GASB Statements:

GASB Statement Impact 74 – “Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans”

This statement is directed at administrators of stand- alone postemployment benefit plans and as such does not apply to the City. The companion statement, GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, is effective for the City in fiscal year 2018. The City is assessing the impact of GASB Statement No. 75 on its financial report.

77 – “Tax Abatement Disclosures”

This statement establishes financial reporting standards for tax abatement agreements entered into by state and local governments that result in a reduction of revenue. This statement requires additional information be disclosed in the notes to the financial statements. See Note 13.

78 – “Pensions Provided through Certain Multiple-Employer Defined Benefit Plans”

This statement does not apply to the City as this statement is directed at multiple-employer plans. The City’s pension plans are single-employer plans.

80 – “Blending Requirements for Certain Component Units” This statement amends the blending requirements of component units by adding an additional criterion requiring blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. The implementation of this standard had no impact on amounts reported in the financial statements.

The more significant accounting and reporting policies and practices used by the City are described below. As a local government, the City is not subject to federal income taxes, under the Internal Revenue Code Section 115. Furthermore, it is not subject to state sales tax. a -- Reporting Entity These financial statements present the City’s primary government, its component units, and other entities for which the City is considered financially accountable. Blended component units, although legally separate entities, are in substance, part of the City’s operations; therefore, data from these units are combined with data of the City. Discrete component units are legally separate entities that are not considered part of the City’s operations; therefore, data from these units are shown separately from data of the City.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

43

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued a -- Reporting Entity, continued Blended Component Units – Following are the City’s blended component units.

Blended Component Units Brief Description of Activities, Relationship to City, and Key Inclusion Criteria The Austin Housing Finance Corporation (AHFC)

AHFC was created in 1979 as a public, nonprofit corporation and instrumentality of the City under the provisions of the Texas Housing Finance Corporation Act, Chapter 394, and Local Government Code. The mission of the AHFC is to generate and implement strategic housing solutions for the benefit of low- and moderate- income residents of the City. AHFC is governed by a board composed of the City Council. In addition, City management has operational responsibilities for this component unit. Reporting Fund: Housing Assistance Fund, a nonmajor special revenue fund

Urban Renewal Agency (URA) URA was created by the City under Chapter 374 of the Texas Local Government Code. The Mayor, with consent of the City Council, appoints the board of commissioners for this agency, whose primary responsibility is to oversee the implementation and compliance of urban renewal plans adopted by the City Council. An urban renewal plan's primary purpose is to eliminate slum and blighting influence within a designated area of the city. City Council maintains the ability to impose its will on the organization. URA exclusively receives financial support/benefits from its relationship with the City. Reporting Fund: Urban Renewal Agency fund, a nonmajor special revenue fund

Austin Industrial Development Corporation (AIDC)

AIDC was created under the Texas Development Corporation Act of 1979 to provide a means of extending tax-exempt financing to projects that are deemed to have substantial social benefit through the creation of commercial, industrial, and manufacturing enterprises, in order to promote and encourage employment in the City. City Council acts as the board of directors of the corporation. In addition, City management has operational responsibilities for this component unit. Reporting Fund: Austin Industrial Development Corporation Fund, a nonmajor special revenue fund

Mueller Local Government Corporation (MLGC)

MLGC is a non-profit local government corporation created by the City under Subchapter D of Chapter 431 of the Texas Transportation Code. MLGC was created for the purpose of financing infrastructure projects required for the development of the former site of Mueller Airport. City Council acts as the board of directors of the corporation. Members of the City staff serve as officers of the corporation and have operational responsibilities for this component unit. Reporting Fund: Mueller Local Government Corporation, a nonmajor special revenue fund

Austin-Bergstrom International Airport (ABIA) Development Corporation

ABIA Development Corporation is governed by a board composed of the City Council. The entity has no day-to-day operations. Its existence relates only to the authorization for issuance of industrial revenue bonds or to other similar financing arrangements in accordance with the Texas Development Corporation Act of 1979. To date, none of the bonds issued constitute a liability of ABIA Development Corporation or the City. In addition, City management has operational responsibilities for this component unit. There is no financial activity to report related to this component unit.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

44

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued a -- Reporting Entity, continued Discretely Presented Component Units – Following are the City’s discretely presented component units. Financial statements for these entities can be requested from the addresses located below.

Discretely Presented Component Units Description of Activities, Relationship to City, and Key Inclusion Criteria Austin-Bergstrom Landhost Enterprises, Inc. (ABLE) 2716 Spirit of Texas Drive Austin, TX 78719

ABLE is a legally separate entity that issues revenue bonds for the purpose of financing the cost of acquiring, improving, and equipping a full-service hotel on airport property. City Council appoints this entity's Board and maintains a contractual ability to remove board members at will. Debt issued by ABLE does not constitute a debt or pledge of the faith and credit of the City.

Austin Convention Enterprises, Inc. (ACE) 500 East 4th Street Austin, TX 78701

ACE is a legally separate entity that owns, operates, and finances the Austin Convention Center Hotel. City Council appoints this entity's Board and maintains a contractual ability to remove board members at will. Debt issued by ACE does not constitute a debt or pledge of the faith and credit of the City.

Waller Creek Local Government Corporation (WCLGC) 124 W. 8th Street Austin, TX 78701

WCLGC is a non-profit local government corporation created by the City under Subchapter D of Chapter 431 of the Texas Transportation Code. The purpose of WCLGC is implementing the financing, design, construction, maintenance and operation of certain public improvements located within or around the Waller Creek Redevelopment Project district. City Council appoints a voting majority of the board of directors of the WCLGC and maintains a contractual ability to remove board members at will. There is no financial activity to report related to this component unit.

Related Organizations -- The City Council appoints the voting majority of the board members, but the City has no significant financial accountability for the Austin Housing Authority. The Mayor appoints the persons to serve as commissioners of this organization; however, this entity is separate from the operating activities of the City. The City of Austin retirement plans (described in Note 7) and the City of Austin Deferred Compensation Plan are not included in the City’s reporting entity since the City does not exercise substantial control over these plans. Related organizations are not included in the City’s reporting entity. b -- Government-wide and Fund Financial Statements The basic financial statements include both government-wide and fund financial statements. The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all governmental and business-type activities of the primary government and its component units. Fiduciary activities are not included in the government-wide statements. Internal service fund asset, deferred outflow of resources, liability, and deferred inflow of resources balances that are not eliminated in the statement of net position are primarily reported in the governmental activities column on the government-wide 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 to external customers. The statement of activities demonstrates the degree to which the direct expenses of a function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Certain indirect costs are included in the program expenses of most business-type activities. Program revenues include: 1) charges to customers who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and 2) grants and contributions that are restricted to meet the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported as general revenues. The accounts of the City are organized on the basis of funds. The fund level statements focus on the governmental, proprietary, and fiduciary funds. Each fund was established to account for specific activities in accordance with applicable regulations, restrictions, or limitations. Major funds are determined by criteria specified by GAAP. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. All other funds are aggregated into nonmajor governmental, nonmajor enterprise, or internal service fund groupings. A reconciliation of the fund financial statements to the government-wide statements is provided in the financial statements to explain the differences between the two different reporting approaches.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

45

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued b -- Government-wide and Fund Financial Statements, continued The City’s fiduciary funds are presented in the fund financial statements by type (private-purpose and agency). By definition, fiduciary fund assets are held for the benefit of a third party and cannot be used to address activities or obligations of the primary government; therefore, they are not included in the government-wide statements. The government-wide financial statements are reported using the flow of economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenue is recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenue in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements have been met. c -- Measurement Focus, Basis of Accounting, and Financial Statement Presentation Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. This basis of accounting recognizes revenues in the accounting period in which they become susceptible to accrual (i.e. both measurable and available). Revenues, other than grants, are considered available when they are collectible within the current period or soon enough thereafter to liquidate liabilities of the current period (defined by the City as collected within 60 days of the end of the fiscal year). Revenues billed under a contractual agreement with another governmental entity, including federal and state grants, are recognized when billed or when all eligibility requirements of the provider have been met, and they are considered to be available if expected to be collected within one year. Expenditures generally are recorded when incurred. However, expenditures related to compensated absences and arbitrage are recorded when payment is due. Debt service expenditures are recognized when payment is due. The reported fund balance of governmental funds is considered a measure of available spendable resources. Property taxes, sales taxes, franchise taxes, hotel occupancy taxes, vehicle rental taxes, municipal court fines, development permits and inspections, building safety permits and inspections, public health charges, emergency medical service charges, and interest associated with the current fiscal period are all considered to be susceptible to accrual and, to the extent they are considered available, have been recognized as revenues of the current fiscal period. All other revenue items are considered measurable and available in the fiscal period the City receives cash. Governmental Funds: Consist of the general fund, special revenue funds, debt service funds, capital projects funds, and permanent funds. The City reports the following major governmental fund:

General Fund: The primary operating fund of the City. It is used to account for all financial resources that are not required to be accounted for in another fund. It includes the following activities: general government; public safety; transportation, planning, and sustainability; public health; public recreation and culture; and urban growth management.

In addition, the City reports the following nonmajor governmental funds:

Special Revenue Funds: Account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Debt Service Funds: Account for and report financial resources, and the accumulation of those financial resources, that are restricted, committed, or assigned to expenditure for principal and interest of general long-term debt and HUD Section 108 loans. Capital Projects Funds: Account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets (other than those reported within proprietary funds). It is primarily funded by general obligation debt, other tax supported debt, interest income, and other intergovernmental revenues. A 1981 ordinance requires the establishment of a separate fund for each bond proposition approved in each bond election. Permanent Funds: Account for and report resources that are restricted to the extent that only earnings, and not principal, may be used for purposes that support the City’s programs.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

46

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued c -- Measurement Focus, Basis of Accounting, and Financial Statement Presentation, continued Proprietary Funds: Consist of enterprise funds and internal service funds. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services in connection with a proprietary fund’s principal ongoing operations, such as providing electric or water-wastewater services. Other revenues or expenses are nonoperating items.

Enterprise Funds: Account for operations that are financed and operated in a manner similar to private business enterprises. Costs are financed or recovered primarily through user charges.

The City reports the following major enterprise funds:

Austin Energy™: Accounts for the activities of the City-owned electric utility. Austin Water Utility: Accounts for the activities of the City-owned water and wastewater utility. Airport: Accounts for the operations of the Austin-Bergstrom International Airport.

The City reports the following nonmajor business-type activities in Exhibit A-2: Convention: Accounts for convention center and public events activities. Environmental and health services: Accounts for solid waste services activities. Public recreation: Accounts for golf activities. Urban growth management: Accounts for drainage and transportation activities.

Internal Service Funds: Account for the financing of goods or services provided by one City department or agency to other City departments or to other governmental units on a cost-reimbursement basis. These activities include, but are not limited to, capital projects management, combined emergency center operations, employee health benefits, fleet services, information services, liability reserve (City-wide self-insurance) services, support services, wireless communication services, and workers’ compensation coverage.

Fiduciary Funds: Account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, or other governments:

Private-purpose Trust Funds: Account for trust arrangements under which principal and income benefit individuals, private organizations, or other governments. Private-purpose trust funds account for various purposes: general government; transportation, planning, and sustainability; public recreation and culture; and urban growth management. Agency Funds: Account for resources held by the City in a custodial capacity for permit fees; campaign financing donations and fees; Municipal Court service fees; debt service payments for special assessment debt; and escrow deposits and payments to loan recipients.

d -- Budget The City Manager is required by the City Charter to present a proposed operating and capital budget to the City Council no later than thirty days before the beginning of the new fiscal year. The final budget shall be adopted no later than the twenty-seventh day of the last month of the preceding fiscal year. During the final adoption process, the City Council passes an appropriation ordinance and a tax-levying ordinance. Annual budgets are legally adopted for the General Fund, certain special revenue funds, and debt service funds. Annual budgets are also adopted for enterprise and internal service funds, although they are not legally required. Multi-year budgets are adopted for capital projects and grant funds, where appropriations remain authorized for the life of the projects, irrespective of fiscal year. Expenditures are appropriated on a modified accrual basis, except that commitments related to purchase orders are treated as expenditures in the year of commitment. Certain employee training and other fund-level expenditures are budgeted as general city responsibilities. Formal budgetary control is employed during the year at the fund and department level as a management control device for annual budgeted funds. Budgets are modified throughout the year. The City Manager is authorized to transfer appropriation balances within a fund and department of the City. The City Council approves amendments to the budget and transfers of appropriations from one fund and department to another. The original and final budgets for the General Fund are reported in the required supplementary information. Unencumbered appropriations for annual budgets lapse at fiscal year end.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

47

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued e -- Financial Statement Elements Pooled Investments and Cash -- Cash balances of all City funds (except for certain funds shown in Note 3 as having non- pooled investments) are pooled and invested. Interest earned on investments purchased with pooled cash is allocated monthly to each participating fund based upon the fund’s average daily balance. Funds that carry a negative balance in pooled cash and investments are not allocated interest earnings nor charged interest expense. Investments -- Certain investments are required to be reported at fair value. Realized gains or losses resulting from the sale of investments are determined by the specific cost of the securities sold. The City carries all of its investments in U.S. government and agency debt securities at fair value and money market mutual funds at amortized cost. Investments in local government investment pools are carried at either net asset value (NAV) or at amortized cost. Accounts Receivable -- Balances of accounts receivable, reported on the government-wide statement of net position, are aggregations of different components such as charges for services, fines, and balances due from taxpayers or other governments. In order to assist the reader, the following information has been provided regarding significant components of receivable balances as of September 30, 2017 (in thousands):

Governmental activities General

Fund

Nonmajor Governmental

Funds

Internal Service Funds Total

Charges for Services 282,504$ 658 10,200 293,362 Fines 18,510 81 -- 18,591 Taxes 46,584 22,332 -- 68,916 Other Governments -- 3,988 -- 3,988 Other -- 2,708 -- 2,708 Allowance for doubtful accounts (286,057) (1,264) -- (287,321)

Total 61,541$ 28,503 10,200 100,244

Receivables reported in business-type activities are primarily comprised of charges for services.

Austin Energy Austin Water Airport

Nonmajor enterprise Total

Accounts Receivable 134,068$ 72,808 7,260 21,636 235,772 Allowance for doubtful accounts (8,463) (2,438) (1,798) (1,609) (14,308)

Total 125,605$ 70,370 5,462 20,027 221,464

Elimination of Internal Activities -- The elimination of internal service fund activity is needed in order to eliminate duplicate activity in making the transition from the fund level financial statements to the government-wide financial statements. In addition, the elimination of internal service fund activity requires the City to “look back” and adjust the internal service funds’ internal charges. A positive change in net position derived from internal service fund activity results in a pro-rata reduction in the charges made to the participatory funds. A deficit change in net position of internal service funds requires a pro-rata increase in the amounts charged to the participatory funds. Internal Balances -- In the government-wide statement of net position, internal balances are the receivables and payables between the governmental and business-type activities. Interfund Receivables and Payables -- During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as “due from other funds” or “due to other funds” on the fund-level statements when they are expected to be liquidated within one year. If receivables or payables are not expected to be liquidated within one year, they are classified as “advances to other funds” or “advances from other funds.”

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

48

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued e -- Financial Statement Elements, continued Inventories -- Inventories are valued at cost, which is determined as follows:

Fund Inventory Valuation Method

General Fund Average cost; postage first-in, first-out

Austin Energy

Fuel oil Last-in, first-out

Other inventories Average cost

All others Average cost

Inventories for all funds are accounted for using the consumption method and expenditures are recorded when issued. Inventories reported in the General Fund are offset by an equal amount in nonspendable fund balance, which indicates that they do not represent “available spendable resources.” Restricted Assets -- Restricted assets are assets whose use is subject to constraints that are either (a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitutional provisions or enabling legislation. Since Austin Energy and Austin Water Utility report in accordance with accounting for regulated operations, enabling legislation also includes restrictions on asset use established by its governing board which is the City Council. Restricted assets used to repay maturing debt and other current liabilities are classified as current. The balances of restricted assets in the enterprise funds are as follows (in thousands):

Aus tin Energy

Austin Water Utility Airport

Nonm ajor Ente rpris e

Total Re stricted

As sets Capital projects 45,517$ 93,853 512,644 16,921 668,935 Customer and escrow deposits 30,241 14,926 1,351 6,257 52,775 Debt service 45,568 67,982 67,601 11,474 192,625 Environmental and landf ill -- -- -- 81 81 Federal grants 11,431 -- 868 89 12,388 Operating reserve account -- 37,651 14,874 5,712 58,237 Passenger f acility charge account -- -- 90,044 -- 90,044 Plant decommissioning 220,391 -- -- -- 220,391 Renew al and replacement account 12,386 -- 10,000 1,229 23,615 Revenue bond reserve 24,315 59,670 39,513 13,305 136,803 Strategic reserve 186,718 -- -- -- 186,718

576,567$ 274,082 736,895 55,068 1,642,612

Capital Assets -- Capital assets, which primarily include land and improvements, buildings and improvements, plant and equipment, vehicles, water rights, and infrastructure assets, are reported in the proprietary funds and the applicable governmental or business-type activity columns of the government-wide statement of net position; related depreciation or amortization is allocated to programs in the statement of activities. Capital assets are defined as assets with an initial individual cost of $5,000 or more and an estimated useful life of greater than one year. Assets purchased, internally generated, or constructed are capitalized at historical cost. Contributed or annexed capital assets are recorded at estimated fair value at the time received. Capital outlay is recorded as an expenditure in the General Fund and other governmental funds and as an asset in the government-wide financial statements and proprietary funds. Maintenance and repairs are charged to operations as incurred. Improvements and betterments that extend the useful lives of capital assets or increase their value are capitalized in the government-wide and proprietary statement of net position and expended in governmental funds. The City obtains public domain capital assets (infrastructure) through capital improvement projects (CIP) construction or through annexation or developer contribution. Infrastructure assets include streets and roads, bridges, pedestrian facilities, drainage systems, and traffic signal systems acquired after September 30, 1980. Interest is not capitalized on governmental capital assets. Enterprise funds, with the exception of Austin Energy and Austin Water Utility, capitalize interest paid on long-term debt when it can be attributed to a specific project and when it materially exceeds the interest revenue generated by the bond proceeds issued to fund the project. Interest is not capitalized on Austin Energy and Austin Water Utility assets in accordance with accounting for regulated operations.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

49

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued e -- Financial Statement Elements, continued Capital assets, except for nuclear fuel, are depreciated or amortized using the straight-line method over the following estimated useful lives (in years):

Business-type Activities

Assets Governmental Activities (1)

Austin Energy

Austin Water Utility Airport

Nonmajor Enterprise

Buildings and improvements 5-40 -- 15-50 15-40 12-40 Plant and equipment 5-50 -- 5-60 4-50 5-40 Vehicles 3-20 3-15 3-20 3-20 3-30 Electric plant -- 3-50 -- -- -- Non-electric plant -- 3-30 -- -- -- Communication equipment 7-15 -- 7 7 7 Furniture and fixtures 12 -- 12 12 12 Computers and EDP equipment 3-7 -- 3-7 3-7 3-7 Nuclear fuel -- (2) -- -- -- Water rights -- -- 101 -- -- Infrastructure

Streets and roads 30 -- -- -- --

Bridges 50 -- -- -- --

Drainage systems 50 -- -- -- --

Pedestrian facilities 20 -- -- -- --

Traffic signals 25 -- -- -- --

(1) Includes internal service funds (2) Nuclear fuel is amortized over units of production

Depreciation of assets is classified by functional component. The City considers land, arts and treasures, and library collections to be inexhaustible; therefore, these assets are reported as nondepreciable. The true value of arts and treasures is expected to be maintained over time and, thus, is not depreciated. The initial investment of library collections for each library is capitalized. All subsequent expenditures related to the maintenance of the collection (replacement of individual items) are expensed, with the overall value of the collection being maintained, and therefore, not depreciated. In the government-wide and proprietary fund statements, the City recognizes a gain or loss on the disposal of assets when it retires or otherwise disposes of capital assets. Water rights represent the amortized cost of a $100 million contract, net of accumulated amortization of $17.8 million, between the City and the Lower Colorado River Authority (LCRA) for a fifty-one year assured water supply agreement, with an option to extend another fifty years. The City and the LCRA entered into the contract in 1999. The asset amortization period is 101.25 years. Regulatory Assets -- In accordance with accounting for regulated operations, certain utility expenses that do not currently require funding are recorded as assets and amortized over future periods if they are intended to be recovered through future rates. These expenses include unrealized gain/loss on investments, debt issuance costs, pension, other postemployment benefits, interest, decommissioning, and pass-through rates, such as the Power Supply Adjustment charge, Community Benefit charge, and Regulatory charge. Regulatory Assets will be recovered in these future periods by setting rates sufficient to provide funds for the requirements. If regulatory assets are not recoverable in future rates, the regulatory asset will be subject to write off. Retail deregulation of electric rates in the future may affect the City’s current accounting treatment of its electric utility revenues and expenses.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

50

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued e -- Financial Statement Elements, continued Deferred Outflows (Inflows) of Resources -- Deferred outflows of resources represent the consumption of net position that are applicable to a future reporting period. Deferred outflows have a positive effect on net position, similar to assets. Deferred inflows of resources represent the acquisition of net position that have a negative effect on net position, similar to liabilities. The following chart reflects the activities included in deferred outflows and inflows (in thousands).

Activities Category and explanation

Deferred Outflows Deferred Inflows

Governmental Activities

Business-type Activities

Governmental Activities

Business-type Activities

Derivative instruments

Deferred outflows or inflows. Derivative instruments are reported in the statement of net position at fair value. Changes in fair value of hedging derivative instruments are recognized through the application of hedge accounting as either deferred outflows or inflows in the statement of net position, as an offset to the related hedging derivative instrument. $ --

61,919 --

1,863

Gain/loss on debt refundings

Deferred outflows or inflows. When debt is refunded, the associated gains (deferred inflows) or losses (deferred outflows) are recognized as deferred outflows or inflows of resources and amortized over future periods. 22,664

105,607 --

245

Regulated operations

Deferred inflows. In accordance with accounting for regulated operations, certain credits to income are held as deferred inflows of resources until the anticipated matched charge is incurred. These credits include unrealized gain/loss on investments, contributions, interest, decommissioning, and pass- through rates. -- -- --

1,023,936

Service concession arrangements

Deferred inflows. The resources related to the service concession arrangements that will be recognized as revenue in future years over the terms of arrangements between the City and the operators are reported as deferred inflows of resources. -- -- 1,174

189,161

Pensions

Deferred outflows or inflows. Differences between estimated and actual investment earnings, changes in actuarial assumptions, and differences between projected and actual actuarial experience may be treated as either deferred outflows or inflows. Contributions made to the pension systems between the Plans’ measurement date (December 31) and the City’s fiscal year end (September 30) are recognized as deferred outflows. 337,178 175,145 5,054 --

Total $ 359,842

342,671 6,228

1,215,205

The governmental funds' statements include amounts recognized as deferred inflows of resources as a result of property taxes, other taxes, and certain revenues ($22.8 million) that are not available to liquidate current liabilities in the funds. These amounts will be recognized in the period these amounts become available. Compensated Absences -- The amounts owed to employees for unpaid vacation, exception vacation, and sick leave liabilities, including the City’s share of employment-related taxes, are reported on the accrual basis of accounting in the applicable business-type activity columns of the government-wide statements and in the proprietary activities of the fund financial statements. The liabilities and expenditures are reported on the modified accrual basis in the governmental fund financial statements; the estimated liability in governmental funds is the amount of unused vacation, exception vacation, and sick leave eligible for payout upon termination for employees that terminated by the fiscal year end.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

51

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued e -- Financial Statement Elements, continued Accumulated leave payouts are limited to the lower of actual accumulated hours or the hours listed below:

Work- week

Non-Sworn Employees (1)

Sworn Police (2)

Sworn Fire (3)

Sworn EMS (4)

Vacation 0-40 240 240 240 240

42 N/A N/A N/A 270

48 N/A N/A N/A 309

53 N/A N/A 360 N/A

Exception vacation (5) 0-40 160 160 176 206

42 160 N/A N/A 206

48 160 N/A N/A 206

53 N/A N/A 264 N/A

Sick leave 0-40 720 1,400 720 720

42 N/A N/A N/A 756

48 N/A N/A N/A 864

53 N/A N/A 1,080 N/A

Compensatory time (6) 120 120 120 120

(1) Non-sworn employees are eligible for accumulated sick leave payout if hired before October 1, 1986. (2) Sworn police employees with 12 years of actual service are eligible for accumulated sick leave payout. As of January 1, 2011, officers may be eligible to receive up to 1,700 hours of sick leave if certain criteria are met. (3) Sworn fire employees are eligible for accumulated sick leave payout regardless of hire date. (4) Sworn EMS employees with 12 years of actual service are eligible for accumulated sick leave payout if certain criteria are met. (5) Exception vacation hours are hours accumulated by an employee when the employee works on a City holiday. (6) Employees may earn compensatory time in lieu of paid overtime; maximum payout is 120 hours for all employees. Other Postemployment Benefits (OPEB) -- The City provides certain health care benefits for its retired employees and their families as more fully described in Note 8. At September 30, 2017, the City’s total actuarial accrued liability for these retiree benefits was approximately $2.0 billion. The City funds the costs of these benefits on a pay-as-you-go basis. Long-Term Debt -- The debt service for general obligation bonds and other general obligation debt (including loans), issued to fund general government capital projects, is paid from tax revenues, interfund transfers, and intergovernmental revenues. Such general obligation debt is reported in the government-wide statements under governmental activities. The debt service for general obligation bonds and other general obligation debt issued to finance proprietary fund capital projects is normally paid from net revenues of the applicable proprietary fund, although such debt will be repaid from tax revenues if necessary. Such general obligation debt is shown as a specific liability of the applicable proprietary fund, which is appropriate under generally accepted accounting principles and in view of the expectation that the proprietary fund will provide resources to service the debt. Revenue bonds issued to finance capital projects of certain enterprise funds are to be repaid from select revenues of these funds. Note 6 contains more information about pledged revenues by fund. The corresponding debt is recorded in the applicable fund. The City has certain contractual commitments with several municipal utility districts (MUDs) for the construction of additions and improvements to the City’s water and wastewater system that serve the MUDs and surrounding areas. These additions and improvements are funded by other tax supported debt, whose principal and interest are payable primarily from the net revenues of Austin Water Utility. For proprietary funds and for governmental activities in the government-wide financial statements, the City defers and amortizes gains and losses realized on refundings of debt and reports both the new debt as a liability and the related deferred loss (gain) amount as deferred outflows (or deferred inflows) of resources on the statement of net position. Austin Energy and Austin Water Utility recognize gains and losses on debt defeasance in accordance with accounting for regulated operations.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

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1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued e -- Financial Statement Elements, continued Other Long-Term Liabilities -- Capital appreciation bonds are recorded at net accreted value. Annual accretion of the bonds is recorded as interest expense during the life of the bonds. The cumulative accretion of capital appreciation bonds, net of principal and interest payments on the bonds, is recorded as capital appreciation bond interest payable. Landfill Closure and Postclosure Care Costs -- Municipal solid waste landfill costs and the liability for landfill closure and postclosure costs are reported in Austin Resource Recovery, a nonmajor enterprise fund. Operating Revenues -- Revenues are recorded net of allowances, including bad debt, in the government-wide and proprietary fund-level statements. The funds listed below report revenues net of bad debt expense, as follows (in thousands):

Bad Debt Expense

Austin Energy $ 4,862 Austin Water Utility 815 Airport 191 Nonmajor Enterprise 886

Electric, water, and wastewater revenue is recorded when earned. Customers’ electric and water meters are read and bills rendered on a cycle basis by billing district. Electric rate schedules include a fuel cost adjustment clause that permits recovery of fuel costs in the month incurred or in future months. The City reports fuel costs on the same basis as it recognizes revenue. Unbilled revenue is recorded in Austin Energy by estimating the daily power generation and allocating by each billing district meter read dates as of September 30, 2017. The amount of unbilled revenue recorded, as of September 30, 2017, was $27.8 million. Austin Water Utility records unbilled revenue as earned based upon the percentage of October’s billing that represented water usage through September 30, 2017. The amount of unbilled revenue reported in accounts receivable as of September 30, 2017 was $17.1 million for water and $14.4 million for wastewater. Revenues are also recorded net of discounts in the government-wide and proprietary fund-level statements. Discounts are offered as incentives geared towards generating additional revenue in the form of new or expanded business, or to encourage events with a significant economic impact, as well as expedient event planning. The funds listed below report revenues net of discounts, as follows (in thousands):

Discounts Airport $ 1,035 Nonmajor Enterprise 2,574

Interfund Revenues, Expenses, and Transfers -- Transactions between funds that would be treated as revenues, expenditures, or expenses if they involved organizations external to the governmental unit are accounted for as revenues, expenditures, or expenses in the funds involved, such as billing for utility services. Transactions between funds that constitute reimbursements for expenditures or expenses are recorded as expenditures or expenses in the reimbursing fund and as reductions of the expenditure or expense in the fund that is reimbursed. Transfers between funds are reported in the operations of governmental and proprietary funds. In the government-wide statement of activities, the effect of interfund activity has generally been removed from the statements. Exceptions include the chargeback of services, such as utilities or vehicle maintenance, and charges for central administrative costs. Elimination of these charges would distort the direct costs and program revenues of the various functions reported. The City recovers indirect costs that are incurred in the Support Services Fund, which is reported as an internal service fund. Indirect costs are calculated in a citywide cost allocation plan or through indirect cost rates, which are based on the cost allocation plan. Intergovernmental Revenues, Receivables, and Liabilities -- Intergovernmental revenues and related receivables arise primarily through funding received from Federal and State grants. Revenues are earned through expenditure of money for grant purposes. Intergovernmental liabilities arise primarily from funds held in an agency capacity for other local governmental units.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

53

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued e -- Financial Statement Elements, continued Federal and State Grants, Entitlements, and Shared Revenues -- Grants, entitlements, and shared revenues may be accounted for within any City fund. The purpose and requirements of each grant, entitlement, or shared revenue are analyzed to determine the appropriate fund statement and revenue category in which to report the related transactions. Grants, entitlements, and shared revenues received for activities normally recorded in a particular fund may be accounted for in that fund, provided that applicable legal restrictions can be satisfied. Revenues received for activities normally accounted for within the nonmajor governmental fund groupings include: Federal grant funds, State grant funds, and other special revenue grant funds. Capital grants restricted for capital acquisitions or construction, other than those associated with proprietary type funds, are accounted for in the applicable capital projects funds. Revenues received for operating activities of proprietary funds or revenues that may be used for either operations or capital expenses are recognized in the applicable proprietary fund. Fund Equity -- Fund balances for governmental funds are reported in classifications that demonstrate the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. The governmental fund type classifications are as follows:

Nonspendable: The portion of fund balance that cannot be spent because it is either (a) not in spendable form, such as inventories and prepaid items, or (b) legally or contractually required to be maintained intact.

Restricted: The portion of fund balance that is restricted to specific purposes due to constraints placed on the use of resources that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or (b) imposed by law through constitution provisions or enabling legislation.

Committed: The portion of fund balance that can only be used for specific purposes pursuant to constraints imposed by an ordinance, the highest level action taken, adopted by the City Council. An equal action (ordinance) must be enacted to rescind the commitment. The City Council is the highest level of decision making authority. Assigned: The portion of fund balance that is constrained by the City’s intent to use for specific purposes, but are neither restricted nor committed. Under the City charter, the City Manager is authorized to assign individual amounts up to $58,000 in fiscal year 2017 to a specific purpose. This amount is updated annually based on the most recently published federal government, Bureau of Labor Statistics Indicator, Consumer Price Index (CPI-W U.S. City Average) U.S. City Average.

Unassigned: The portion of fund balance that is not restricted, committed, or assigned to specific purposes; only the General Fund reports a positive unassigned fund balance.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

54

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued e -- Financial Statement Elements, continued The constraints placed on the fund balances of the General Fund and the nonmajor governmental funds are presented below (in thousands):

General Fund

Special Revenue

Debt Service

Capital Projects Permanent Total

Nonspendable Inventory 28$ -- -- -- -- 28 Prepaid items 699 -- -- -- -- 699 Permanent funds -- -- -- -- 1,070 1,070

Total Nonspendable 727 -- -- -- 1,070 1,797

Restricted Municipal court services -- 2,173 -- -- -- 2,173 Police special purpose -- 7,714 -- -- -- 7,714 Fire special purpose -- 49 -- -- -- 49 Transportation, planning, and sustainability -- 218 -- -- -- 218 Public health services -- 241 -- -- -- 241 Parks services -- 2,111 -- -- -- 2,111 Library services -- 1,930 -- -- 1 1,931 Tourism programs -- 19,676 -- -- -- 19,676 Affordable housing programs -- 32,321 -- -- -- 32,321 Urban growth programs -- 9,251 -- -- -- 9,251 Capital construction -- -- -- 114,310 -- 114,310 Debt service -- -- 24,587 -- -- 24,587

Total Restricted -- 75,684 24,587 114,310 1 214,582

Committed Parks services -- 5,673 -- -- -- 5,673 Affordable housing programs -- 738 -- -- -- 738 Urban growth programs -- 34,241 -- -- -- 34,241

Total Committed -- 40,652 -- -- -- 40,652

Assigned General government services 177 -- -- -- -- 177 Municipal court services 391 -- -- -- -- 391 Police special purpose 5,627 39 -- -- -- 5,666 Fire special purpose 619 -- -- -- -- 619 EMS special purpose 2,172 -- -- -- -- 2,172 Transportation, planning, and sustainability 61 10 -- -- -- 71 Public health services 5,699 32 -- -- -- 5,731 Parks services 543 156 -- -- -- 699 Library services 698 6 -- -- -- 704 Tourism programs -- 98 -- -- -- 98 Affordable housing programs 205 4,344 -- -- -- 4,549 Urban growth programs 13,426 6,241 -- -- -- 19,667 Capital construction -- -- -- 98,766 -- 98,766

Total Assigned 29,618 10,926 -- 98,766 -- 139,310

Unassigned 141,469 (2,542) -- (22,827) -- 116,100

Total Fund Balance 171,814$ 124,720 24,587 190,249 1,071 512,441

Nonmajor Governmental

Restricted resources -- If both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first and unrestricted resources as needed. In governmental funds, unrestricted resources would be utilized in order from committed to assigned and finally unassigned. Budget stabilization -- By formal action of City Council, the General Fund maintains two reserve funds: an emergency reserve and a budget stabilization reserve. These reserves are part of unassigned fund balance for the General Fund. As of September 30, 2017, the emergency reserve maintains a balance of six percent of total General Fund requirements, or $58.2 million, and the budget stabilization reserve reports a balance of $76 million. The funds in the budget stabilization reserve may be appropriated to fund capital or other one-time costs, but such appropriation should not exceed one-third of the total amount in the reserve.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

55

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued e -- Financial Statement Elements, continued Cash and Cash Equivalents -- For purposes of the statement of cash flows, the City considers cash and cash equivalents to be currency on hand, cash held by trustee, demand deposits with banks, and all amounts included in pooled investments and cash accounts. The City considers the investment pool to be highly liquid, similar to a money market mutual fund. Pensions -- For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s three pension plans and additions to/deductions from each plan’s fiduciary net position have been determined on the same basis as they are reported by the plans. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. The net pension liability, pension expenses, and long-term deferrals are allocated to funds based on actual contributions by fund during the corresponding measurement period with the exception of the internal service funds, which are presented in governmental activities in the government-wide statements (see Note 7). Risk Management -- The City is exposed to employee-related risks for health benefits and workers’ compensation, as well as to various risks of loss related to torts; theft of, damage to, or destruction of assets; fraud; and natural disasters. The City is self- insured for legal liabilities, workers’ compensation claims, and employee health benefits. The City does not participate in a risk pool but purchases commercial insurance coverage for property loss or damage, commercial crime, fidelity bonds, airport operations, and contractors working at selected capital improvement project sites (see Note 14). Austin Energy has established an energy risk management program. This program was authorized by City Council and led by the risk oversight committee. Under this program, Austin Energy enters into futures contracts, options, and swaps to reduce exposure to natural gas and energy price fluctuations. For additional details see Note 9. f -- Comparative Data Governments are required to present comparative data only in connection with Management’s Discussion and Analysis (MD&A). Comparative data has been utilized within the MD&A to help readers more fully understand the City’s financial statements for the current period. g -- Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. 2 – POOLED INVESTMENTS AND CASH The following summarizes the amounts of pooled investments and cash by fund at September 30, 2017 (in thousands):

Unrestricted Restricted General Fund 170,879$ -- Nonmajor governmental funds 335,784 -- Austin Energy 398,583 97,865 Austin Water Utility 187,932 145,121 Airport 7,514 656,769 Nonmajor enterprise funds 339,984 30,172 Internal service funds 152,918 4,447 Fiduciary funds 4,183 -- Subtotal pooled investments and cash 1,597,777 934,374

Total pooled investments and cash 2,532,151$

Pooled Investments and Cash

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

56

3 – INVESTMENTS AND DEPOSITS a – Investments Chapter 2256 of the Texas Government Code (the Public Funds Investment Act) authorizes the City to invest its funds under a written investment policy (the “Investment Policy”) that primarily emphasizes safety of principal and liquidity; addresses investment diversification, yield, and maturity; and addresses the quality and capability of investment personnel. The Investment Policy defines what constitutes the legal list of investments allowed under the policy, which excludes certain investment instruments allowed under Chapter 2256 of the Texas Government Code. The City’s deposits and investments are invested pursuant to the Investment Policy, which is approved annually by the City Council. The Investment Policy includes a list of authorized investment instruments, a maximum allowable stated maturity of any individual investment, and the maximum average dollar weighted maturity allowed for pooled fund groups. In addition, it includes an “Investment Strategy Statement” that specifically addresses each fund’s investment options and describes the priorities of suitability of investment type, preservation and safety of principal, liquidity, marketability, diversification, and yield. Additionally, the soundness of financial institutions in which the City will deposit funds is addressed. The City Treasurer submits an investment report each quarter to the investment committee. Members of the Investment Committee include the Chief Financial Officer (as chair), the City Treasurer (as vice chair), Assistant Treasurer over Investment Management, Assistant Treasurer over Debt Management, the City Controller, a public sector investment expert, a Financial Advisor's representative, a representative from Austin Energy, a representative from the Austin Water Utility, and a representative from the Law Department. The report details the investment position of the City and the compliance of the investment portfolio as it relates to both the adopted investment strategy statements and Texas state law. The City is authorized to invest in the following investment instruments if they meet the guidelines of the investment policy:

1. Obligations of the United States or its agencies and instrumentalities; 2. Direct obligations of the State of Texas; 3. Other obligations, the principal and interest on which are unconditionally guaranteed or insured by the State of Texas

or the United States or its agencies and instrumentalities; 4. Obligations of other states, cities, counties, or other political subdivisions of any state having been rated as to

investment quality by a nationally recognized investment rating firm and having received a rating of not less than A or its equivalent;

5. Bankers’ acceptances, so long as each such acceptance has a stated maturity of 270 days or less from the date of its issuance, will be liquidated in full at maturity, are eligible collateral for borrowing from a Federal Reserve Bank, and are accepted by a domestic bank whose short-term obligations are rated at least A-1, P-1, or the equivalent by a nationally recognized credit rating agency or which is the largest subsidiary of a bank holding company whose short-term obligations are so rated;

6. Commercial paper with a stated maturity of 270 days or less from the date of its issuance that is either rated not less than A-1, P-1, or the equivalent by at least two nationally recognized credit rating agencies or is rated at least A-1, P- 1, or the equivalent by at least one nationally recognized credit rating agency and is fully secured by an irrevocable letter of credit issued by a bank organized and existing under the laws of the United States or any state thereof;

7. Collateralized repurchase agreements having a defined termination date and described in more detail in the Investment Policy;

8. Certificates of deposit issued by depository institutions that have a main office or branch office in Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation or its successor or as further described in the Investment Policy;

9. Share certificates issued by a depository institution that has a main office or branch office in Texas; 10. Money market mutual funds; 11. Local government investment pools (LGIPs); and 12. Securities lending program.

The City did not participate in any reverse repurchase agreements or security lending arrangements during fiscal year 2017. All City investments are insured, registered, or held by an agent in the City’s name; therefore, the City is not exposed to custodial credit risk. The City participates in TexPool/TexPool Prime, TexasDAILY, TexStar, and Lone Star (collectively referred to as the LGIPs). The State Comptroller oversees TexPool/Texpool Prime, with Federated Investors managing the daily operations of the pool under a contract with the State Comptroller. Although there is no regulatory oversight over TexasDAILY, an advisory board consisting of participants or their designees maintains oversight responsibility for TexasDAILY. PFM Asset Management LLC manages the daily operations of TexasDAILY under a contract with the advisory board. JPMorgan Investment Management, Inc. and First Southwest Asset Management, Inc. serve as co-administrators for TexStar under an agreement with the TexStar board of directors. First Public, LLC serves as the administrator of Lone Star under an agreement with Lone Star’s board of directors.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

57

3 – INVESTMENTS AND DEPOSITS, continued a -- Investments, continued The City invests in LGIPs to provide its liquidity needs. The LGIPs were established in conformity with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code and the Public Funds Investment Act, Chapter 2256 of the Code. The LGIPs are structured like money market mutual funds and allow shareholders the ability to deposit or withdraw funds on a daily basis. In addition, interest rates are adjusted on a daily basis, and the funds seek to maintain a constant NAV of $1.00, although this cannot be fully guaranteed. The LGIPs are rated AAAm and must maintain a dollar weighted average maturity not to exceed a 60-day limit. At September 30, 2017, TexPool, Texpool Prime, TexasDAILY, TexStar, and Lone Star had a weighted average maturity of 37 days, 51 days, 35.6 days, 27 days, and 21 days, respectively. The City’s LGIP investments are not subject to limitations, penalties, or restrictions on withdrawals outside emergency conditions that make the sale of assets or determination of fund NAV not reasonably practical, and therefore, the City considers holdings in these funds to have an effective weighted average maturity of one day. Certain external investment pools and pool participants have an option to measure these investment pools at amortized cost rather than fair value if certain criteria are met. All City LGIPs are qualifying pools for these purposes. TexPool, Texpool Prime, TexasDAILY and Lone Star opted to report at amortized cost, while TexStar measures their investments at fair value. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are other observable inputs; Level 3 inputs are unobservable inputs. The City has the following recurring fair value measurements as of September 30, 2017:

 U.S. Treasury securities of $377 million are valued using other observable inputs, including but not limited to, model processes, benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing (Level 2 inputs).

 U.S. Agency securities of $1.5 billion are valued using other observable inputs, including but not limited to, model processes, benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing (Level 2 inputs).

As of September 30, 2017, the City presented Money Market Funds of $68.5 million, LGIPs of $1,014 million valued using amortized cost, and LGIP’s of $251 million valued using NAV. The following table includes the portfolio balances of all non-pooled and pooled investments of the City at September 30, 2017 (in thousands):

Governmental Activities

Business- type Activities

Fiduciary Funds Total

Non-pooled investments: Local Governm ent Inves tm ent Pools 23,694$ 310,024 -- 333,718 Money Market Funds 1,773 62,833 3,863 68,469 US Treas ury Notes -- 17,984 -- 17,984 US Agency Bonds -- 293,513 -- 293,513 Total non-pooled inves tments 25,467 684,354 3,863 713,684

Pooled investments: Local Governm ent Inves tm ent Pools 244,263 685,651 1,539 931,453 US Treas ury Notes 94,171 264,341 593 359,105 US Agency Bonds 321,451 902,293 2,051 1,225,795 Total pooled inves tments 659,885 1,852,285 4,183 2,516,353 Total inves tm ents 685,352$ 2,536,639 8,046 3,230,037

Concentration of Credit Risk At September 30, 2017, the City of Austin was exposed to concentration of credit risk since it held investments with more than five percent of the total investment portfolio balances of the City in securities of the following issuers (in millions): Federal Farm Credit Bank ($433.7 or 13%), Federal Home Loan Bank ($353.8 or 11%), Federal Home Loan Mortgage Corporation ($378.7 or 12%), and Federal National Mortgage Association ($353.1 or 11%).

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

58

3 – INVESTMENTS AND DEPOSITS, continued a -- Investments, continued The risk exposures for governmental and business-type activities, individual major funds, nonmajor funds in the aggregate, and fiduciary fund types of the City are not significantly greater than the deposit and investment risk of the primary government. The Investment Policy segregates the portfolios into strategic categories including:

1. Operating funds excluding special project funds, 2. Debt service funds, 3. Debt service reserve funds, and 4. Special project funds or special purpose funds.

The City’s credit risk is controlled by complying with the Investment Policy, which includes qualification of the brokers and financial institutions with whom the City will transact, sufficient collateralization, portfolio diversification, and maturity limitations. b -- Investment Categories As of September 30, 2017, the City had the following investments in each of these strategic categories (in thousands):

Weighted

Investment Type by Category Governmental

Activities Business-

type Activities Fiduciary

Funds Total Average Maturity

Operating funds Local Government Inves tm ent Pools 244,263$ 685,651 1,539 931,453 1 US Treas ury Notes 94,171 264,341 593 359,105 259 US Agency Bonds 321,451 902,293 2,051 1,225,795 491 Total Operating funds 659,885 1,852,285 4,183 2,516,353

Debt service funds General Obligation Debt Service

Local Government Inves tm ent Pools 23,694 -- -- 23,694 1 Utility (1)

Local Government Inves tm ent Pools -- 113,549 -- 113,549 1 Airport

Local Government Inves tm ent Pools -- 32,494 -- 32,494 1 Nonmajor Enterpris e-Convention Center

Local Government Inves tm ent Pools -- 11,163 -- 11,163 1 Total Debt service funds 23,694 157,206 -- 180,900

Debt service reserve funds Utility (1)

Local Government Inves tm ent Pools -- 41,394 -- 41,394 1 Money Market Funds -- 1,214 -- 1,214 1

Airport Local Government Inves tm ent Pools -- 39,513 -- 39,513 1

Nonmajor Enterpris e-Convention Center Local Government Inves tm ent Pools -- 13,305 -- 13,305 1 Total Debt service reserve funds -- 95,426 -- 95,426

Special projects/purpose funds Aus tin Energy Strategic Res erve

Local Government Inves tm ent Pools -- 31,233 -- 31,233 1 US Treas ury Notes -- -- -- -- US Agency Bonds -- 158,805 -- 158,805 927 Total Aus tin Energy Strategic Reserve -- 190,038 -- 190,038

Aus tin Energy Nuclear Decom m is s ioning Trust Funds (NDTF) Money Market Funds -- 61,232 -- 61,232 1 US Treas ury Notes -- 17,984 -- 17,984 526 US Agency Bonds -- 134,708 -- 134,708 598 Total Aus tin Energy NDTF -- 213,924 -- 213,924

Special Projects - Utility Reserve (1) Local Government Inves tm ent Pools -- 27,296 -- 27,296 1

Special Projects - Airport Cons truction Local Government Inves tm ent Pools -- 77 -- 77 1

Special Purpose Funds - Investm ents Held by Trustee Money Market Funds 1,773 387 3,863 6,023 1 Total Special projects/purpose funds 1,773 431,722 3,863 437,358

Total funds 685,352$ 2,536,639 8,046 3,230,037

(1) Includes com bined pledge debt s ervice

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

59

3 – INVESTMENTS AND DEPOSITS, continued b -- Investment Categories, continued Credit Risk At September 30, 2017, City funds held investments in LGIPs and Money Market Funds rated AAAm by Standard & Poor’s, short-to-medium term U.S. Agency bonds rated AA+ by Standard & Poor’s, and the remaining investments in Treasury securities, which are direct obligations of the U.S. government. Concentration of Credit Risk Operating Funds At September 30, 2017, the operating funds held investments with more than five percent of the total portfolio in securities of the following issuers (in millions): Federal Farm Credit Bank ($418.8 or 17%), Federal Home Loan Bank ($279.2 or 11%), Federal Home Loan Mortgage Corporation ($298.9 or 12%), and Federal National Mortgage Association ($228.8 or 9%). Special Projects or Special Purpose Funds At September 30, 2017, the Austin Energy Strategic Reserve Fund held investments with more than five percent of the total in securities of the following issuers (in millions): Federal Farm Credit Bank ($14.9 or 8%), Federal Home Loan Bank ($34.8 or 18%), Federal Home Loan Mortgage Corporation ($44.9 or 24%), and Federal National Mortgage Association ($64.2 or 34%). At September 30, 2017, the NDTF held investments with more than five percent of the total in securities of the following issuers (in millions): Federal Home Loan Bank ($39.7 or 19%), Federal Home Loan Mortgage Corporation ($34.9 or 16%), Federal National Mortgage Association ($60.1 or 28%). Interest Rate Risk Operating Funds As a means of minimizing risk of loss due to interest rate fluctuations, the Investment Policy requires that investment maturities will not exceed the lesser of a dollar weighted average maturity of 365 days or the anticipated cash flow requirements of the funds. Quality short-to-medium term securities should be purchased, which complement each other in a structured manner that minimizes risk and meets the City’s cash flow requirements. Three years is the maximum period before maturity. At September 30, 2017, less than half of the Investment Pool was invested in AAAm rated LGIPs, with the remainder invested in short-to-medium term U.S. Agency and Treasury obligations. Term limits on individual maturities did not exceed three years from the purchase date. The dollar weighted average maturity of all securities was 277 days, which was less than the threshold of 365 days. Debt Service Funds Investment strategies for debt service funds have as the primary objective the assurance of investment liquidity adequate to cover the debt service obligation on the required payment date. As a means of minimizing risk of loss due to interest rate fluctuations, securities purchased cannot have a stated final maturity date which exceeds the debt service payment date. Debt Service Reserve Funds Investment strategies for debt service reserve funds have as the primary objective the ability to generate a dependable revenue stream to the appropriate debt service fund from securities with a low degree of volatility. Except as may be required by bond ordinance specific to an individual issue, securities should be of high quality, with short-term to intermediate-term securities. Special Projects or Special Purpose Funds As a means of minimizing risk of loss due to interest rate fluctuations, the Investment Policy requires that investment maturities in this category not exceed the anticipated cash flow requirements of the funds. Special Purpose Funds - Austin Energy Strategic Reserve Fund At September 30, 2017, the portfolios held investments in TexPool, U.S. Treasury, and U.S. Agency obligations with maturities that will meet anticipated cash flow requirements and an overall dollar weighted average maturity of 775 days. Special Purpose Funds - Austin Energy Nuclear Decommissioning Trust Funds (NDTF) As a means of minimizing risk of loss due to interest rate fluctuations, the Investment Policy for the NDTF portfolios requires that the dollar weighted average maturity, using final stated maturity dates, shall not exceed seven years, although the portfolio’s weighted average maturity may be substantially shorter if market conditions so dictate. At September 30, 2017, the dollar weighted average maturity was 421 days.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

60

3 – INVESTMENTS AND DEPOSITS, continued b -- Investment Categories, continued Special Purpose Funds - Investments Held by Trustee Investment objectives for these special purpose funds have as the primary objective the safety of principal and assurance of liquidity adequate to cover construction expense draws. As a means of minimizing risk of loss due to interest rate fluctuations, funds are being held in overnight money market funds. c -- Investment and Deposits Investments and deposits portfolio balances at September 30, 2017, are as follows (in thousands):

Governmental

Activities Business-type

Activities Fiduciary

Funds Total Non-pooled investments and cash $ 37,078 690,510 3,863 731,451 Pooled investments and cash 661,206 1,855,994 4,183 2,521,383

Total investments and cash 698,284 2,546,504 8,046 3,252,834

Unrestricted cash

64 730 --

794 Restricted cash 11,547 5,426 -- 16,973 Pooled investments and cash 661,206 1,855,994 4,183 2,521,383 Investments 25,467 684,354 3,863 713,684

Total $ 698,284 2,546,504 8,046 3,252,834

A difference of $10.8 million exists between portfolio balance and book balance, primarily due to deposits in transit offset by outstanding checks. Deposits The September 30, 2017 carrying amount of deposits at the bank and cash on hand are as follows (in thousands):

Governmental

Activities Business-type

Activities Total Cash Unrestricted $ 64 62 126 Restricted -- 4,951 4,951 Cash held by trustee Unrestricted -- 668 668 Restricted 11,547 475 12,022 Pooled cash 1,321 3,709 5,030

Total deposits $ 12,932 9,865 22,797

All bank accounts were either insured or collateralized with securities held by the City or its agents in the City’s name at September 30, 2017.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

61

4 – PROPERTY TAXES The City’s property tax is levied each October 1 on the assessed value listed as of January 1 for all real and personal property located in the City. The adjusted assessed value for the roll as of January 1, 2016, upon which the 2017 levy was based, was $125,371,654,656 Taxes are due by January 31 following the October 1 levy date. During the year ended September 30, 2017, 99.50% of the current tax levy (October 1, 2016) was collected. The statutory lien date is January 1. The methods of property assessment and tax collection are determined by Texas statutes. The statutes provide for a property tax code, countywide appraisal districts, a State property tax board, and certain exemptions from taxation, such as intangible personal property, household goods, and family-owned automobiles. The appraisal of property within the City is the responsibility of the Travis Central Appraisal District, the Williamson Central Appraisal District, and the Hays Central Appraisal District. The appraisal districts are required under the Property Tax Code to assess all real and personal property within the appraisal district on the basis of 100% of its appraised value and are prohibited from applying any assessment ratios. The value of property within the appraisal district must be reviewed every two years; however, the City may require more frequent reviews of appraised values at its own expense. The Travis Central Appraisal District and the Hays Central Appraisal District have chosen to review the value of property in their respective districts every two years, while the Williamson Central Appraisal District has chosen to review the value of property on an annual basis. The City may challenge appraised values established by the appraisal district through various appeals and, if necessary, legal action. The City is authorized to set tax rates on property within the city limits. However, if the effective tax rate, excluding tax rates for bonds, certificates of obligation, and other contractual obligations, as adjusted for new improvements and revaluation, exceeds the rate for the previous year by more than 8%, State statute allows qualified voters of the City to petition for an election to determine whether to limit the tax rate increase to no more than 8%. The City is permitted by Article XI, Section 5 of the State of Texas Constitution to levy taxes up to $2.50 per $100 of assessed valuation for general governmental services, including the payment of principal and interest on general obligation long-term debt. Under the City charter, a limit on taxes levied for general governmental services, exclusive of payments of principal and interest on general obligation long-term debt, has been established at $1.00 per $100 assessed valuation. A practical limitation on taxes levied for debt service of $1.50 per $100 of assessed valuation is established by state statute and City charter limitations. Through contractual arrangements, Travis, Williamson, and Hays Counties bill and collect property taxes for the City. The tax rate to finance general governmental functions, other than the payment of principal and interest on general obligation long-term debt, for the year ended September 30, 2017, was $0.3399 per $100 assessed valuation. The tax rate for servicing the payment of principal and interest on general obligation long-term debt for the fiscal year ended September 30, 2017 was $0.1019 per $100 assessed valuation. The City has a tax margin for general governmental purposes of $0.6601 per $100 assessed valuation, and could levy approximately $82,757,829,238 in additional taxes from the assessed valuation of $125,371,654,656 before the legislative limit is reached. The City has reserved a portion of the taxes collected for lawsuits filed by certain taxpayers against the appraisal districts challenging assessed values in the government-wide financial statements.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

62

5 – CAPITAL ASSETS AND INFRASTRUCTURE Governm ental Activities

Capital as set activity for the year ended September 30, 2017, was as follows (in thous ands ):

Beginning Ending

Balance Increases (1) Decreases (1) Balance

Depreciable capital assets Building and improvements 887,946$ 125,941 (29) 1,013,858

Plant and equipm ent 259,566 11,993 (6,701) 264,858

Vehicles 135,121 13,432 (6,928) 141,625

Infras tructure 2,693,713 154,485 -- 2,848,198

Total depreciable capital as s ets 3,976,346 305,851 (13,658) 4,268,539

Les s accumulated depreciation for

Building and improvements (336,626) (25,965) 11 (362,580)

Plant and equipm ent (185,325) (20,708) 6,010 (200,023)

Vehicles (85,556) (11,181) 6,771 (89,966)

Infras tructure (1,111,913) (78,139) -- (1,190,052)

Total accumulated depreciation (1,719,420) (135,993) (2) 12,792 (1,842,621)

Depreciable capital as s ets , net 2,256,926 169,858 (866) 2,425,918

Nondepreciable capital assets Land and improvements 373,974 8,256 (3,069) 379,161

Arts and treas ures 9,357 845 -- 10,202

Library collections 17,610 557 -- 18,167

Cons truction in progres s 240,575 113,383 (238,312) 115,646

Total nondepreciable as s ets 641,516 123,041 (241,381) 523,176

Total capital assets 2,898,442$ 292,899 (242,247) 2,949,094

(1) Increas es and decreas es do not include trans fers (at net book value) between Governmental Activities (2) Components of accum ulated depreciation/am ortization increas es : Governm ental Activities : General government 6,238$ Public s afety 14,909 Trans portation, planning and s us tainability 60,520 Public health 1,570 Public recreation and culture 17,329 Urban growth management 23,828 Internal s ervice funds 11,599

Total increases in accumulated depreciation/amortization 135,993$

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

63

5 – CAPITAL ASSETS AND INFRASTRUCTURE, continued Bus ines s -type Activities: Total

Capital ass et activity for the year ended September 30, 2017, was as follows (in thousands ):

Beginning Ending

Balance Increases (1) Decreases (1) Balance

Depreciable capital assets Building and improvements 2,502,842$ 197,421 -- 2,700,263

Plant and equipm ent 3,792,162 130,848 (5,544) 3,917,466 Vehicles 213,653 13,350 (6,146) 220,857 Electric plant 4,804,559 130,936 (16,124) 4,919,371 Non-electric plant 215,306 6,110 (183) 221,233

Nuclear fuel 362,713 13,672 -- 376,385

Water rights 100,000 -- -- 100,000 Total depreciable capital as sets 11,991,235 492,337 (27,997) 12,455,575

Less accumulated depreciation/am ortization for

Building and improvements (726,981) (57,839) 2 (784,818)

Plant and equipm ent (1,471,191) (102,618) 3,836 (1,569,973)

Vehicles (132,617) (17,400) 4,978 (145,039)

Electric plant (2,582,528) (151,942) 13,157 (2,721,313)

Non-electric plant (71,087) (9,106) 65 (80,128)

Nuclear fuel (316,092) (17,489) -- (333,581)

Water rights (16,791) (987) -- (17,778)

Total accum ulated depreciation/am ortization (5,317,287) (357,381) 22,038 (5,652,630)

Depreciable capital ass ets , net 6,673,948 134,956 (5,959) 6,802,945

Nondepreciable capital assets Land and im provem ents 650,508 25,723 (74) 676,157

Arts and treasures 4,081 17 -- 4,098

Cons truction in progress 341,154 501,410 (439,835) 402,729

Plant held for future use 23,115 -- -- 23,115

Total nondepreciable ass ets 1,018,858 527,150 (439,909) 1,106,099

Total capital assets 7,692,806$ 662,106 (445,868) 7,909,044

(1) Increases and decreas es do not include trans fers (at net book value) between Busines s-type Activities .

(2) Com ponents of accum ulated depreciation/amortization increas es :

Bus ines s -type Activities:

Electric 180,419$

Water 62,047

Wastewater 59,474

Airport 26,667

Convention 9,071

Environmental and health services 8,794

Public recreation 804

Urban growth m anagem ent 10,105 Total increas es in accum ulated depreciation/amortization 357,381$

(2)

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

64

5 – CAPITAL ASSETS AND INFRASTRUCTURE, continued Bus iness -type Activities : Aus tin Energy

Capital ass et activity for the year ended September 30, 2017, was as follows (in thousands):

Beginning Ending

Balance Increases Decreases Balance

Depreciable capital assets Vehicles 32,617$ 1,596 (1,061) 33,152 Electric plant 4,804,559 130,936 (16,124) 4,919,371 Non-electric plant 215,306 6,110 (183) 221,233 Nuclear fuel 362,713 13,672 -- 376,385

Total depreciable capital as sets 5,415,195 152,314 (17,368) 5,550,141

Less accumulated depreciation/amortization for Vehicles (25,234) (1,882) 826 (26,290) Electric plant (2,582,528) (151,942) 13,157 (2,721,313) Non-electric plant (71,087) (9,106) 65 (80,128) Nuclear fuel (316,092) (17,489) -- (333,581)

Total accum ulated depreciation/am ortization (2,994,941) (180,419) (1) 14,048 (3,161,312)

Depreciable capital as sets , net 2,420,254 (28,105) (3,320) 2,388,829

Nondepreciable capital assets Land and im provements 64,511 229 -- 64,740

Plant held for future us e 23,115 -- -- 23,115

Construction in progres s 102,073 165,913 (143,856) 124,130

Total nondepreciable as sets 189,699 166,142 (143,856) 211,985

Total capital assets 2,609,953$ 138,037 (147,176) 2,600,814

(1) Com ponents of accum ulated depreciation/am ortization increases:

Current year depreciation 162,930$

Current year amortization included in operating expense 17,489 Total increas es in accumulated depreciation/amortization 180,419$

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

65

5 – CAPITAL ASSETS AND INFRASTRUCTURE, continued Business-type Activities: Austin Water Utility

Capital asset activity for the year ended September 30, 2017, was as follows (in thousands):

Beginning Ending Balance Increases Decreases Balance

Depreciable capital assets Building and improvements 1,181,887$ 9,140 -- 1,191,027 Plant and equipment 3,559,760 106,024 (1,335) 3,664,449 Vehicles 40,702 2,923 (1,042) 42,583 Water rights 100,000 -- -- 100,000 Total depreciable capital assets 4,882,349 118,087 (2,377) 4,998,059

Less accumulated depreciation/amortization for Building and improvements (279,515) (25,552) -- (305,067) Plant and equipment (1,377,313) (92,590) 75 (1,469,828) Vehicles (31,348) (2,392) 949 (32,791) Water rights (16,791) (987) -- (17,778) Total accumulated depreciation/amortization (1,704,967) (121,521) (1) 1,024 (1,825,464) Depreciable capital assets, net 3,177,382 (3,434) (1,353) 3,172,595 Nondepreciable capital assets Land and improvements 230,923 447 (10) 231,360 Arts and treasures 103 8 -- 111 Construction in progress 140,415 149,953 (72,895) 217,473 Total nondepreciable assets 371,441 150,408 (72,905) 448,944

Total capital assets 3,548,823$ 146,974 (74,258) 3,621,539

(1) Components of accumulated depreciation/amortization increases: Current year depreciation

Water 61,060$ Wastewater 59,474

Current year amortization Water 987

Total increases in accumulated depreciation/amortization 121,521$

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

66

5 – CAPITAL ASSETS AND INFRASTRUCTURE, continued Business-type Activities: Airport

Capital asset activity for the year ended September 30, 2017, was as follows (in thousands):

Beginning Ending Balance Increases Decreases Balance

Depreciable capital assets Building and improvements 984,905$ 181,652 -- 1,166,557 Plant and equipment 29,256 7,114 (33) 36,337 Vehicles 14,385 1,391 (355) 15,421 Total depreciable capital assets 1,028,546 190,157 (388) 1,218,315

Less accumulated depreciation for Building and improvements (293,086) (23,407) -- (316,493) Plant and equipment (15,770) (1,742) 25 (17,487) Vehicles (7,295) (1,518) 298 (8,515) Total accumulated depreciation (316,151) (26,667) (1) 323 (342,495) Depreciable capital assets, net 712,395 163,490 (65) 875,820

Nondepreciable capital assets Land and improvements 96,381 -- -- 96,381 Arts and treasures 3,366 9 -- 3,375 Construction in progress 66,194 129,545 (162,599) 33,140 Total nondepreciable assets 165,941 129,554 (162,599) 132,896

Total capital assets 878,336$ 293,044 (162,664) 1,008,716

(1) Components of accumulated depreciation/amortization increases: Current year depreciation 26,667$

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

67

5 – CAPITAL ASSETS AND INFRASTRUCTURE, continued

Bus ines s -type Activities : Nonmajor Enterpris e Funds

Capital as set activity for the year ended September 30, 2017, was as follows (in thous ands):

Beginning Ending

Balance Increases (1) Decreases (1) Balance

Depreciable capital assets Building and improvements 336,050$ 6,629 -- 342,679

Plant and equipm ent 203,146 17,710 (4,176) 216,680

Vehicles 125,949 7,440 (3,688) 129,701

Total depreciable capital as s ets 665,145 31,779 (7,864) 689,060

Les s accumulated depreciation for

Building and improvements (154,380) (8,880) 2 (163,258)

Plant and equipm ent (78,108) (8,286) 3,736 (82,658)

Vehicles (68,740) (11,608) 2,905 (77,443)

Total accumulated depreciation (301,228) (28,774) (2) 6,643 (323,359)

Depreciable capital as s ets , net 363,917 3,005 (1,221) 365,701

Nondepreciable capital assets Land and improvements 258,693 25,047 (64) 283,676

Arts and treas ures 612 -- -- 612 Cons truction in progres s 32,472 55,999 (60,485) 27,986

Total nondepreciable as s ets 291,777 81,046 (60,549) 312,274

Total capital assets 655,694$ 84,051 (61,770) 677,975

(1) Increas es and decreas es do not include trans fers (at net book value) between nonm ajor enterpris e funds.

(2) Com ponents of accumulated depreciation/amortization increas es :

Current year depreciation Convention 9,071$ Environm ental and health s ervices 8,794

Public recreation 804 Urban growth management 10,105

Total increases in accumulated depreciation/amortization 28,774$

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

68

5 – CAPITAL ASSETS AND INFRASTRUCTURE, continued Capitalized Interest The City has recorded capitalized interest for fiscal year 2017 in the following funds related to the construction of various enterprise fund capital improvement projects (in thousands):

Enterprise Funds

Major fund:

Airport $ 1,893 Nonmajor enterprise funds:

Convention Center 160

Drainage 843

Interest is not capitalized on governmental capital assets. In accordance with accounting for regulated operations, interest is also not capitalized for Austin Energy or Austin Water Utility capital assets. Service Concession Arrangements The City has recorded net capital assets of $172.8 million, other assets of $21.1 and deferred inflows of $169.2 million derived from four service concession arrangements (SCA) described below. An SCA is an arrangement in which the City conveys use of a capital asset to an operator in exchange for significant consideration; where the operator is compensated from third parties; where the City may determine what services are provided, to whom and for what price; where the City retains a significant residual interest in the asset after the SCA terminates. The City has had an agreement with the Friends of Umlauf Garden, Inc. since 1991 to manage and operate the Umlauf Sculpture Garden and Museum. The agreement extends through 2021 and is for the purpose of displaying the artistic works of Charles Umlauf for the public enjoyment and education. Structures, which are dedicated to the City, have been built on City-owned land and display City-owned artwork. The City entered into an agreement with the Young Men’s Christian Association (YMCA) in 2010 to develop and operate a new joint-use recreational facility for public use. The facility is owned by the City and operated by the YMCA under a 20 year agreement extending through 2032. The City entered into a Master Lease Agreement with Austin CONRAC LLC, a corporation established to operate Austin’s consolidated rent-a-car facility (“CONRAC”). The master lease, with a 20 year initial term and a 10 year extension option, provides for construction, financing, and management of a joint use facility. CONRAC began operations October 1, 2015. The operator pays annual rent of $900,000 to the Airport. The present value of the future rent payments was $13 million at lease inception. As of September 30, 2017, the unamortized balance was $12.1 million and is presented in other assets and deferred inflows of resources. The CONRAC was financed with $143 million in City issued Rental Car Special Facility Bonds, conduit debt secured by customer facilities charges (CFC). CFC funds are remitted by rental car concessionaires directly to the bond trustee. See Note 16 for conduit debt information. Construction costs totaled $152.4 million and the City has recorded the asset with a corresponding deferred inflow of resources to be amortized over the 30 year term of the master lease agreement. The City entered into a Lease and Development Agreement with Scott Airport Parking, LLC (Scott) to develop and operate a 2,000-space covered parking facility and full service pet boarding facility (Bark and Zoom). The lease has a 40 year term which began on October 2016. Scott pays a monthly square footage rate, a monthly percentage rate, and a fixed monthly rate in exchange for the right to operate the facilities, as defined in the lease and development agreement. The fixed monthly rate for the first 5 years is $5,000. The present value of the future payments was $9.2 million at lease inception. As of September 30, 2017, the unamortized balance was $8.9 million and is presented in other assets and deferred inflows of resources. Construction costs totaled $26.5 million and the City has recorded the asset with a corresponding deferred inflow of resources to be amortized over the 40 year term of the master lease agreement.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

69

5 – CAPITAL ASSETS AND INFRASTRUCTURE, continued As of September 30, 2017, the City reported the following SCA activities (in thousands):

Service Concession Arrangement

Beginning Asset

Construction Cost

Current year Additions

Beginning Accumulated Depreciation

Current Year Depreciation

Ending Accumulated Depreciation

Net Book Value

Governmental Activities: Umlauf Sculpture Garden 2,337$ -- 1,457 58 1,515 822 YMCA Northeast Recreation Center 1,333 -- 127 32 159 1,174 Total Governmental Activities 3,670 -- 1,584 90 1,674 1,996

Business-type Activities: CONRAC facility 151,565 931 5,052 2,572 7,624 144,872 Bark and Zoom facility -- 26,558 -- 664 664 25,894 Total Business-type Activities 151,565 27,489 5,052 3,236 8,288 170,766

Beginning Deferred Inflows

Current year Additions

Beginning Accumulated Amortization

Current Year Amortization

Ending Accumulated Amortization

Ending Deferred Inflows

Governmental Activities: Umlauf Sculpture Garden 397 -- 1,940 78 2,018 319 YMCA Northeast Recreation Center 921 -- 412 66 478 855 Total Governmental Activities 1,318 -- 2,352 144 2,496 1,174

Business-type Activities: CONRAC facility 146,513 931 5,052 5,083 10,135 142,361 CONRAC base rent agreement 12,605 -- 436 435 871 12,170 Bark and Zoom facility -- 26,558 -- 885 885 25,673 Bark and Zoom base rent agreement -- 9,264 -- 307 307 8,957 Total Business-type Activities 159,118$ 36,753 5,488 6,710 12,198 189,161

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

70

6 – DEBT AND NON-DEBT LIABILITIES a -- Long-Term Liabilities

Payments on bonds for governmental activities will be made from the general obligation debt service funds. Accrued compensated absences that pertain to governmental activities will be liquidated by the General Fund, special revenue funds, and internal service funds. Claims payable will be liquidated by internal service funds. Other liabilities that pertain to governmental activities will be liquidated by the General Fund, special revenue funds, general governmental capital improvement projects funds, and internal service funds. There are a number of limitations and restrictions contained in the various bond indentures. The City is in compliance with all limitations and restrictions. Internal service funds predominately serve the governmental funds. Accordingly, long-term liabilities for these funds are included in governmental activities. The following is a summary of changes in long-term obligations. Certain long-term obligations provide financing to both governmental and business-type activities. Balances at September 30, 2017, were as follows (in thousands):

October 1, September 30, Amounts Due 2016 Increases Decreases 2017 Within One Year

Governmental activities General obligation bonds, net 1,108,558$ 133,078 (131,870) 1,109,766 60,206 Certificates of obligation, net 166,201 62,743 (14,550) 214,394 7,703 Contractual obligations, net 101,012 25,244 (14,388) 111,868 16,435 Debt service requirements total 1,375,771 221,065 (160,808) 1,436,028 84,344

Other long-term obligations Accrued compensated absences 136,682 3,239 (256) 139,665 61,301 Claims payable 49,338 26,076 (26,318) 49,096 26,353 Net pension liability 1,125,290 181,785 (103,670) 1,203,405 -- Other postemployment benefits 537,840 93,336 -- 631,176 -- Other liabilities 93,682 12,953 (4,440) 102,195 83,648 Governmental activities total 3,318,603 538,454 (295,492) 3,561,565 255,646

Total business-type activities General obligation bonds, net 24,073 2,536 (6,306) 20,303 3,724 Certificates of obligation, net 58,814 7,043 (10,615) 55,242 2,177

Contractual obligations, net 45,537 -- (12,642) 32,895 11,051 Other tax supported debt, net 7,655 -- (539) 7,116 546 General obligation bonds and other tax supported debt total 136,079 9,579 (30,102) 115,556 17,498 Commercial paper notes, net 129,916 141,181 (125,000) 146,097 -- Revenue bonds, net 4,578,492 896,319 (593,609) 4,881,202 129,382 Capital lease obligations 1,040 -- (51) 989 54 Debt service requirements total 4,845,527 1,047,079 (748,762) 5,143,844 146,934 Other long-term obligations Accrued compensated absences 25,105 2,227 (985) 26,347 26,060 Claims payable -- 7,805 (5,172) 2,633 2,412 Net pension liability 634,844 74,485 (52,764) 656,565 -- Other postemployment benefits 325,744 54,417 -- 380,161 -- Accrued landfill closure and postclosure costs 12,603 125 (35) 12,693 2,794 Decommissioning expense payable 186,350 -- (20,404) 165,946 6,662 Other liabilities 90,552 6,863 (940) 96,475 59,463 Business-type activities total 6,120,725 1,193,001 (829,062) 6,484,664 244,325 Total liabilities (1) 9,439,328$ 1,731,455 (1,124,554) 10,046,229 499,971

(1) This schedule excludes select short-term liabilities of $105,385 for governmental activities. For business-type activities, it excludes select short-term liablities of $288,545, capital appreciation bond interest payable of $26,661 and derivative instruments of $61,919.

Description

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

71

6 – DEBT AND NON-DEBT LIABILITIES, continued a -- Long-Term Liabilities, continued

October 1, September 30, Amounts Due 2016 Increases Decreases 2017 Within One Year

Business-type activities: Electric activities General obligation bonds, net 406$ -- (127) 279 115 General obligation bonds

and other tax supported debt total 406 -- (127) 279 115 Commercial paper notes, net 87,746 58,351 -- 146,097 -- Revenue bonds, net 1,339,190 113,890 (157,181) 1,295,899 34,971 Capital lease obligations 1,040 -- (51) 989 54 Debt service requirements total 1,428,382 172,241 (157,359) 1,443,264 35,140 Other long-term obligations Accrued compensated absences 10,271 585 (286) 10,570 10,570 Claims payable -- 3,822 (1,752) 2,070 2,060 Net pension liability 266,357 29,053 (21,959) 273,451 -- Other postemployment benefits 128,415 19,847 -- 148,262 -- Decommissioning expense payable 186,350 -- (20,404) 165,946 6,662 Other liabilities 66,972 1,059 (451) 67,580 31,635 Electric activities total 2,086,747 226,607 (202,211) 2,111,143 86,067

Water and Wastewater activities General obligation bonds, net 1,753 1,270 (1,050) 1,973 731 Certificates of obligation bonds, net -- 1,781 (88) 1,693 86 Contractual obligations, net 7,440 -- (1,938) 5,502 1,608 Other tax supported debt, net 4,901 -- (345) 4,556 350 General obligation bonds

and other tax supported debt total 14,094 3,051 (3,421) 13,724 2,775 Commercial paper notes, net 42,170 82,830 (125,000) -- -- Revenue bonds, net 2,529,804 393,924 (369,559) 2,554,169 57,712 Debt service requirements total 2,586,068 479,805 (497,980) 2,567,893 60,487 Other long-term obligations Accrued compensated absences 5,531 507 (404) 5,634 5,632 Claims payable -- 3,974 (3,412) 562 351 Net pension liability 142,157 15,670 (11,737) 146,090 -- Other postemployment benefits 83,250 12,726 -- 95,976 -- Other liabilities 14,210 3,970 -- 18,180 17,113 Water and Wastewater activities total 2,831,216 516,652 (513,533) 2,834,335 83,583

Airport activities General obligation bonds, net 80 -- (24) 56 21 General obligation bonds

and other tax supported debt total 80 -- (24) 56 21 Revenue bonds, net 546,495 359,425 (24,557) 881,363 23,744 Debt service requirements total 546,575 359,425 (24,581) 881,419 23,765 Other long-term obligations Accrued compensated absences 1,988 206 -- 2,194 2,194 Claims payable -- 9 (8) 1 1 Net pension liability 44,268 5,690 (3,716) 46,242 -- Other postemployment benefits 21,935 4,259 -- 26,194 -- Other liabilities 3,043 591 (461) 3,173 3,173 Airport activities total 617,809 370,180 (28,766) 959,223 29,133

Nonmajor activities

General obligation bonds, net 21,834 1,266 (5,105) 17,995 2,857 Certificates of obligation, net 58,814 5,262 (10,527) 53,549 2,091 Contractual obligations 38,097 -- (10,704) 27,393 9,443 Other tax supported debt, net 2,754 -- (194) 2,560 196 General obligation bonds

and other tax supported debt total 121,499 6,528 (26,530) 101,497 14,587 Revenue bonds, net 163,003 29,080 (42,312) 149,771 12,955 Debt service requirements total 284,502 35,608 (68,842) 251,268 27,542 Other long-term obligations Accrued compensated absences 7,315 929 (295) 7,949 7,664 Net pension liability 182,062 24,072 (15,352) 190,782 -- Other postemployment benefits 92,144 17,585 -- 109,729 -- Accrued landfill closure and postclosure costs 12,603 125 (35) 12,693 2,794 Other liabilities 6,327 1,243 (28) 7,542 7,542 Nonmajor activities total 584,953$ 79,562 (84,552) 579,963 45,542

Description

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

72

6 – DEBT AND NON-DEBT LIABILITIES, continued b -- Governmental Activities Long-Term Liabilities

General Obligation Bonds -- General obligation debt is collateralized by the full faith and credit of the City. The City intends to retire its general obligation debt, plus interest, from future ad valorem tax levies and is required by ordinance to create from such tax revenues a sinking fund sufficient to pay the current interest due thereon and each installment of principal as it becomes due. General obligation debt issued to finance capital assets of enterprise funds is reported as an obligation of these enterprise funds, although the funds are not obligated by the applicable bond indentures to repay any portion of principal and interest on outstanding general obligation debt. However, the City intends for the enterprise funds to meet the debt service requirements from program revenues. The following table summarizes significant facts about general obligation bonds, certificates of obligation, contractual obligations, and assumed municipal utility district (MUD) bonds outstanding at September 30, 2017, including those reported in certain proprietary funds (in thousands):

Original Aggregate Interest Interest Rates Amount Principal Requirements of Debt Maturity Dates

Series Fiscal Year Issue Outstanding Outstanding Outstanding of Serial Debt NW Austin MUD - 2004 2005 2,630$ 630 50 (1)(3) 4.15 - 4.30% 9/1/2018-2020 NW Austin MUD - 2006 2006 7,995 6,336 2,058 (1)(3) 4.10 - 4.25% 9/1/2018-2026 NW Austin MUD - 2009 2010 2,760 150 3 (1)(3) 4.25% 3/1/2018 Mueller Contractual Obligation - 2006 2006 12,000 7,180 1,714 (1)(4) 4.00 - 5.00% 9/1/2018-2026 Contractual Obligation - 2007 2008 9,755 245 4 (2) 3.66% 11/1/2017 Public Improvement Refunding - 2008 2008 172,505 37,525 3,878 (1) 5.00% 9/1/2018-2021 Public Improvement - 2008 2009 76,045 3,750 150 (1) 4.00% 9/1/2018 Certificates of Obligation - 2008 2009 10,700 495 25 (1) 5.00% 9/1/2018 Public Improvement - 2009B 2009 78,460 73,845 25,609 (1) 4.35 - 5.31% 9/1/2018-2029 Certificates of Obligation - 2009 2009 12,500 8,225 4,016 (1) 3.00 - 4.75% 9/1/2018-2039 Contractual Obligation - 2009 2009 13,800 1,460 69 (2) 3.00 - 3.25% 11/1/2017-2019 Mueller Contractual Obligation - 2009 2010 15,000 10,540 3,051 (1)(4) 4.00 - 4.25% 9/1/2018-2029 Public Improvement - 2010A 2011 79,528 66,030 21,024 (1) 2.13 - 4.00% 9/1/2018-2030 Public Improvement - 2010B 2011 26,400 24,570 8,845 (1) 3.45 - 4.65% 9/1/2018-2030 Certificates of Obligation - 2010 2011 22,300 16,805 4,171 (1) 2.00 - 3.50% 9/1/2018-2030 Contractual Obligation - 2010 2011 16,450 1,245 11 (2) 1.75% 11/1/2017 Public Improvement Refunding - 2010 2011 91,560 68,720 11,857 (1) 4.34 - 5.00% 9/1/2018-2023 Public Improvement - 2011A 2012 78,090 68,140 25,944 (1) 2.00 - 4.00% 9/1/2018-2031 Public Improvement - 2011B 2012 8,450 7,800 2,795 (1) 2.50 - 4.50% 9/1/2018-2031 Certificates of Obligation - 2011 2012 51,150 45,260 24,181 (1) 3.00 - 5.00% 9/1/2018-2041 Contractual Obligation - 2011 2012 26,725 6,360 128 (2) 2.00% 11/1/2017-2018 Public Improvement Refunding - 2011A 2012 68,285 18,100 3,283 (1) 4.00 - 5.00% 9/1/2018-2023 Public Improvement - 2012A 2013 74,280 70,945 25,069 (1) 3.00 - 5.00% 9/1/2023-2032 Public Improvement - 2012B 2013 6,640 5,030 1,389 (1) 2.00 - 3.50% 9/1/2018-2032 Certificates of Obligation - 2012 2013 24,645 20,485 6,220 (1) 3.00 - 4.00% 9/1/2018-2037 Contractual Obligation - 2012 2013 27,135 10,400 565 (2) 3.00 - 4.00% 11/1/2017-2019 Mueller Contractual Obligation - 2012 2013 16,735 14,210 4,487 (1)(4) 2.00 - 3.38% 9/1/2018-2032 Public Improvement - 2013 2014 104,665 93,380 44,457 (1) 4.00 - 5.00% 9/1/2019-2033 Certificates of Obligation - 2013 2014 25,355 23,765 12,302 (1) 3.25 - 5.00% 9/1/2018-2038 Contractual Obligation - 2013 2014 50,150 25,115 1,144 (2) 2.00 - 3.00% 11/1/2017-2020 Public Improvement Refunding - 2013A 2014 43,250 27,420 5,882 (1) 5.00% 9/1/2018-2024 Public Improvement Refunding - 2013B 2014 71,455 36,015 1,524 (1) 1.93 - 2.72% 9/1/2018-2020 Public Improvement - 2014 2015 89,915 89,205 56,882 (1) 3.00 - 5.00% 9/1/2020-2034 Public Improvement - 2014 2015 10,000 9,750 4,722 (1) 1.81 - 4.02% 9/1/2018-2034 Certificates of Obligation - 2014 2015 35,490 31,840 15,552 (1) 2.00 - 5.00% 9/1/2018-2034 Certificates of Obligation - 2014 2015 9,600 8,520 3,122 (1) 1.76 - 3.92% 9/1/2018-2034 Contractual Obligation - 2014 2015 14,100 12,245 1,372 (2) 4.00 - 5.00% 11/1/2017-2021 Mueller Contractual Obligation - 2014 2015 15,845 15,365 6,108 (1)(4) 3.00 - 5.00% 9/1/2018-2029 Public Improvement and Refunding - 2015 2016 236,905 229,105 79,137 (1) 2.95 - 5.00% 9/1/2018-2035 Public Improvement - 2015 2016 10,000 9,605 3,916 (1) 2.89 - 4.27% 9/1/2018-2035 Certificates of Obligation - 2015 2016 43,710 40,730 21,608 (1) 3.25 - 5.00% 9/1/2018-2035 Contractual Obligation - 2015 2016 14,450 11,700 1,789 (2) 3.00 - 5.00% 11/1/2017-2022 Public Improvement and Refunding - 2016 2017 98,365 91,210 39,115 (1) 3.00 - 5.00% 9/1/2018-2036 Certificates of Obligation - 2016 2017 44,015 42,460 23,306 (1) 3.00 - 5.00% 9/1/2018-2036 Contractual Obligation - 2016 2017 22,555 21,095 3,195 (2) 2.00 - 5.00% 11/1/2017-2023 Public Improvement - 2016 2017 12,000 11,530 3,577 (1) 1.81 - 4.00% 9/1/2018-2036 Certificates of Obligation - 2016 2017 8,700 8,360 2,592 (1) 1.81 - 4.00% 9/1/2018-2036

1,432,896$

(1) Interest is paid semiannually on March 1 and September 1. (2) Interest is paid semiannually on May 1 and November 1. (3) Includes Austin Water Utility principal of $4,556 and interest of $1,351 and Drainage Fund principal of $2,560 and interest of $760. (4) Included with contractual obligations are Mueller Local Government Corporation contract revenue bonds.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

73

6 – DEBT AND NON-DEBT LIABILITIES, continued b -- Governmental Activities Long-Term Liabilities, continued In October 2016, the City issued $98,365,000 of Public Improvement and Refunding Bonds, Series 2016. The net proceeds of $51,810,000 (after issue costs, discounts, and premiums) from the non-refunding portion of the issue will be used as follows: streets and mobility ($22,380,000), parks and recreation ($13,625,000), and facility improvements ($15,805,000). The net proceeds of the refunding portion of $68,557,045 were used to refund $56,905,000 Public Improvement Bonds, Series 2008 and $6,755,000 Certificates of Obligation, Series 2008. These bonds will be amortized serially on September 1 of each year from 2017 to 2036. Interest is payable on March 1 and September 1 of each year, commencing March 1, 2017. Total interest requirements for these bonds, at rates ranging from 2.0% to 5.0%, are $43,356,567. An economic gain of $9,165,242 was recognized on this transaction. The change in net cash flows that resulted from the refunding was a decrease of $10,419,491. An accounting loss of $4,355,130, which will be deferred and amortized, was recorded on this refunding. In October 2016, the City issued $44,015,000 of Certificates of Obligation, Series 2016. The net proceeds of $53,550,000 (after issue costs, discounts, and premiums) from this issue will be used as follows: watershed home buyouts ($50,000,000), and the Central Library ($3,550,000). These certificates of obligation will be amortized serially on September 1 of each year from 2017 to 2036. Interest is payable on March 1 and September 1 of each year, commencing on March 1, 2017. Total interest requirements for these obligations, at rates ranging from 2.0% to 5.0%, are $25,209,767. In October 2016, the City issued $22,555,000 of Public Property Finance Contractual Obligations, Series 2016. The net proceeds of $25,070,000 (after issue costs, discounts, and premiums) from this issue will be used as follows: capital equipment ($16,470,000), and CTM network equipment ($8,600,000). These contractual obligations will be amortized serially on May 1 and November 1 of each year from 2017 to 2023. Interest is payable on May 1 and November 1 of each year, commencing May 1, 2017. Total interest requirements for these obligations, at rates ranging from 2.0% to 5.0%, are $3,734,764. In October 2016, the City issued $12,000,000 of Public Improvement Taxable Bonds, Series 2016. The net proceeds of $12,176,103 (after issue costs, discounts, and premiums) from the issuance were used for affordable housing ($10,000,000) and for Austin Film Studios ($2,000,000). Interest is payable March 1 and September 1 of each year from 2017 to 2036, commencing on March 1, 2017. Principal payments are due September 1 of each year from 2017 to 2036. Total interest requirements for this obligation, at rates ranging from 1.8% to 4.0% are $3,889,491. In October 2016, the City issued $8,700,000 of Certificates of Obligation Bonds, Taxable Series 2016. The net proceeds of $8,827,815 (after issue costs, discounts, and premiums) from the issuance were used for the Seaholm Garage. Interest is payable March 1 and September 1 of each year from 2017 to 2036, commencing on March 1, 2017. Principal payments are due September 1 of each year from 2017 to 2036. Total interest requirements for this obligation, at rates ranging from 1.8% to 4.0% are $2,817,885. General obligation bonds authorized and unissued amounted to $866,420,000 at September 30, 2017. Bond ratings at September 30, 2017 were Aaa (Moody’s Investors Service, Inc.), AAA (Standard & Poor’s), and AAA (Fitch). c -- Business-Type Activities Long-Term Liabilities Utility Debt -- The City has previously issued combined debt for the Austin Energy and Austin Water Utility. The City began issuing separate debt for electric and water and wastewater activities in 2000. The following paragraphs describe both combined and separate debt. Combined Utility Systems Debt -- General - Austin Energy and Austin Water Utility comprise the combined utility systems, which issue combined utility systems revenue bonds to finance capital projects. Principal and interest on these bonds are payable solely from the combined net revenues of Austin Energy and Austin Water Utility. The total combined utility systems revenue bond obligations at September 30, 2017, exclusive of discounts, premiums, and loss on refundings consists of $18,625,434 prior lien bonds and $109,920,695 subordinate lien bonds. Aggregate interest requirements for all prior lien and subordinate lien bonds are $110,883,283 at September 30, 2017. Revenue bonds authorized and unissued amount to $1,492,642,660 at that date. Bond ratings at September 30, 2017, for the prior lien and subordinate lien bonds were, respectively, Aa1 and Aa2 (Moody’s Investors Service, Inc.), AA+ and AA (Standard & Poor’s), and AA and AA- (Fitch). Combined Utility Systems Debt -- Revenue Bond Refunding Issues - The combined utility systems have refunded various issues of revenue bonds, notes, and certificates of obligation through refunding revenue bonds. Principal and interest on these refunding bonds are payable solely from the combined net revenues of Austin Energy and Austin Water Utility. The prior lien bonds are subordinate only to the prior lien revenue bonds outstanding at the time of issuance, while the subordinate lien bonds are subordinate to prior lien revenue bonds and to subordinate lien revenue bonds outstanding at the time of issuance.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

74

6 – DEBT AND NON-DEBT LIABILITIES, continued c -- Business-Type Activities Long-Term Liabilities, continued Some of these bonds are callable prior to maturity at the option of the City. The term bonds are subject to a mandatory redemption prior to the maturity dates as defined in the respective official statements. The net proceeds of each of the refunding bond issuances were used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service. As a result, the refunded bonds are considered to be legally defeased and the liability for the refunded bonds has been removed from the financial statements. The accounting gains and losses due to the advance refunding of debt have been deferred and are being amortized over the life of the refunding bonds by the straight-line method. However, a gain or loss on refunded bonds is recognized when funds from current operations are used. Combined Utility Systems Debt -- Bonds Issued and Outstanding - The following schedule shows the refunding revenue bonds outstanding at September 30, 2017 (in thousands):

Original Aggregate Interest Interest Rates Amount Principal of Debt Maturity Dates

Series Fiscal Year Issued Outstanding Outstanding of Serial Debt 1990B Refunding 1990 236,009$ 819 5,216 (2) 7.35% 11/15/2017 1994 Refunding 1995 142,559 17,806 66,244 (2) 6.60% 5/15/2018-2019 1998 Refunding 1999 139,965 103,105 27,955 (1) 5.25% 5/15/2018-2025 1998A Refunding 1999 105,350 6,816 11,469 (2) 4.25% 5/15/2018-2020

128,546$

(1) Interest is paid semiannually on May 15 and November 15. (2) Interest requirements include accreted interest

Requirements Outstanding

Combined Utility Systems Debt -- Tax Exempt Commercial Paper Notes - The City is authorized by ordinance to issue commercial paper notes in an aggregate principal amount not to exceed $400,000,000 outstanding at any one time. Proceeds from the notes are used to provide interim financing for capital project costs for additions, improvements, and extensions to the City’s electric system and the City’s water and wastewater system and to refinance, renew, or refund maturing notes and other obligations of the systems. Note ratings at September 30, 2017, were P-1 (Moody’s Investors Service, Inc.), A-1 (Standard & Poor’s), and F1 (Fitch). The notes are in denominations of $100,000 or more and mature not more than 270 days from the date of issuance. Principal and interest on the notes are payable from the combined net revenues of Austin Energy and Austin Water Utility. At September 30, 2017, Austin Energy had tax exempt commercial paper notes of $114,905,000 outstanding with interest ranging from 0.84% to 0.96%, which are adjusted daily. Subsequent issues cannot exceed the maximum rate of 12%. The City intends to refinance maturing commercial paper notes by issuing additional commercial paper notes or by issuing long-term debt. The associated letter of credit agreements have the following terms (in thousands):

Note Series Liquidity Provider

Commitment Fee Rate Remarketing

Remarketing Fee Rate Outstanding Expiration

Various Bank of Tokyo Mitsubishi 0.41% Goldman Sachs 0.05% 114,905$ 10/15/2017 (1)

(1) In October 2017, the City extended the letter of credit agreement with the current parties. The new agreement expires October 9, 2020, thus the City has classified this debt as long-term at the end of the fiscal year.

These notes are payable at maturity to the holder at a price equal to principal plus accrued interest. If the remarketing agent is unable to successfully remarket the notes, the notes will be purchased by the respective liquidity providers and become bank notes with principal to be paid in 12 equal, quarterly installments. Bank notes bear an interest rate based on the bank rate which is the lesser of the base rate plus any applicable excess interest or the maximum rate.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

75

6 – DEBT AND NON-DEBT LIABILITIES, continued c -- Business-Type Activities Long-Term Liabilities, continued Combined Utility Systems Debt -- Taxable Commercial Paper Notes - The City is authorized by ordinance to issue taxable commercial paper notes (the “taxable notes”) in an aggregate principal amount not to exceed $50,000,000 outstanding at any time. Proceeds from the taxable notes are used to provide interim financing for capital project costs for additions, improvements, and extensions to the City’s electric system and the City’s water and wastewater system and to refinance, renew, or refund maturing notes and other obligations of the systems. Note ratings at September 30, 2017, were P-1 (Moody’s Investors Service, Inc.), A-1 (Standard & Poor’s), and F1 (Fitch). The taxable notes are issued in denominations of $100,000 or more and mature not more than 270 days from the date of issuance. Principal and interest on the taxable notes are payable from the combined net revenues of Austin Energy and Austin Water Utility. At September 30, 2017, Austin Energy had outstanding taxable commercial paper notes of $31,192,000 with interest rates ranging from 1.20% to 1.23%. The City intends to refinance maturing commercial paper notes by issuing long-term debt. The associated letter of credit agreement has the following terms (in thousands):

Note Series Liquidity Provider

Commitment Fee Rate Remarketing

Remarketing Fee Rate Outstanding Expiration

Various Citibank 0.28% Goldman Sachs 0.05% 31,192$ 10/15/2017 (1)

(1) In October 2017, the City extended the letter of credit agreement with the current parties. The new agreement expires October 9, 2020, thus the City has classified this debt as long-term at the end of the fiscal year.

These taxable notes are payable at maturity to the holder at a price equal to the par value of the note. If the remarketing agent is unable to successfully remarket the notes, the notes will be purchased by Citibank, NA and become bank notes with principal due immediately. Bank notes bear an interest rate based on the bank rate which is the lesser of the base rate plus any applicable excess note interest or the maximum rate. The taxable notes are secured by a direct-pay Letter of Credit issued by Citibank, NA which permits draws for the payment of the Notes. Draws made under the Letter of Credit are immediately due and payable by the City from the resources more fully described in the ordinance. A 36-month term loan feature is provided by this agreement. Electric Utility System Revenue Debt -- General - The City is authorized by ordinance to issue electric utility system revenue obligations. Proceeds from these obligations are used only to fund electric capital projects or to refund debt issued to fund these capital projects. Principal and interest on these obligations are payable solely from the net revenues of Austin Energy. Bond ratings at September 30, 2017, were Aa3 (Moody’s Investors Service, Inc.), AA (Standard & Poor’s), and AA- (Fitch). Electric Utility System Revenue Debt -- Revenue Bond Refunding Issues – In February 2017, the City issued $101,570,000 of Electric Utility System Revenue Refunding Bonds, Series 2017. The net proceeds of $113,890,104 (after issue costs, premium and discounts) from the issuance were used to refund $105,460,000 in series 2008A Revenue Refunding Bonds. Interest is payable May 15 and November 15 of each year from 2017 to 2038, commencing on May 15, 2017. Principal payments are due November 15 of each year from 2019 to 2038. Total interest requirements for this obligation, with rates ranging from 4.0% to 5.0% are $79,171,457. An economic gain of $10,934,470 was recognized on this transaction. The change in net cash flows that resulted from the refunding was a decrease of $11,439,372. An accounting loss of $6,785,613, which will be deferred and amortized, was recorded on this refunding.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

76

6 – DEBT AND NON-DEBT LIABILITIES, continued c -- Business-Type Activities Long-Term Liabilities, continued Electric Utility System Revenue Debt -- Bonds Issued and Outstanding - The following table summarizes all electric system refunding revenue bonds outstanding at September 30, 2017 (in thousands):

Original Aggregate Interest Interest Rates Amount Principal of Debt Maturity Dates

Series Fiscal Year Issued Outstanding Outstanding of Serial Debt 2007 Refunding 2007 146,635$ 29,810 2,836 (1) 5.00% 11/15/2017-2020 2008 Refunding 2008 50,000 40,015 23,208 (1) 5.20 - 6.26% 11/15/2017-2032 2010A Refunding 2010 119,255 98,555 51,379 (1) 4.00 - 5.00% 11/15/2017-2040 2010B Refunding 2010 100,990 100,990 81,860 (1) 4.54 - 5.72% 11/15/2019-2040 2012A Refunding 2013 267,770 262,950 166,462 (1) 2.50 - 5.00% 11/15/2017-2040 2012B Refunding 2013 107,715 83,615 19,631 (1) 1.53 - 3.16% 11/15/2018-2027 2015A Refunding 2015 327,845 327,845 283,547 (1) 5.00% 11/15/2021-2045 2015B Refunding 2015 81,045 81,045 25,876 (1) 1.11 - 4.66% 11/15/2017-2037 2017 Refunding 2017 101,570 101,570 77,995 (1) 4.00 - 5.00% 11/15/2019-2038

1,126,395$

(1) Interest is paid semiannually on May 15 and November 15.

Requirements Outstanding

Electric Utility System Revenue Debt -- Pledged Revenues - The net revenue of Austin Energy was pledged to service the outstanding principal and interest payments for revenue debt outstanding. The table below represents the pledged amounts at September 30, 2017 (in thousands):

Gross Revenue (1)

Operating Expense (2) Net Revenue

Debt Service Requirement

Revenue Bond Coverage

1,373,020$ 1,018,604 354,416 104,970 3.38

(1) Gross revenue includes revenues from operations and interest income. (2) Excludes depreciation, other postemployment benefits and net pension liability accruals.

Water and Wastewater System Revenue Debt -- General - The City is authorized by ordinance to issue Austin Water Utility revenue obligations. Proceeds from these obligations are used only to fund water and wastewater capital projects or to refund debt issued to fund these capital projects. Principal and interest on these obligations are payable solely from the net revenues of the Austin Water Utility. Bond ratings at September 30, 2017, were Aa2 (Moody’s Investors Service, Inc.), AA (Standard & Poor’s), and AA- (Fitch). Water and Wastewater System Revenue Debt -- Revenue Bond Issue - In November 2016, the City issued $20,430,000 of Water and Wastewater System Revenue Bonds, Series, 2016A. This is a private placement structured through a memorandum with the Texas Water Development Board (TWDB). Project funds of $19,119,376 will be used as follows: improving and extending the Water/Wastewater system. The debt service requirements on the bonds are $24,155,813 with interest rates ranging from 0.5% to 2.1%. Interest payments are due May 15 and November 15 of each year from 2017 to 2036. Principal payments are due November 15 of each year from 2017 to 2036. Water and Wastewater System Revenue Debt -- Revenue Bond Cash Defeasance - In March 2017, the City defeased $8,330,000 of separate lien revenue refunding bonds, series 2004A, $7,070,000 of separate lien revenue refunding bonds, series 2009, $2,305,000 of separate lien revenue refunding bonds, series 2009A, and $2,000,000 of separate lien revenue refunding bonds, series 2014, with a $21,317,330 cash payment. The funds were deposited in an irrevocable escrow account to provide for the future debt service payments on the defeased bonds. The City is legally released from the obligation for the defeased debt.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

77

6 – DEBT AND NON-DEBT LIABILITIES, continued c -- Business-Type Activities Long-Term Liabilities, continued Water and Wastewater System Revenue Debt -- Revenue Bond Refunding Issues - In August 2017, the City issued $311,100,000 of Water and Wastewater System Revenue Refunding Bonds, Series 2017. The net proceeds of $372,187,436 (after issue costs, discounts, and premiums) from the bond refunding were used to refund $98,460,000 of the City’s separate lien revenue refunding bonds, series 2009, $130,340,000 of the City’s separate lien revenue refunding bonds, series 2009A, and $125,000,000 of tax-exempt commercial paper. The debt service requirements on the refunding bonds are $219,556,958 with interest rates ranging from 2.5% to 5.0%. Interest payments are due May 15 and November 15 of each year from 2017 to 2046. Principal payments are due November 15 of each year from 2020 to 2046. An economic gain of $29,045,226 was recognized on this transaction. The change in net cash flows that resulted from the refunding was a decrease of $36,830,194. An accounting loss of $11,572,025, which will be deferred and amortized, was recorded on this refunding. Water and Wastewater System Revenue Debt -- Bonds Issued and Outstanding - The following table summarizes all water and wastewater system original and refunding revenue bonds outstanding at September 30, 2017 (in thousands):

Original Interest Rates Amount Principal of Debt Maturity Dates

Series Fiscal Year Issued Outstanding Outstanding of Serial Debt 2004A Refunding 2005 165,145$ 5,680 677 (1) 5.00% 11/15/2018-2019 2007 Refunding 2008 135,000 3,220 85 (1) 5.25% 11/15/2017 2008 Refunding 2008 170,605 109,820 34,560 (2) 0.54 - 0.94% 11/15/2017-2031 (3) 2009 Refunding 2009 175,000 17,115 1,021 (1) 4.00 - 5.00% 11/15/2017-2019 2009A Refunding 2010 166,575 6,830 377 (1) 4.50 - 5.00% 11/15/2017-2019 2010 2010 31,815 26,505 -- (4) 0.00% 11/15/2017-2041 2010A Refunding 2011 76,855 71,235 51,720 (1) 5.00 - 5.13% 11/15/2017-2040 2010B Refunding 2011 100,970 95,805 76,995 (1) 3.36 - 6.02% 11/15/2017-2040 2011 Refunding 2012 237,530 236,030 150,270 (1) 2.00 - 5.00% 11/15/2017-2041 2012 Refunding 2012 336,820 269,530 167,478 (1) 2.50 - 5.00% 11/15/2017-2042 2013A Refunding 2013 282,460 270,100 178,760 (1) 3.00 - 5.00% 11/15/2017-2043 2014 Refunding 2014 282,205 280,205 208,391 (1) 4.00 - 5.00% 5/15/2018-2043 2015A Refunding 2015 249,145 247,805 108,274 (1) 2.85 - 5.00% 11/15/2017-2036 2015B Refunding 2015 40,000 36,490 2,035 (1) 1.13 - 2.54% 11/15/2017-2021 2016 Refunding 2016 247,770 247,770 222,580 (1) 5.00% 11/15/2019-2045 2016A 2017 20,430 20,430 3,587 (1) 0.53 - 2.12% 11/15/2017-2036 2017 Refunding 2017 311,100 311,100 219,557 (1) 2.50 - 5.00% 11/15/2020-2046

2,255,670$

(1) Interest is paid semiannually on May 15 and November 15. (2) Interest is paid monthly and is based on a variable rate. Aggregate interest requirement is calculated utilizing the rate of 3.60% in effect at the end of the fiscal year. (3) Series matures on May 15 of the final year. (4) Zero interest bond placed with Texas Water Development Board.

Requirements Outstanding

Aggregate Interest

Series 2008 refunding bonds are variable rate demand bonds. The associated letter of credit agreement has the following terms (in thousands):

Bond Sub- Series Liquidity Provider

Commitment Fee Rate

Remarketing Agent

Remarketing Fee Rate Outstanding Expiration

2008 Citibank 0.28% Goldman Sachs 0.05% 109,820$ 10/15/2018

These bonds are subject to purchase on the demand of the holder at a price equal to principal plus accrued interest with proper notice and delivery to the corresponding remarketing agent. If the remarketing agent is unable to successfully remarket the bonds, the bonds will be purchased by the respective liquidity providers and become bank bonds with principal to be paid in equal semi-annual installments over a 5-year amortization period. Bank bonds bear an interest rate based on the bank rate which is the lesser of the base rate plus any applicable excess interest or the maximum rate. The remarketing agent takes the variable debt to auction on a weekly basis; the winning bid determines the weekly rate paid.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

78

6 – DEBT AND NON-DEBT LIABILITIES, continued c -- Business-Type Activities Long-Term Liabilities, continued Water and Wastewater System Revenue Debt -- Pledged Revenues - The net revenue of Austin Water Utility was pledged to service the outstanding principal and interest payments for revenue debt outstanding. The table below represents the pledged amounts at September 30, 2017 (in thousands):

Gross Revenue (1)

Operating Expense (2) Net Revenue

Debt Service Requirement

Revenue Bond Coverage (3)

601,928$ 233,592 368,336 227,382 1.62

(1) Gross revenue includes revenues from operations and interest income. (2) Excludes depreciation, other postemployment benefits, and net pension liability accruals. (3) The coverage calculation presented considers all Water and Wastewater debt service obligations, regardless of type or designation. This methodology closely approximates but does not follow exactly the coverage calculation required by the master ordinance.

Airport Revenue Bonds -- General - The City’s Airport Fund issues airport system revenue bonds to fund Airport Fund capital projects. Principal and interest on these bonds are payable solely from the net revenues of the Airport Fund. At September 30, 2017, the total airport system obligation for prior lien bonds is $812,933,000 exclusive of discounts, premiums, and loss on refundings. Aggregate interest requirements for all prior lien bonds are $621,373,096 at September 30, 2017. Revenue bonds authorized and unissued amount to $735,795,000. Bond ratings at September 30, 2017, for the revenue bonds were A (Standard & Poor’s) and A1 (Moody’s Investors Service, Inc.). Airport System Revenue Debt -- Revenue Bond Issue - In February 2017, the City issued $185,300,000 of Airport System Revenue Bonds, Series 2017A. The net proceeds of $213,319,508 (after issue costs, discounts, and premiums) from the issuance are being used for parking garage project construction. Interest is payable May 15 and November 15 of each year from 2017 to 2046, commencing on May 15, 2017. Principal payments are due November 15 of each year from 2026 to 2046. Total interest requirements for these obligations, at a constant rate of 5.0%, are $199,610,319. In February 2017, the City issued $129,665,000 of Airport System Revenue Bonds, Series 2017B (AMT). The bonds are subject to the alternative minimum tax (AMT). The net proceeds of $146,104,969 (after issue costs, discounts, and premiums) from the issuance are being used for expansion and improvements to the terminal and apron. Interest is payable May 15 and November 15 of each year from 2017 to 2046, commencing on May 15, 2017. Principal payments are due November 15 of each year from 2026 to 2046. Total interest requirements for these obligations, a constant rate of 5.00% are $139,677,305. The following table summarizes all airport system original and refunding revenue bonds outstanding at September 30, 2017 (in thousands):

Original Aggregate Interest Interest Rates Amount Principal of Debt Maturity Dates

Series Fiscal Year Issued Outstanding Outstanding of Serial Debt

2005 Refunding 2008 (1) 281,300$ 179,075 34,734 (2) 0.60 - 0.97% 11/15/2017-2025

2013 Revenue 2013 60,000 56,410 7,897 (3) 2.25% 11/15/2017-2028 (4)

2013A Refunding 2014 35,620 17,988 162 (3) 1.56% 11/15/2017-2018

2014 Revenue 2015 244,495 244,495 243,798 (3) 5.00% 11/15/2026-2044

2017A Revenue 2017 185,300 185,300 196,960 (3) 5.00% 11/15/2026-2046

2017B Revenue 2017 129,665 129,665 137,822 (3) 5.00% 11/15/2026-2046 812,933$

(1) Series was remarketed in 2008. (2) Interest is paid monthly and is based on a variable rate. Aggregate interest requirement is calculated utilizing the rate of 4.05% in effect at the end of the fiscal year. (3) Interest is paid semiannually on May 15 and November 15. (4) Series matures on May 15 of the final year.

Requirements Outstanding

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

79

6 – DEBT AND NON-DEBT LIABILITIES, continued c -- Business-Type Activities Long-Term Liabilities, continued The Series 2005 refunding bonds that were remarketed in 2008 are variable rate demand bonds. These bonds are separated into 4 subseries with a total principal amount of $179,075,000. The associated letter of credit agreement has the following terms (in thousands):

Bond Sub- Series Liquidity Provider

Commitment Fee Rate

Remarketing Agent

Remarketing Fee Rate Outstanding Expiration

2005-1 Sumitomo Mitsui Banking Corporation 0.62% Morgan Stanley 0.10% 44,775$ 10/15/2018

2005-2 Sumitomo Mitsui Banking Corporation 0.62% Morgan Stanley 0.10% 44,750 10/15/2018

2005-3 Sumitomo Mitsui Banking Corporation 0.62% Morgan Stanley 0.10% 44,775 10/15/2018 2005-4 Sumitomo Mitsui Banking Corporation 0.62% Morgan Stanley 0.10% 44,775 10/15/2018

179,075$

These bonds are subject to purchase on the demand of the holder at a price equal to principal plus accrued interest with proper notice and delivery to the corresponding remarketing agent. If the remarketing agent is unable to successfully remarket the bonds or if the agreement expires with no new agreement in place, the bonds will be purchased by the respective liquidity provider and become bank bonds with principal to be paid in annual installments over the remaining life of the bond series beginning on the first business day of the month six months following the triggering repayment event. Thus, under any circumstance, no principal payments will be due within a year of September 30, 2017. Bank bonds bear an interest rate based on the bank rate which is the lesser of the base rate plus any applicable excess interest or the maximum rate. The remarketing agent takes the variable debt to auction on a weekly basis; the winning bid determines the weekly rate paid. Airport Revenue Debt -- Pledged Revenues - The net revenue of the Airport Fund was pledged to service the outstanding principal and interest payments for revenue debt outstanding (including revenue bonds and revenue notes). The table below represents the pledged amounts at September 30, 2017 (in thousands):

Gross Revenue (1)

Other Available Funds (2)

Operating Expense (3)

Net Revenue and Other Available

Funds Debt Service

Requirement (4) Revenue Bond

Coverage

154,570$ 4,830 94,139 65,261 19,319 3.38

(1) Gross revenue includes revenues from operations and interest income.

(2) Pursuant to the bond ordinance, in addition to gross revenue, the Airport is authorized to use "other available funds" in the calculation of revenue bond coverage not to exceed 25% of the debt service requirements.

(3) Excludes depreciation, other postemployment benefits, and net pension liability accruals. (4) Excludes debt service amounts paid with passenger facility charge revenues and restricted bond proceeds applied to current interest payments.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

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6 – DEBT AND NON-DEBT LIABILITIES, continued c -- Business-Type Activities Long-Term Liabilities, continued Nonmajor Fund Debt: Convention Center -- Prior and Subordinate Lien Revenue Refunding Bonds - The City’s Convention Center Fund issues convention center revenue bonds and hotel occupancy tax revenue bonds to fund Convention Center Fund capital projects. Principal and interest on these bonds are payable solely from pledged hotel occupancy tax revenues and the special motor vehicle rental tax revenues. At September 30, 2017, the total convention center obligation for prior and subordinate lien bonds is $148,010,000 exclusive of discounts, premiums, and loss on refundings. Aggregate interest requirements for all prior and subordinate lien bonds are $29,469,204 at September 30, 2017. Revenue bonds authorized and unissued amount to $760,000 at September 30, 2017. Bond ratings at September 30, 2017, for the revenue bonds and subordinate lien bonds were, respectively, Aa3 and A1 (Moody’s Investors Service, Inc.), and AA and A+ (Standard & Poor’s). Convention Center -- Revenue Refunding Bond Issue - In November 2016, the City issued 29,080,000 of Town Lake Park Community Events Center Venue Project Refunding Bonds, Series 2016. The bonds were issued via private placement bonds. Proceeds from the bonds were used to refund $28,920,000 of the City’s Series 2005 Venue Project Refunding bonds. Interest is payable May 15 and November 15 of each year from 2017 to 2029, commencing on May 15, 2017. Principal payments are due November 15 of each year from 2017 to 2029. Total interest requirements at a rate of 1.875% are $3,945,923. An economic gain of $6,112,269 was recognized on this transaction. The change in net cash flows that resulted from the refunding was a decrease of $6,920,227. An accounting loss of $785,846, which will be deferred and amortized, was recorded on this refunding. The following table summarizes Convention Center refunding revenue bonds outstanding at September 30, 2017 (in thousands):

Original Aggregate Interest Interest Rates Amount Principal of Debt Maturity Dates

Series Fiscal Year Issued Outstanding Outstanding of Serial Debt 2008AB Refunding 2008 125,280$ 87,820 18,936 (2) 0.54 - 0.96% 11/15/2017-2029 2012 Refunding 2012 20,185 16,995 5,777 (1) 2.50 - 5.00% 11/15/2017-2029 2013 Refunding 2014 26,485 14,115 1,082 (1) 5.00% 11/15/2017-2019 2016 Refunding 2017 29,080 29,080 3,674 (1) 1.88% 11/15/2017-2029

148,010$

(1) Interest is paid semiannually on May 15 and November 15. (2) Interest is paid monthly and is based on a variable rate. Aggregate interest requirement is calculated utilizing the rate of 3.25% in effect at the end of the fiscal year.

Requirements Outstanding

The Series 2008 A and B refunding bonds are variable rate demand bonds. The associated letter of credit agreements have the following terms (in thousands):

Bond Sub- Series Liquidity Provider

Commitment Fee Rate Remarketing Agent

Remarketing Fee Rate Outstanding Expiration

2008-A JPMorgan Chase Bank, NA 0.42% Raymond James 0.06% 43,910$ 12/15/2017 (1) 2008-B JPMorgan Chase Bank, NA 0.42% 0.05% 43,910 12/15/2017 (1)

87,820$

(1) In October 2017, the City extended the letter of credit agreements with the current parties. The new agreements expire on October 9, 2020, thus the City has classified this debt as long-term at the end of the fiscal year.

Merrill Lynch, Pierce, Fenner & Smith Inc.

These bonds are subject to purchase on the demand of the holder at a price equal to principal plus accrued interest with proper notice and delivery to the corresponding remarketing agent. If the remarketing agent is unable to successfully remarket the bonds or if the agreement expires with no new agreement in place, the bonds will be purchased by the respective liquidity provider and become bank bonds with principal to be paid in equal semi-annual installments over a 5-year amortization period beginning six months from the triggering repayment event. Thus, under any circumstance, no principal payments will be due within a year of September 30, 2017. Bank bonds bear an interest rate based on the bank rate which is the lesser of the base rate plus any applicable excess interest or the maximum rate. The remarketing agent takes the variable debt to auction on a weekly basis; the winning bid determines the weekly rate paid.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

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6 – DEBT AND NON-DEBT LIABILITIES, continued d -- Debt Service Requirements

Fiscal Year

Ended

September 30 Principal Interest Principal Interest Principal Interest

2018 60,206$ 44,419 7,703 8,184 16,435 3,986

2019 63,233 42,032 7,502 7,899 15,485 3,428

2020 66,161 39,375 7,729 7,621 13,824 2,879

2021 70,562 36,318 8,057 7,329 11,455 2,388

2022 70,876 32,943 8,402 7,022 8,953 1,935 2023-2027 352,950 116,862 47,907 29,718 24,562 5,545

2028-2032 263,350 48,163 57,090 18,694 14,395 1,376

2033-2037 75,130 5,779 41,643 6,879 -- --

2038-2042 -- -- 9,835 974 -- -- 1,022,468 365,891 195,868 94,320 105,109 21,537

Less: Unamortized bond discounts (45) -- -- -- (7) --

Add: Unamortized bond premiums 87,343 -- 18,526 -- 6,766 -- Net debt service requirements 1,109,766 365,891 214,394 94,320 111,868 21,537

Fiscal Year

Ended

September 30 Principal Interest Total

2018 84,344 56,589 140,933

2019 86,220 53,359 139,579 2020 87,714 49,875 137,589

2021 90,074 46,035 136,109

2022 88,231 41,900 130,131

2023-2027 425,419 152,125 577,544

2028-2032 334,835 68,233 403,068

2033-2037 116,773 12,658 129,431

2038-2042 9,835 974 10,809 1,323,445 481,748 1,805,193

Less: Unamortized bond discounts (52) -- (52)

Add: Unamortized bond premiums 112,635 -- 112,635 Net debt service requirements 1,436,028$ 481,748 1,917,776

Total Governmental

Debt Service Requirements

Governmental Activities

General Obligation Bonds

Contractual Obligations Certificates of Obligation

(in thousands)

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

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6 – DEBT AND NON-DEBT LIABILITIES, continued d -- Debt Service Requirements, continued

Fiscal Year

Ended

September 30 Principal Interest Principal Interest Principal Interest

2018 3,724$ 869 2,177 2,157 11,051 922

2019 3,171 714 2,273 2,090 9,195 605

2020 3,119 587 2,371 2,016 6,851 339

2021 3,254 443 2,488 1,935 3,285 163

2022 2,574 297 2,602 1,849 1,256 63

2023-2027 3,365 253 15,048 7,617 413 10

2028-2032 -- -- 15,920 4,105 -- -- 2033-2037 -- -- 7,453 952 -- --

2038-2042 -- -- 745 53 -- --

2043-2047 -- -- -- -- -- -- 19,207 3,163 51,077 22,774 32,051 2,102

Less: Unamortized bond discounts -- -- -- -- -- --

Add: Unamortized bond premiums 1,096 -- 4,165 -- 844 -- Net debt service requirements 20,303 3,163 55,242 22,774 32,895 2,102

Fiscal Year

Ended

September 30 Principal Interest Principal Interest Principal Interest

2018 546 467 146,097 136 129,382 251,990

2019 455 575 -- -- 118,729 225,554

2020 775 258 -- -- 162,048 198,454

2021 820 226 -- -- 186,565 187,508 2022 845 191 -- -- 195,216 179,476

2023-2027 3,675 394 -- -- 1,005,955 761,991

2028-2032 -- -- -- -- 886,182 538,454

2033-2037 -- -- -- -- 715,825 358,408

2038-2042 -- -- -- -- 674,355 179,119

2043-2047 -- -- -- -- 397,297 39,933 7,116 2,111 146,097 136 4,471,554 2,920,887

Less: Unamortized bond discounts -- -- -- -- (1,123) --

Add: Unamortized bond premiums -- -- -- -- 410,771 -- Net debt service requirements 7,116$ 2,111 146,097 136 4,881,202 2,920,887

(1) The City intends to refinance maturing commercial paper notes by issuing additional commercial (Continued)

paper notes or by issuing long-term debt.

(2) A portion of these bonds are variable rate bonds with rates ranging from 0.54% to 0.97%.

Business-type Activities

Contractual Obligations

(in thousands)

Commercial Paper Notes (1)

General Obligation Bonds Certificates of Obligation

Revenue Bonds (2)

Other Tax Supported Debt

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

83

6 – DEBT AND NON-DEBT LIABILITIES, continued d -- Debt Service Requirements, continued

Fiscal Year

Ended

September 30 Principal Interest Principal Interest Total

2018 54$ 73 293,031 256,614 549,645

2019 57 70 133,880 229,608 363,488

2020 60 67 175,224 201,721 376,945

2021 63 64 196,475 190,339 386,814

2022 67 61 202,560 181,937 384,497

2023-2027 387 250 1,028,843 770,515 1,799,358

2028-2032 301 104 902,403 542,663 1,445,066

2033-2037 -- -- 723,278 359,360 1,082,638

2038-2042 -- -- 675,100 179,172 854,272

2043-2047 -- -- 397,297 39,933 437,230 989 689 4,728,091 2,951,862 7,679,953

Less: Unamortized bond discounts -- -- (1,123) -- (1,123)

Add: Unamortized bond premiums -- -- 416,876 -- 416,876 Net debt service requirements 989$ 689 5,143,844 2,951,862 8,095,706

Debt Service Requirements

Business-type Activities, continued

(in thousands)

Capital Lease

Obligations

Total Business-Type Activities

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

84

6 – DEBT AND NON-DEBT LIABILITIES, continued d -- Debt Service Requirements, continued

Fiscal Year General Obligation

Ended Bonds

September 30 Principal Interest Principal Interest Principal Interest

2018 115$ 7 146,097 136 34,971 58,656

2019 109 4 -- -- 37,007 54,363

2020 50 2 -- -- 46,993 52,724

2021 4 -- -- -- 47,106 50,835

2022 -- -- -- -- 54,593 48,794

2023-2027 -- -- -- -- 272,027 205,366

2028-2032 -- -- -- -- 244,980 141,113

2033-2037 -- -- -- -- 198,520 90,294

2038-2042 -- -- -- -- 162,165 43,403

2043-2047 -- -- -- -- 105,015 10,880 278 13 146,097 136 1,203,377 756,428

Less: Unamortized bond discounts -- -- -- -- (180) --

Add: Unamortized bond premiums 1 -- -- -- 92,702 -- Net debt service requirements 279 13 146,097 136 1,295,899 756,428

Fiscal Year Capital Lease Ended Obligations

September 30 Principal Interest Principal Interest Total

2018 54 73 181,237 58,872 240,109

2019 57 70 37,173 54,437 91,610

2020 60 67 47,103 52,793 99,896

2021 63 64 47,173 50,899 98,072

2022 67 61 54,660 48,855 103,515

2023-2027 387 250 272,414 205,616 478,030

2028-2032 301 104 245,281 141,217 386,498

2033-2037 -- -- 198,520 90,294 288,814

2038-2042 -- -- 162,165 43,403 205,568

2043-2047 -- -- 105,015 10,880 115,895 989 689 1,350,741 757,266 2,108,007

Less: Unamortized bond discounts -- -- (180) -- (180)

Add: Unamortized bond premiums -- -- 92,703 -- 92,703 Net debt service requirements 989$ 689 1,443,264 757,266 2,200,530

(1) The City intends to refinance maturing commercial paper notes by issuing additional commercial paper notes or by

issuing long-term debt.

Debt Service Requirements

Revenue Bonds

Business-type Activities: Austin Energy

(in thousands)

Commercial Paper Notes (1)

Total Austin Energy

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

85

6 – DEBT AND NON-DEBT LIABILITIES, continued d -- Debt Service Requirements, continued

Fiscal Year

Ended

September 30 Principal Interest Principal Interest Principal Interest

2018 731$ 84 86 62 1,608 174

2019 239 51 91 59 1,352 126

2020 207 43 92 56 1,052 83

2021 186 34 99 53 671 50

2022 187 27 102 50 419 24

2023-2027 343 26 590 190 175 4

2028-2032 -- -- 591 60 -- --

2033-2037 -- -- 3 -- -- --

2038-2042 -- -- -- -- -- --

2043-2047 -- -- -- -- -- -- 1,893 265 1,654 530 5,277 461

Less: Unamortized bond discounts -- -- -- -- -- --

Add: Unamortized bond premiums 80 -- 39 -- 225 -- Net debt service requirements 1,973 265 1,693 530 5,502 461

Fiscal Year

Ended

September 30 Principal Interest Principal Interest Principal Interest Total

2018 350 299 57,712 152,213 60,487 152,832 213,319

2019 291 368 44,033 131,419 46,006 132,023 178,029

2020 496 165 74,955 107,441 76,802 107,788 184,590 2021 525 145 103,999 99,779 105,480 100,061 205,541

2022 541 122 105,583 95,042 106,832 95,265 202,097

2023-2027 2,353 252 547,133 398,391 550,594 398,863 949,457

2028-2032 -- -- 497,067 271,786 497,658 271,846 769,504

2033-2037 -- -- 392,720 171,824 392,723 171,824 564,547

2038-2042 -- -- 353,205 74,704 353,205 74,704 427,909

2043-2047 -- -- 130,827 11,018 130,827 11,018 141,845 4,556 1,351 2,307,234 1,513,617 2,320,614 1,516,224 3,836,838

Less: Unamortized bond discounts -- -- (620) -- (620) -- (620)

Add: Unamortized bond premiums -- -- 247,555 -- 247,899 -- 247,899 Net debt service requirements 4,556$ 1,351 2,554,169 1,513,617 2,567,893 1,516,224 4,084,117

(1) Portions of these bonds are variable rate bonds with rates of 0.54% - 0.94%.

Revenue Bonds (1)

Other Tax Supported Debt

Total Austin Water Utility

Debt Service Requirements

Business-type Activities: Austin Water Utility

General Obligation Bonds

Certificates of Obligation

Contractual Obligations

(in thousands)

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

86

6 – DEBT AND NON-DEBT LIABILITIES, continued d -- Debt Service Requirements, continued

Fiscal Year General Obligation

Ended Bonds Revenue Bonds (1)

September 30 Principal Interest Principal Interest

2018 21$ 2 23,744 36,505

2019 20 1 24,249 35,646

2020 10 -- 26,135 34,682

2021 2 -- 26,150 33,702 2022 1 -- 25,430 32,748

2023-2027 -- -- 134,065 148,641

2028-2032 -- -- 108,135 124,112

2033-2037 -- -- 124,585 96,290

2038-2042 -- -- 158,985 61,012

2043-2047 -- -- 161,455 18,035 54 3 812,933 621,373

Less: Unamortized bond discounts -- -- (259) --

Add: Unamortized bond premiums 2 -- 68,689 -- Net debt service requirements 56 3 881,363 621,373

Fiscal Year

Ended September 30 Principal Interest Total

2018 23,765 36,507 60,272

2019 24,269 35,647 59,916

2020 26,145 34,682 60,827

2021 26,152 33,702 59,854

2022 25,431 32,748 58,179

2023-2027 134,065 148,641 282,706

2028-2032 108,135 124,112 232,247

2033-2037 124,585 96,290 220,875

2038-2042 158,985 61,012 219,997

2043-2047 161,455 18,035 179,490 812,987 621,376 1,434,363

Less: Unamortized bond discounts (259) -- (259)

Add: Unamortized bond premiums 68,691 -- 68,691 Net debt service requirements 881,419$ 621,376 1,502,795

(1) Portions of these bonds are variable rate bonds with rates ranging from 0.60% - 0.97%.

Total Airport

Debt Service Requirements

Business-type Activities: Airport

(in thousands)

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

87

6 – DEBT AND NON-DEBT LIABILITIES, continued d -- Debt Service Requirements, continued

Fiscal Year

Ended

September 30 Principal Interest Principal Interest Principal Interest

2018 2,857$ 776 2,091 2,095 9,443 748

2019 2,803 658 2,182 2,031 7,843 479

2020 2,852 542 2,279 1,960 5,799 256

2021 3,062 409 2,389 1,882 2,614 113

2022 2,386 270 2,500 1,799 837 39

2023-2027 3,022 227 14,458 7,427 238 6

2028-2032 -- -- 15,329 4,045 -- --

2033-2037 -- -- 7,450 952 -- --

2038-2042 -- -- 745 53 -- -- 16,982 2,882 49,423 22,244 26,774 1,641

Less: Unamortized bond discounts -- -- -- -- -- --

Add: Unamortized bond premiums 1,013 -- 4,126 -- 619 -- Net debt service requirements 17,995 2,882 53,549 22,244 27,393 1,641

Fiscal Year

Ended Revenue Bonds (1)

September 30 Principal Interest Principal Interest Principal Interest Total

2018 196 168 12,955 4,616 27,542 8,403 35,945

2019 164 207 13,440 4,126 26,432 7,501 33,933

2020 279 93 13,965 3,607 25,174 6,458 31,632

2021 295 81 9,310 3,192 17,670 5,677 23,347

2022 304 69 9,610 2,892 15,637 5,069 20,706

2023-2027 1,322 142 52,730 9,593 71,770 17,395 89,165

2028-2032 -- -- 36,000 1,443 51,329 5,488 56,817

2033-2037 -- -- -- -- 7,450 952 8,402

2038-2042 -- -- -- -- 745 53 798 2,560 760 148,010 29,469 243,749 56,996 300,745

Less: Unamortized bond discounts -- -- (64) -- (64) -- (64)

Add: Unamortized bond premiums -- -- 1,825 -- 7,583 -- 7,583 Net debt service requirements 2,560$ 760 149,771 29,469 251,268 56,996 308,264

(1) A portion of these bonds are variable rate bonds with rates ranging from 0.54% - 0.96%.

Other Tax

Supported Debt

Business-type Activities: Nonmajor Enterprise

General Obligation Bonds

Certificates of Obligation

Contractual Obligations

(in thousands)

Debt Service Requirements

Total Nonmajor Enterprise

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

88

6 – DEBT AND NON-DEBT LIABILITIES, continued e -- Defeased Bonds Over time, the City has issued refunding bonds to advance refund certain public improvement bonds, certificates of obligation, and enterprise revenue bonds. The proceeds of the sale of the refunding bonds were deposited with an escrow agent in an amount necessary to accomplish the discharge and final payment of the refunded obligations. These funds are held by the escrow agent in an escrow fund and used to purchase direct obligations of the United States of America to be held in the escrow fund. The escrow fund is irrevocably pledged to the payment of the principal and interest on the refunded obligations. On September 30, 2017, defeased bonds remaining unredeemed or unmatured are provided below (in thousands):

Escrow

Refunded Bonds Maturity Dates Balance (1)

General Obligation

Public Improvement Bonds, Series 2008 9/1/2018 56,905$

Certificates of Obligation, Series 2008 9/1/2018 6,755

Austin Water Utility

Series 2004A 11/15/2018 - 11/15/2019 8,330

Series 2007 11/15/2017 110,940

Series 2009 11/15/2018 - 11/15/2019 118,360

Series 2009A 11/15/2018 - 11/15/2019 137,210

Series 2014 5/15/2018 - 5/15/2019 2,000

Austin Energy

Series 2008A 11/15/2017 - 11/15/2018 169,605

Combined Utility System Revenue

Series 1994 Subordinate Lien 5/15/2019 3,700

613,805$

(1) The balances shown have been escrowed to their respective call dates.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

89

7 – RETIREMENT PLANS a -- General Information Plan Description. The City participates in funding three contributory, defined benefit retirement plans: the City of Austin Employees’ Retirement and Pension Fund (City Employees), the City of Austin Police Officers’ Retirement and Pension Fund (Police Officers), and the Fire Fighters’ Relief and Retirement Fund of Austin, Texas (Fire Fighters). An Independent Board of Trustees administers each plan. These plans are City-wide single employer funded plans each with a fiscal year end of December 31. All three plans were created by state law and can be found in Vernon’s Texas Civil Statutes as follows: City Employees’ Fund Article 6243n Police Officers’ Fund Article 6243n-1 Fire Fighters’ Fund Article 6243e.1 State law governs benefit and contribution provisions. Amendments may be made by the Legislature of the State of Texas. Plan Financial Statements. The most recently available financial statements of the pension funds are for the year ended December 31, 2016. Stand-alone financial reports that include financial statements and supplementary information for each plan are publicly available at the locations and internet addresses shown below.

Plan Address Telephone

City of Austin Employees' Retirement 418 E. Highland Mall Blvd. (512)458-2551

and Pension Fund Austin, Texas 78752-3720 www.coaers.org

City of Austin Police Officers' Retirement 2520 S. IH 35, Ste. 100 (512)416-7672

and Pension Fund Austin, Texas 78704 www.ausprs.org

Fire Fighters' Relief and Retirement Fund 4101 Parkstone Heights Dr., Ste. 270 (512)454-9567

of Austin, Texas Austin, Texas 78746 www.afrs.org

Classes of Employees Covered. The three pension plans cover substantially all full-time employees. The City Employees’ fund covers all regular, full-time employees working 30 hours or more except for civil service police officers and fire fighters. Membership in this fund is comprised of two tiers. Group A includes all employees hired before January 1, 2012. Group B includes all employees hired on or after this date. The Police Officers’ fund covers all commissioned law enforcement officers and cadets upon enrollment in the Austin Police Academy. The Fire Fighters’ fund covers all commissioned civil service and Texas state-certified fire fighters with at least six months of service employed by the Austin Fire Department. Benefits Provided. Each plan provides service retirement, death, and disability benefits as shown in the following chart. For the City Employees’ fund, vesting occurs after 5 years of creditable service. For the other two systems, vesting occurs after 10 years of creditable service. For all three systems, creditable service includes employment at the City plus purchases of certain types of service where applicable. Withdrawals from the systems include actual contributions plus interest at varying rates depending on the system. This applies to both non-vested employees who leave the City as well as vested employees who leave the City and wish to withdraw their contributions. In addition, each plan offers various Deferred Retirement Option Programs (DROP). These are not included in the discussion of benefits provided.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

90

7 – RETIREMENT PLANS, continued a -- General Information, continued

City Employees Police Officers Fire Fighters Eligibility Group A members qualify for

retirement benefits at age 62; age 55 with 20 years creditable service; or any age with 23 years creditable service. No reduced benefits are available. Group B members qualify for normal retirement benefits at age 65 with 5 years creditable service or at age 62 with 30 years creditable service. Reduced benefits are available at age 55 with 10 years of creditable service.

Members are eligible for retirement benefits at any age with 23 years creditable service (excluding pre- membership military service), age 55 and 20 years creditable service (excluding pre- membership military service), or age 62 and any number of creditable service years.

Members are eligible for normal retirement benefits upon the earlier of age 50 with 10 years of service or 25 years of service regardless of age. Members are eligible for early retirement at 45 with 10 years of service or with 20 years of service regardless of age.

Calculation Average of 36 highest months

of base pay multiplied by years and months of creditable service multiplied by 3.0% for Group A and 2.5% for Group B.

Average of 36 highest months of base salary plus longevity pay multiplied by years and months of service multiplied by 3.2%.

Average of 36 highest months of base salary plus longevity pay multiplied by years of service multiplied by 3.3% with a $2,000 monthly minimum.

Death Benefits Retiree or active member

eligible for retirement, $10,000 lump sum and continuation of benefits to beneficiary if this option was selected. If not eligible for retirement, refund of accumulated deposits plus death benefit from COAERS equal to those deposits excluding purchases of time.

For retirees and members eligible for retirement, $10,000 lump sum and the member's accrued benefit as of the date of death based on annuity selected. Non-vested members receive the greater of $10,000 or twice the amount of the member's accumulated contributions.

Surviving spouse receives 75% of retiree benefits based on the greater of 20 years or years of service at time of death. If surviving spouse exists, each dependent receives 15% of the payment paid to the surviving spouse. If no surviving spouse exists, dependents split equally the amount that would have been paid to surviving spouse.

Disability Benefits After approved for disability

benefits, active members may choose from several different disability retirement options. Must have 5 years of service if disability is not job related.

After approved for disability benefits, if disability is the result of employment duties, benefit is based on the greater of 20 years or normal retirement calculation. Must have 10 years of service if disability is not job related.

For the first 30 months, eligible for retiree benefits based on the greater of service at time of disability or 20 years. After 30 months, continuance of annuity may be reevaluated.

Cost of Living Adjustments (COLA)

The plan does not require COLAs. Such increases must be deemed sustainable by the actuary and approved by the City Council and Board of Trustees of the fund. The most recent COLA was put into effect in 2002.

The plan does not require COLAs. Such increases must be approved by the Board of Trustees and the actuary of the fund. The most recent COLA was put into effect in 2007.

The plan does not require COLAs. Such increases must be approved by the Board of Trustees and the actuary of the fund. The most recent COLA was put into effect for 2017.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

91

7 – RETIREMENT PLANS, continued a -- General Information, continued Employees Covered by Benefit Terms: Membership in the plans as of December 31, 2016, is as follows:      

City Employees

Police Officers

Fire Fighters

Inactive em ployees or beneficiaries

currently receiving benefits 5,934 849 750

Inactive em ployees entitled to but

not yet receiving benefits 2,507 36 7

Active em ployees 9,364 1,837 990

Total 17,805 2,722 1,747

Contributions. For all three systems, minimum contributions are determined by the enabling legislation cited above. In certain cases the City may contribute at a level greater than that stated in the law. While the contribution requirements are not actuarially determined, state law requires that a qualified actuary approve each plan of benefits adopted.  

City

Employees Police

Officers Fire

Fighters

Employee contribution (percent of earnings) 8.00% 13.00% 18.70% City contribution (percent of earnings) 18.00% (1) 21.313% 22.05% City contributions year ended September 30, 2017 (in thousands) $108,929 34,717 19,104

(1) The City contributes two-thirds of the cost of prior service benefit payments. A rate

of 18% was effective October 1, 2012. The City’s net pension liability was measured as of December 31, 2016 for all three systems. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date for the City Employees’ fund. For the other two systems, the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of December 31, 2015 using the final 2016 assumptions and then was rolled forward to the plan’s year ending December 31, 2016. Actuarial Assumptions. Actuarial assumptions used in the most recent actuarial valuations include:

City Employees__ Police Officers_ Fire Fighters__

Inflation rate 2.75% 3.00% 3.00%

Projected annual salary increases 4.00% to 6.25%

0.1% to 18.00% Service based (1)(2)

1.00% to 8.50%

Service based (2)

Investment rate of return 7.50% 7.70% 7.70%

Ad hoc postemployment benefit changes including COLAs

None None None

Dates of experience studies 2011 - 2015 2012 - 2016 2004 - 2014

Source for mortality assumptions RP-2014 Mortality Table with Blue Collar adjustment. Generational mortality improvements in accordance with Scale BB are projected from the year 2014.

RP-2000 Combined Healthy without projection - Sex Distinct.

RP2000 (Fully Generational using Scale AA) set back two years for males and females - Sex Distinct.

(1) This includes the classification status change upon graduation from the academy. (2) This does not include assumed general wage increases of 3.25% and 3.00% for Police and Fire, respectively.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

92

7 – RETIREMENT PLANS, continued b -- Net Pension Liability Development of Long-Term Rate of Return on Investments. Each pension plan utilizes different asset allocations and assumed rates of return in developing the long-term rate of return on investments. However all three use the same methodology as follows: The long-term 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 expenses 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 following provides asset allocations and long-term expected real rate of return for each asset class for the three funds.

Target Allocation

Long-Term Expected Real Rate of Return

City Employees: International equity 30.00% 5.90% US equity 30.00% 4.57% Fixed incom e 24.50% 1.25% Alternative investm ents 10.00% 3.25% to 7.25% Real estate 5.50% 4.00% Total 100.00%

Police Officers: Dom estic equity 40.00% 7.50% International equity 15.00% 8.50% Other Equity 7.50% 7.50% Core Fixed Income 5.00% 2.50% Global fixed incom e 5.00% 3.50% Other Fixed Incom e 5.00% 2.50% Real estate 15.00% 4.50% Timber 2.50% 2.50% Hedge Funds 5.00% 5.00% Total 100.00%

Fire Fighters: Public dom estic equity 20.00% 5.30% Public foreign equity 22.00% 6.90% Private equity fund of funds 15.00% 5.60% Investm ent grade bonds 13.00% 1.10% Treasury inflation protected securities 5.00% 0.80% High yield/bank loans 5.00% 3.80% Em erging market debt 7.00% 3.60% Core real estate 5.00% 3.40% Non-core real estate 5.00% 5.00% Natural res ources 3.00% 5.90% Total 100.00%

Asset Class

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

93

7 – RETIREMENT PLANS, continued b -- Net Pension Liability, continued Discount Rate. The following provides information on the discount rate used to measure the City’s total pension liability. Based on the assumptions presented below, the fiduciary net position for all three pension funds was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

City Employees__ Police Officers_ Fire Fighters__ Single discount rate 7.50% 7.70% 7.70% Change since last measurement date

None (0.10%) None

Long-term expected rate of return on pension plan investments

7.50% 7.70% 7.70%

Cash flow assumptions Plan member contributions will be made at the current rate. City contributions will be made at the current rate for 32 years and then will decrease to 8%.

Plan member contributions will be made at current contribution rates. City contributions will be made at rates equal to the difference between the actuarially determined contribution rates and the member rate.

Plan member contributions will be made at current contribution rates. City contributions will be made at rates equal to the difference between the actuarially determined contribution rates and the member rate.

Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the net pension liability of each of the pension funds of the City calculated using the long-term expected rate of return on pension plan investments, as well as what the net pension liability (in thousands) would be if it were calculated using a discount rate that is 1-percentage point lower and 1-percentage point higher than the current rate.

Net Pension Liability Rate

Net Pension Liability Rate

Net Pension Liability

City Em ployees 6.50% $ 1,731,803 7.50% $ 1,291,688 8.50% 924,512$

Police Officers 6.70% 543,431 7.70% 420,169 8.70% 315,661

Fire Fighters 6.70% 248,626 7.70% 148,113 8.70% 63,515

Current Discount Rate 1% Increase1% Decrease

Rate

Pension Plan Fiduciary Net Position. Detailed information about the pension plans’ fiduciary net position is available in the separately issued financial report of each of the pension systems.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

94

7 – RETIREMENT PLANS, continued b -- Net Pension Liability, continued Schedule of Changes in Net Pension Liability. Changes in net pension liability for all three funds and the City for the measurement period ended December 31, 2016 are as follows (in thousands):

City Employees

Police Officers Fire Fighters Total

Total pension liability at December 31, 2015 (a) 3,391,796$ 1,028,909 913,618 5,334,323

Changes for the year: Service cost 107,111 32,990 24,323 164,424 Interest 251,684 80,846 70,893 403,423 Benefit changes -- -- 5,491 5,491 Differences between expected and actual experience 19,914 7,455 8,893 36,262 Assumption changes -- 5,148 -- 5,148 Contribution buy back -- 1,668 -- 1,668 Benefit payments including refunds (179,129) (50,827) (45,495) (275,451) Net change in total total pension liability 199,580 77,280 64,105 340,965

Total pension liability at December 31, 2016 (b) 3,591,376$ 1,106,189 977,723 5,675,288

Total plan fiduciary net position at December 31, 2015 (c) 2,144,804$ 644,174 785,211 3,574,189

Changes for the year: Employer contributions 104,273 33,814 19,104 157,191 Employee contributions 60,801 20,623 15,884 97,308 Contribution buy back -- 1,668 -- 1,668 Pension plan net investm ent income (loss) 171,640 37,965 55,569 265,174 Benefits payments and refunds (179,129) (50,827) (45,496) (275,452) Pension plan adminis trative expense (2,701) (1,397) (662) (4,760) Net change in total plan fiduciary net position 154,884 41,846 44,399 241,129

Total plan fiduciary net position at December 31, 2016 (d) 2,299,688$ 686,020 829,610 3,815,318

Net pension liability at December 31, 2015 (a-c) 1,246,992$ 384,735 128,407 1,760,134

Net pension liability at December 31, 2016 (b-d) 1,291,688$ 420,169 148,113 1,859,970

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

95

7 – RETIREMENT PLANS, continued b -- Net Pension Liability, continued The City Employees’ fund had no changes of assumptions or benefit terms that affected the total pension liability for the measurement period. The Police Officers’ fund had no changes to benefit terms during the measurement period but did have several changes in assumptions that affected the measurement of the total pension liability. Changes to assumptions included:

- The investment return assumption has been decreased from 7.80% to 7.70%, - The core inflation rate assumption has been decreased from 3.25% to 3.00% per year, - The general wage inflation rate assumption has been decreased from 3.50% to 3.25% per year, - The assumed rates of salary increase have been amended at most service points, - The payroll growth assumption has been increased from 3.50% to 4.00% per year.

The Fire Fighters’ fund had no significant changes of assumptions during the measurement period but did have a change in benefit term that affected the total pension liability. Effective January 1, 2017 a cost-of-living adjustment increase of 1.50% went into effect. c -- Pension Expense Total pension expense recognized by the City for the fiscal year ended September 30, 2017, was comprised of the following (in thousands): 

Pension Expense

City Employees $ 232,097 Police Officers 61,389 Fire Fighters 42,862

Total $ 336,348

d -- Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At September 30, 2017, the City reported deferred outflows and inflows of resources related to pensions from the following sources (in thousands):

Source City

Employees Police Officers

Fire Fighters Total

Deferred Outflows of Resources

Contributions to the plans subsequent to the measurement date $ 80,263 25,486 13,993 119,742

Differences between expected and actual experience 37,943 6,710 13,176 57,829

Changes in assumptions 76,077 17,653 3,255 96,985

Net difference between projected and actual earnings on pension plan investments 150,241 45,226 42,300 237,767

Total 344,524 95,075 72,724 512,323

Deferred Inflows of Resources

Differences between expected and actual experience -- 5,054 -- 5,054

Total $ -- 5,054 -- 5,054

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

96

7 – RETIREMENT PLANS, continued d -- Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions, continued The portion of deferred outflows and inflows of resources that will be recognized in pension expense is as follows (in thousands):

Fiscal Year Ended

September 30

City

Employees Police Officers

Fire Fighters Total

2018 $ 92,107 17,461 17,405 126,973 2019 91,888 17,461 17,406 126,755 2020 71,810 15,115 14,256 101,181 2021 6,876 4,919 3,446 15,241 2022 1,580 2,433 2,553 6,566 Thereafter -- 7,146 3,665 10,811

Total $ 264,261 64,535 58,731 387,527

  8 – OTHER POSTEMPLOYMENT BENEFITS a -- Description In addition to the contributions made to the three pension systems, the City provides certain other postemployment benefits to its retirees. Other postemployment benefits include access to medical, dental, and vision insurance for the retiree and the retiree’s family and $1,000 of life insurance on the retiree only. All retirees who are eligible to receive pension benefits under any of the City’s three pension systems are eligible for other postemployment benefits. Retirees may also enroll eligible dependents under the medical, dental, and vision plan(s) in which they participate. The City’s other postemployment benefits plan is a single employer plan. The City is under no obligation to pay any portion of the cost of other postemployment benefits for retirees or their dependents. Allocation of City funds to pay other postemployment benefits is determined on an annual basis by the City Council as part of the budget approval process on a pay-as-you-go basis. The City recognizes the cost of providing these benefits to active employees as an expense and corresponding revenue in the Employee Benefits Fund; no separate plan report is available. The City pays actual claims for medical and 100% of the retiree’s life insurance premium. Group dental and vision coverage is available to retirees and their eligible dependents. The retiree pays the full cost of the dental and vision premium. The pay-as-you-go cost of providing medical and life benefits was $43.1 million for 4,834 retirees in 2017 and $39.3 million for 4,644 retirees in 2016. b -- Annual Other Postemployment Benefits (OPEB) Cost and Net OPEB Obligation The annual cost associated with the City’s OPEB retiree benefits for the fiscal year ended September 30, 2017 is as follows (in thousands):

OPEB Obligation

Annual required contribution 203,571$

Interes t on net OPEB obligation 36,358

Adjus tm ent to annual required contribution (49,125)

Annual OPEB cost 190,804

Contributions m ade (43,051)

Change in net OPEB obligation 147,753

Beginning net OPEB obligation 863,584

Net OPEB obligation 1,011,337$

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

97

8 – OTHER POSTEMPLOYMENT BENEFITS, continued b -- Annual Other Postemployment Benefits (OPEB) Cost and Net OPEB Obligation, continued

The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the current year and the two preceding years are as follows (in thousands):

Year Ended September 30

Percentage of Annual OPEB Cost

Contributed Net OPEB Obligation

2015 126,916$ 31% 777,699 2016 125,199 31% 863,584 2017 190,804 22% 1,011,337

Annual OPEB Cost

c -- Schedule of Funding Progress at September 30, 2017 (in thousands):

Actuarial Value of Assets

Actuarial Accrued Liability UAAL (1) Funded Ratio

Annual Covered Payroll

Percentage of UAAL to Covered

Payroll -- $ 2,004,664 2,004,664 0% 850,259 235.8%

(1) UAAL - Unfunded Actuarial Accrued Liability

Actuarial valuations for OPEB plans involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. These actuarially determined amounts are subject to continual revisions as actual results are compared to past expectations and new estimates are made about the future. The schedule of funding progress, presented as Required Supplementary Information, presents multiyear information about whether the actuarial value of plan assets is increasing or decreasing relative to the actuarial accrued liability for benefits over time. d -- Actuarial Methods and Assumptions Projections of benefits are based on the plan in place at the time of the valuation and include the type of benefits provided at the valuation date and the cost sharing pattern between the employer and plan members at that time. The actuarial calculations of the OPEB plan reflect a long-term perspective and utilize actuarial methods and assumptions that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities. e -- Funding Policy The actuarial cost method and significant assumptions underlying the actuarial calculation are as follows:

OPEB

Actuarial valuation date October 1, 2016

Actuarial cost m ethod Projected Unit Credit

Am ortization m ethod Level Percentage Open

Rem aining am ortization period 30 years

Ass et valuation m ethod N/A

Inves tm ent rate of return 4.21%

Inflation rate None

Salary increas e None

Payroll Increase None Health care cos t trend rate 8.0% in 2017, decreas ing 0.5% per year for s ix

years to an ultim ate trend of 5.0% in 2023

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

98

9 – DERIVATIVE INSTRUMENTS The City has derivatives in two hedging programs: Energy Risk Management Program and Variable Rate Debt Management Program. In accordance with GAAP, the City is required to report the fair value of all derivative instruments on the statement of net position. All derivatives must be categorized into two basis types – (1) hedging derivative instruments and (2) investment derivative instruments. Hedging derivative instruments significantly reduce an identified financial risk by substantially offsetting changes in cash flows or fair values of an associated hedgeable item. Investment derivative instruments are entered into primarily for income or profit purposes or they are derivative instruments that do not meet the criteria of an effective hedging derivative instrument. Changes in fair value of hedging derivative instruments are deferred on the statement of net position, and changes in fair value of investment derivative instruments are recognized as gains or losses on the statement of activities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, which is the City’s fiscal year end date of September 30. This requires consideration of nonperformance risk when measuring the fair value of a liability and considers the effect of the government’s own credit quality and any other factors that might affect the likelihood that the obligation will or will not be fulfilled. a -- Energy Risk Management Program In an effort to mitigate the financial and market risk associated with the purchase of natural gas, energy, and congestion price volatility, Austin Energy has established a Risk Management Program. This program was authorized by the Austin City Council and is led by the Risk Oversight Committee. Under this program, Austin Energy enters into futures contracts, options, swaps and congestion revenue rights for the purpose of reducing exposure to natural gas, energy and congestion price risk. Use of these types of instruments for the purpose of reducing exposure to price risk is performed as a hedging activity. These contracts may be settled in cash or delivery of certain commodities. Austin Energy typically settles these contracts in cash. Hedging Derivative Instruments Natural Gas Derivatives Austin Energy purchases financial contracts on the New York Mercantile Exchange (NYMEX) to provide a hedge against the physical delivery price of natural gas from its various hubs. Austin Energy enters into basis swaps to protect delivery price differences between Henry Hub and its natural gas delivery points, Western Area Hub Association (WAHA), Katy, and the Houston Ship Channel (HSC). The fair value of futures, swaps, and basis swap contracts is determined using the NYMEX closing settlement prices as of the last day of the reporting period, using a hierarchy level 2 market approach. The fair value is calculated by deriving the difference between the closing futures price on the last day of the reporting period and purchase price at the time the positions were established. The fair value of the options is categorized as hierarchy level 2, calculated using the Black/Scholes valuation method utilizing implied volatility based on the NYMEX closing settlement prices of the options as of the last day of the reporting period, including any necessary price analysis adjustments, risk free interest rate, time to maturity, and the NYMEX forward price of the underlier as of the last day of the reporting period. Premiums paid for options are deferred until the contract is settled. As of September 30, 2017, $195 thousand in premiums was deferred. As of September 30, 2017, the fair value of Austin Energy’s futures, options, swaps and congestion revenue rights, was an unrealized loss of $13.1 million, of which $15.0 million is reported as derivative instruments in liabilities and $1.9 million is reported as derivative instruments in assets. The fair values of these derivative instruments are deferred until future periods on the statement of net position using deferred outflows and deferred inflows. Congestion Revenue Rights Derivatives Preassigned Congestion Revenue Rights (PCRRs) and Congestion Revenue Rights (CRRs) function as financial hedges against the cost of resolving congestion in the Electric Reliability Council of Texas (ERCOT) market. These instruments allow Austin Energy to hedge expected future congestion that may arise during a certain period. CRRs are purchased at auction, annually and monthly at market value. Municipally owned utilities are granted the right to purchase PCRRs annually at 10-20% of the cost of CRRs. The instruments exhibit all three characteristics - settlement, leverage, and net settlement - to classify them as derivative instruments. As of September 30, 2017, PCRRs had a fair value of $81 thousand and CRRs had a fair value of $1.4 million, and both are reported as derivative instruments. The market value for CRRs and PCRRs is calculated using the implied market value (the difference between future proxy sink price and source price) multiplied by the number of open positions, hierarchy level 2 market approach. The difference in the prices represents what the expected cost of congestion will be for that given point in time. In fiscal year 2017, Austin Energy sold PCRRs and recorded a gain of $205 thousand; however, this gain was deferred under the accounting requirements for regulated operations. At September 30, 2017, $205 thousand remained deferred.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

99

9 – DERIVATIVE INSTRUMENTS, continued a -- Energy Risk Management Program, continued On September 30, 2017, Austin Energy had the following outstanding hedging derivative instruments (in thousands):

Reference Index Maturity Dates

Notional Volumes Fair Value

Change in Fair Value

Premiums Deferred

Long OTC Call Options Henry Hub Oct 2017 - Sept 2021 12,040,000 (1) 389$ (130) 2,868 Long OTC Basis Swaps WAHA Apr 2018 - Oct 2018 1,070,000 (1) 24 24 -- n/a Congestion Rights ICE (2) Oct 2017- Jun 2018 22,029,210 (3) 1,450 (1,728) --

Derivative instruments (assets) 1,863 (1,834) 2,868

Short OTC Put Options Henry Hub Oct 2017 - Sep 2021 (12,040,000) (1) (6,234) 1,242 (2,673) Long OTC Swaps Henry Hub Oct 2017 - Sep 2020 8,437,500 (1) (8,726) 783 --

Derivative instruments (liabilities) (14,960) 2,025 (2,673)

Total (13,097)$ 191 195

(1) Volume in MMBTUs (2) Intercontinental Exchange (3) Volume in MWHs

Fair Value at September 30, 2017

Type of Transaction

Austin Energy routinely purchases derivative instruments. The outstanding hedging derivative instruments were purchased at various dates. The realized gains and losses related to the hedging activity derivative instruments are netted to Power Supply Adjustment expense in the period realized. Risks Credit Risk. Credit risk is the risk of loss due to a counterparty defaulting on its obligations. Austin Energy’s fuel derivative contracts expose Austin Energy to custodial credit risk on Exchange Traded derivative positions. In the event of default or nonperformance by brokers or the exchange, Austin Energy’s operations will not be materially affected. At September 30, 2017, the brokerages had credit ratings of A. The over-the-counter agreements expose Austin Energy to credit risk; however, at September 30, 2017, none of the counterparties had outstanding obligations with Austin Energy. The contractual provisions applied to these contracts under the International Swaps and Derivatives Association (ISDA) agreement include collateral provisions. At September 30, 2017, no collateral was required under these provisions. The congestion revenue rights expose Austin Energy to custodial credit risk in the event of default or nonperformance by ERCOT, a regulatory entity of the State of Texas. In the event of default of nonperformance, Austin Energy’s operations will not be materially affected. Termination Risk. Termination risk is the risk that a derivative will terminate prior to its scheduled maturity due to a contractual event. Contractual events include illegality, tax and credit events upon merger and other events. Termination risk for exchange- traded instruments is greatly reduced by the strict rules and guidelines set up by the exchange, which is governed by the Commodity Futures Trade Commission. Austin Energy’s exposure to termination risk for over-the counter agreements is minimal due to the high credit rating of the counterparties and the contractual provisions under the ISDA agreement applied to these contracts. Termination risk is associated with all of Austin Energy’s derivatives up to the fair value of the instrument. Netting Arrangements. Austin Energy enters into netting arrangements whenever it has entered into more than one derivative instrument transaction with a counterparty. Under the terms of these arrangements, should one party become insolvent or otherwise default on its obligations, close-out netting provisions permit the non-defaulting party to accelerate and terminate all outstanding transactions and net the transactions’ fair values so that a single sum will be owed by or owed to the non-defaulting party.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

100

9 – DERIVATIVE INSTRUMENTS, continued a -- Energy Risk Management Program, continued Basis Risk. Austin Energy is exposed to basis risk on its fuel hedges because the expected commodity purchases being hedged will price based on a delivery point (WAHA/Katy/HSC) different than that at which the financial hedging contracts are expected to settle NYMEX (Henry Hub). As of September 30, 2017, the NYMEX price was $2.97 per MMBTU (one million British thermal unit, a measurement of heating value), the WAHA Hub price was $2.44 per MMBTU, Katy was $2.92 per MMBTU, and the HSC Hub price was $2.88 per MMBTU. Risks As of September 30, 2017, Austin Energy was not exposed to credit, interest, or foreign currency risk on its investment derivative instruments. b -- Variable Rate Debt Management Program Hedging Derivative Instruments The intention of each of the City’s swaps is to provide a cash flow hedge for its variable interest rate bonds by providing synthetic fixed rate bonds. As a means to lower its borrowing costs when compared against fixed rate bonds at the time of issuance, the City executed pay-fixed, receive-variable swaps in connection with its issuance of variable rate bonds. As of September 30, 2017, the City has three outstanding swap transactions with initial and outstanding notional amounts totaling $602.1 million and $376.7 million, respectively. The fair values of the interest rate derivative transactions were estimated based on an independent pricing service. The valuations provided were derived from proprietary models based upon well-recognized principles and estimates about relevant future market conditions. The expected transaction cash flows are calculated using the zero-coupon discounting method which takes into consideration the prevailing benchmark interest rate environment, the specific terms and conditions of a given transaction, and assumes that the current forward rates implied by the benchmark yield curve are the market’s best estimate of future spot interest rates. The income approach is then used to obtain the fair value of the transactions, where future amounts (the expected transaction cash flows) are converted to a single current amount, discounted using a rate of return that takes into account the relative risk of nonperformance associated with the cash flows. Where applicable under the income approach an option pricing model is applied such as the Black-Scholes-Merton model, the Black-Derman-Toy model, one of the short-rate models, or other market standard models consistent with accepted practices in the market for interest rate option products. The option models consider probabilities, volatilities, time, settlement prices, and other variables pertinent to the transactions. This valuation technique is applied consistently across all the transactions. Given the observability of inputs significant to the measurements, the fair values of the transactions are categorized as Level 2. On September 30, 2017, the City had the following outstanding interest rate swap hedging derivative instruments (in thousands):

Item Related Variable Rate Bonds Term s Effective

Date Maturity

Date Notional Am ount Fair Value

Bus iness-Type Activities - Hedging de rivatives:

WW2 Water & Wastew ater Revenue Ref unding Bonds, Series 2008

Pay 3.600%, receive SIFMA sw ap index 5/15/2008 5/15/2031 109,820$ (15,509)

AIR1

Airport System Subordinate Lien Revenue Ref unding Bonds, Series 2005

Pay 4.051%, receive 71% of LIBOR 8/17/2005 11/15/2025 179,075 (21,535)

HOT1

Hotel Occupancy Tax Subordinate Lien Variable Rate Revenue Ref unding Bonds, Series 2008

Pay 3.251%, receive 67% of LIBOR 8/14/2008 11/15/2029 87,820 (9,915)

376,715$ (46,959)

All swaps are pay-fixed interest rate swaps. All were entered into with the objective of hedging changes in the cash flows on the related variable rate debt.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

101

9 – DERIVATIVE INSTRUMENTS, continued b -- Variable Rate Debt Management Program, continued The fair value of the City’s interest rate swap hedging derivative instruments is reported as derivative instruments in liabilities with an offsetting adjustment to deferred outflow of resources. The table below provides for the fair value and changes in fair value of the City’s interest rate swap agreements as of September 30, 2017 (in thousands):  

Outstanding Notional Deferred Deferred

Item Amount Amount Classification Outflows Inflows

Business-Type Activities: Hedging derivative instruments (cash flow hedges):

WW2 109,820$ (15,509) Non-current liability 7,917 -- AIR1 179,075 (21,535) Non-current liability 10,492 -- HOT1 87,820 (9,915) Non-current liability 5,156 --

376,715$ (46,959) 23,565 --

Change in fair value Fair Value and Classification

Due to the continued low interest rate levels during fiscal year 2017, the City’s interest rate swap hedging derivative instruments had negative fair values as of September 30, 2017. The fair value takes into consideration nonperformance risk, the prevailing interest rate environment, the specific terms and conditions of a given transaction, and any upfront payments that may have been received. Risks Credit risk. As of September 30, 2017, the City was not exposed to credit risk on any of its outstanding swap agreements because each swap had a negative fair value. However, should interest rates change and the fair value of a swap become positive, the City would be exposed to credit risk in the amount of the swap’s fair value. The counterparty credit ratings for the City’s interest rate swap hedging derivative instruments at September 30, 2017, are included in the table below:

Item Related Variable Rate Bonds Counterparty

Moody's Investors

Service, Inc Standard &

Poor's Fitch, Inc

Business-Type Activities:

WW2 Water & Wastew ater Revenue Refunding Bonds, Series 2008 Goldman Sachs Bank USA A1 A+ A

AIR1

Airport System Subordinate Lien Revenue Ref unding Bonds, Series 2005 Morgan Stanley Capital Services, LLC A3 BBB+ A

HOT1

Hotel Occupancy Tax Subordinate Lien Variable Rate Revenue Ref unding Bonds, Series 2008

Morgan Keegan Financial Products (MKFP) Baa2 A- BBB+

Counterparty Ratings

Swap agreements for all three swaps contain collateral agreements with the counterparties. These swap agreements require collateralization of the fair value of the swap should the counterparty’s credit rating fall below the applicable thresholds in the agreements. For Swap AIR1, the City purchased swap insurance to mitigate the need to post collateral as long as the insurer, Financial Security Assurance, maintains a credit rating above A2/A by Moody’s/S&P. For Swap HOT1, the credit support provider of MKFP is Deutsche Bank AG, New York Branch (DBAG). This swap requires collateralization of the fair value of the swap should DBAG’s credit rating fall below the applicable thresholds in the agreement.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

102

9 – DERIVATIVE INSTRUMENTS, continued b -- Variable Rate Debt Management Program, continued Swap payments and associated debt. The net cash flows for the City’s interest rate swap hedging derivative instruments for the year ended September 30, 2017, are included in the table below (in thousands):

Related Variable Rate Counterparty Swap Interest Interest to Net Interest Item Bonds Pay Receive Net Bondholders Payments

Business-Type Activities:

WW2

Water & Wastewater Revenue Refunding Bonds, Series 2008 $ (3,978) 821 (3,157) (826) (3,983)

AIR1

Airport System Subordinate Lien Revenue Refunding Bonds, Series 2005 (7,278) 1,076 (6,202) (1,385) (7,587)

HOT1

Hotel Occupancy Tax Subordinate Lien Variable Rate Revenue Refunding Bonds, Series 2008 (2,883) 527 (2,356) (674) (3,030)

$ (14,139) 2,424 (11,715) (2,885) (14,600)

Basis and interest rate risk. Basis risk is the risk that the interest rate paid by the City on underlying variable rate bonds to bondholders temporarily differs from the variable swap rate received from the applicable counterparty. The City does not bear basis risk on Swap WW2. At September 30, 2017, the City bears basis risk on the two remaining swaps. These swaps have basis risk since the City receives a percentage of LIBOR to offset the actual variable rate the City pays on the related bonds. The City is exposed to basis risk should the floating rate that it receives on a swap drop below the actual variable rate the City pays on the bonds. Depending on the magnitude and duration of any basis risk shortfall, the expected cost of the basis risk may vary. The City will be exposed to interest rate risk only if the counterparty to the swap defaults or if the swap is terminated. Tax risk. Tax risk is a specific type of basis risk. Tax risk is the risk of a permanent mismatch occurring between the interest rate paid on the City’s underlying variable rate bonds and the rate received on the swap caused by a reduction or elimination in the benefits of the tax exemption for municipal bonds. For example, a grandfathering of the elimination of federal tax-exemption on existing tax-exempt bonds, or a tax cut, would result in the yields required by investors on the City’s bonds coming close to or being equal to taxable yields. This would result in an increase in the ratio of tax-exempt to taxable yields. The City is receiving 71% of LIBOR on AIR1, and 67% of LIBOR on Swap HOT1 and would experience a shortfall relative to the rate paid on its bonds if marginal income tax rates decrease relative to expected levels, thus increasing the overall cost of its synthetic fixed rate debt. Nonperformance/Termination risk. The City or the counterparties may terminate any of the swaps if the other party fails to perform under the terms of the respective contracts. If any of the swaps are terminated, the associated variable rate bonds would no longer be hedged to a fixed rate. If at the time of termination the swap has a negative fair value, the City would be liable to the counterparty for a payment equal to the swap’s fair value. The additional termination events in the agreement are limited to credit related events only and the ratings triggers are substantially below the current credit rating of the City. Additionally, the City purchased swap insurance on the Swap AIR1 to further reduce the possibility of termination risk. Rollover risk. The City is exposed to rollover risk on hedging derivative instruments that are hedges of debt that mature or may be terminated prior to the maturity of the hedged debt. When these hedging derivative instruments terminate, the City will be re-exposed to the risks being hedged by the hedging derivative instrument. The City is currently not exposed to rollover risk on its hedging derivative instruments. Investment Derivative Instruments At September 30, 2017, the City did not have any investment derivative instruments related to interest rate swaps.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

103

9 – DERIVATIVE INSTRUMENTS, continued c -- Swap Payments and Associated Debt As of September 30, 2017, debt service requirement of the City’s variable rate debt and net swap payments, assuming current interest rates remain the same, for their term are as follows (as rates vary, variable rate bond interest payments and net swap payments will vary):

(1) The net effect of the reference rate projected to be paid to the City versus the variable

rate projected to be paid to bondholders utilizing rates in effect at 9/30/2017.

10 – DEFICITS IN FUND BALANCES AND NET POSITION

At September 30, 2017, the following funds reported deficits in fund balances/net position (in thousands). Management intends to recover these deficits through future operating revenues, transfers, or debt issues.

Nonmajor Governmental Deficit Special Revenue Funds:

Auto Theft Interdiction $ 29 Fiscal Surety - Land Development 279 Neighborhood Housing & Conservation 1,948 City Hall 169 Mueller Tax Increment Financing 89 Tourism and Promotion 10 Waller Creek Tax Increment Finance 18 Capital Projects Funds: 2012 fund Health 545 2016 fund Mobility 13,211 Other funds Health Projects 1,118 Build Austin 264

Public Works 439

Watershed Protection 718

City Hall, plaza, parking garage 6,532 Internal Service Funds Capital Projects Management 347 Nonmajor Enterprise Austin Resource Recovery 39,957

Transportation 27,413

Fiscal Year Variable Rate Bonds Ended (in thousands) Interest Rate Total

September 30 Principal Interest (1) Swaps, Net Interest

2018 $ 12,600 43 13,652 13,695 2019 28,525 38 12,697 12,735 2020 31,935 28 11,507 11,535 2021 31,010 18 10,318 10,336 2022 27,710 9 9,235 9,244

2023-2027 168,090 (88) 25,629 25,541 2028-2031 76,845 (36) 5,181 5,145

Total $ 376,715 12 88,219 88,231

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

104

11 – INTERFUND BALANCES AND TRANSFERS a -- Interfund receivables, payables, and advances Interfund receivables, payables, and advances at September 30, 2017, are as follows (in thousands):  

Due From

Nonmajor Austin Austin Water Nonmajor

Due To Governmental Energy Utility Enterprise Total

General $ 31 210 -- -- 241

Nonmajor governmental 11,412 -- -- -- 11,412

Austin Water Utility -- 3,101 -- -- 3,101

Airport -- 162 -- -- 162

Nonmajor enterprise -- -- 301 1,700 2,001

Total $ 11,443 3,473 301 1,700 16,917

Interfund receivables (due from) and payables (due to) reflect short term loans between funds, mainly the result of short term deficits in pooled investments and cash ($13.1 million). Deficits in grant funds awaiting reimbursement from grantors ($9.9 million) was borrowed from the Fiscal Surety fund.  

Advance To

Nonmajor Austin Austin Water Nonmajor Internal

Advance From Governmental Energy Utility Airport Enterprise Service Total

General $ -- 654 -- -- -- -- 654

Nonmajor governmental 17,641 255 -- 52 311 7 18,266

Austin Water Utility 680 13,926 -- -- -- -- 14,606

Airport -- 506 -- -- -- -- 506

Nonmajor enterprise 775 -- 2,104 -- -- -- 2,879

Total $ 19,096 15,341 2,104 52 311 7 36,911

Advances to and advances from reflect borrowing that will not be liquidated within one year. Of the above amounts, $6.6 million is an interfund loan between capital project funds, the CTM and City Hall funds. $8.9 million is an interfund loan between the Transportation and Mobility funds, both capital project funds, to cover deficit pooled cash. $43 million in bond proceeds, including $15 million for corridor mobility improvements and $10 million for sidewalks, will be transferred to the Mobility fund in 2018. The advance to Austin Water Utility from Austin Energy funded the Combined Utility System Revenue Bond Retirement Reserve Account. Austin Energy funded the entire reserve on behalf of both enterprise funds. b -- Transfers

Transfers at September 30, 2017, are as follows (in thousands):  Transfers In

General Nonmajor Austin Austin Nonmajor Internal Transfers Out Fund Governmental Energy Water Enterprise Service Total General Fund $ -- 8,393 9 -- 1,353 2,370 12,125 Nonmajor governmental 4,918 26,116 3 -- 126,905 -- 157,942 Austin Energy 115,493 -- -- -- 54 35 115,582 Austin Water Utility 45,805 76 2,110 -- 3,050 174 51,215 Airport -- -- -- -- -- 33 33 Nonmajor enterprise 472 2,826 -- 13 6,647 95 10,053 Internal service -- 18,441 -- -- 1,191 222 19,854

Total $ 166,688 55,852 2,122 13 139,200 2,929 366,804

Interfund transfers are authorized through City council approval. Significant transfers include: Austin Energy and Austin Water Utility transfers to the General fund ($161.3 million), which are comparable to a return on investment to owners. The transfer of tax collections from the Hotel-Motel Occupancy Tax ($67.3 million) and the Vehicle Rental Tax ($9.3 million) special revenue funds to the Convention Center, and a ($50 million) transfer from non-major governmental fund to Drainage for Watershed home buyout program.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

105

12 – SELECTED REVENUES a -- Major Enterprise Funds Austin Energy and Austin Water Utility The Texas Public Utility Commission (PUC) has jurisdiction over electric utility wholesale transmission rates. On June 3, 2014, the PUC approved the City’s most recent wholesale transmission rate of $1.160111/KW. Transmission revenues totaled approximately $78 million in FY17. The City Council has jurisdiction over all other electric utility rates and over all water and wastewater utility rates and other services. The Council determines electric utility and water and wastewater utility rates based on the cost of operations. Under a bill passed by the Texas Legislature in 1999, municipally-owned electric utilities such as the City’s utility system have the option of offering retail competition after January 1, 2002. As of September 30, 2017, the City has elected not to enter the retail market, as allowed by state law. Electric rates include a fixed-rate component and cost-adjustment factors that allow for recovery of power supply, regulatory, and community benefit costs. If actual power supply costs differ from amounts billed to customers, then regulatory assets or deferred inflows are recorded by Austin Energy. The power supply factor is reviewed annually or when over- or under-recovery is more than 10% of expected power supply costs. Any over- or under-collections of the power supply, regulatory, or community benefit costs are applied to the respective cost-adjustment factor. Airport The City has entered into certain lease agreements as the lessor for concessions at the Airport. These lease agreements qualify as operating leases for accounting purposes. In the fiscal year 2017, the Airport fund revenues included minimum concession guarantees of $20,253,878. The following is a schedule by year of minimum future rentals on non-cancelable operating leases with remaining terms of up to 80 years for the Airport Fund as of September 30, 2017 (in thousands):  

Fiscal Year Airport Ended Lease

September 30 Receipts 2018 26,576$ 2019 25,268 2020 24,156 2021 24,143 2022 22,535

2023-2027 101,204 2028-2032 16,430 2033-2037 14,858 2038-2042 10,344 Thereafter 4,863

Totals 270,377$

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

106

12 – SELECTED REVENUES, continued b -- Operating Lease Revenue The City has entered into various lease agreements as the lessor of office space, antenna space and ground leases. Minimum guaranteed income on these non-cancelable operating leases is as follows (in thousands):  

Fiscal Year Future Ended Lease

September 30 Receivables 2018 $ 2,635 2019 2,322 2020 2,118 2021 1,775 2022 1,583

2023-2027 7,272

Totals $ 17,705

13 – TAX ABATEMENTS

The City grants tax abatements as defined in GASB Statement No. 77 under one of two programs, the Chapter 380 Performance Based Economic Development Incentive Program under which sales and property taxes may be rebated if the entity meets performance criteria, and the Media Production Development Zone program under which sales, excise, and use taxes may be abated. Performance Based Rebate Program To promote local economic development and stimulate business and commercial activity in the municipality, the City has granted tax rebate agreements under the authority of Chapter 380 of the Texas Local Government Code through the City’s Chapter 380 Performance Based Economic Development Incentive Program. All or a portion of property taxes, sales taxes, or a combination of the two were abated as a part of these agreements. To be eligible to participate in the program an entity must make a commitment to move or expand its business in the City through investments in real and/or personal property or leasehold improvements as well as commitments about the number of new jobs it will create. Some agreements also require the participants in this program to meet other City requirements such as salary levels of employees and local business participation. Each agreement is negotiated individually and the terms vary depending on the type of development and the economic benefits to the City. Sales taxes abated may either be all or a portion of those generated by the entity or its actions. The amount of property taxes abated may be all or a portion of property taxes on the entity’s real and personal property or leasehold investment. Agreements generally run for a certain number of years and also may be subject to a not-to-exceed maximum of taxes to be abated. All taxes are collected and then rebated if the entity meets commitments made under the agreement. If the criteria are not met, no taxes are refunded. During fiscal year 2017, the City had four agreements under this program which resulted in rebates that meet the definition of tax abatements of approximately $13.3 million. The City had no commitments related to these agreements other than the timeframe during which a compliance review will occur and a deadline for the refund of the taxes. The City is not subject to any tax abatement agreements entered into by other governmental entities.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

107

14 – COMMITMENTS AND CONTINGENCIES a -- Fayette Power Project Austin Energy’s coal-fired electric generating units are located at the Fayette Power Project (FPP) and operate pursuant to a participation agreement with LCRA. Austin Energy has an undivided 50 percent interest in Units 1 and 2, and LCRA wholly owns Unit 3. A management committee of four members governs FPP; each participant administratively appoints two members. As managing partner, LCRA is responsible for the operation of the project and appoints project management. Austin Energy’s investment is financed through operations, revenue bonds, or commercial paper, which are repaid by Austin Energy (see Note 6), and its pro-rata share of operations is recorded as if wholly owned. Austin Energy’s pro-rata interest in FPP was $28.0 million as of September 30, 2017. The decrease in the pro-rata interest from 2016 is primarily due to a decrease in coal inventory. The pro-rata interest in the FPP is calculated pursuant to the participation agreement and is reported in various asset and liability accounts within the City’s financial statements. The original cost of Austin Energy’s share of FPP’s generation and transmission facilities is recorded in the utility plant accounts of the City in accordance with its accounting policies. b -- South Texas Project Austin Energy is one of three participants in the South Texas Project (STP), which consists of two 1,250-megawatt nuclear generating units in Matagorda County, Texas. The other participants in the STP are NRG South Texas LP and City Public Service of San Antonio. In-service dates for STP were August 1988 for Unit 1 and June 1989 for Unit 2. Austin Energy’s 16 percent ownership in the STP represents 400 megawatts of plant capacity. At September 30, 2017, Austin Energy’s investment in the STP was approximately $380.1 million, net of accumulated depreciation. Effective November 17, 1997, the participation agreement among the owners of STP was amended and restated, and the STP Nuclear Operating Company (STPNOC), a Texas non-profit non-member corporation created by the participants, assumed responsibility as the licensed operator of STP. The participants share costs in proportion to ownership interests, including all liabilities and expenses of STPNOC. Each participant is responsible for its STP funding. The City’s portion is financed through operations, revenue bonds, or commercial paper, which are repaid by Austin Energy (see Note 6). In addition, each participant has the obligation to finance any deficits that may occur. Each participant appoints one member to the board of directors of STPNOC, as well as one other member to the management committee. A member of the management committee may serve on the board of directors in the absence of a board member. The City’s portion of STP is classified as plant in service, construction in progress, and nuclear fuel inventory. Nuclear fuel includes fuel in the reactor as well as nuclear fuel in process. STP requested a 20-year license extension for units 1 & 2 with the Nuclear Regulatory Commission (NRC). The 20 year license renewal was issued by the NRC in September 2017. Unit 1 and 2 are currently licensed through 2047 and 2048, respectively. c -- South Texas Project Decommissioning Austin Energy began collecting in rates and accumulating funds for decommissioning STP in 1989 in an external trust. The Decommissioning Trust assets are reported as restricted investments held by trustee. The related liability is reported as a decommissioning liability payable. Excess or unfunded liabilities related to decommissioning STP will be adjusted in future rates so that there are sufficient funds in place to pay for decommissioning. The increase to nuclear deferred inflow of resources from prior fiscal year is attributable to the NRC issued license extension in FY17. At September 30, 2017, the trust’s assets were in excess of the estimated liability by $55.0 million which is reported as part of deferred inflows of resources (in thousands).

   STP is subject to regulation by the Nuclear Regulatory Commission (NRC). The NRC requires that each holder of a nuclear plant-operating license submit a certificate of financial assurance to the NRC for plant decommissioning every two years or upon transfer of ownership. The certificate provides reasonable assurance that sufficient funds are being accumulated to provide the minimum requirement for decommissioning mandated by the NRC. The most recent annual calculation of financial assurance filed on December 31, 2016, showed that the trust assets exceeded the minimum required assurance by $49.0 million. d -- Purchased Power

Austin Energy has commitments totaling $6.4 billion to purchase energy and capacity through purchase power agreements. This amount includes provisions for wind power through 2041, landfill power through 2018, biomass through 2032, and solar through 2049.

Decomm is sioning trust ass ets 214,322$

Pro rata decomm is sioning liability (159,284)

55,038$

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

108

14 – COMMITMENTS AND CONTINGENCIES, continued e -- Decommissioning and Environmental/Pollution Remediation Contingencies Austin Energy may incur costs for environmental/pollution remediation of certain sites including the Holly, Fayette, and Decker Power Plants. At September 30 2017, the financial statements includes a $6.7 million short-term decommissioning liability related to Holly and a $430 thousand short-term environmental liability related to Fayette and Decker, classified as other liabilities. The amount is based on 2017 cost estimates to perform remediation and decommissioning. Actual costs may be higher due to inflation, changes in technology, or changes in regulations. f -- Arbitrage Rebate Payable The City’s arbitrage consultant has determined that the City has not earned interest revenue on unused bond proceeds in excess of amounts allowed by applicable Federal regulations. Therefore, the City will not be required to rebate any amounts to the federal government. There are no estimated payables at September 30, 2017. g -- Federal and State Financial Assistance Programs The City participates in a number of federally assisted and state grant programs, financed primarily by the U.S. Housing and Urban Development Department, U.S. Health and Human Services Department, and U.S. Department of Transportation. The City’s programs are subject to program compliance audits by the grantor agencies. Management believes that no material liability will arise from any such audits. h -- Capital Improvement Plan As required by charter, the City has a Capital Improvements Program plan (capital budget) covering a five-year period which details anticipated spending for projects in the upcoming and future years. The City’s 2017 Capital Budget has substantial contractual commitments relating to its capital improvement plan. The key projects in progress include improvements to and development of the electric system, water and wastewater systems, airport, transportation infrastructure, public recreation and culture activities, and urban growth management activities. Remaining commitments represent current unspent budget and future costs required to complete projects.

Remaining Commitment

Project (in thousands) Governmental activities:

General government $ 175,819 Public safety 27,935

Transportation 113,821

Public health 5,916

Public recreation and culture 64,551

Urban growth management 22,240 Business-type activities:

Electric 181,445 Water 120,408

Wastewater 170,867

Airport 417,956

Convention 55,601

Environmental and health services 1,835

Urban growth management 127,762

Total $ 1,486,156

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

109

14 – COMMITMENTS AND CONTINGENCIES, continued i -- Encumbrances The City utilizes encumbrances to track commitments against budget in governmental funds. The amount of outstanding encumbrances at September 30, 2017, is as follows (in thousands):   

Encumbrances General Fund $ 19,487 Nonmajor governmental

Special Revenue 28,273 Capital Projects 114,915

$ 162,675

Significant encumbrances include reservations for the 2012 bond program ($30,632), Communications and Technology Management ($19,408), General Government Projects ($15,421), and 2016 Bond Program ($16,549). j -- Landfill Closure and Postclosure Liability State and federal regulations require the City to place a final cover on the City of Austin landfill site (located on FM 812) when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfill stops accepting waste, a portion of these future closure and postclosure care costs are reported as an operating expense in each period as incurred in the Austin Resource Recovery Fund, a nonmajor enterprise fund. Substantial closure occurred in fiscal year 2011. Flooding in fiscal year 2015 has delayed final closure, which is expected in fiscal year 2019. While the landfill only reached 99.04% capacity, the City is no longer accepting waste. The amount of costs reported, based on landfill capacity of 100% as of September 30, 2017, is as follows (in thousands):

Closure Postclosure Total Total es tim ated cos ts 22,500$ 9,899 32,399

% capacity us ed 100% 100% 100%

Cum ulative liability accrued 22,500 9,899 32,399

Cos ts incurred (19,706) -- (19,706)

Closure and pos tclosure liability 2,794$ 9,899 12,693

These amounts are based on the 2017 cost estimates to perform closure and postclosure care. Actual costs may be higher due to inflation, changes in technology, or changes in regulations. State and federal laws require owners to demonstrate financial assurance for closure, postclosure, and/or corrective action. The City complies with the financial and public notice components of the local government financial test and government-guarantee of the test. k -- Risk-Related Contingencies The City uses internal service funds to account for risks related to health benefits, third-party liability, and workers’ compensation. The funds are as follows:

Fund Name Description Employee Benefits City employees and retirees may choose a self-insured PPO, HMO, or CDHP with

HSA for health coverage. Approximately 20% of City employees and 27% of retirees use the HMO option; approximately 72% of City employees and 72% of retirees use the PPO option; and approximately 8% of City employees and 1% of retirees use the CDHP with HSA option. Costs are charged to City funds through a charge per employee per pay period.

Liability Reserve This self-insured program includes losses and claims related to liability for bodily injury,

property damage, professional liability, and certain employment liability. Premiums are charged to other City funds each year based on historical costs. Beginning in 2017, third-party claims activities are being reported directly in the Austin Energy, Austin Water Utility, and Aviation enterprise funds.

Workers’ Compensation Premium charges for this self-insured program are assessed to other funds each year

based on the number of full-time equivalent (FTE) employees per fund.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

110

14 – COMMITMENTS AND CONTINGENCIES, continued k -- Risk-Related Contingencies, continued The City purchases stop-loss insurance for the City’s PPO, HMO, and CDHP plans. This stop-loss insurance covers individual claims that exceed $500,000 per calendar year, up to a maximum of $5 million. In calendar year 2017 (through September 30), four claims exceeded the stop-loss limit of $500,000; during calendar years 2016 and 2015, fifteen claims and ten claims, respectively, exceeded the stop-loss limit of $500,000. City coverage is unlimited for lifetime benefits. The City does not purchase stop-loss insurance for workers’ compensation claims. The City is self-insured for much of its risk exposure; however, the City purchases commercial insurance coverage for loss or damage to real property, theft and other criminal acts committed by employees, and third party liability associated with the airport, owned aircraft, and electric utility operations. There have been no claims settlements in excess of the purchased insurance coverage for the last three years. The City also purchases insurance coverage through a program that provides workers’ compensation, employer’s liability, and third party liability coverage to contractors working on designated capital improvement project sites. Liabilities are reported when it is probable that a loss has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported. The City utilizes actuarial information and historical claim settlement trends to determine the claim liabilities for the Employee Benefits Fund and Workers’ Compensation Fund. Claims liabilities for the Austin Energy, Austin Water Utility, Airport and Liability Reserve funds are calculated based on an estimate of outstanding claims, which may differ from the actual amounts paid. Possible losses are estimated to range from $51.7 to $55.7 million. In accordance with GAAP, $51.7 million is recognized as claims payable in the financial statements with $28.8 million recognized as a current liability and $22.9 million recognized as long term. For Employee Benefits and Workers Compensation, city funds contribute amounts to these internal service funds based on an estimate of anticipated costs for claims each year. Beginning in fiscal year 2017, the Austin Energy, Austin Water utility, and Airport funds report their respective claims activities for third-party claims. All other funds contribute amounts to the Liability Reserve Fund based on an estimate of anticipated costs for claims each year. Changes in the balances of claims liability are as follows (in thousands):

2017 2016 2017 2016 2017 2016 Liability balances, beginning of year -- $ -- -- -- -- -- Claims and changes in estimates 2,221 -- 1,839 -- 9 -- Claim payments (151) -- (1,277) -- (8) -- Liability balances, end of year 2,070 -- 562 -- 1 --

2017 2016 2017 2016 2017 2016 Liability balances, beginning of year 14,310 13,286 9,364 9,337 25,664 24,841 Claims and changes in estimates 18,568 17,904 3,984 3,929 3,524 4,651 Claim payments (14,056) (16,880) (8,373) (3,902) (3,889) (3,828) Liability balances, end of year 18,822$ 14,310 4,975 9,364 25,299 25,664

Austin Austin Water Energy Utility Aviation

Workers' Compensation

Employee Benefits (1)

Liability Reserve

(1) For the Employee Benefits Fund, claim payments as reported above, represent amounts paid against claims outstanding at the beginning of the year. Claims initiated after the beginning of the year, but not yet settled, are reported in claims and changes in estimates. Cash paid for claims was $161,004 and $160,180 for the years ended September 30, 2016 and 2017, respectively.

The Austin Water Utility Fund claims liability balance at fiscal year-end included liabilities of $216 thousand discounted at 3.75%. The Liability Reserve Fund claims liability balance at fiscal year-end included liabilities of $3.1 million discounted at 3.75% and $3.1 million discounted at 3.19% in 2016. l -- Redevelopment of Robert Mueller Municipal Airport In December 2004, City Council approved a master development agreement with Catellus Development Group (Catellus) to develop approximately 700 acres at the former site of the City’s municipal airport into a mixed-use urban village near downtown Austin. Catellus is currently developing and marketing the property. The Mueller Local Government Corporation (MLGC), created by the City for this development, issues debt to fund infrastructure such as streets, drainage facilities, public parks, and greenways, which are supported by taxes generated from this development.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

111

14 – COMMITMENTS AND CONTINGENCIES, continued l -- Redevelopment of Robert Mueller Municipal Airport, continued In September 2006, the MLGC issued debt in the amount of $12 million. Proceeds of the debt have been used to reimburse the developer for eligible infrastructure such as streets, drainage, and parks. Debt service payments are funded through an economic development grant from the City of Austin, and supported by sales tax proceeds from the development. The MLGC has three additional debt issuances: October 2009 ($15,000,000), October 2012 ($16,735,000), and October 2014 ($15,845,000). Proceeds from the debt have been used to reimburse the developer for additional eligible infrastructure. Debt service payments are funded by property tax proceeds from the Mueller Tax Increment Reinvestment Zone. The development contains over 1.6 million square feet of civic, institutional, hotel and Class A office space and approximately 602,000 square feet of retail space that is either complete or under construction. Over 80 employers provide approximately 5,000 jobs at Mueller. From the start of home sales in 2007, the community has been well received. As of September 30, 2017, approximately 1,736 single-family homes and 1,981 multi-family units were either complete or under construction. Catellus has also started the infrastructure for an additional 350 single-family homes. m -- No-Commitment Special Assessment Debt In November 2011, the City issued $15,500,000 of Special Assessment Revenue Bonds, Senior Series 2011 related to the Whisper Valley Public Improvement District. The bonds are special obligations of the City payable solely from the assessments levied against parcels within the Public Improvement District and other pledged funds held under the indenture. The bonds do not give rise to a charge against the general credit or taxing powers of the City. The City is acting as an agent for the property owners within the district in collecting the future assessments, forwarding collections to trustees, approving bond proceed disbursements, and initiating any future foreclosures. $1,740,561 in total assessments were levied in the year ended September 30, 2017. The aggregate principal outstanding and the balance of bond proceeds held by the trustee at September 30, 2017 are $14,365,000 and $109,580, respectively. In November 2011, the City issued $2,860,000 of Special Assessment Revenue Bonds, Senior Series 2011 related to the Indian Hills Public Improvement District. The bonds are special obligations of the City payable solely from the assessments levied against parcels within the Public Improvement District and other pledged funds held under the indenture. The bonds do not give rise to a charge against the general credit or taxing powers of the City. The City is acting as an agent for the property owners within the district in collecting the future assessments, forwarding collections to trustees, approving bond proceed disbursements, and initiating any future foreclosures. $344,396 in total assessments were levied in the year ended September 30, 2017. The aggregate principal outstanding and the balance of bond proceeds held by the trustee at September 30, 2017 are $2,650,000 and $360, respectively. In July 2013, the City issued $12,590,000 of Special Assessment Revenue Bonds, Series 2013 related to the Estancia Hill Country Public Improvement District. The bonds are special obligations of the City payable solely from the assessments levied against parcels within the Public Improvement District and other pledged funds held under the indenture. The bonds do not give rise to a charge against the general credit or taxing powers of the City. The City is acting as an agent for the property owners within the district in collecting the future assessments, forwarding collections to trustees, approving bond proceed disbursements, and initiating any future foreclosures. $1,745,255 in total assessments were levied during the fiscal year with $18,410 in delinquent receivables at September 30, 2017. The aggregate principal outstanding at September 30, 2017 is $11,300,000. n -- Capital Leases The City has entered into a lease agreement to finance equipment for business-type activities. This lease agreement qualifies as a capital lease for accounting purposes and has been recorded at the present value of the future minimum lease payments at their inception date. The lease agreement ends in 2031. See Note 6 for the debt service requirements on this lease. The following summarizes capital assets recorded at September 30, 2017, under capital lease obligations (in thousands):

Austin Capital Assets Energy Building and improvements 1,405$

Accum ulated depreciation (527) Net capital as sets 878$

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

112

14 – COMMITMENTS AND CONTINGENCIES, continued o -- Operating Leases The City is committed under various leases for building and office space, tracts of land and rights-of-way, and certain equipment. These leases are considered operating leases for accounting purposes. Lease expense for the year ended September 30, 2017, was $21.9 million.

Fiscal Year Future Ended Lease

September 30 Payments

2018 $ 15,132

2019 12,746

2020 8,996

2021 7,345

2022 6,324

2023-2027 9,269

Totals $ 59,812

15 – LITIGATION A number of claims and lawsuits against the City are pending with respect to various matters arising in the normal course of the City’s operations. Legal counsel and City management are of the opinion that settlement of these claims and lawsuits will not have a material effect on the City’s financial statements. The City has accrued liabilities in the Austin Energy, Austin Water Utility, Airport, and Liability Reserve funds for claims payable at September 30, 2017. These liabilities, reported in the government-wide statement of net position, include amounts for claims and lawsuits settled subsequent to year-end. 16 – CONDUIT DEBT The City has issued several series of housing revenue bonds to provide for low cost housing. These bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. As of September 30, 2017, $66.1 million in housing revenue bonds were outstanding with an original issue value of $74 million. Revenue bonds have been issued by various related entities to provide for facilities located at the international airport and convention center. These bonds are special limited obligations payable solely from and secured by a pledge of revenue to be received from agreements between the entities and various third parties. As of September 30, 2017, $146.5 million in revenue and revenue refunding bonds were outstanding with an original issue value of $148.6 million. The above bonds do not constitute a debt or pledge of the faith and credit of the City and accordingly have not been reported in the accompanying financial statements.

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

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17 – SEGMENT INFORMATION – CONVENTION CENTER The Convention Center provides event facilities and services to its customers. Below are the condensed financial statements for this segment (in thousands):

ASSETS Current assets 169,223$ Capital assets 214,497 Other noncurrent assets 13,347 Total assets 397,067

DEFERRED OUTFLOWS OF RESOURCES 25,923

LIABILITIES Other current liabilities 23,020 Other noncurrent liabilities 204,825 Total liabilities 227,845

DEFERRED INFLOWS OF RESOURCES 231

NET POSITION Net investment in capital assets 60,018 Restricted 25,991 Unrestricted 108,905 Total net position 194,914$

OPERATING REVENUES User fees and rentals 40,196$ Total operating revenues 40,196

OPERATING EXPENSES Operating expenses before depreciation 59,969 Depreciation and amortization 9,071 Total operating expenses 69,040 Operating income (loss) (28,844)

Nonoperating revenues (expenses) (6,845) Transfers 76,299 Change in net position 40,610

Total net position, beginning 154,304 Total net position, ending 194,914$

Net cash provided (used) by: Operating activities (13,241)$ Noncapital financing activities 76,296 Capital and related financing activities (28,187) Investing activities 414 Net increase (decrease) in cash and cash equivalents 35,282 Cash and cash equivalents, beginning 122,525 Cash and cash equivalents, ending 157,807$

Condensed Statement of Net Position

Condensed Statement of Revenues, Expenses, and Changes in Net Position

Condensed Statement of Cash Flows

Notes to Basic Financial Statements City of Austin, Texas September 30, 2017 (Continued)

114

18 – SUBSEQUENT EVENTS a -- General Obligation Bond Issue In October 2017, the City issued $63,580,000 of Public Improvement Bonds, Series 2017. The net proceeds of $74,000,000 (after issue costs, discounts, and premiums) from the issue will be used as follows: streets and mobility ($43,000,000), parks and recreation ($15,300,000), and facility improvements ($15,700,000). These bonds will be amortized serially on September 1 of each year from 2018 to 2037. Interest is payable on March 1 and September 1 of each year, commencing March 1, 2018. Total interest requirements for these bonds, at a rate of 5.0%, are $28,965,422. In October 2017, the City issued $29,635,000 of Certificates of Obligation, Series 2017. The net proceeds of $35,325,000 (after issue costs, discounts, and premiums) from this issue will be used as follows: watershed home buyouts ($22,000,000), central library ($5,000,000), animal shelter improvements ($5,425,000), and women and children’s shelter ($2,900,000). These certificates of obligation will be amortized serially on September 1 of each year from 2018 to 2037. Interest is payable on March 1 and September 1 of each year, commencing on March 1, 2018. Total interest requirements for these obligations, at rates ranging from 4.0% to 5.0%, are $17,602,222. In October 2017, the City issued $5,075,000 of Public Property Finance Contractual Obligations, Series 2017. The net proceeds of $5,460,000 (after issue costs, discounts, and premiums) from this issue will be used for capital equipment ($5,460,000). These contractual obligations will be amortized serially on May 1 and November 1 of each year from 2018 to 2024. Interest is payable on May 1 and November 1 of each year, commencing May 1, 2018. Total interest requirements for these obligations, at rates ranging from 2.0% to 5.0%, are $702,034. In October 2017, the City issued $25,000,000 of Public Improvement Taxable Bonds, Series 2017. The net proceeds of $25,000,000 (after issue costs, discounts, and premiums) from the issuance will be used for affordable housing ($25,000,000). Interest is payable March 1 and September 1 of each year from 2018 to 2037, commencing on March 1, 2018. Principal payments are due September 1 of each year from 2018 to 2037. Total interest requirements for this obligation, at rates ranging from 2.3% to 5.0% are $9,890,858. b -- Water and Wastewater – System Revenue Bond Issue In November 2017, the City issued $45,175,000 of Water and Wastewater System Revenue Bonds, Series, 2017A. This is a private placement structured through a memorandum with the Texas Water Development Board (TWDB). Project funds of $42,363,027 will be used to improve and extend the water/wastewater system. The debt service requirements on the bonds are $54,326,741 with interest rates ranging from 0.6% to 2.3%. Interest payments are due May 15 and November 15 of each year from 2018 to 2037. Principal payments are due November 15 of each year from 2018 to 2037.

REQUIRED SUPPLEMENTARY INFORMATION

115

General Fund City of Austin, Texas Schedule of Revenues, Expenditures, and Changes in RSI Fund Balances--Budget and Actual-Budget Basis For the year ended September 30, 2017 (In thousands)

General Fund Actual- Variance (3) Adjustments Budget Positive

Actual (1) (2) Basis Original Final (Negative) REVENUES Taxes 646,918$ 100 647,018 650,538 650,538 (3,520) Franchise fees 36,057 153 36,210 36,717 36,717 (507) Fines, forfeitures and penalties 13,117 1 13,118 16,209 16,209 (3,091) Licenses, permits and inspections 61,076 (1) 61,075 50,799 50,799 10,276 Charges for services/goods 59,362 1,266 60,628 60,890 60,890 (262) Interest and other 15,754 (9,626) 6,128 4,540 4,540 1,588 Total revenues 832,284 (8,107) 824,177 819,693 819,693 4,484 EXPENDITURES General government Municipal Court 22,386 158 22,544 22,619 22,619 75 Public safety Police 340,924 42,103 383,027 386,573 386,573 3,546 Fire 172,320 16,901 189,221 187,208 190,708 1,487 Emergency Medical Services 72,006 10,199 82,205 84,036 84,036 1,831 Transportation, planning, and sustainability Transportation, planning, and sustainability 421 (421) -- -- -- -- Public health Health 80,487 2,870 83,357 83,688 83,688 331 Public recreation and culture Parks and Recreation 72,452 7,823 80,275 80,829 80,829 554 Austin Public Library 40,276 4,930 45,206 47,167 47,167 1,961 Urban growth management Neighborhood Planning and Zoning 38,088 6,865 44,953 45,567 45,567 614 Other urban growth management 32,403 480 32,883 35,244 35,244 2,361 General city responsibilities (4) 104,259 (97,501) 6,758 6,963 6,963 205 Total expenditures 976,022 (5,593) 970,429 979,894 983,394 12,965 Excess (deficiency) of revenues

over expenditures (143,738) (2,514) (146,252) (160,201) (163,701) 17,449 OTHER FINANCING SOURCES (USES) Transfers in 166,688 39,203 205,891 187,296 190,803 15,088 Transfers out (12,125) (41,132) (53,257) (34,662) (38,169) (15,088) Total other financing sources (uses) 154,563 (1,929) 152,634 152,634 152,634 --

Excess (deficiency) of revenues and other sources over expenditures and other uses 10,825 (4,443) 6,382 (7,567) (11,067) 17,449 Fund balance at beginning of year 160,989 7,501 168,490 142,590 142,590 25,900 Fund balance at end of year 171,814$ 3,058 174,872 135,023 131,523 43,349

(1) Includes adjustments to expenditures for current year encumbrances, payments against prior year encumbrances, compensated absences, and amounts budgeted as operating transfers.

(2) Includes adjustments to revenues/transfers required for adjusted budget basis presentation. (3) Variance is actual-budget basis to final budget. (4) Actual expenditures include employee training costs and amounts budgeted as fund-level expenditures or operating transfers.

Actual-budget basis expenditures include employee training costs and amounts budgeted as fund-level expenditures.

Budget

116

Required Supplementary Information City of Austin, Texas Notes to Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual-Budget Basis September 30, 2017

117

BUDGET BASIS REPORTING a -- General The City of Austin prepares its annual operating budget based on the modified accrual basis. Encumbrances constitute the equivalent of expenditures for budgetary purposes. In order to provide a meaningful comparison of actual results to the budget, the Schedule of Revenues, Expenditures and Changes in Fund Balances -- Budget and Actual-Budget Basis for the General Fund presents the actual and actual-budget basis amounts in comparison with original and final budgets. The General Fund, as reported in the financial statements is comprised of nine separately budgeted funds: the Budgetary General Fund, as budgeted by the City, plus the Budget Stabilization Reserve, Community Development Incentives, Economic Development, Economic Incentives Reserve, Emergency Reserve, Long Center Capital Improvements, Music Venue Assistance Program, and the Property Tax Reserve Fund. The General Fund budget includes other revenues and requirements, which are presented in the general city responsibilities category. The expenditure budget for these general city requirements includes interdepartmental charges ($6,137,157). b -- Budget Amendments The original revenue budget of the General Fund was not amended during fiscal year 2017. The original expenditure budget of the General Fund was amended during fiscal year 2017 for the addition of one full time position at the Austin Fire Department ($83,000). This increase was offset by a reimbursement from Aviation. In addition, an increase in expenditures in the Austin Fire Department for the increase in overtime due to staffing shortage. The Budget Stabilization Reserve transferred ($3.5 million) to Austin Fire to fund this additional expense. c -- Reconciliation of GAAP Basis and Budget Basis Amounts The primary differences between GAAP-basis and budget-basis reporting for the General Fund are the reporting of encumbrances and the reporting of certain transfers. General Fund accrued payroll is recorded at the department level on a GAAP basis and as an expenditure in the general city responsibilities activity on the budget basis. Adjustments necessary to convert the excess revenues and other sources over expenditures and other uses on a GAAP basis to a budget basis for the activities comprising the General Fund are provided, as follows (in thousands):  

General Fund

Excess (deficiency) of revenues and other sources over expenditures and other uses - GAAP basis 10,825$

Adjustments - increases (decreases) due to: Unbudgeted revenues (1,688) Net compensated absences accrual 300 Outstanding encumbrances established in current year (16,780) Payments against prior year encumbrances 12,609 Other 1,116

Excess (deficiency) of revenues and other sources over expenditures and other uses - budget basis 6,382$

Required Supplementary Information City of Austin, Texas Retirement Plans and Other Postemployment Benefits Trend Information September 30, 2017

118

RETIREMENT PLANS-TREND INFORMATION Changes in net pension liability for each pension plan for the measurement periods ended December 31, 2014, 2015, and 2016 are presented in the next three schedules:

2014 2015 2016

Beginning total pension liability (a) 2,909,918$ 3,094,056 3,391,796

Changes for the year: Service cost 89,235 93,506 107,111 Interest 222,710 236,844 251,684 Differences between expected and actual experience 33,911 13,414 19,914

Assumption changes -- 123,493 -- Benefit payments including refunds (161,718) (169,517) (179,129)

Net change in total pension liability 184,138 297,740 199,580

Ending total pension liability (b) 3,094,056$ 3,391,796 3,591,376

Beginning total plan fiduciary net position (c) 2,130,624$ 2,209,800 2,144,804

Changes for the year: Employer contributions 93,331 100,485 104,273 Employee contributions 50,490 54,066 60,801 Pension plan net investment income (loss) 99,704 (47,608) 171,640 Benefits payments and refunds (161,718) (169,517) (179,129) Pension plan administrative expense (2,631) (2,422) (2,701) Net change in plan fiduciary net position 79,176 (64,996) 154,884

Ending total plan fiduciary net position (d) 2,209,800$ 2,144,804 2,299,688

Beginning net pension liability (a-c) 779,294$ 884,256 1,246,992

Ending net pension liability (b-d) 884,256$ 1,246,992 1,291,688

Plan fiduciary net position as a percentage of the total pension liability (d/b) 71.42% 63.24% 64.03%

Covered payroll 514,787$ 546,058 573,308

City's net pension liability as a percentage of covered payroll 171.77% 228.36% 225.30%

Schedule of Changes in the City Employees' Net Pension Liability and Related Ratios (in thousands)

Notes to Changes in the City Employees’ Net Pension Liability and Related Ratios The City Employees’ fund had no significant changes of benefit terms in any of the years presented. There were no other significant factors that affected measurement of the total pension liability during the years ended December 31, 2016 or December 31, 2014; however, significant changes to assumptions were made as the result of an experience study of the five years ended December 31, 2015, including:

 Decreasing the inflation assumption from 3.25% to 2.75%,  Reducing the investment rate of return assumption from 7.75% to 7.5%,  Decreasing the salary increase assumption from 4.5% to 4.0%,  Increasing new entrant pay from 3.75% to 4.0%,  Reducing the assumed retirement rates at most ages to better reflect the emerging trend of members retiring at later

ages,  Lowering termination rates and using a select table based on a three year select period for withdrawal rates, and  Using the RP-2014 blue collar mortality table for males and females project from 2014 to 2026 using mortality

improvement scale BB with a 62% weighting of males and a 38% weighting of females. Previously the RP-2000 white collar mortality tables were used.

Required Supplementary Information City of Austin, Texas Retirement Plans and Other Postemployment Benefits Trend Information September 30, 2017

119

RETIREMENT PLANS-TREND INFORMATION, continued

2014 2015 2016 Beginning total pension liability (a) 909,000$ 971,623 1,028,909

Changes for the year: Service cost 30,254 32,138 32,990 Interest 72,443 76,999 80,846 Benefit changes (11,015) (4,080) -- Differences between expected and actual experience -- (6,318) 7,455

Assumption changes 14,137 3,904 5,148 Contribution buy back 2,207 4,648 1,668 Benefit payments including refunds (45,403) (50,005) (50,827) Net change in total pension liability 62,623 57,286 77,280

Ending total pension liability (b) 971,623$ 1,028,909 1,106,189

Beginning total plan fiduciary net position (c) 595,110$ 638,019 644,174

Changes for the year: Employer contributions 32,400 33,239 33,814 Employee contributions 19,458 20,061 20,623 Contribution buy back 2,207 4,648 1,668 Pension plan net investment income (loss) 35,574 (322) 37,965 Benefits payments and refunds (45,403) (50,005) (50,827) Pension plan administrative expense (1,327) (1,466) (1,397) Net change in plan fiduciary net position 42,909 6,155 41,846

Ending total plan fiduciary net position (d) 638,019$ 644,174 686,020

Beginning net pension liability (a-c) 313,890$ 333,604 384,735

Ending net pension liability (b-d) 333,604$ 384,735 420,169

Plan fiduciary net position as a percentage of the total pension liability (d/b) 65.67% 62.61% 62.02%

Covered payroll 149,686$ 152,696 157,303

City's net pension liability as a percentage of covered payroll 222.87% 251.96% 267.11%

Schedule of Changes in the Police Officers' Net Pension Liability and Related Ratios (in thousands)

Notes to Changes in the Police Officers’ Net Pension Liability and Related Ratios

The Police Officers’ fund had no significant changes of benefit terms, and no other significant factors that affected measurement of the total pension liability during the years ended December 31, 2015 or December 31, 2014. For the year ended December 31, 2016 there were no changes to benefit terms that affected measurement of the total pension liability; there were, however, the following assumption changes:

 The investment return assumption has been decreased from 7.80% to 7.70% (decreasing 0.30% over the last three years)

 The core inflation rate assumption has been decreased from 3.25% to 3.00%,  The general wage inflation rate assumption has been decreased from 3.50% to 3.25%,  The assumed rates of salary increase have been amended at most service points, and  The payroll growth assumption has been increased from 3.50% to 4.00%.

Required Supplementary Information City of Austin, Texas Retirement Plans and Other Postemployment Benefits Trend Information September 30, 2017

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RETIREMENT PLANS-TREND INFORMATION, continued

2014 2015 2016 Beginning total pension liability (a) 806,282$ 861,468 913,618 Changes for the year: Service cost 25,319 23,309 24,323 Interest 62,977 66,405 70,893 Benefit Changes -- -- 5,491 Differences between expected and actual experience -- 7,193 8,893 Assumption changes 4,883 -- -- Benefit payments including refunds (37,993) (44,757) (45,495) Net change in total pension liability 55,186 52,150 64,105

Ending total pension liability (b) 861,468 913,618 977,723

Beginning total plan fiduciary net position (c) 752,622 789,433 785,211

Changes for the year: Employer contributions 18,670 19,222 19,104 Employee contributions 14,660 15,547 15,884 Pension plan net investment income 42,005 6,328 55,569 Benefits payments and refunds (37,993) (44,757) (45,496) Pension plan administrative expense (531) (562) (662) Net change in plan fiduciary net position 36,811 (4,222) 44,399 Ending total plan fiduciary net position (d) 789,433 785,211 829,610 Beginning net pension liability (a-c) 53,660 72,035 128,407 Ending net pension liability (b-d) 72,035$ 128,407 148,113 Plan fiduciary net position as a percentage of the total pension liability (d/b) 91.64% 85.95% 84.85% Covered payroll 84,589 83,979 86,632 City's net pension liability as a percentage of covered payroll 85.16% 152.90% 170.97%

Schedule of Changes in the Fire Fighters' Net Pension Liability and Related Ratios (in thousands)

Notes to Changes in the Fire Fighters’ Net Pension Liability and Related Ratios There were no significant assumption or benefit changes or any other significant factors that affected measurement of the total pension liability for the Fire Fighter’s Fund during the years ended December 31, 2016, 2015, or 2014.

Required Supplementary Information City of Austin, Texas Retirement Plans and Other Postemployment Benefits Trend Information September 30, 2017

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RETIREMENT PLANS-TREND INFORMATION, continued Information pertaining to City contributions to the retirement systems for the fiscal year ending September 30, 2017, is shown in the following two tables (in thousands). An actuarially determined contribution was calculated for the City Employees’ fund but was not calculated for the other two funds.

Fiscal Year Ended

September 30

Actual Contribution as a

% of Covered Payroll

2015 96,554 97,655 (1,101) 540,110 18.08% 2016 109,725 102,609 7,116 566,227 18.12% 2017 119,038 108,929 10,109 600,726 18.13%

Schedule of Actuarially Determined City Contributions to the City Employees' Fund (in thousands)

Actuarially Determined Contribution

$ $

Actual Contribution

Contribution Deficiency (Excess)

$

Covered Payroll

$

Notes to Schedule of Actuarially Determined City Contributions to the City Employees’ Fund

Valuation Date: December 31 of each calendar year occurring during the fiscal year. Notes Members and employers contribute based on statutorily fixed or negotiated rates.

A funding period is solved for through open group projections.

Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal (all years) Asset Valuation Method 2017 - Expected actuarial value plus 20% recognition of prior years' differences

between expected and actual investment income 2016 and 2015 - 20% of market plus 80% of expected actuarial value

Inflation 2.75% for 2017 and 2016, 3.25% for 2015 Salary Increases 4.00% to 6.25% for 2017 and 2016, 4.50% to 6.00% for 2015 Investment Rate of Return 7.50% for 2017 and 2016, 7.75% for 2015 Retirement Age 2017 and 2016 - Experience-based table of rates that are gender specific. Last

updated for December 31, 2015 valuation pursuant to an experience study of the 5-year period ending December 31, 2015. 2015 - For previous valuation updated on December 31, 2012 valuation pursuant to an experience study of the 5-year period ending December 31, 2011.

Mortality 2017 and 2016 - RP-2014 Mortality Table with Blue Collar adjustment. Generational mortality improvements in accordance with Scale BB are projected from the year 2014. For 2015 RP-2000 Mortality Table with White Collar adjustment and multipliers of 110% for males and 120% for females. Generational mortality improvements in accordance with Scale AA are projected from the year 2000.

Other Information: There were no benefit changes during the periods displayed.

Required Supplementary Information City of Austin, Texas Retirement Plans and Other Postemployment Benefits Trend Information September 30, 2017

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RETIREMENT PLANS-TREND INFORMATION, continued

Fiscal Year Ended

September 30

Statutorily Required

Contribution Actual

Contribution

Contribution Deficiency (Excess)

Actual Contribution as a

% of Covered Payroll (1)

$ $ $

Police Officers 2015 32,942 32,942 -- 152,229 21.64% 2016 33,141 33,141 -- 155,476 21.32% 2017 34,717 34,717 -- 162,891 21.31%

Fire Fighters 2015 18,327 18,327 -- 83,118 22.05% 2016 19,145 19,145 -- 86,826 22.05% 2017 19,104 19,104 -- 86,642 22.05%

(1) Statutorily required contribution for Police Officers decreased from 21.63% in 2015 to 21.313% in 2016.

Schedule of Statutorily Required City Contributions to the Police Officers' Fund and the Fire Fighters' Fund (in thousands)

Covered Payroll

$

Supplementary information for each plan as well as information on where to obtain plan financial statements can be found in Note 7. OTHER POSTEMPLOYMENT BENEFITS-TREND INFORMATION Under GAAP, the City is required to have an actuarial valuation of its other postemployment benefits program every other year. The Schedule of Funding Progress for other postemployment benefits is as follows (in thousands):

Percentage Fiscal Year Actuarial Actuarial Annual of UAAL

Ended Valuation Date, Value of Accrued Funded Covered to Covered September 30 October 1 Assets Liability UAAL(1) Ratio Payroll Payroll

$ $ $ $ 2013 2012 -- 1,384,490 1,384,490 0.0% 696,559 198.8% 2015 2014 -- 1,449,238 1,449,238 0.0% 775,527 186.9% 2017 2016 -- 2,004,664 2,004,664 0.0% 850,259 235.8%

(1) UAAL – Unfunded Actuarial Accrued Liability (Excess)

Supplementary information for the OPEB plan can be found in Note 8.

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES

GENERAL FUND

General Fund City of Austin, Texas Schedule of Revenues - Budget and Actual-Budget Basis Exhibit E-1 As of September 30, 2017 (In thousands) 02/15 3:56p

Actual- Variance- Adjustments Budget Positive

Actual (1) Basis Budget (Negative) Taxes Property taxes:

Current 415,378$ 100 415,478 412,368 3,110 Delinquent (382) -- (382) 1,077 (1,459) Penalty and interest 1,544 -- 1,544 1,179 365 Property taxes 416,540 100 416,640 414,624 2,016

Sales taxes 218,790 -- 218,790 224,166 (5,376) Other taxes 11,588 -- 11,588 11,748 (160) Total taxes 646,918 100 647,018 650,538 (3,520)

Franchise fees 36,057 153 36,210 36,717 (507)

Fines, forfeitures, and penalties Library fines 546 1 547 797 (250) Traffic fines 6,153 -- 6,153 8,174 (2,021) Parking violations 2,951 -- 2,951 2,893 58 Other 3,467 -- 3,467 4,345 (878) Total fines, forfeitures, and penalties 13,117 1 13,118 16,209 (3,091)

Licenses, permits, and inspections Alarm permits 3,208 -- 3,208 3,282 (74) Public health 4,685 -- 4,685 4,360 325 Development 18,942 (1) 18,941 12,494 6,447 Building safety 32,979 -- 32,979 29,593 3,386 Beer and wine permits 593 -- 593 397 196 Other 669 -- 669 673 (4) Total licenses, permits, and inspections 61,076 (1) 61,075 50,799 10,276

Charges for services/goods Recreation and culture 8,765 -- 8,765 7,945 820 Public health 7,686 (261) 7,425 7,631 (206) Emergency medical services 41,099 1,527 42,626 43,457 (831) General government 1,812 -- 1,812 1,857 (45) Total charges for services/goods 59,362 1,266 60,628 60,890 (262)

Interest and other Interest 2,587 -- 2,587 1,095 1,492 Rental income 1,865 -- 1,865 2,052 (187) Sale of property 1,207 1 1,208 1,170 38 Other 10,095 (9,627) 468 223 245 Total interest and other 15,754 (9,626) 6,128 4,540 1,588

Total revenues 832,284$ (8,107) 824,177 819,693 4,484

(1) Adjustments and actual-budget basis include amounts budgeted as fund-level revenues.

123

General Fund City of Austin, Texas Schedule of Expenditures - Budget and Actual-Budget Basis Exhibit E-2 As of September 30, 2017 (In thousands)

Actual- Variance- Adjustments Budget Positive

Actual (1) Basis Budget (Negative) General government Municipal Court: Salaries and fringe benefits 13,963$ -- 13,963 13,860 (103) Contractual services 8,431 155 8,586 8,711 125 Commodities 147 (27) 120 173 53 Expense refunds (205) -- (205) (205) -- Capital outlay 50 30 80 80 -- Total general government 22,386 158 22,544 22,619 75

Public safety Police: Salaries and fringe benefits 321,084 (293) 320,791 318,444 (2,347) Contractual services 31,002 42,451 73,453 73,312 (141) Commodities 4,919 (40) 4,879 5,084 205 Expense refunds (16,559) (132) (16,691) (10,874) 5,817 Capital outlay 478 117 595 607 12

340,924 42,103 383,027 386,573 3,546 Fire: Salaries and fringe benefits 163,987 (77) 163,910 163,390 (520) Contractual services 10,578 17,665 28,243 29,181 938 Commodities 5,534 (2,326) 3,208 2,911 (297) Indirect cost 489 -- 489 423 (66) Expense refunds (8,307) (14) (8,321) (6,891) 1,430 Capital outlay 39 1,653 1,692 1,694 2

172,320 16,901 189,221 190,708 1,487 Emergency Medical Services: Salaries and fringe benefits 60,467 22 60,489 62,309 1,820 Contractual services 8,453 8,974 17,427 16,878 (549) Commodities 3,867 (22) 3,845 3,786 (59) Expense refunds (1,568) -- (1,568) (1,156) 412 Capital outlay 787 1,225 2,012 2,219 207

72,006 10,199 82,205 84,036 1,831 Total public safety 585,250 69,203 654,453 661,317 6,864

(C Transportation, planning, and sustainability Transportation, Planning, and Sustainability: Contractual services 421 (421) -- -- --

421 (421) -- -- --

Public health Salaries and fringe benefits 33,830 (947) 32,883 33,522 639 Contractual services 46,798 3,632 50,430 49,666 (764) Commodities 2,033 46 2,079 2,041 (38) Expense refunds (2,175) (34) (2,209) (1,802) 407 Capital outlay 1 173 174 261 87

80,487 2,870 83,357 83,688 331 Total public health 80,487 2,870 83,357 83,688 331

Public recreation and culture Parks and Recreation: Salaries and fringe benefits 56,522 (15) 56,507 56,359 (148) Contractual services 15,645 8,522 24,167 25,025 858 Commodities 4,257 (451) 3,806 3,214 (592) Indirect cost 545 -- 545 510 (35) Expense refunds (4,773) (10) (4,783) (4,362) 421 Capital outlay 256 (223) 33 83 50

72,452$ 7,823 80,275 80,829 554 (Continued)

03/01 8:54a

124

Total transportation, planning, and sustainability

General Fund City of Austin, Texas Schedule of Expenditures - Budget and Actual-Budget Basis Exhibit E-2 As of September 30, 2017 (In thousands) 03/01 8:54a (Continued)

Actual- Variance- Adjustments Budget Positive

Actual (1) Basis Budget (Negative)

Austin Public Library: Salaries and fringe benefits 30,653$ (1) 30,652 32,399 1,747 Contractual services 6,112 3,400 9,512 10,490 978 Commodities 5,140 208 5,348 4,348 (1,000) Expense refunds (394) -- (394) (70) 324 Capital outlay (1,235) 1,323 88 -- (88)

40,276 4,930 45,206 47,167 1,961 Total public recreation and culture 112,728 12,753 125,481 127,996 2,515

Urban growth management Neighborhood Planning & Zoning: Salaries and fringe benefits 38,486 48 38,534 39,219 685 Contractual services 6,345 6,865 13,210 12,930 (280) Commodities 837 (62) 775 855 80 Expense refunds (7,695) -- (7,695) (7,574) 121 Capital outlay 115 14 129 137 8

38,088 6,865 44,953 45,567 614 Other urban growth management: Salaries and fringe benefits 11,489 21 11,510 9,320 (2,190) Contractual services 23,342 324 23,666 26,619 2,953 Commodities 534 135 669 444 (225) Expense refunds (2,962) -- (2,962) (1,139) 1,823

32,403 480 32,883 35,244 2,361

Total urban growth management 70,491 7,345 77,836 80,811 2,975

General city responsibilities (2) 104,259 (97,501) 6,758 6,963 205 Total expenditures 976,022 (5,593) 970,429 983,394 12,965

General fund expenditures Salaries 730,481 (1,242) 729,239 728,822 (417) Contractuals 157,127 91,567 248,694 252,812 4,118 Commodities 27,268 (2,539) 24,729 22,856 (1,873) Indirect cost 1,034 -- 1,034 933 (101) Expense refunds (44,638) (190) (44,828) (34,073) 10,755 Capital outlay 491 4,312 4,803 5,081 278 General city responsibilities 104,259 (97,501) 6,758 6,963 205 Total expenditures 976,022$ (5,593) 970,429 983,394 12,965

(1) Includes adjustments for current year encumbrances, payments against prior year encumbrances, compensated absences, and amounts budgeted as operating transfers or fund-level expenditures.

(2) Actual expenditures include employee training costs and amounts budgeted as fund-level expenditures or operating transfers. Actual-budget basis expenditures include employee training costs and amounts budgeted as fund-level expenditures.

125

General Fund City of Austin, Texas Schedule of Transfers - Budget and Actual-Budget Basis Exhibit E-3 As of September 30, 2017 (In thousands)

Actual- Variance- Adjustments Budget Positive

Actual (1) Basis Budget (Negative) Transfers in General Fund:

Budgetary General Fund -- $ 31,988 31,988 16,900 15,088 Budget Stabilization Reserve -- 7,055 7,055 7,055 --

Special revenue funds: Business Retention & Enhancement 4,787 159 4,946 4,946 -- Tax Increment Finance 131 -- 131 131 --

Enterprise funds: Austin Energy 115,493 -- 115,493 115,493 -- Austin Water Utility 45,805 1 45,806 45,806 --

Austin Resource Recovery 472 -- 472 472 --

Total transfers in 166,688 39,203 205,891 190,803 15,088

Transfers out General Fund:

Barton Springs Conservation -- 53 53 53 -- Budgetary General Fund -- 3,500 3,500 3,500 --

Budget Stabilization Reserve -- 15,247 15,247 159 (15,088) Community Development Incentives -- 7 7 7 -- Economic Development -- 4,863 4,863 4,863 -- Economic Incentives Reserve -- 11,637 11,637 11,637 -- Emergency Reserve -- 3,548 3,548 3,548 -- Long Center Capital Improvements -- 300 300 300 -- Music Venue Assistance Program -- 100 100 100 --

Special revenue funds: Child Safety 836 -- 836 836 --

Housing Trust Social Equity 2,497 -- 2,497 2,497 -- Urban Renewal Agency 7 (7) -- -- -- Cable TV 475 -- 475 475 -- Downtown Public Improvement District 38 (38) -- -- -- Mueller Local Government Corporation 976 -- 976 976 -- Tax Increment Finance -- 100 100 100 --

Capital Improvement Projects 3,472 71 3,543 3,543 -- Debt Service funds:

Debt Service 92 -- 92 92 -- Enterprise funds:

Austin Energy 9 (9) -- -- -- Golf 500 -- 500 500 -- Transportation 3,223 (2,370) 853 853 --

Internal service funds: Information Systems -- 336 336 336 -- Liability Reserve -- 1 1 1 -- Support Services -- 1,362 1,362 1,362 -- Wireless Communication -- 2,370 2,370 2,370 -- Workers Compensation -- 61 61 61 --

Total transfers out 12,125 41,132 53,257 38,169 (15,088) Net transfers 154,563$ (1,929) 152,634 152,634 --

(1) Includes adjustments to actual transfers required for adjusted budget basis presentation.

02/15 3:58p

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NONMAJOR GOVERNMENTAL FUNDS

127

Nonmajor Governmental Funds City of Austin, Texas Combining Balance Sheet Exhibit E-4 September 30, 2017 (In thousands)

Special Revenue

Debt Service

Capital Projects

Permanent Funds Total

ASSETS Pooled investments and cash 125,377$ 71 209,265 1,071 335,784 Investments -- 23,694 -- -- 23,694 Cash held by trustee - restricted 9,582 -- -- -- 9,582 Investments held by trustee - restricted 1,773 -- -- -- 1,773 Property taxes receivable, net of allowance -- 3,636 -- -- 3,636 Accounts receivable, net of allowance 25,937 -- 2,566 -- 28,503 Receivables from other governments 12,004 -- 25 -- 12,029 Notes receivable, net of allowance 23,942 -- -- -- 23,942 Due from other funds 11,412 31 -- -- 11,443 Advances to other funds -- 1,455 17,641 -- 19,096 Real property held for resale 5,675 -- -- -- 5,675 Other assets 3,048 -- -- -- 3,048 Total assets 218,750 28,887 229,497 1,071 478,205

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES

LIABILITIES Accounts payable 3,429 -- 20,755 -- 24,184 Accrued payroll 123 -- -- -- 123 Due to other funds 11,412 -- -- -- 11,412 Due to other governments 9 -- -- -- 9 Unearned revenue 2,973 -- -- -- 2,973 Advances from other funds -- 625 17,641 -- 18,266 Deposits and other liabilities 73,376 -- 412 -- 73,788

Total liabilities 91,322 625 38,808 -- 130,755

DEFERRED INFLOWS OF RESOURCES 2,708 3,675 440 -- 6,823

FUND BALANCES Nonspendable:

Permanent funds -- -- -- 1,070 1,070 Restricted 75,684 24,587 114,310 1 214,582 Committed 40,652 -- -- -- 40,652 Assigned 10,926 -- 98,766 -- 109,692 Unassigned (2,542) -- (22,827) -- (25,369)

Total fund balances 124,720 24,587 190,249 1,071 340,627

Total liabilities, deferred inflows of resources, and fund balances 218,750$ 28,887 229,497 1,071 478,205

128

02/15 1:46p

Nonmajor Governmental Funds City of Austin, Texas Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Exhibit E-5 For the year ended September 30, 2017 (In thousands)

Special Revenue

Debt Service

Capital Projects

Permanent Funds Total

REVENUES Property taxes 10,379$ 127,492 -- -- 137,871 Franchise fees and other taxes 104,025 -- -- -- 104,025 Fines, forfeitures and penalties 4,511 -- -- -- 4,511 Licenses, permits and inspections 374 -- -- -- 374 Charges for services/goods 22,006 -- -- -- 22,006 Intergovernmental 52,623 -- 6,949 -- 59,572 Property owners' participation and contributions 3,012 -- 11,647 -- 14,659 Interest and other 4,343 3,424 3,529 -- 11,296

Total revenues 201,273 130,916 22,125 -- 354,314

EXPENDITURES Current:

General government 2,063 -- -- -- 2,063 Public safety 8,156 -- -- -- 8,156 Transportation, planning, and sustainability 4,704 -- -- -- 4,704 Public health 20,538 -- -- -- 20,538 Public recreation and culture 13,871 -- -- -- 13,871 Urban growth management 57,491 -- -- -- 57,491

Debt service: Principal 2,115 85,252 -- -- 87,367 Interest 4,186 57,676 -- -- 61,862 Fees and commissions -- 13 -- -- 13

Capital outlay -- -- 130,783 -- 130,783

Total expenditures 113,124 142,941 130,783 -- 386,848 Excess (deficiency) of revenues over

expenditures 88,149 (12,025) (108,658) -- (32,534)

OTHER FINANCING SOURCES (USES) Issuance of tax supported debt 9,878 654 120,133 -- 130,665 Issuance of refunding bonds -- 54,970 -- -- 54,970 Bond premiums 176 13,774 21,480 -- 35,430 Payment to refunding bond escrow agent -- (68,744) -- -- (68,744) Transfers in 15,385 14,329 26,138 -- 55,852 Transfers out (105,263) -- (52,679) -- (157,942)

Total other financing sources (uses) (79,824) 14,983 115,072 -- 50,231

Net change in fund balances 8,325 2,958 6,414 -- 17,697 Fund balances at beginning of year 116,395 21,629 183,835 1,071 322,930 Fund balances at end of year 124,720$ 24,587 190,249 1,071 340,627

02/15 1:46p

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130

FEDERAL, STATE AND OTHER SPECIAL REVENUE GRANTS These represent grants awarded to the City from various federal, state and other sources. This category includes operational and capital grant activities. Grants awarded to enterprise operations are consolidated with enterprise reporting and are reported in the supplemental schedules. OTHER SPECIAL REVENUE FUNDS General Government Municipal Court: Municipal Court Building Security Fund - Provides funding to enhance courthouse security. Municipal Court Juvenile Case Manager Fund - Accounts for the collection of fees associated with fine only misdemeanor charges. Municipal Court Technology Fund - Provides funding for technological enhancements to Municipal Court operations. Public Safety Police: ARIC Sustainability Fund - Accounts for the funding of costs to sustain operation of the Austin Regional Intelligence Center (ARIC).

Auto Theft Interdiction Fund - Accounts for funds seized related to current auto theft investigations. Municipal Court Traffic Safety Fund - Collection of fees associated with red light camera program penalties.

Police Benefit Fund - Accounts for donations received for the benefit and improvement of the Police Department. Police Federal Dept. of Justice Asset Forfeiture Fund - Records all Dept. of Justice federal seized funds generated by police enforcement activities. Police Federal Dept. of Treasury Asset Forfeiture Fund - Records all Dept. of Treasury federal seized funds generated by police enforcement activities. Police State Contraband Asset Forfeiture Fund - Accounts for the redistribution of proceeds generated by police enforcement activities. Police State Forfeiture Gambling Fund - Accounts for proceeds from the sale of property forfeited through the courts for illegal gambling operations. Fire: Fire Miscellaneous Fund - Accounts for contributions for "The Firehouse," a public safety awareness exhibit, which is transported to different sites throughout Austin. Transportation, Planning, and Sustainability Public Works and Transportation: Capital Area Metropolitan Planning Organization - Accounts for transportation planning activities regarding the Austin Metropolitan roadways, bicycle areas, and pedestrian walkways.

Child Safety Fund - Accounts for certain fines and fees used to provide school crossing guards at City schools. Fiscal Surety - Land Development Fund - Escrow funds received from contractors for improvements for environmental, health, safety controls, and public infrastructure.

SPECIAL REVENUE FUNDS

Special revenue funds account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. The City reports the following nonmajor

special revenue funds:

Public Health Health and Human Services: Health Miscellaneous Fund - Accounts for contributions for Strategic Intervention for High Risk Youth. Other Public Health: Animal Services Fund - Accounts for donations to fund animal services activities. Animal Shelter Building Fund - Accounts for donations to improve the Town Lake Animal Shelter.

Public Recreation and Culture Austin Public Library:

Austin History Center Fund - Accounts for contributions to be used for the Austin-Travis County Collection. Friends of Austin Public Library Fund - Accounts for proceeds of book sales. Special Library Fund - Accounts for donations received to purchase books or special equipment.

Parks and Recreation: Adaptive Programs Fund - Accounts for various revenues and fees generated by programs and activities sponsored by the Parks and Recreation Dept. PARD Cultural Projects Fund - Records activities for cultural project purposes. Funded by a portion of the hotel occupancy tax.

PARD Miscellaneous Fund - Accounts for miscellaneous deposits and revenues to be used for specified purposes.

Planting for the Future Fund - Accounts for donations received for plantings in the City of Austin.

Republic Square Fund - Accounts for donations for the improvement and beautification of Republic Square.

Special Events Fund - Accounts for the collection and use of revenue received for specific special events utilizing Austin’s parklands through ticket surcharges and other special event fees.

Summer Musical Fund - Accounts for funds for the annual summer musical production that is administered by the Parks and Recreation Department.

Teen Activity Fund - Accounts for contributions received to provide leisure activities for teenagers.

Tennis League Fund - Accounts for tournament fees received from participants of Austin Tennis League activities and tournaments.

Town Lake Beautification Fund - Accounts for donations for the beautification of Lady Bird Lake.

OTHER SPECIAL REVENUE FUNDS, continued Urban Growth Management Neighborhood Housing & Community Development: Homestead Preservation Reinvestment Tax Increment Fund - Accounts for property tax revenue that is collected in the City of Austin reinvestment zone. The purpose of the fund is to increase home ownership, provide affordable housing, and prevent the involuntary loss of homesteads by existing low-income and moderate-income families. Housing Loan Fund - Accounts for Affordable Housing loan activities. Housing Trust Social Equity Fund - Accounts for housing funds set aside for SMART Housing initiative. Neighborhood Housing & Conservation - Provides funding for affordable housing programs through general obligation bonds. UNO Housing Trust Fund - The fund was created to provide rental housing development assistance to development within the University Neighborhood Overlay. Urban Renewal Agency Fund - Accounts for the agency responsible for overseeing the implementation and compliance of urban renewal plans. (blended component unit) Development Services and Watershed Protection: Austin Industrial Development Corporation (AIDC) - Accounts for the administrative costs related to the Corporation. (blended component unit) Austin Lake Hills Water Quality Fund - Accounts for developer funding to design and construct water quality controls for specific lots located in the Austin Lake Hills subdivision. Barton Springs Zone Mitigation Fund - Accounts for the Barton Springs zone mitigation fee. Riparian Zone Mitigation Fund - Accounts for the fees paid by developers to restore riparian health or provide mitigation if on-site restoration is infeasible in the Critical Water Quality Zone Urban Forest Replenishment Fund - Assists in planting replacement trees, saving blocks of natural areas, providing a maintenance program for trees to be retained, requiring special construction techniques, and/or transplanting existing trees. Water Supply Mitigation Fund - Accounts for funds received from properties located in a water supply rural or water supply suburban watershed. Other Urban Growth Management: Business Retention & Enhancement Fund - Accounts for funds to retain and enhance downtown businesses. Cable TV Fund - Accounts for payments from cable companies and disbursements to Austin Access Television. City Hall Fund - Accounts for revenue and operating expenditures related to City Hall’s retail leases and underground parking garage. City Hall Retail Tenant Improvement Fund – Accounts for revenue and deposits related to retail space in City Hall. Downtown Public Improvement District Fund - Accounts for the downtown public improvement district, which will provide services, security, and improvements for the downtown Austin area. East Sixth Street Public Improvement District Fund – Accounts for the E Sixth Street public improvement district, which will provide services, security, and improvements for the E Sixth Street area. Estancia Hill Country Public Improvement District Fund – Accounts for the Estancia Hill Country public improvement district, which issued bonds to finance the construction, ownership and maintenance of certain improvements to support the Estancia Hill Country development. Hotel-Motel Occupancy Tax Fund - Accounts for hotel/motel occupancy tax revenues and transfers of these revenues to participating funds. I-35 Parking Program Fund - Accounts for revenue, operations and maintenance requirements for two parking lots located under the I- 35 overpass. These state-owned lots fall under the City’s control through a 1963 lease arrangement. Indian Hills Public Improvement District Fund – Accounts for the Indian Hills public improvement district, which issued bonds to finance the construction, ownership and maintenance of certain improvements to support the Indian Hills development.

Mueller Development Fund - Accounts for the costs of overseeing the life of the redevelopment project, Robert Mueller Municipal Airport site. Mueller Local Government Corporation - Established for the purpose of financing projects required for the development of the former site of Mueller Airport. (blended component unit) Mueller Tax Increment Financing Fund - Accounts for property tax revenue that is collected in the Mueller Tax Increment Financing Reinvestment Zone No. 16. One Texas Center Fund - Accounts for the revenues and debt service requirements of the One Texas Center building. Public Arts Fund - Provides for preservation and conservation of the City of Austin public art collection. Rainey Street District Fund - The fund was created to assist in the rehabilitation of the existing single-family structures that are relocated outside of the Rainey Street District to be used and maintained as affordable housing units. Rutherford Lane Facility Fund - Accounts for the revenue, expenditures and debt service requirements associated with the Rutherford Lane facilities. Seaholm Parking Garage Fund - Accounts for property tax revenue and other revenue related to the Seaholm parking garage. The revenue will be used for debt service costs associated with the redevelopment of the former Seaholm Power Plant. Seaholm Tax Increment Financing Fund – Accounts for property tax revenue that is collected in the Seaholm Tax Increment Financing Reinvestment Zone No. 18 to finance the construction of public improvements for the Seaholm Redevelopment Project. Section 108 Family Business Loan Fund - Accounts for the public- private partnership loan program funded by a U.S. Department of Housing and Urban Development (HUD) Section 108 loan guarantee. South Congress Public Improvement District Fund – Accounts for the South Congress public improvement district, which will provide services, security and improvements to the South Congress area. Tax Increment Finance Fund - Accounts for maintaining the plazas, streetscapes and other public improvements installed on specific downtown blocks. Tourism and Promotion Fund - Accounts for the promotion of tourism in Austin as both a leisure and business destination. Funded by a portion of bed tax receipts. Vehicle Rental Tax Fund - Accounts for the levy of a short-term motor vehicle rental tax. Waller Creek Reserve Fund – Provides reserve funding for the proposed Waller Creek tunnel project. Waller Creek Tax Increment Finance Fund - Accounts for property tax revenue that is collected in the Waller Creek Tax Increment Financing Reinvestment Zone No. 17. Whisper Valley Public Improvement District Fund – Accounts for the Whisper Valley public improvement district, which issued bonds to finance the construction, ownership and maintenance of certain improvements to support the Whisper Valley development Wildland Conservation Fund - Accounts for the City and County's management of preserve systems. HOUSING ASSISTANCE FUND Accounts for the activities of the Austin Housing Finance Corporation.

YeSpecial Revenue Funds City of Austin, Texas NoCombining Balance Sheet Exhibit E-6 YeFor the year ended September 30, 2017

(In thousands) 02/15 1:49p

Federal, State, and Other

Special Revenue Grants

Other Special Revenue

Funds Housing

Assistance Total ASSETS Pooled investments and cash 2,125$ 119,714 3,538 125,377 Cash held by trustee - restricted 842 8,740 -- 9,582 Investments held by trustee - restricted -- 1,773 -- 1,773 Accounts receivable, net of allowance -- 25,779 158 25,937 Receivables from other governments 11,994 -- 10 12,004 Notes receivable, net of allowance -- 3,534 20,408 23,942 Due from other funds -- 11,412 -- 11,412 Real property held for resale -- 678 4,997 5,675 Other assets 13 3,035 -- 3,048 Total assets 14,974 174,665 29,111 218,750

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES

LIABILITIES Accounts payable 968 2,461 -- 3,429 Accrued payroll -- 123 -- 123 Due to other funds 9,869 1,543 -- 11,412 Due to other governments -- 9 -- 9 Unearned revenue 2,973 -- -- 2,973 Deposits and other liabilities 1,164 70,455 1,757 73,376

Total liabilities 14,974 74,591 1,757 91,322

DEFERRED INFLOWS OF RESOURCES -- 2,708 -- 2,708

FUND BALANCES Restricted -- 48,330 27,354 75,684 Committed -- 40,652 -- 40,652 Assigned -- 10,926 -- 10,926 Unassigned -- (2,542) -- (2,542) Total fund balances -- 97,366 27,354 124,720 Total liabilities, deferred inflows of

resources, and fund balances 14,974$ 174,665 29,111 218,750

131

YeSpecial Revenue Funds City of Austin, Texas NoCombining Statement of Revenues, Expenditures, and Changes in Fund Balances Exhibit E-7 YeFor the year ended September 30, 2017

(In thousands) 02/15 1:49p

Federal, State, and Other

Special Revenue Grants

Other Special Revenue

Funds Housing

Assistance Total REVENUES Property taxes -- $ 10,379 -- 10,379 Franchise fees and other taxes -- 104,025 -- 104,025 Fines, forfeitures, and penalties -- 4,511 -- 4,511 Licenses, permits and inspections -- 374 -- 374 Charges for services/goods -- 21,851 155 22,006 Intergovernmental 43,577 678 8,368 52,623 Property owners' participation and contributions -- 3,012 -- 3,012 Interest and other -- 4,296 47 4,343

Total revenues 43,577 149,126 8,570 201,273

EXPENDITURES Current:

General government 480 1,583 -- 2,063 Public safety 6,620 1,536 -- 8,156 Transportation, planning, and sustainability 1,793 2,911 -- 4,704 Public health 20,254 284 -- 20,538 Public recreation and culture 805 13,066 -- 13,871 Urban growth management 13,625 36,671 7,195 57,491

Debt service: Principal -- 2,115 -- 2,115 Interest -- 4,186 -- 4,186

Total expenditures 43,577 62,352 7,195 113,124

Excess of revenues over expenditures -- 86,774 1,375 88,149

OTHER FINANCING SOURCES (USES) Issuance of tax supported debt -- 9,878 -- 9,878 Bond premiums 176 176 Transfers in -- 15,385 -- 15,385 Transfers out -- (105,263) -- (105,263)

Total other financing sources (uses) -- (79,824) -- (79,824)

Net change in fund balances -- 6,950 1,375 8,325 Fund balances at beginning of year -- 90,416 25,979 116,395 Fund balances at end of year -- $ 97,366 27,354 124,720

132

YeSpecial Revenue Funds City of Austin, Texas N Combining Balance Sheet - All Special Revenue Grants Exhibit E-8

September 30, 2017 (In thousands)

Assets Liabilities and Fund Balances Receivables Total

Pooled from Due to Liabilities Investments Cash held Other Other Total Accounts Other Unearned Other Total Fund and Fund

and Cash by trustee Governments Assets Assets Payable Funds Revenue Liabilities Liabilities Balances Balances Federal grants 02GBA0020 02GBA004002GBA0100 02GBA0170 02GBL00102GBL0040 02GBL00502GBL0080 U.S. Department of Agriculture 175$ -- 1,023 -- 1,198 2 1,021 -- 175 1,198 -- 1,198 Equal Employment Opportunity Commission -- -- 2 -- 2 -- 2 -- -- 2 -- 2 U.S. Department of Justice 4 -- 443 -- 447 -- 388 4 55 447 -- 447 U.S. Department of Labor -- -- 10 -- 10 -- 10 -- -- 10 -- 10 U.S. Department of State -- -- 170 -- 170 63 107 -- -- 170 -- 170 U.S. Department of Transportation -- -- 1,146 -- 1,146 -- 1,126 20 -- 1,146 -- 1,146 U.S. Health & Human Services 262 193 1,368 13 1,836 3 1,306 249 278 1,836 -- 1,836 U.S. Department of Homeland Security 62 -- 4,264 -- 4,326 65 3,649 612 -- 4,326 -- 4,326 U.S. Housing/Urban Development 175 649 1,967 -- 2,791 835 1,135 700 121 2,791 -- 2,791 U.S. National Endowment for the Arts 20 -- 99 -- 119 -- 99 20 -- 119 -- 119 U.S. National Science Foundation 39 -- -- -- 39 -- -- -- 39 39 -- 39 U.S. Department of Interior -- -- 30 -- 30 -- -- -- 30 30 -- 30 U.S. Institute of Museum and Library Services -- -- 40 -- 40 -- 40 -- -- 40 -- 40

Total federal grants 737 842 10,562 13 12,154 968 8,883 1,605 698 12,154 -- 12,154

State grants Texas Governor's Office Criminal Justice Division -- -- 469 -- 469 -- 447 -- 22 469 -- 469 State Health Services 13 -- 397 -- 410 -- 385 -- 25 410 -- 410 Texas Commission of the Arts 5 -- -- -- 5 -- -- 2 3 5 -- 5 Texas Parks and Wildlife -- -- 29 -- 29 -- 29 -- -- 29 -- 29 Texas Department of Motor Vehicles -- -- 125 -- 125 -- 125 -- -- 125 -- 125 Texas Commission of Environmental Quality -- -- -- -- -- -- -- -- -- -- -- -- Texas Department of Housing and Community Affairs -- -- -- -- -- -- -- -- -- -- -- -- Total state grants 18 -- 1,020 -- 1,038 -- 986 2 50 1,038 -- 1,038

Other special revenue grants 1,370 -- 412 -- 1,782 -- -- 1,366 416 1,782 -- 1,782

Total all grants 2,125$ 842 11,994 13 14,974 968 9,869 2,973 1,164 14,974 -- 14,974

02/15 1:50p

1 3

3

YeSpecial Revenue Funds City of Austin, Texas N Combining Statement of Revenues, Expenditures, and Exhibit E-9 Ye Changes in Fund Balances - All Special Revenue Grants

For the year ended September 30, 2017 (In thousands) 02/15 1:50p

Excess (Deficiency)

Revenues Expenditures Of Revenues Fund Balances Fund Balances Inter- Special Over at Beginning at End

governmental Projects Expenditures of Year of Year Federal grants U.S. Department of Agriculture 5,213$ 5,213 -- -- --

Equal Employment Opportunity Commission 128 128 -- -- -- U.S. Department of Justice 1,000 1,000 -- -- -- U.S. Department of Labor -- -- -- -- -- U.S. Department of State 327 327 -- -- -- U.S. Department of Transportation 2,982 2,982 -- -- -- U.S. Health & Human Services 12,930 12,930 -- -- -- U.S. Department of Homeland Security 2,892 2,892 -- -- -- U.S. Housing/Urban Development 14,297 14,297 -- -- -- U.S. National Foundation for the Arts 30 30 -- -- -- U.S. National Science Foundation 6 6 -- -- -- U.S. Department of Interior -- -- -- -- -- U.S. Institute of Museum and Library Services 97 97 -- -- --

Total federal grants 39,902 39,902 -- -- --

State grants Texas Governor's Office Criminal Justice Division 763 763 -- -- -- State Health Services 936 936 -- -- -- Texas Commission of the Arts 22 22 -- -- -- Texas Parks and Wildlife 185 185 -- -- -- Texas Department of Motor Vehicles 406 406 -- -- -- Texas Commission on Environmental Quality 26 26 -- -- -- Texas Department of Housing and Community Affairs 509 509 -- -- --

Total state grants 2,847 2,847 -- -- --

Other special revenue grants 828 828 -- -- --

Total all grants 43,577$ 43,577 -- -- --

-- $ -- -- -- --

1 3

4

YeSpecial Revenue Funds City of Austin, Texas NoCombining Schedule of Expenditures - All Special Revenue Grants Exhibit E-10

From Inception to September 30, 2017 (In thousands)

Total Expenditures at Total Expenditures at Beginning of Year Current Year End of Year Budget

In-Kind In-Kind In-Kind In-Kind Grant Match Total Grant Match Grant Match Total Grant Match Total

Federal grants U.S. Department of Agriculture 55,565$ -- 55,565 5,213 5 60,778 5 60,783 64,433 5 64,438 Equal Employment Opportunity Commission 957 -- 957 128 -- 1,085 -- 1,085 1,200 -- 1,200 U.S. Department of Justice 32,995 5,420 38,415 1,000 142 33,995 5,562 39,557 38,126 6,226 44,352 U.S. Department of Labor 68 -- 68 -- -- 68 -- 68 82 -- 82 U.S. Department of State 131 -- 131 327 -- 458 -- 458 500 166 666 U.S. Department of Transportation 47,721 13,185 60,906 2,982 857 50,703 14,042 64,745 70,122 19,405 89,527 U.S. Health & Human Services 142,545 970 143,515 12,930 253 155,475 1,223 156,698 182,912 1,435 184,347 U.S. Department of Homeland Security 51,819 2,932 54,751 2,892 560 54,711 3,492 58,203 60,372 4,138 64,510 U.S. Housing/Urban Development 286,137 4,434 290,571 14,297 705 300,434 5,139 305,573 311,257 5,289 316,546 U.S. National Endowment for the Arts 112 44 156 30 -- 142 44 186 152 58 210 U.S. National Science Foundation -- -- -- 6 -- 6 -- 6 75 -- 75 U.S. Department of Interior 395 305 700 -- -- 395 305 700 397 311 708 U.S. Institute of Museum and Library Services 174 33 207 97 -- 271 33 304 283 33 316 Total federal grants 618,619 27,323 645,942 39,902 2,522 658,521 29,845 688,366 729,911 37,066 766,977

State grants Texas Governor's Office Criminal Justice Division 637 157 794 763 185 1,400 342 1,742 1,419 345 1,764 State Health Services 7,268 658 7,926 936 97 8,204 755 8,959 10,161 884 11,045 Texas Commission of the Arts 215 71 286 22 -- 237 71 308 279 125 404 Texas Parks and Wildlife 1,576 1,554 3,130 185 168 1,761 1,722 3,483 2,309 2,345 4,654 Texas Department of Motor Vehicles 3,245 1,075 4,320 406 194 3,651 1,269 4,920 3,717 1,269 4,986 Texas Commission on Environmental Quality 7,297 5,539 12,836 26 -- 7,323 5,539 12,862 7,571 8,861 16,432 Texas Department of Housing and Community Affairs 4,393 192 4,585 509 -- 4,902 192 5,094 4,934 192 5,126 Total state grants 24,631 9,246 33,877 2,847 644 27,478 9,890 37,368 30,390 14,021 44,411

Other special revenue grants 6,518 93 6,611 828 16 7,346 109 7,455 13,259 553 13,812

Total all grants 649,768$ 36,662 686,430 43,577 3,182 693,345 39,844 733,189 773,560 51,640 825,200

02/15 1:50p

1 3

5

Special Revenue Funds - Other Combining Balance Sheet For the year ended September 30, 2017 (In thousands)

02GBA002002GBA0040 02GBA008002GBA011002GBA01202GBA0152GBA0170 02GBA0090 02GBA0100

Cash Investments Pooled Held by Held by Net Net Due from Property

Investments Trustee, Trustee, Accounts Notes Other Held for Other Total and Cash Restricted Restricted Receivable Receivable Funds Resale Assets Assets

02GBA0020 02GBA004 02GBA0050 02GBA008002GBA0110 02GBA01202GBA01502GBA0170 General government Municipal Court: Municipal Court Building Security 21$ -- -- -- -- -- -- -- 21

1,666 -- -- -- -- -- -- -- 1,666 Municipal Court Technology 527 -- -- -- -- -- -- -- 527

Total general government 2,214 -- -- -- -- -- -- -- 2,214

Public safety Police: ARIC Sustainability 1,411 -- -- -- -- -- -- -- 1,411 Auto Theft Interdiction 1 -- -- -- -- -- -- -- 1 Municipal Court Traffic Safety 74 -- -- -- -- -- -- -- 74 Police Benefit 327 -- -- -- -- -- -- -- 327

2,490 -- -- -- -- -- -- -- 2,490

1,638 -- -- -- -- -- -- -- 1,638

1,392 -- -- -- -- -- -- -- 1,392

611 -- -- -- -- -- -- -- 611 Total Police 7,944 -- -- -- -- -- -- -- 7,944

Fire: Fire Miscellaneous 49 -- -- -- -- -- -- 49

Total Fire 49 -- -- -- -- -- -- -- 49

Total public safety 7,993 -- -- -- -- -- -- -- 7,993

Public Works and Transportation:

-- -- -- -- -- -- -- -- -- Child Safety 241 -- -- 81 -- -- -- -- 322 Fiscal Surety - Land Development 53,064 -- -- -- -- 9,869 -- -- 62,933

53,305 -- -- 81 -- 9,869 -- -- 63,255

Total transportation, planning, and sustainability 53,305 -- -- 81 -- 9,869 -- -- 63,255

Public health Health and Human Services: Health Miscellaneous 163 -- -- -- -- -- -- -- 163

Total Health and Human Services 163 -- -- -- -- -- -- -- 163 Other public health: Animal Services 276 -- -- 25 -- -- -- -- 301 Animal Shelter Building 15 -- -- -- -- -- -- -- 15

Total other public health 291 -- -- 25 -- -- -- -- 316

Total public health 454$ -- -- 25 -- -- -- -- 479

Transportation, planning, and sustainability

Assets

136

Police State Contraband Asset Forfeiture Police State Gambling Asset Forfeiture

Capital Area Metropolitan Planning Organization

Municipal Court Juvenile Case Manager

Police Federal Dept. of Treasury Asset Forfeiture

Police Federal Dept. of Justice Asset Forfeiture

Total Public Works and Transportation

City of Austin, Texas Exhibit E-11

02GBL00102GBL0022GBL002GBL00402GBL0080 02GBL2000 02GBF0102GBF0202GBF0402GBF0600 Total Liabilities, Deferred

Due to Deposits Inflows of Due to Other and Deferred Total Resources,

Accounts Accrued Other Govern- Other Total Inflows of Restr- Com- Assi- Unass- Fund and Fund Payable Payroll Funds ments Liabilities Liabilities Resources icted mitted gned igned Balances Balances

02GBL00102GBL0002GBL 02GBL0002GBL0080 02GBL2000 02GBF0 02GBF002GBF002GBF0600

-- -- -- -- -- -- -- 21 -- -- -- 21 21

1 22 -- -- -- 23 -- 1,643 -- -- -- 1,643 1,666 18 -- -- -- -- 18 -- 509 -- -- -- 509 527

19 22 -- -- -- 41 -- 2,173 -- -- -- 2,173 2,214

-- -- -- -- -- -- -- 1,411 -- -- -- 1,411 1,411 -- -- -- -- 30 30 -- -- -- -- (29) (29) 1 74 -- -- -- -- 74 -- -- -- -- -- -- 74 -- -- -- -- -- -- -- 288 -- 39 -- 327 327

116 -- -- -- -- 116 -- 2,374 -- -- -- 2,374 2,490

-- -- -- -- -- -- -- 1,638 -- -- -- 1,638 1,638

-- -- -- -- -- -- -- 1,392 -- -- -- 1,392 1,392

-- -- -- -- -- -- -- 611 -- -- -- 611 611 190 -- -- -- 30 220 -- 7,714 -- 39 (29) 7,724 7,944

-- -- -- -- -- -- -- 49 -- -- -- 49 49 -- -- -- -- -- -- -- 49 -- -- -- 49 49

190 -- -- -- 30 220 -- 7,763 -- 39 (29) 7,773 7,993

-- -- -- -- -- -- -- -- -- -- -- -- -- 1 93 -- -- -- 94 -- 218 -- 10 -- 228 322

-- -- -- -- 63,212 63,212 -- -- -- -- (279) (279) 62,933

1 93 -- -- 63,212 63,306 -- 218 -- 10 (279) (51) 63,255

1 93 -- -- 63,212 63,306 -- 218 -- 10 (279) (51) 63,255

1 -- -- -- 107 108 -- 54 -- 1 -- 55 163 1 -- -- -- 107 108 -- 54 -- 1 -- 55 163

12 -- -- -- 86 98 -- 187 -- 16 -- 203 301 -- -- -- -- -- -- -- -- -- 15 -- 15 15 12 -- -- -- 86 98 -- 187 -- 31 -- 218 316

13 -- -- -- 193 206 -- 241 -- 32 -- 273 479

(Continued)

Liabilities Fund Balances

137

Special Revenue Funds - Other Combining Balance Sheet For the year ended September 30, 2017 (In thousands)

Cash Investments Pooled Held by Held by Net Net Due from Property

Investments Trustee, Trustee, Accounts Notes Other Held for Other Total and Cash Restricted Restricted Receivable Receivable Funds Resale Assets Assets

Public recreation and culture Austin Public Library: Austin History Center 100$ -- -- -- -- -- -- -- 100 Friends of Austin Public Library 428 -- -- -- -- -- -- 7 435 Special Library 1,401 -- -- -- -- -- -- -- 1,401

Total Austin Public Library 1,929 -- -- -- -- -- -- 7 1,936 Parks and Recreation: Adaptive Programs 10 -- -- -- -- -- -- -- 10 PARD Cultural Projects 5,890 -- -- -- -- -- -- 7 5,897 PARD Miscellaneous 1,118 -- -- -- -- -- -- -- 1,118 Planting for the Future 514 -- -- -- -- -- -- -- 514 Republic Square 1 -- -- -- -- -- -- -- 1 Special Events -- -- -- -- -- -- -- -- -- Summer Musical 360 -- -- -- -- -- -- -- 360 Teen Activity 135 -- -- -- -- -- -- -- 135 Tennis League 2 -- -- -- -- -- -- -- 2 Town Lake Beautification 49 -- -- -- -- -- -- -- 49

Total Parks and Recreation 8,079 -- -- -- -- -- -- 7 8,086

10,008 -- -- -- -- -- -- 14 10,022

Urban growth management

253 -- -- -- -- -- -- -- 253 Housing Loan -- -- -- -- 3,534 -- -- -- 3,534 Housing Trust Social Equity 2,990 -- -- -- -- 1,416 -- -- 4,406

-- -- -- -- -- -- -- -- -- UNO Housing Trust 1,114 -- -- 100 -- -- -- -- 1,214 Urban Renewal Agency -- -- -- -- -- -- 678 -- 678

Total Neighborhood Housing & Community Development 4,357 -- -- 100 3,534 1,416 678 -- 10,085

185 -- -- -- -- -- -- -- 185 Austin Lake Hills Water Quality 96 -- -- -- -- -- -- -- 96 Barton Springs Zone Mitigation 401 -- -- -- -- -- -- -- 401 Riparian Zone Mitigation 753 -- -- -- -- -- -- -- 753 Urban Forest Replenishment 3,969 -- -- -- -- -- -- -- 3,969

8 -- -- -- -- -- -- -- 8 Total Development Services and Watershed Protection 5,412$ -- -- -- -- -- -- -- 5,412

Austin Industrial Development Corporation (AIDC)

Water Supply Mitigation

138

Assets

Total public recreation and culture

Development Services and Watershed Protection:

Neighborhood Housing & Community Development:

Neighborhood Housing & Conservation

Homestead Preservation Reinvestment Tax Increment

City of Austin, Texas Exhibit E-11

(Continued)

Total Liabilities, Deferred

Due to Deposits Inflows of Due to Other and Deferred Total Resources,

Accounts Accrued Other Govern- Other Total Inflows of Restr- Com- Assi- Unass- Fund and Fund Payable Payroll Funds ments Liabilities Liabilities Resources icted mitted gned igned Balances Balances

-- -- -- -- -- -- -- 100 -- -- -- 100 100 -- -- -- -- -- -- -- 429 -- 6 -- 435 435 -- -- -- -- -- -- -- 1,401 -- -- -- 1,401 1,401 -- -- -- -- -- -- -- 1,930 -- 6 -- 1,936 1,936

-- -- -- -- -- -- -- 10 -- -- -- 10 10 143 -- -- -- -- 143 -- -- 5,673 81 -- 5,754 5,897

-- -- -- -- -- -- -- 1,043 -- 75 -- 1,118 1,118 -- -- -- -- -- -- -- 514 -- -- -- 514 514 -- -- -- -- -- -- -- 1 -- -- -- 1 1 -- -- -- -- -- -- -- -- -- -- -- -- -- 3 -- -- -- -- 3 -- 357 -- -- -- 357 360

-- -- -- -- -- -- -- 135 -- -- -- 135 135 -- -- -- -- -- -- -- 2 -- -- -- 2 2 -- -- -- -- -- -- -- 49 -- -- -- 49 49

146 -- -- -- -- 146 -- 2,111 5,673 156 -- 7,940 8,086

146 -- -- -- -- 146 -- 4,041 5,673 162 -- 9,876 10,022

-- -- -- -- -- -- -- 253 -- -- -- 253 253 -- -- -- -- -- -- -- 3,534 -- -- -- 3,534 3,534 36 -- -- -- -- 36 -- -- 60 4,310 -- 4,370 4,406

531 -- 1,417 -- -- 1,948 -- -- -- -- (1,948) (1,948) -- -- -- -- -- -- -- -- 1,180 -- 34 -- 1,214 1,214 -- -- -- -- -- -- -- -- 678 -- -- 678 678

567 -- 1,417 -- -- 1,984 -- 4,967 738 4,344 (1,948) 8,101 10,085

-- -- -- -- -- -- -- -- 185 -- -- 185 185 -- -- -- -- -- -- -- -- 96 -- -- 96 96 -- -- -- -- -- -- -- -- 397 4 -- 401 401 -- -- -- -- -- -- -- -- 747 6 -- 753 753

162 -- -- -- -- 162 -- -- 3,758 49 -- 3,807 3,969 -- -- -- -- -- -- -- -- 8 -- -- 8 8

162 -- -- -- -- 162 -- -- 5,191 59 -- 5,250 5,412

(Continued)

139

Liabilities Fund Balances

Special Revenue Funds - Other Combining Balance Sheet For the year ended September 30, 2017 (In thousands)

Cash Investments Pooled Held by Held by Net Net Due from Property

Investments Trustee, Trustee, Accounts Notes Other Held for Other Total and Cash Restricted Restricted Receivable Receivable Funds Resale Assets Assets

Other urban growth management: Business Retention & Enhancement 583$ -- -- 521 -- -- -- 6 1,110 Cable TV 5,430 -- -- -- -- 127 -- -- 5,557 City Hall -- -- -- 12 -- -- -- -- 12 City Hall Retail Tenant Improvement 117 -- -- -- -- -- -- -- 117

3,759 -- -- 224 -- -- -- -- 3,983

63 -- -- 51 -- -- -- -- 114

176 -- 1,269 18 -- -- -- -- 1,463 Hotel-Motel Occupancy Tax 85 -- -- 19,676 -- -- -- -- 19,761 I-35 Parking Program 938 -- -- -- -- -- -- -- 938

192 -- 115 -- -- -- -- -- 307 Mueller Development 92 -- -- 2,708 -- -- -- -- 2,800

2,985 1,823 -- -- -- -- -- -- 4,808 Mueller Tax Increment Financing -- -- -- -- -- -- -- -- -- One Texas Center 401 -- -- -- -- -- -- -- 401 Public Arts 11 -- -- -- -- -- -- -- 11 Rainey Street District 101 -- -- -- -- -- -- -- 101 Rutherford Lane Facility 981 -- -- -- -- -- -- -- 981 Seaholm Parking Garage 817 -- -- -- -- -- -- -- 817 Seaholm Tax Increment Financing 1,833 -- -- -- -- -- -- -- 1,833 Section 108 Family Business Loan 714 6,917 -- -- -- -- -- 3,015 10,646

107 -- -- 87 -- -- -- -- 194 Tax Increment Finance 731 -- -- -- -- -- -- -- 731 Tourism and Promotion 797 -- -- -- -- -- -- -- 797 Vehicle Rental Tax -- -- -- 2,276 -- -- -- -- 2,276 Waller Creek Reserve 13,005 -- -- -- -- -- -- -- 13,005 Waller Creek Tax Increment Finance -- -- -- -- -- -- -- -- --

615 -- 389 -- -- -- -- -- 1,004 Wildland Conservation 1,438 -- -- -- -- -- -- -- 1,438

35,971 8,740 1,773 25,573 -- 127 -- 3,021 75,205

Total urban growth management 45,740 8,740 1,773 25,673 3,534 1,543 678 3,021 90,702

Total 119,714$ 8,740 1,773 25,779 3,534 11,412 678 3,035 174,665

(1) Previously reported as Estancia Public Improvement District.

Total other urban growth management

Assets

140

Whisper Valley Public Improvement District

East Sixth Street Public Improvement District

South Congress Public Improvement District

Mueller Local Government Corporation

Estancia Hill Country Public Improvement District (1)

Indian Hills Public Improvement District

Downtown Public Improvement District

City of Austin, Texas Exhibit E-11

(Continued)

Total Liabilities, Deferred

Due to Deposits Inflows of Due to Other and Deferred Total Resources,

Accounts Accrued Other Govern- Other Total Inflows of Restr- Com- Assi- Unass- Fund and Fund Payable Payroll Funds ments Liabilities Liabilities Resources icted mitted gned igned Balances Balances

14 -- -- -- -- 14 -- -- 127 969 -- 1,096 1,110 63 -- -- -- -- 63 -- 3,379 -- 2,115 -- 5,494 5,557

153 -- 19 9 -- 181 -- -- -- -- (169) (169) 12 23 -- -- -- -- 23 -- 94 -- -- -- 94 117

-- -- -- -- -- -- -- -- 2,955 1,028 -- 3,983 3,983

-- -- -- -- -- -- -- -- 7 107 -- 114 114

-- -- -- -- -- -- -- -- 342 1,121 -- 1,463 1,463 -- -- -- -- 85 85 -- 19,676 -- -- -- 19,676 19,761 1 -- -- -- -- 1 -- 915 -- 22 -- 937 938

-- -- -- -- -- -- -- -- 302 5 -- 307 307 -- -- -- -- 7 7 2,708 -- 85 -- -- 85 2,800

-- -- -- -- -- -- -- -- 4,808 -- -- 4,808 4,808 -- -- 89 -- -- 89 -- -- -- -- (89) (89) -- -- -- -- -- -- -- -- -- 401 -- -- 401 401 -- -- -- -- 11 11 -- -- -- -- -- -- 11 -- -- -- -- -- -- -- -- 69 32 -- 101 101

155 -- -- -- -- 155 -- -- 826 -- -- 826 981 -- -- -- -- -- -- -- 817 -- -- -- 817 817 -- -- -- -- -- -- -- 1,833 -- -- -- 1,833 1,833 2 -- -- -- 6,917 6,919 -- -- 3,727 -- -- 3,727 10,646

28 -- -- -- -- 28 -- -- 160 6 -- 166 194 96 -- -- -- -- 96 -- 35 -- 600 -- 635 731

807 -- -- -- -- 807 -- -- -- -- (10) (10) 797 -- -- -- -- -- -- -- 2,178 -- 98 -- 2,276 2,276 -- -- -- -- -- -- -- -- 13,005 -- -- 13,005 13,005 -- -- 18 -- -- 18 -- -- -- -- (18) (18) --

-- -- -- -- -- -- -- -- 980 24 -- 1,004 1,004 21 8 -- -- -- 29 -- -- 1,256 153 -- 1,409 1,438

1,363 8 126 9 7,020 8,526 2,708 28,927 29,050 6,280 (286) 63,971 75,205

2,092 8 1,543 9 7,020 10,672 2,708 33,894 34,979 10,683 (2,234) 77,322 90,702

2,461 123 1,543 9 70,455 74,591 2,708 48,330 40,652 10,926 (2,542) 97,366 174,665

Fund BalancesLiabilities

141

Special Revenue Funds - Other Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the year ended September 30, 2017 (In thousands) ########

Gross Fines, Licenses, Charges for Interest Property Receipts Forfeitures Permits, and Services/ Intergov- Contri- and Total

Taxes Taxes and Penalties Inspections Goods ernmental butions Other Revenues 02GIR00102GIR00302GIR0040 02GIR0050 02GIR0060 02GIR007002GIR0002GIR0090

General government Municipal Court: Municipal Court Building Security -- $ -- 285 -- -- -- -- -- 285

-- -- 470 -- -- -- -- 14 484 Municipal Court Technology -- -- 380 -- -- -- -- 5 385

Total general government -- -- 1,135 -- -- -- -- 19 1,154

Public safety Police: ARIC Sustainability -- -- -- -- -- -- 471 11 482 Auto Theft Interdiction -- -- -- -- -- -- -- -- -- Municipal Court Traffic Safety -- -- 683 -- -- -- -- 70 753 Police Benefit -- -- -- -- -- -- 118 -- 118

-- -- 271 -- -- -- -- 20 291

-- -- 471 -- -- -- -- 13 484

-- -- 223 -- -- -- -- 14 237

-- -- 40 -- -- -- -- 5 45 Total Police -- -- 1,688 -- -- -- 589 133 2,410

Fire: Fire Miscellaneous -- -- -- -- 2 -- -- 1 3

Total Fire -- -- -- -- 2 -- -- 1 3

Total public safety -- -- 1,688 -- 2 -- 589 134 2,413

Public Works and Transportation:

-- -- -- -- 10 -- -- -- 10 Child Safety -- -- 1,688 -- -- -- -- 1 1,689 Fiscal Surety - Land Development -- -- -- -- -- -- -- -- --

-- -- 1,688 -- 10 -- -- 1 1,699 Total transportation, planning, and sustainability -- -- 1,688 -- 10 -- -- 1 1,699

Public health Health and Human Services: Health Miscellaneous -- -- -- -- -- -- 10 -- 10

Total Health and Human Services -- -- -- -- -- -- 10 -- 10 Other public health: Animal Services -- -- -- -- -- -- 226 2 228 Animal Shelter Building -- -- -- -- -- -- -- -- --

Total other public health -- -- -- -- -- -- 226 2 228

Total public health -- $ -- -- -- -- -- 236 2 238

(1) Expenditures include capital outlay of $603 thousand.

142

Police Federal Dept. of Treasury Asset Forfeiture

Police Federal Dept. of Justice Asset Forfeiture

Police State Contraband Asset Forfeiture

Transportation, planning, and sustainability

Revenues

Total Public Works and Transportation

Municipal Court Juvenile Case Manager

Police State Gambling Asset Forfeiture

Capital Area Metropolitan Planning Organization

City of Austin, Texas Exhibit E-12

02/15 1:57p

Excess (Deficiency) Net Fund Fund

Current Of Revenues Issuance of Change Balances Balances Expend- Over Tax Supported Bond Transfers Transfers in Fund at Beginning at End itures (1) Principal Interest Expenditures Debt Premiums In Out Balances of Year of Year

02GIE020 02GIE0210 02GIO0500 02GIO0515 02GIO053002GIO0540 FBBY

322 -- -- (37) -- -- -- -- (37) 58 21

736 -- -- (252) -- -- -- -- (252) 1,895 1,643 525 -- -- (140) -- -- -- -- (140) 649 509

1,583 -- -- (429) -- -- -- -- (429) 2,602 2,173

186 -- -- 296 -- -- -- -- 296 1,115 1,411 6 -- -- (6) -- -- -- -- (6) (23) (29)

727 -- -- 26 -- -- -- (26) -- -- -- 57 -- -- 61 -- -- -- -- 61 266 327

405 -- -- (114) -- -- -- -- (114) 2,488 2,374

55 -- -- 429 -- -- -- -- 429 1,209 1,638

100 -- -- 137 -- -- -- -- 137 1,255 1,392

-- -- -- 45 -- -- -- -- 45 566 611 1,536 -- -- 874 -- -- -- (26) 848 6,876 7,724

-- -- -- 3 -- -- -- -- 3 46 49 -- -- -- 3 -- -- -- -- 3 46 49

1,536 -- -- 877 -- -- -- (26) 851 6,922 7,773

193 -- -- (183) -- -- -- -- (183) 183 -- 2,347 -- -- (658) -- -- 836 -- 178 50 228

371 -- -- (371) -- -- -- -- (371) 92 (279)

2,911 -- -- (1,212) -- -- 836 -- (376) 325 (51)

2,911 -- -- (1,212) -- -- 836 -- (376) 325 (51)

-- -- -- 10 -- -- -- -- 10 45 55

-- -- -- 10 -- -- -- -- 10 45 55

284 -- -- (56) -- -- -- -- (56) 259 203 -- -- -- -- -- -- -- -- -- 15 15

284 -- -- (56) -- -- -- -- (56) 274 218

284 -- -- (46) -- -- -- -- (46) 319 273

(Continued)

Expenditures

Debt Service

Other Financing Sources (Uses)

143

Special Revenue Funds - Other Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the year ended September 30, 2017 (In thousands) ######## ######

Gross Fines, Licenses, Charges for Interest Property Receipts Forfeitures Permits, and Services/ Intergov- Contri- and Total

Taxes Taxes and Penalties Inspections Goods ernmental butions Other Revenues

Public recreation and culture Austin Public Library: Austin History Center -- $ -- -- -- -- -- 12 -- 12 Friends of Austin Public Library -- -- -- -- -- -- 137 1 138 Special Library -- -- -- -- -- -- 364 -- 364

Total Austin Public Library -- -- -- -- -- -- 513 1 514 Parks and Recreation: Adaptive Programs -- -- -- -- -- -- -- -- -- PARD Cultural Projects -- 10,867 -- -- -- -- -- 37 10,904 PARD Miscellaneous -- -- -- 2 -- -- 272 -- 274 Planting for the Future -- -- -- 139 -- -- 62 -- 201 Republic Square -- -- -- -- -- -- -- -- -- Special Events -- -- -- -- 1,654 -- -- -- 1,654 Summer Musical -- -- -- -- -- -- 152 -- 152 Teen Activity -- -- -- -- -- -- 1 -- 1 Tennis League -- -- -- -- -- -- -- -- -- Town Lake Beautification -- -- -- -- -- -- -- -- --

Total parks and recreation -- 10,867 -- 141 1,654 -- 487 37 13,186

-- 10,867 -- 141 1,654 -- 1,000 38 13,700

Urban growth management

253 -- -- -- -- -- -- -- 253 Housing Loan -- -- -- -- -- -- -- -- -- Housing Trust Social Equity -- -- -- -- 1,359 -- -- 24 1,383

-- -- -- -- -- -- -- -- -- UNO Housing Trust -- -- -- -- 104 -- -- 11 115 Urban Renewal Agency -- -- -- -- -- -- -- -- --

Total Neighborhood Housing & Community Development 253 -- -- -- 1,463 -- -- 35 1,751

-- -- -- -- -- -- -- 1 1 Austin Lake Hills Water Quality -- -- -- -- -- -- -- 1 1 Barton Springs Zone Mitigation -- -- -- -- -- -- -- 3 3 Riparian Zone Mitigation -- -- -- -- -- -- 188 5 193 Urban Forest Replenishment -- -- -- -- -- -- 994 28 1,022 Water Supply Mitigation -- -- -- -- -- -- -- -- --

Total Development Services and Watershed Protection -- $ -- -- -- -- -- 1,182 38 1,220

(1) Expenditures include capital outlay of $603 thousand.

144

Revenues

Neighborhood Housing & Conservation

Total public recreation and culture

Development Services and Watershed Protection: Austin Industrial Development Corporation (AIDC)

Neighborhood Housing & Community Development: Homestead Preservation Reinvestment Tax Increment

City of Austin, Texas Exhibit E-12

02/15 1:57p (Continued)

Excess (Deficiency) Net Fund Fund

Current Of Revenues Issuance of Change Balances Balances Expend- Over Tax Supported Bond Transfers Transfers in Fund at Beginning at End itures (1) Principal Interest Expenditures Debt Premiums In Out Balances of Year of Year

59 -- -- (47) -- -- -- -- (47) 147 100 144 -- -- (6) -- -- -- -- (6) 441 435 183 -- -- 181 -- -- -- -- 181 1,220 1,401 386 -- -- 128 -- -- -- -- 128 1,808 1,936

4 -- -- (4) -- -- -- -- (4) 14 10 10,285 -- -- 619 -- -- -- -- 619 5,135 5,754

299 -- -- (25) -- -- -- -- (25) 1,143 1,118 60 -- -- 141 -- -- -- -- 141 373 514 -- -- -- -- -- -- -- -- -- 1 1

1,654 -- -- -- -- -- -- -- -- -- -- 183 -- -- (31) -- -- -- -- (31) 388 357 128 -- -- (127) -- -- -- -- (127) 262 135

-- -- -- -- -- -- -- -- -- 2 2 67 -- -- (67) -- -- -- -- (67) 116 49

12,680 -- -- 506 -- -- -- -- 506 7,434 7,940

13,066 -- -- 634 -- -- -- -- 634 9,242 9,876

-- -- -- 253 -- -- -- -- 253 -- 253 167 -- -- (167) -- -- -- -- (167) 3,701 3,534

1,323 -- -- 60 -- -- 2,497 -- 2,557 1,813 4,370

5,676 -- -- (5,676) 9,878 176 -- -- 4,378 (6,326) (1,948) -- -- -- 115 -- -- -- -- 115 1,099 1,214 7 -- -- (7) -- -- 7 -- -- 678 678

7,173 -- -- (5,422) 9,878 176 2,504 -- 7,136 965 8,101

-- -- -- 1 -- -- -- -- 1 184 185 -- -- -- 1 -- -- -- -- 1 95 96 -- -- -- 3 -- -- -- -- 3 398 401 -- -- -- 193 -- -- -- -- 193 560 753

646 -- -- 376 -- -- -- -- 376 3,431 3,807 -- -- -- -- -- -- -- -- -- 8 8

646 -- -- 574 -- -- -- -- 574 4,676 5,250

(Continued)

Expenditures Other Financing Sources (Uses)

145

Debt Service

Special Revenue Funds - Other Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the year ended September 30, 2017 (In thousands) ######## ######

Gross Fines, Licenses, Charges for Interest Property Receipts Forfeitures Permits, and Services/ Intergov- Contri- and Total

Taxes Taxes and Penalties Inspections Goods ernmental butions Other Revenues

Other urban growth management: Business Retention & Enhancement -- $ -- -- 233 289 -- -- 34 556 Cable TV -- 2,120 -- -- -- -- -- 38 2,158 City Hall -- -- -- -- 1,511 -- -- 4 1,515 City Hall Retail Tenant Improvement -- -- -- -- -- -- 5 20 25

-- -- -- -- 6,742 -- -- 41 6,783

-- -- -- -- 104 -- -- -- 104

-- -- -- -- 1,791 -- -- 8 1,799 Hotel-Motel Occupancy Tax -- 66,676 -- -- -- -- -- -- 66,676 I-35 Parking Program -- -- -- -- 349 -- -- 7 356

-- -- -- -- 345 -- -- 4 349 Mueller Development -- -- -- -- 32 -- -- 251 283

-- -- -- -- -- -- -- 6 6 Mueller Tax Increment Financing 4,376 -- -- -- -- -- -- 17 4,393 One Texas Center -- -- -- -- 1,567 -- -- -- 1,567 Public Arts -- -- -- -- -- -- -- -- -- Rainey Street District -- -- -- -- -- -- -- 1 1 Rutherford Lane Facility -- -- -- -- 3,488 -- -- 5 3,493 Seaholm Parking Garage -- -- -- -- 597 -- -- 2 599 Seaholm Tax Increment Financing 894 -- -- -- -- -- -- 9 903 Section 108 Family Business Loan -- -- -- -- -- 678 -- 74 752

-- -- -- -- 167 -- -- -- 167 Tax Increment Finance 100 -- -- -- -- -- -- 6 106 Tourism and Promotion -- 15,002 -- -- -- -- -- 26 15,028 Vehicle Rental Tax -- 9,360 -- -- -- -- -- 35 9,395 Waller Creek Reserve -- -- -- -- -- -- -- 3,014 3,014 Waller Creek Tax Increment Finance 4,756 -- -- -- -- -- -- 4 4,760

-- -- -- -- 1,740 -- -- 15 1,755 Wildland Conservation -- -- -- -- -- -- -- 408 408

10,126 93,158 -- 233 18,722 678 5 4,029 126,951

Total urban growth management 10,126 93,158 -- 233 20,185 678 1,187 4,102 129,669

Total 10,379$ 104,025 4,511 374 21,851 678 3,012 4,296 149,126

(1) Expenditures include capital outlay of $603 thousand. (2) Previously reported as Estancia Public Improvement District.

Revenues

Downtown Public Improvement District

Indian Hills Public Improvement District

Estancia Hill Country Public Improvement District (2)

146

Total other urban growth management

South Congress Public Improvement District

East Sixth Street Public Improvement District

Mueller Local Government Corporation

Whisper Valley Public Improvement District

City of Austin, Texas Exhibit E-12

02/15 1:57p (Continued)

Excess (Deficiency) Net Fund Fund

Current Of Revenues Issuance of Change Balances Balances Expend- Over Tax Supported Bond Transfers Transfers in Fund at Beginning at End itures (1) Principal Interest Expenditures Debt Premiums In Out Balances of Year of Year

-- -- -- 556 -- -- -- (4,787) (4,231) 5,327 1,096 1,486 -- -- 672 -- -- 475 -- 1,147 4,347 5,494 1,013 -- -- 502 -- -- -- (650) (148) (21) (169)

24 -- -- 1 -- -- -- -- 1 93 94

6,320 -- -- 463 -- -- 360 -- 823 3,160 3,983

164 -- -- (60) -- -- 35 -- (25) 139 114

973 -- 770 56 -- -- -- -- 56 1,407 1,463 -- -- -- 66,676 -- -- -- (67,251) (575) 20,251 19,676

127 -- -- 229 -- -- -- (102) 127 810 937

116 -- 221 12 -- -- -- -- 12 295 307 250 -- -- 33 -- -- -- -- 33 52 85

4 2,115 1,997 (4,110) -- -- 5,462 -- 1,352 3,456 4,808 -- -- -- 4,393 -- -- -- (4,486) (93) 4 (89) -- -- -- 1,567 -- -- -- (3,083) (1,516) 1,917 401 -- -- -- -- -- -- -- -- -- -- -- -- -- -- 1 -- -- -- -- 1 100 101

1,765 -- -- 1,728 -- -- -- (1,884) (156) 982 826 -- -- -- 599 -- -- 785 (567) 817 -- 817 -- -- -- 903 -- -- -- -- 903 930 1,833 5 -- -- 747 -- -- -- (213) 534 3,193 3,727

84 -- -- 83 -- -- 3 -- 86 80 166 224 -- -- (118) -- -- -- (131) (249) 884 635

15,479 -- -- (451) -- -- -- (994) (1,445) 1,435 (10) -- -- -- 9,395 -- -- -- (9,333) 62 2,214 2,276 -- -- -- 3,014 -- -- 4,925 (6,831) 1,108 11,897 13,005 -- -- -- 4,760 -- -- -- (4,925) (165) 147 (18)

549 -- 1,198 8 -- -- -- -- 8 996 1,004 269 -- -- 139 -- -- -- -- 139 1,270 1,409

28,852 2,115 4,186 91,798 -- -- 12,045 (105,237) (1,394) 65,365 63,971

36,671 2,115 4,186 86,697 9,878 176 14,549 (105,237) 6,063 71,006 77,069

56,051 2,115 4,186 86,774 9,878 176 15,385 (105,263) 6,950 90,416 97,366

Expenditures Other Financing Sources (Uses)

Debt Service

147

YesSpecial Revenue Funds - Other City of Austin, Texas No Combining Schedule of Revenues, Expenditures, and Transfers - Exhibit E-13 Yes Budget and Actual-Budget Basis

For the year ended September 30, 2017 (In thousands)

Fund Excess of Fund Balances Sources Balances

at Beginning Transfer Transfer Over at End of Year Revenues Expenditures In Out Uses of Year

General government Municipal Court: Municipal Court Building Security

Actual-budget basis 58$ 285 340 -- -- (55) 3 Budget 36 355 399 -- -- (44) (8) Variance-Positive (Negative) 22 (70) 59 -- -- (11) 11

Municipal Court Juvenile Case Manager Actual-budget basis 1,829 483 723 -- 10 (250) 1,579 Budget 1,746 616 947 -- 10 (341) 1,405 Variance-Positive (Negative) 83 (133) 224 -- -- 91 174

Municipal Court Technology Actual-budget basis 649 385 528 -- -- (143) 506 Budget 630 475 1,103 -- -- (628) 2 Variance-Positive (Negative) 19 (90) 575 -- -- 485 504

Public safety Police: Municipal Court Traffic Safety

Actual-budget basis -- 753 726 -- 27 -- -- Budget -- 1,665 1,349 -- 316 -- -- Variance-Positive (Negative) -- (912) 623 -- 289 -- --

Police Federal Dept. of Justice Asset Forfeiture Actual-budget basis 2,489 291 708 -- -- (417) 2,072 Budget 2,340 -- 2,340 -- -- (2,340) -- Variance-Positive (Negative) 149 291 1,632 -- -- 1,923 2,072

Police Federal Dept. of Treasury Asset Forfeiture Actual-budget basis 1,209 484 55 -- -- 429 1,638 Budget 1,051 -- 1,051 -- -- (1,051) -- Variance-Positive (Negative) 158 484 996 -- -- 1,480 1,638

Police State Contraband Asset Forfeiture Actual-budget basis 1,167 237 12 -- -- 225 1,392 Budget 788 -- 788 -- -- (788) -- Variance-Positive (Negative) 379 237 776 -- -- 1,013 1,392

Police State Gambling Asset Forfeiture Actual-budget basis 567 44 -- -- -- 44 611 Budget 566 -- 566 -- -- (566) -- Variance-Positive (Negative) 1 44 566 -- -- 610 611

(Continued)

02/16 10:23a

148

Other Financing Sources (Uses)

YesSpecial Revenue Funds - Other City of Austin, Texas No Combining Schedule of Revenues, Expenditures, and Transfers - Exhibit E-13 Yes Budget and Actual-Budget Basis

For the year ended September 30, 2017 (In thousands) (Continued)

Fund Excess of Fund Balances Sources Balances

at Beginning Transfer Transfer Over at End of Year Revenues Expenditures In Out Uses of Year

Transportation, planning, and sustainability Public Works and Transportation: Child Safety

Actual-budget basis 50$ 1,689 2,343 836 15 167 217 Budget 267 1,736 2,511 836 15 46 313 Variance-Positive (Negative) (217) (47) 168 -- -- 121 (96)

Public recreation and culture Parks and Recreation: PARD Cultural Projects

Actual-budget basis 4,761 37 11,146 10,867 -- (242) 4,519 Budget 4,313 8 11,645 10,561 -- (1,076) 3,237 Variance-Positive (Negative) 448 29 499 306 -- 834 1,282

Special Events Actual-budget basis -- 1,654 1,654 -- -- -- -- Budget -- 1,884 1,884 -- -- -- -- Variance-Positive (Negative) -- (230) 230 -- -- -- --

Urban growth management Neighborhood Housing & Community Development: Housing Trust Social Equity

Actual-budget basis 1,614 1,383 1,554 2,497 -- 2,326 3,940 Budget 831 -- 3,328 2,497 -- (831) -- Variance-Positive (Negative) 783 1,383 1,774 -- -- 3,157 3,940

UNO Housing Trust Actual-budget basis 1,099 115 -- -- -- 115 1,214 Budget 1,082 -- 1,082 -- -- (1,082) -- Variance-Positive (Negative) 17 115 1,082 -- -- 1,197 1,214

Other urban growth management: Business Retention and Enhancement

Actual-budget basis 5,321 557 -- -- 4,787 (4,230) 1,091 Budget 4,787 -- -- -- 4,787 (4,787) -- Variance-Positive (Negative) 534 557 -- -- -- 557 1,091

Cable TV Actual-budget basis 3,871 2,158 1,645 475 -- 988 4,859 Budget 2,790 1,903 2,009 475 -- 369 3,159 Variance-Positive (Negative) 1,081 255 364 -- -- 619 1,700

(Continued)

02/16 10:23a

149

Other Financing Sources (Uses)

Special Revenue Funds - Other City of Austin, Texas Combining Schedule of Revenues, Expenditures, and Transfers - Exhibit E-13

Budget and Actual-Budget Basis For the year ended September 30, 2017 (In thousands) (Continued)

Fund Excess of Fund Balances Sources Balances

at Beginning Transfer Transfer Over at End of Year Revenues Expenditures In Out Uses of Year

Urban growth management, continued City Hall

Actual-budget basis (28)$ 1,515 1,025 -- 650 (160) (188) Budget 59 1,831 1,155 -- 650 26 85 Variance-Positive (Negative) (87) (316) 130 -- -- (186) (273)

Downtown Public Improvement District Actual-budget basis 569 6,783 7,338 360 -- (195) 374 Budget 558 7,288 7,648 360 -- -- 558 Variance-Positive (Negative) 11 (505) 310 -- -- (195) (184)

East Sixth Street Public Improvement District Actual-budget basis 113 104 165 35 -- (26) 87 Budget 112 90 165 35 -- (40) 72 Variance-Positive (Negative) 1 14 -- -- -- 14 15

Estancia Hill Country Public Improvement District (1) Actual-budget basis 121 1,799 1,744 -- -- 55 176 Budget 126 1,745 1,745 -- -- -- 126 Variance-Positive (Negative) (5) 54 1 -- -- 55 50

Hotel-Motel Occupancy Tax Actual-budget basis (161) 93,280 -- -- 93,119 161 -- Budget -- 90,495 -- -- 90,495 -- -- Variance-Positive (Negative) (161) 2,785 -- -- (2,624) 161 --

I-35 Parking Program Actual-budget basis 787 356 481 -- 102 (227) 560 Budget 597 435 660 -- 102 (327) 270 Variance-Positive (Negative) 190 (79) 179 -- -- 100 290

Indian Hills Public Improvement District Actual-budget basis 183 348 339 -- -- 9 192 Budget -- 1,659 1,659 -- -- -- -- Variance-Positive (Negative) 183 (1,311) 1,320 -- -- 9 192

Mueller Tax Increment Financing Actual-budget basis 5 4,392 4,486 -- -- (94) (89) Budget 3 4,490 4,486 -- -- 4 7 Variance-Positive (Negative) 2 (98) -- -- -- (98) (96)

One Texas Center Actual-budget basis 1,917 1,567 -- -- 3,083 (1,516) 401 Budget 1,682 1,643 -- -- 3,083 (1,440) 242 Variance-Positive (Negative) 235 (76) -- -- -- (76) 159

(1) Previously reported as Estancia Public Improvement District. (Continued)

02/16 10:23a

Other Financing Sources (Uses)

150

Special Revenue Funds - Other City of Austin, Texas Combining Schedule of Revenues, Expenditures, and Transfers - Exhibit E-13

Budget and Actual-Budget Basis For the year ended September 30, 2017 (In thousands) (Continued)

Fund Excess of Fund Balances Sources Balances

at Beginning Transfer Transfer Over at End of Year Revenues Expenditures In Out Uses of Year

Urban growth management, continued Rutherford Lane Facility

Actual-budget basis 857$ 3,493 2,001 -- 1,884 (392) 465 Budget 704 3,488 2,204 -- 1,884 (600) 104 Variance-Positive (Negative) 153 5 203 -- -- 208 361

Seaholm Parking Garage Actual-budget basis -- 598 -- 785 566 817 817 Budget 559 500 -- -- 700 (200) 359 Variance-Positive (Negative) (559) 98 -- 785 134 1,017 458

Seaholm Tax Increment Financing Actual-budget basis 930 903 -- -- -- 903 1,833 Budget 928 894 -- -- -- 894 1,822 Variance-Positive (Negative) 2 9 -- -- -- 9 11

Section 108 Family Business Loan Actual-budget basis (1,812) 6,348 683 -- 213 5,452 3,640 Budget 1,398 3,539 3,000 -- 304 235 1,633 Variance-Positive (Negative) (3,210) 2,809 2,317 -- 91 5,217 2,007

South Congress Public Improvement District Actual-budget basis 24 168 104 3 -- 67 91 Budget 21 129 132 3 -- -- 21 Variance-Positive (Negative) 3 39 28 -- -- 67 70

Tax Increment Finance Actual-budget basis 877 6 763 100 131 (788) 89 Budget 823 -- 792 100 131 (823) -- Variance-Positive (Negative) 54 6 29 -- -- 35 89

Tourism and Promotion Actual-budget basis 1,434 26 15,479 15,002 994 (1,445) (11) Budget 1,888 6 15,479 14,579 994 (1,888) -- Variance-Positive (Negative) (454) 20 -- 423 -- 443 (11)

Vehicle Rental Tax Actual-budget basis (62) 9,395 -- -- 9,333 62 -- Budget -- 9,001 -- -- 9,001 -- -- Variance-Positive (Negative) (62) 394 -- -- (332) 62 --

Waller Creek Reserve Actual-budget basis 11,897 3,014 -- 4,925 6,831 1,108 13,005 Budget 11,890 3,230 -- 4,925 6,831 1,324 13,214 Variance-Positive (Negative) 7 (216) -- -- -- (216) (209)

(Continued)

151

Other Financing Sources (Uses)

02/16 10:23a

Special Revenue Funds - Other City of Austin, Texas Combining Schedule of Revenues, Expenditures, and Transfers - Exhibit E-13

Budget and Actual-Budget Basis For the year ended September 30, 2017 (In thousands) (Continued)

Fund Excess of Fund Balances Sources Balances

at Beginning Transfer Transfer Over at End of Year Revenues Expenditures In Out Uses of Year

Urban growth management, continued Waller Creek Tax Increment Finance

Actual-budget basis 147$ 4,760 -- -- 4,925 (165) (18) Budget 146 4,784 -- -- 4,925 (141) 5 Variance-Positive (Negative) 1 (24) -- -- -- (24) (23)

Whisper Valley Public Improvement District Actual-budget basis 618 1,755 1,758 -- -- (3) 615 Budget -- 16,699 16,699 -- -- -- -- Variance-Positive (Negative) 618 (14,944) 14,941 -- -- (3) 615

Wildland Conservation Actual-budget basis 1,254 408 338 -- -- 70 1,324 Budget 1,295 253 428 -- -- (175) 1,120 Variance-Positive (Negative) (41) 155 90 -- -- 245 204

Total Actual-budget basis 44,354$ 151,573 58,138 35,885 126,670 2,650 47,004 Budget 44,016 160,841 87,254 34,371 124,228 (16,270) 27,746 Variance-Positive (Negative) 338 (9,268) 29,116 1,514 (2,442) 18,920 19,258

02/16 10:23a

Other Financing Sources (Uses)

152

DEBT SERVICE FUNDS Debt service funds account for and report financial resources, and the accumulation of those financial resources, that are restricted, committed, or assigned to expenditure for principal and interest of general long-term debt and HUD Section 108 loans. The City reports the following nonmajor debt service funds: General Obligation Debt Service Fund - Accounts for payments of principal, interest and related costs of general obligation and other tax-supported debt; HUD Section 108 Loans Fund - Accounts for HUD loans for construction costs.

153

Debt Service Funds City of Austin, Texas Combining Balance Sheet Exhibit E-14 September 30, 2017 (In thousands) 02/15 2:12p

General Obligation

HUD Section 108 Loans Total 2011 Total

Varianc e

ASSETS Pooled investments and cash 71$ -- 71 614 (543) Investments 23,694 -- 23,694 17,165 6,529 Property taxes receivable, net of allowance 3,636 -- 3,636 3,771 (135) Due from other funds 31 -- 31 19 12 Advances to other funds 1,455 -- 1,455 3,597 (2,142) Total assets 28,887 -- 28,887 25,166 3,721

LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES

LIABILITIES Advances from other funds 625 -- 625 474 151

Total liabilities 625 -- 625 4,360 (3,735)

DEFERRED INFLOWS OF RESOURCES 3,675 -- 3,675

FUND BALANCES Restricted 24,587 -- 24,587 20,806

Total fund balances 24,587 -- 24,587 20,806 --

Total liabilities, deferred inflows of resources, and fund balances 28,887$ -- 28,887 25,166 (3,735)

154

Debt Service Funds City of Austin, Texas Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Exhibit E-15 For the period ended September 30, 2017 (In thousands)

General Obligation

HUD Section 108 Loans

Total 2011 Total Variance

REVENUES Property taxes

Current 126,998$ -- 126,998 101,181 25,817 Penalty and interest 494 -- 494 467 27

Total property taxes 127,492 -- 127,492 Interest and other 2,887 537 3,424 7,793 (4,369)

Total revenues 130,379 537 130,916 109,441 21,475

EXPENDITURES Debt service:

Principal 84,692 560 85,252 77,473 7,779 Interest 57,490 186 57,676 43,823 13,853 Fees and commissions 9 4 13 13 --

Total expenditures 142,191 750 142,941 121,309 21,632 Excess (deficiency) of revenues over

expenditures (11,812) (213) (12,025) (11,868) (157) OTHER FINANCING SOURCES (USES)

Issuance of tax supported debt 654 -- 654 Issuance of refunding bonds 54,970 -- 54,970 Bond premiums 13,774 -- 13,774 Payment to refunding bond escrow agent (68,744) -- (68,744) Transfers in 14,116 213 14,329 6,177 8,152

Total other financing sources (uses) 14,770 213 14,983 7,164 8,152

Net change in fund balances 2,958 -- 2,958 (3,179) 7,995 Fund balances at beginning of year 21,629 -- 21,629 20,806 (5,691) Fund balances at end of year 24,587$ -- 24,587 20,806 2,304

02/15 2:12p

155

Ye Debt Service Funds City of Austin, Texas NoCombining Schedule of Revenues, Expenditures, and Changes in Exhibit E-16 Ye Fund Balances - Budget and Actual-Budget Basis

For the period ended September 30, 2017 (In thousands) 02/15 2:12p

General Obligation HUD Section 108 Loans Total Actual- Variance- Actual- Variance- Budget Positive Budget Positive Basis Budget (Negative) Basis Budget (Negative)

REVENUES General Property taxes 127,492$ 127,105 387 -- -- -- 127,492 99,999 Interest 1,335 1,325 10 -- -- -- 1,335 90 Other revenue 2,097 119 1,978 537 841 (304) 2,634 4,393

Total revenues 130,924 128,549 2,375 537 841 (304) 131,461 104,482

EXPENDITURES Principal 102,760 103,875 1,115 560 560 -- 103,320 90,065 Interest 62,121 64,543 2,422 186 277 91 62,307 49,809 Fees and commissions 9 -- (9) 4 4 -- 13 16

Total expenditures 164,890 168,418 3,528 750 841 91 165,640 139,890 Excess (deficiency) of revenues

over expenditures (33,966) (39,869) 5,903 (213) -- (213) (34,179) (35,408)

OTHER FINANCING SOURCES (USES)

Transfers in 37,037 36,599 438 213 -- 213 37,250 33,479 Total other financing

sources (uses) 37,037 36,599 438 213 -- 213 37,250 33,479 Excess (deficiency) of revenues

and other sources over expenditures and other uses 3,071 (3,270) 6,341 -- -- -- 3,071 (1,929)

Fund balances at beginning of year 20,687 19,899 788 -- -- -- 20,687 17,682 Fund balances at end of year 23,758$ 16,629 7,129 -- -- -- 23,758 15,753

Actual-Budget Basis

2016 Actual-Budget

Basis Total

1 5 6

CAPITAL PROJECTS FUNDS Capital projects funds account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets (other than those reported within proprietary funds). The City reports the following nonmajor capital projects funds: Prior to 1984: Funds authorized August 29, 1981, for emergency

medical service projects;

1984: Funds authorized September 8, 1984, for parks and recreation, street and drainage improvements, and fire projects;

1985: Funds authorized January 19, 1985, for cultural arts;

Funds authorized July 26, 1985, for parks and recreation;

1987: Funds authorized September 3, 1987, for street

improvements;

1992: Funds authorized August 10, 1992, for various purposes;

1997: Funds authorized May 3, 1997, for radio trunking;

1998: Funds authorized November 3, 1998, for various

purposes;

2000: Funds authorized November 7, 2000, for transportation mobility and land acquisition;

2006: Funds authorized November 7, 2006, for various

purposes; 2010: Funds authorized November 2, 2010, for

transportation mobility; 2012: Funds authorized November 6, 2012, for various

purposes; 2016: Funds authorized November 8, 2016, for mobility

purposes; and Other: Other funds established for various purposes.

157

YCapital Projects Funds NCombining Balance Sheet

September 30, 2017 (In thousands)

Pooled Net Receivables Advances Investments Accounts from other to Total Accounts

and Cash Receivable Governments Other Funds Assets Payable Funds Authorized

September 8, 1984 Parkland acquisition -- $ -- -- -- -- -- Street improvements 689 -- 17 -- 706 -- Fire improvements -- -- -- -- -- -- Total Funds Authorized in 1984 689 -- 17 -- 706 --

Funds Authorized January 19, 1985

Cultural arts -- -- -- -- -- --

Funds Authorized July 26, 1985

Neighborhood park and recreation 21,925 -- -- -- 21,925 40

Total Funds Authorized in 1985 21,925 -- -- -- 21,925 40

Funds Authorized September 3, 1987

Street resurfacing 250 -- -- -- 250 -- Total Funds Authorized in 1987 250 -- -- -- 250 --

Funds Authorized August 10, 1992

Asbestos abatement/ADA compliance/ East Austin health clinic 46 -- -- -- 46 --

Erosion & flood control -- -- -- -- -- -- Street & traffic signals -- -- -- -- -- -- Barton Creek greenway 320 -- -- -- 320 -- Total Funds Authorized in 1992 366 -- -- -- 366 --

Funds Authorized November 3, 1998

Cultural arts and land 39 -- -- -- 39 -- Traffic signals 3,578 63 -- -- 3,641 -- Public safety facilities 110 -- -- -- 110 -- Parks and recreation facilities 135 -- -- -- 135 -- Total Funds Authorized in 1998 3,862$ 63 -- -- 3,925 --

Liabilities

158

Assets

City of Austin, Texas Exhibit E-17

Total Liabilities, Deferred

Inflows of Advances Deferred Resources,

from Other Total Inflows of Fund and Fund Other Funds Liabilities Liabilities Resources Restricted Assigned Unassigned Balances Balances

-- -- -- -- -- -- -- -- -- -- -- -- -- -- 706 -- 706 706 -- -- -- -- -- -- -- -- -- -- -- -- -- -- 706 -- 706 706

-- -- -- -- -- -- -- -- --

-- -- 40 -- 21,729 156 -- 21,885 21,925

-- -- 40 -- 21,729 156 -- 21,885 21,925

-- -- -- -- -- 250 -- 250 250 -- -- -- -- -- 250 -- 250 250

-- -- -- -- -- 46 -- 46 46 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 320 -- -- 320 320 -- -- -- -- 320 46 -- 366 366

-- -- -- -- 39 -- -- 39 39 -- -- -- -- 3,641 -- -- 3,641 3,641 -- -- -- -- 110 -- -- 110 110 -- -- -- -- 135 -- -- 135 135 -- -- -- -- 3,925 -- -- 3,925 3,925

(Continued)

Liabilities

159

Fund Balances

Capital Projects Funds Combining Balance Sheet September 30, 2017 (In thousands)

Pooled Net Receivables Advances Investments Accounts from other to Total Accounts

and Cash Receivable Governments Other Funds Assets Payable Funds Authorized

November 7, 2000 Transportation Mobility Improvement 1,402$ -- -- -- 1,402 156 Total Funds Authorized in 2000 1,402 -- -- -- 1,402 156

Funds Authorized November 7, 2006

Transportation 545 -- -- -- 545 -- Drainage & Open Spaces 6,962 -- -- -- 6,962 60 Parks 1,827 -- -- -- 1,827 55 Cultural Facilities 1,252 -- -- -- 1,252 -- Affordable Housing 147 -- -- -- 147 -- Central Library 1,331 -- -- -- 1,331 51 Public Safety 6,332 -- -- -- 6,332 11 Total Funds Authorized in 2006 18,396 -- -- -- 18,396 177

Funds Authorized November 2, 2010

Mobility 2,604 -- -- -- 2,604 148 Total Funds Authorized in 2010 2,604 -- -- -- 2,604 148

Funds Authorized November 6, 2012

Transportation 18,986 -- -- 9,216 28,202 1,406 Open Space 196 -- -- -- 196 1 Parks 15,591 -- -- -- 15,591 1,031 Public Safety 8,290 -- -- -- 8,290 372 Health -- -- -- -- -- 180 Library & Cultural 5,071 -- -- -- 5,071 157 Total Funds Authorized in 2012 48,134 -- -- 9,216 57,350 3,147

Funds Authorized November 8, 2016

Mobility -- -- -- -- -- 4,360 Total Funds Authorized in 2016 -- $ -- -- -- -- 4,360

160

LiabilitiesAssets

City of Austin, Texas Exhibit E-17

(Continued)

Total Liabilities, Deferred

Inflows of Advances Deferred Total Resources,

from Other Total Inflows of Fund and Fund Other Funds Liabilities Liabilities Resources Restricted Assigned Unassigned Balances Balances

-- -- 156 -- -- 1,246 -- 1,246 1,402 -- -- 156 -- -- 1,246 -- 1,246 1,402

-- -- -- -- 545 -- -- 545 545 -- -- 60 -- 6,902 -- -- 6,902 6,962 -- -- 55 -- 1,772 -- -- 1,772 1,827 -- -- -- -- 1,252 -- -- 1,252 1,252 -- -- -- -- 147 -- -- 147 147 -- -- 51 -- 1,280 -- -- 1,280 1,331 -- -- 11 -- 6,321 -- -- 6,321 6,332 -- -- 177 -- 18,219 -- -- 18,219 18,396

-- -- 148 -- 2,456 -- -- 2,456 2,604 -- -- 148 -- 2,456 -- -- 2,456 2,604

-- -- 1,406 -- 26,796 -- -- 26,796 28,202 -- -- 1 -- 195 -- -- 195 196 -- -- 1,031 -- 14,560 -- -- 14,560 15,591 -- -- 372 -- 7,918 -- -- 7,918 8,290

365 -- 545 -- -- -- (545) (545) -- -- -- 157 -- 4,914 -- -- 4,914 5,071

365 -- 3,512 -- 54,383 -- (545) 53,838 57,350

8,851 -- 13,211 -- -- -- (13,211) (13,211) -- 8,851 -- 13,211 -- -- -- (13,211) (13,211) --

(Continued)

Fund Balances

161

Liabilities

Capital Projects Funds Combining Balance Sheet September 30, 2017 (In thousands)

Pooled Net Receivables Advances Investments Accounts from other to Total Accounts

and Cash Receivable Governments Other Funds Assets Payable Other funds TPSD general improvements 13,550$ 50 -- -- 13,600 354 Library automation system 3,443 -- -- -- 3,443 3,103 Fire/EMS/NW Austin MUD #1 772 -- -- -- 772 1 General government projects 9,235 -- -- -- 9,235 1,510 Health projects -- -- -- -- -- 493 Build Austin -- 20 6 -- 26 176 CMTA Mobility 2,148 2,403 -- -- 4,551 691 Park improvements 2,332 -- -- -- 2,332 -- Parks and Recreation 3,301 -- -- -- 3,301 174 Police and courts 991 -- -- -- 991 -- Fire - general 1,145 -- -- -- 1,145 30 Capital reserve -- -- -- -- -- -- CTM 48,957 -- -- 8,425 57,382 4,616 GCP-PLD In Lieu Of Fee 479 -- -- -- 479 -- Public Works -- -- -- -- -- 32 GCP-PLD Development Fee 289 -- -- -- 289 -- Watershed Protection -- -- -- -- -- -- Great Streets 3,433 -- -- -- 3,433 1 City Hall, plaza, parking garage -- 30 -- -- 30 1 Conservation land -- -- -- -- -- -- Colony Park 1,979 -- 2 -- 1,981 149 NPZ general 5,809 -- -- -- 5,809 347 Economic Development 39 -- -- -- 39 -- Waller Creek Tunnel 6,177 -- -- -- 6,177 1,049 Fleet general improvements 953 -- -- -- 953 -- Interest income fund 6,605 -- -- -- 6,605 -- Total other funds 111,637 2,503 8 8,425 122,573 12,727

Totals 209,265$ 2,566 25 17,641 229,497 20,755

162

LiabilitiesAssets

City of Austin, Texas Exhibit E-17

(Continued)

Total Liabilities, Deferred

Inflows of Advances Deferred Total Resources,

from Other Total Inflows of Fund and Fund Other Funds Liabilities Liabilities Resources Restricted Assigned Unassigned Balances Balances

-- -- 354 -- -- 13,246 -- 13,246 13,600 -- -- 3,103 -- -- 340 -- 340 3,443 -- -- 1 -- -- 771 -- 771 772 -- 412 1,922 -- 2,263 5,050 -- 7,313 9,235

625 -- 1,118 -- -- -- (1,118) (1,118) -- 114 -- 290 -- -- -- (264) (264) 26

-- -- 691 440 3,275 145 -- 3,420 4,551 -- -- -- -- -- 2,332 -- 2,332 2,332 -- -- 174 -- -- 3,127 -- 3,127 3,301 -- -- -- -- 991 -- -- 991 991 -- -- 30 -- -- 1,115 -- 1,115 1,145 -- -- -- -- -- -- -- -- -- -- -- 4,616 -- -- 52,766 -- 52,766 57,382 -- -- -- -- 471 8 -- 479 479

407 -- 439 -- -- -- (439) (439) -- -- -- -- -- 285 4 -- 289 289

718 -- 718 -- -- -- (718) (718) -- -- -- 1 -- -- 3,432 -- 3,432 3,433

6,561 -- 6,562 -- -- -- (6,532) (6,532) 30 -- -- -- -- -- -- -- -- -- -- -- 149 -- -- 1,832 -- 1,832 1,981 -- -- 347 -- -- 5,462 -- 5,462 5,809 -- -- -- -- -- 39 -- 39 39 -- -- 1,049 -- 5,040 88 -- 5,128 6,177 -- -- -- -- 953 -- -- 953 953 -- -- -- -- -- 6,605 -- 6,605 6,605

8,425 412 21,564 440 13,278 96,362 (9,071) 100,569 122,573

17,641 412 38,808 440 114,310 98,766 (22,827) 190,249 229,497

163

Liabilities Fund Balances

YCapital Projects Funds NCombining Statement of Revenues, Expenditures, and Changes in Fund Balances For the year ended September 30, 2017 (In thousands)

Expenditures Property Owners'

Inter- Participation Interest governmental and and Total Capital

Revenues Contributions Other Revenues Outlay Funds Authorized

September 8, 1984 Parkland acquisition -- $ -- -- -- -- Street improvements -- -- -- -- 104 Fire improvements -- -- -- -- -- Total Funds Authorized in 1984 -- -- -- -- 104

Funds Authorized January 19, 1985

Cultural arts -- -- -- -- --

Funds Authorized July 26, 1985

Neighborhood park and recreation -- 5,814 77 5,891 1,848 Total Funds Authorized in 1985 -- 5,814 77 5,891 1,848

Funds Authorized September 3, 1987

Street resurfacing -- -- 3 3 -- Total Funds Authorized in 1987 -- -- 3 3 --

Funds Authorized August 10, 1992

Asbestos abatement/ADA compliance/ East Austin health clinic -- -- -- -- 61

Erosion & flood control -- -- -- -- -- Street & traffic signals -- -- -- -- -- Barton Creek greenway -- -- -- -- -- Total Funds Authorized in 1992 -- -- -- -- 61

Funds Authorized November 3, 1998

Cultural arts and land -- -- -- -- -- Traffic signals -- -- -- -- 55 Public safety facilities -- -- -- -- 105 Parks and recreation facilities 83 -- -- 83 10 Total Funds Authorized in 1998 83$ -- -- 83 170

02/16 10:33a

164

Revenues

City of Austin, Texas Exhibit E-18

02/16 10:33a

Excess (Deficiency) Issuance Total Net Fund Fund of Revenues of Tax Other Change Balances Balances

Over Supported Bond Transfers Transfers Financing In Fund at Beginning at End Expenditures Debt Premiums In Out Sources (Uses) Balances of Year of Year

-- -- -- -- (2) (2) (2) 2 -- (104) -- -- -- -- -- (104) 810 706

-- -- -- -- (4) (4) (4) 4 -- (104) -- -- -- (6) (6) (110) 816 706

-- -- -- -- (263) (263) (263) 263 --

4,043 -- -- -- (15) (15) 4,028 17,857 21,885 4,043 -- -- -- (278) (278) 3,765 18,120 21,885

3 -- -- -- -- -- 3 247 250 3 -- -- -- -- -- 3 247 250

(61) -- -- -- (5) (5) (66) 112 46 -- -- -- -- (1) (1) (1) 1 -- -- -- -- -- (8) (8) (8) 8 -- -- -- -- -- -- -- -- 320 320

(61) -- -- -- (14) (14) (75) 441 366

-- -- -- -- -- -- -- 39 39 (55) -- -- -- -- -- (55) 3,696 3,641

(105) -- -- -- (4) (4) (109) 219 110 73 -- -- -- -- -- 73 62 135

(87) -- -- -- (4) (4) (91) 4,016 3,925

(Continued)

Other Financing Sources (Uses)

165

Capital Projects Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the year ended September 30, 2017 (In thousands)

Expenditures Property Owners'

Inter- Participation Interest governmental and and Total Capital

Revenues Contributions Other Revenues Outlay Funds Authorized

November 7, 2000 Transportation Mobility Improvement -- $ -- -- -- 1,132 Total Funds Authorized in 2000 -- -- -- -- 1,132

Funds Authorized November 7, 2006

Transportation -- -- -- -- 22 Drainage & Open Spaces -- -- -- -- 826 Parks -- -- -- -- 567 Cultural Facilities -- -- -- -- 1 Affordable Housing -- -- -- -- 59 Central Library -- -- -- -- 2,273 Public Safety -- -- -- -- 94 Total Funds Authorized in 2006 -- -- -- -- 3,842

Funds Authorized November 2, 2010

Mobility -- -- -- -- 1,192 Total Funds Authorized in 2010 -- -- -- -- 1,192

Funds Authorized November 6, 2012

Transportation -- -- -- -- 15,362 Open Space -- -- -- -- -- Parks -- -- -- -- 8,569 Public Safety -- -- -- -- 4,250 Health -- -- -- -- 3,977 Library & Cultural -- -- -- -- 1,018 Total Funds Authorized in 2012 -- -- -- -- 33,176

Funds Authorized November 8, 2016

Mobility -- -- -- -- 13,211 Total Funds Authorized in 2016 -- $ -- -- -- 13,211

166

02/16 10:33a

Revenues

City of Austin, Texas Exhibit E-18

02/16 10:33a (Continued)

Excess (Deficiency) Issuance Total Net Fund Fund of Revenues of Tax Other Change Balances Balances

Over Supported Bond Transfers Transfers Financing In Fund at Beginning at End Expenditures Debt Premiums In Out Sources(Uses) Balances of Year of Year

(1,132) -- -- -- -- -- (1,132) 2,378 1,246 (1,132) -- -- -- -- -- (1,132) 2,378 1,246

(22) -- -- -- -- -- (22) 567 545 (826) -- -- -- -- -- (826) 7,728 6,902 (567) -- -- -- -- -- (567) 2,339 1,772

(1) -- -- -- -- -- (1) 1,253 1,252 (59) -- -- -- -- -- (59) 206 147

(2,273) -- -- -- -- -- (2,273) 3,553 1,280 (94) -- -- -- -- -- (94) 6,415 6,321

(3,842) -- -- -- -- -- (3,842) 22,061 18,219

(1,192) -- -- -- -- -- (1,192) 3,648 2,456 (1,192) -- -- -- -- -- (1,192) 3,648 2,456

(15,362) 24,428 4,752 -- -- 29,180 13,818 12,978 26,796 -- -- -- -- -- -- -- 195 195

(8,569) 15,873 3,054 -- -- 18,927 10,358 4,202 14,560 (4,250) 1,963 382 -- -- 2,345 (1,905) 9,823 7,918 (3,977) 172 33 -- -- 205 (3,772) 3,227 (545) (1,018) 2,784 541 -- -- 3,325 2,307 2,607 4,914

(33,176) 45,220 8,762 -- -- 53,982 20,806 33,032 53,838

(13,211) -- -- -- -- -- (13,211) -- (13,211) (13,211) -- -- -- -- -- (13,211) -- (13,211)

(Continued)

167

Other Financing Sources (Uses)

Capital Projects Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances For the year ended September 30, 2017 (In thousands)

Expenditures Property Owners'

Inter- Participation Interest governmental and and Total Capital

Revenues Contributions Other Revenues Outlay Other funds TPSD general improvements 1,560$ 1,081 425 3,066 3,439 Library automation system -- -- -- -- 13,493 Fire/EMS/NW Austin MUD #1 -- -- 6 6 -- General government projects -- 131 120 251 21,284 Health projects 170 -- -- 170 1,288 Build Austin 1,380 -- -- 1,380 1,658 CMTA Mobility 2,403 -- 31 2,434 4,710 Park improvements 484 -- -- 484 1,362 Parks and Recreation 191 1,287 -- 1,478 2,328 Police and courts -- -- -- -- -- Fire - general -- -- -- -- 302 Capital reserve -- -- -- -- 156 CTM -- 2,174 -- 2,174 18,450 GCP-PLD In Lieu Of Fee -- 471 -- 471 -- Public Works 678 344 -- 1,022 1,243 GCP-PLD Development Fee -- 284 1 285 -- Watershed Protection -- -- -- -- -- Great Streets -- -- 1,909 1,909 -- City Hall, plaza, parking garage -- -- -- -- -- Conservation land -- -- -- -- 1 Colony Park -- 61 -- 61 1,139 NPZ general -- -- -- -- 2,625 Economic Development -- -- -- -- -- Waller Creek Tunnel -- -- 55 55 2,492 Fleet general improvements -- -- -- -- 77 Interest income fund -- -- 902 902 -- Total other funds 6,866 5,833 3,449 16,148 76,047

0Totals 6,949$ 11,647 3,529 22,125 130,783

168

02/16 10:33a

Revenues

City of Austin, Texas Exhibit E-18

02/16 10:33a (Continued)

Excess (Deficiency) Issuance Total Net Fund Fund of Revenues of Tax Other Change Balances Balances

Over Supported Bond Transfers Transfers Financing In Fund at Beginning at End Expenditures Debt Premiums In Out Sources(Uses) Balances of Year of Year

(373) -- -- 1,691 (130) 1,561 1,188 12,058 13,246 (13,493) 2,894 656 75 -- 3,625 (9,868) 10,208 340

6 -- -- -- -- -- 6 765 771 (21,033) 22,929 1,838 4,930 (813) 28,884 7,851 (538) 7,313 (1,118) -- -- -- -- -- (1,118) -- (1,118)

(278) -- -- -- -- -- (278) 14 (264) (2,276) -- -- -- -- -- (2,276) 5,696 3,420

(878) -- -- -- -- -- (878) 3,210 2,332 (850) -- -- 1,347 (150) 1,197 347 2,780 3,127

-- -- -- -- (4) (4) (4) 995 991 (302) -- -- -- -- -- (302) 1,417 1,115 (156) -- -- -- -- -- (156) 156 --

(16,276) 7,678 922 15,355 (20) 23,935 7,659 45,107 52,766 471 -- -- 8 -- 8 479 -- 479

(221) -- -- -- -- -- (221) (218) (439) 285 -- -- 4 -- 4 289 -- 289

-- 40,945 9,246 -- (50,191) -- -- (718) (718) 1,909 -- -- -- (1,000) (1,000) 909 2,523 3,432

-- -- -- 500 -- 500 500 (7,032) (6,532) (1) -- -- -- -- -- (1) 1 --

(1,078) -- -- -- -- -- (1,078) 2,910 1,832 (2,625) -- -- 2,228 (40) 2,188 (437) 5,899 5,462

-- -- -- -- -- -- -- 39 39 (2,437) -- -- -- -- -- (2,437) 7,565 5,128

(77) 467 56 -- (29) 494 417 536 953 902 -- -- -- -- -- 902 5,703 6,605

(59,899) 74,913 12,718 26,138 (52,377) 61,392 1,493 99,076 100,569

(108,658) 120,133 21,480 26,138 (52,679) 115,072 6,414 183,835 190,249

169

Other Financing Sources (Uses)

170

PERMANENT FUNDS Permanent funds account for and report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the City’s programs. The City reports the following nonmajor permanent funds: 3M Maintenance Endowment Fund - Accounts for 3M Mitigation Land Endowment. Ellis Library Trust Fund - Accounts for principal and interest income earned on the principal from the Ellis estate. This income is used for purchasing books on the subject of mental health. Perpetual Care Fund - Accounts for revenues to be used for maintenance and care of cemeteries.

171

es Permanent Funds City of Austin, Texas o Combining Balance Sheet Exhibit E-19 es September 30, 2017

(In thousands) 02/15 3:02p

3M Maintenance Endowment

Ellis Library Trust

Perpetual Care Total

Sept 2014 Total

V ar ia

ASSETS

Pooled investments and cash 50$ 10 1,011 1,071 1,053 #

Total assets 50 10 1,011 1,071 1,053 #

FUND BALANCES Nonspendable:

Permanent funds 50 9 1,011 1,070 1,052 # Restricted -- 1 -- 1 1 -- Total fund balances 50 10 1,011 1,071 1,053 # Total liabilities, deferred inflows of

resources, and fund balances 50$ 10 1,011 1,071 1,053 #

172

es Permanent Funds City of Austin, Texas o Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Exhibit E-20 es For the year ended September 30, 2017

(In thousands) 02/15 3:02p 02/15 3:02p

3M Maintenance Endowment

Ellis Library Trust

Perpetual Care Total

Se pt

201 Varia nce

REVENUES

Interest and other --$ -- -- -- 12 (12)

Total revenues -- -- -- -- 12 (12)

EXPENDITURES

Current: Public recreation and culture -- -- -- -- ### (410)

Total expenditures -- -- -- -- ### (410)

Net change in fund balances -- -- -- -- ### 398 Fund balances at beginning of year 50 10 1,011 1,071 ### (380)

Fund balances at end of year 50$ 10 1,011 1,071 ### 18

173

174

NONMAJOR ENTERPRISE FUNDS Enterprise funds account for the acquisition, operations, and maintenance of the City's facilities and services that are entirely or predominantly supported by user charges or those for which the City has decided that periodic determination of the revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. All activities necessary to provide services are accounted for in these funds, including, but not limited to, administration, operations, and maintenance. The City reports the following nonmajor enterprise funds: Austin Resource Recovery Fund – Accounts for solid waste services activities. Convention Center Fund – Accounts for convention center and public events activities. Drainage Fund – Accounts for drainage activities. Golf Fund – Accounts for golf activities. Transportation Fund – Accounts for transportation activities.

175

Y Nonmajor Enterprise Funds N Combining Statement of Net Position Y September 30, 2017

(In thousands)

Austin Resource Recovery

Convention Center Drainage

ASSETS

Current assets:

Cash 3$ 21 1

Pooled investments and cash 8,360 147,425 145,765

Pooled investments and cash - restricted 2,809 10,361 --

Total pooled investments and cash 11,169 157,786 145,765 Investments - restricted -- 11,163 --

Accounts receivable, net of allowance 9,070 110 4,787

Receivables from other governments 401 -- --

Receivable from other governments - restricted 8 -- 81

Due from other funds -- -- 1,700

Inventories, at cost -- 109 --

Prepaid expenses 51 6 9

Other receivables - restricted -- 28 --

Total current assets 20,702 169,223 152,343

Noncurrent assets:

Pooled investments and cash - restricted 4,847 -- 11,333

Advances to other funds - restricted 269 42 -- Investments - restricted -- 13,305 --

Depreciable capital assets, net 37,707 168,935 122,010

Nondepreciable capital assets 23,289 45,562 234,011

Total noncurrent assets 66,112 227,844 367,354

Total assets 86,814 397,067 519,697

DEFERRED OUTFLOWS OF RESOURCES 15,884$ 25,923 10,661

02/15 2:52p

176

City of Austin, Texas Exhibit F-1

Golf Transportation Total ASSETS

Current assets:

Cash 5 2 32

Pooled investments and cash -- 38,434 339,984

Pooled investments and cash - restricted -- -- 13,170

Total pooled investments and cash -- 38,434 353,154 Investments - restricted -- -- 11,163

Accounts receivable, net of allowance 2 6,058 20,027

Receivables from other governments -- 227 628

Receivable from other governments - restricted -- -- 89

Due from other funds -- -- 1,700

Inventories, at cost -- 2,410 2,519

Prepaid expenses 42 60 168

Other receivables - restricted -- -- 28

Total current assets 49 47,191 389,508

Noncurrent assets:

Pooled investments and cash - restricted 822 -- 17,002

Advances to other funds - restricted -- -- 311 Investments - restricted -- -- 13,305

Depreciable capital assets, net 11,366 25,683 365,701

Nondepreciable capital assets 6,493 2,919 312,274

Total noncurrent assets 18,681 28,602 708,593

Total assets 18,730 75,793 1,098,101

DEFERRED OUTFLOWS OF RESOURCES 1,135 15,914 69,517

(Continued)

177

02/15 2:52p

Nonmajor Enterprise Funds Combining Statement of Net Position September 30, 2017 (In thousands)

Austin Resource Recovery

Convention Center Drainage

LIABILITIES

Current liabilities:

Accounts payable 1,356$ 292 953

Accounts and retainage payable from restricted assets 186 1,358 3,274

Accrued payroll 1,715 828 1,098

Accrued compensated absences 2,258 1,209 1,663

Due to other funds -- -- --

Accrued interest payable from restricted assets -- 899 --

Interest payable on other debt 151 68 143

Bonds payable 6,989 1,368 2,009

Bonds payable from restricted assets -- 12,955 --

Customer and escrow deposits payable from restricted assets 2,809 3,448 302

Accrued landfill closure and postclosure costs 2,794 -- --

Other liabilities -- 595 --

Other liabilities payable from restricted assets -- -- 388

Total current liabilities 18,258 23,020 9,830

Noncurrent liabilities, net of current portion:

Accrued compensated absences -- 67 --

Advances from other funds -- -- 775

Bonds payable, net of discount and inclusive of premium 20,262 150,291 39,971

Net pension liability 59,547 28,675 39,267

Other postemployment benefits payable 34,689 15,877 22,957

Accrued landfill closure and postclosure costs 9,899 -- --

Derivative instruments - interest rate swaps -- 9,915 --

Total noncurrent liabilities 124,397 204,825 102,970

Total liabilities 142,655 227,845 112,800

DEFERRED INFLOWS OF RESOURCES -- 231 14

NET POSITION

Net investment in capital assets 48,596 60,018 310,897

Restricted for:

Bond Reserve -- 10,311 --

Capital projects -- -- 11,031

Debt service 269 10,191 --

Operating reserve -- 4,577 --

Renewal and replacement -- 912 --

Unrestricted (88,822) 108,905 95,616 Total net position (39,957) 194,914 417,544

Reconciliation to government-wide Statement of Net Position

Adjustment to consolidate internal service activities 4,666 2,170 843

Total net position - Business-type activities (35,291)$ 197,084 418,387

178

02/15 2:52p

City of Austin, Texas Exhibit F-1

(Continued)

Golf Transportation Total

LIABILITIES

Current liabilities:

Accounts payable -- 2,087 4,688

Accounts and retainage payable from restricted assets 6 160 4,984

Accrued payroll 155 1,778 5,574

Accrued compensated absences 159 2,375 7,664

Due to other funds 1,700 301 2,001

Accrued interest payable from restricted assets -- -- 899

Interest payable on other debt 5 188 555

Bonds payable 119 4,102 14,587

Bonds payable from restricted assets -- -- 12,955

Customer and escrow deposits payable from restricted assets -- -- 6,559

Accrued landfill closure and postclosure costs -- -- 2,794

Other liabilities -- -- 595

Other liabilities payable from restricted assets -- -- 388

Total current liabilities 2,144 10,991 64,243

Noncurrent liabilities, net of current portion:

Accrued compensated absences 112 106 285

Advances from other funds -- 2,104 2,879

Bonds payable, net of discount and inclusive of premium 193 13,009 223,726

Net pension liability 4,263 59,030 190,782

Other postemployment benefits payable 2,326 33,880 109,729

Accrued landfill closure and postclosure costs -- -- 9,899

Derivative instruments - interest rate swaps -- -- 9,915

Total noncurrent liabilities 6,894 108,129 547,215

Total liabilities 9,038 119,120 611,458

DEFERRED INFLOWS OF RESOURCES -- -- 245

NET POSITION

Net investment in capital assets 17,541 11,614 448,666

Restricted for:

Bond Reserve -- -- 10,311

Capital projects 822 -- 11,853

Debt service -- -- 10,460

Operating reserve -- -- 4,577

Renewal and replacement -- -- 912

Unrestricted (7,536) (39,027) 69,136 Total net position 10,827 (27,413) 555,915

Reconciliation to government-wide Statement of Net Position

Adjustment to consolidate internal service activities 427 2,788 10,894

Total net position - Business-type activities 11,254 (24,625) 566,809

02/15 2:52p

179

Y Nonmajor Enterprise Funds N Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Y For the year ended September 30, 2017

(In thousands) 02/15 2:52p

Austin Resource Recovery

Convention Center Drainage

OPERATING REVENUES

User fees and rentals 109,274$ 40,196 90,926

Total operating revenues 109,274 40,196 90,926

OPERATING EXPENSES

Operating expenses before depreciation 99,189 59,969 66,513

Depreciation and amortization 8,794 9,071 5,832

Total operating expenses 107,983 69,040 72,345

Operating income (loss) 1,291 (28,844) 18,581

NONOPERATING REVENUES (EXPENSES)

Interest and other revenues 120 899 758

Interest on revenue bonds and other debt (664) (6,785) (1,471)

Interest capitalized during construction -- 160 843

Other nonoperating revenue (expense) 38 (1,119) (5,259)

Total nonoperating revenues (expenses) (506) (6,845) (5,129)

Income (loss) before contributions and transfers 785 (35,689) 13,452

Capital contributions 30 -- 3,603 Transfers in 10,711 76,584 50,225 Transfers out (710) (285) (3,660) Change in net position 10,816 40,610 63,620

Total net position, beginning (50,773) 154,304 353,924 Total net position, ending (39,957)$ 194,914 417,544

Reconciliation to government-wide Statement of Activities

Change in net position 10,816 40,610 63,620

Adjustment to consolidate internal service activities 193 824 602

Change in net position - Business-type activities 11,009$ 41,434 64,222

180

City of Austin, Texas Exhibit F-2

Golf Transportation Total

OPERATING REVENUES

User fees and rentals 6,705 113,513 360,614

Total operating revenues 6,705 113,513 360,614

OPERATING EXPENSES

Operating expenses before depreciation 8,226 106,457 340,354

Depreciation and amortization 804 4,273 28,774

Total operating expenses 9,030 110,730 369,128

Operating income (loss) (2,325) 2,783 (8,514)

NONOPERATING REVENUES (EXPENSES)

Interest and other revenues 6 168 1,951

Interest on revenue bonds and other debt (4) (364) (9,288)

Interest capitalized during construction -- -- 1,003

Other nonoperating revenue (expense) 209 (333) (6,464)

Total nonoperating revenues (expenses) 211 (529) (12,798)

Income (loss) before contributions and transfers (2,114) 2,254 (21,312)

Capital contributions 290 123 4,046 Transfers in 500 1,180 139,200 Transfers out (44) (5,354) (10,053)

Change in net position (1,368) (1,797) 111,881

Total net position, beginning 12,195 (25,616) 444,034 Total net position, ending 10,827 (27,413) 555,915

Reconciliation to government-wide Statement of Activities

Change in net position (1,368) (1,797) 111,881

Adjustment to consolidate internal service activities 89 1,210 2,918

Change in net position - Business-type activities (1,279) (587) 114,799

181

Y Nonmajor Enterprise Funds N Combining Statement of Cash Flows Y For the year ended September 30, 2017

(In thousands) 02/15 2:52p

Austin Resource Recovery

Convention Center Drainage

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 109,169$ 40,705 87,302 Cash received from other funds 318 -- 3,161 Cash payments to suppliers for goods and services (16,377) (22,088) (12,607) Cash payments to other funds (24,304) (6,467) (16,057) Cash payments to employees for services (46,435) (25,391) (31,632)

Net cash provided (used) by operating activities 22,371 (13,241) 30,167

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES: Transfers in 52 76,584 50,191 Transfers out (630) (285) -- Loans to other funds -- (3) -- Loans from other funds -- -- 118 Loan repayments to other funds -- -- -- Loan repayments from other funds 62 -- 32 Collections from other governments (167) -- 1,199

Net cash provided (used) by noncapital

financing activities (683) 76,296 51,540

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES: Proceeds from the sale of general obligation bonds

and other tax-supported debt -- -- -- Principal paid on long-term debt (7,661) (12,958) (2,249) Interest paid on revenue bonds and other debt (1,022) (6,321) (1,858) Acquisition and construction of capital assets (7,422) (8,934) (36,581) Contributions from state and federal governments 30 -- -- Contributions in aid of construction -- -- 2,804 Bond issuance costs -- (130) -- Bonds issued for advanced refundings of debt -- 29,080 -- Cash paid for bond refunding escrow -- (28,924) --

Net cash provided (used) by capital and related

financing activities (16,075) (28,187) (37,884)

CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investment securities -- (18,747) -- Proceeds from sale and maturities of investment

securities -- 18,262 -- Interest on investments 120 899 758

Net cash provided (used) by investing activities 120 414 758

Net increase (decrease) in cash and cash equivalents 5,733 35,282 44,581 Cash and cash equivalents, beginning 10,286 122,525 112,518 Cash and cash equivalents, ending 16,019$ 157,807 157,099

182

City of Austin, Texas Exhibit F-3

02/15 2:52p

Golf Transportation Total

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 6,703 112,868 356,747 Cash received from other funds -- 167 3,646 Cash payments to suppliers for goods and services (1,789) (23,684) (76,545) Cash payments to other funds (1,206) (18,052) (66,086) Cash payments to employees for services (4,296) (51,595) (159,349)

Net cash provided (used) by operating activities (588) 19,704 58,413

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES: Transfers in 500 983 128,310 Transfers out (44) (2,339) (3,298) Loans to other funds -- -- (3) Loans from other funds -- -- 118 Loan repayments to other funds (32) (301) (333) Loan repayments from other funds -- -- 94 Collections from other governments -- (222) 810

Net cash provided (used) by noncapital

financing activities 424 (1,879) 125,698

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES: Proceeds from the sale of general obligation bonds

and other tax-supported debt -- (119) (119) Principal paid on long-term debt (116) (3,887) (26,871) Interest paid on revenue bonds and other debt (14) (641) (9,856) Acquisition and construction of capital assets (568) (2,035) (55,540) Contributions from state and federal governments -- -- 30 Contributions in aid of construction 290 -- 3,094 Bond issuance costs -- -- (130) Bonds issued for advanced refundings of debt -- -- 29,080 Cash paid for bond refunding escrow -- -- (28,924)

Net cash provided (used) by capital and related

financing activities (408) (6,682) (89,236)

CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investment securities -- -- (18,747) Proceeds from sale and maturities of investment

securities -- -- 18,262 Interest on investments 6 168 1,951

Net cash provided (used) by investing activities 6 168 1,466

Net increase (decrease) in cash and cash equivalents (566) 11,311 96,341 Cash and cash equivalents, beginning 1,393 27,125 273,847 Cash and cash equivalents, ending 827 38,436 370,188

(Continued)

183

Nonmajor Enterprise Funds Combining Statement of Cash Flows For the year ended September 30, 2017 (In thousands) 02/15 2:52p

Austin Resource Recovery

Convention Center Drainage

RECONCILIATION OF OPERATING INCOME TO NET

CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) 1,291$ (28,844) 18,581 Adjustments to reconcile operating income to net cash

provided by operating activities: Depreciation and amortization 8,794 9,071 5,832 Change in assets and liabilities:

(Increase) decrease in accounts receivable (85) 361 (359) Increase (decrease) in allowance for doubtful accounts (204) 3 (104) (Increase) decrease in inventory -- (11) -- (Increase) decrease in prepaid expenses and

other assets (36) 24 (4) (Increase) decrease in deferred outflows related

to operations 3,533 1,539 2,512 Increase (decrease) in accounts payable (85) (334) (473) Increase (decrease) in accrued payroll and

compensated absences 350 312 246 Increase (decrease) in net pension liability 2,808 1,491 610 Increase (decrease) in other postemployment benefits payable 5,413 2,406 3,354 Increase (decrease) in other liabilities 90 595 (28) Increase (decrease) in customer deposits 502 146 --

Total adjustments 21,080 15,603 11,586 Net cash provided (used) by operating activities 22,371$ (13,241) 30,167

NONCASH INVESTING, CAPITAL, AND FINANCING

ACTIVITIES: Capital assets contributed from other funds --$ -- 799 Capital assets contributed to other funds (192) (583) (5,236) Amortization of bond (discounts) premiums 270 849 448 Amortization of deferred gain (loss) on refundings (17) (1,775) (57) Gain (loss) on disposal of assets (61) (405) (23) Transfers from other funds 10,659 -- 34 Transfers to other funds (80) -- (3,660) Capitalized interest -- 160 843

184

City of Austin, Texas Exhibit F-3

02/15 2:52p (Continued)

Golf Transportation Total

RECONCILIATION OF OPERATING INCOME TO NET

CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) (2,325) 2,783 (8,514) Adjustments to reconcile operating income to net cash

provided by operating activities: Depreciation and amortization 804 4,273 28,774 Change in assets and liabilities:

(Increase) decrease in accounts receivable (2) (454) (539) Increase (decrease) in allowance for doubtful accounts -- (23) (328) (Increase) decrease in inventory -- 537 526 (Increase) decrease in prepaid expenses and

other assets -- (32) (48) (Increase) decrease in deferred outflows related

to operations 295 2,662 10,541 Increase (decrease) in accounts payable (1) (14) (907) Increase (decrease) in accrued payroll and

compensated absences 19 371 1,298 Increase (decrease) in net pension liability 23 3,788 8,720 Increase (decrease) in other postemployment benefits payable 599 5,813 17,585 Increase (decrease) in other liabilities -- -- 657 Increase (decrease) in customer deposits -- -- 648

Total adjustments 1,737 16,921 66,927 Net cash provided (used) by operating activities (588) 19,704 58,413

NONCASH INVESTING, CAPITAL, AND FINANCING

ACTIVITIES: Capital assets contributed from other funds -- 123 922 Capital assets contributed to other funds -- -- (6,011) Amortization of bond (discounts) premiums 8 248 1,823 Amortization of deferred gain (loss) on refundings -- -- (1,849) Gain (loss) on disposal of assets (2) (337) (828) Transfers from other funds -- 197 10,890 Transfers to other funds -- (3,015) (6,755) Capitalized interest -- -- 1,003

185

186

INTERNAL SERVICE FUNDS Internal service funds account for and report the financing of goods or services provided by one department to other departments of the City and other agencies on a cost- reimbursement basis. The City reports the following internal service funds: Capital Projects Management Fund – Accounts for project delivery costs related to the City’s capital improvement projects. Combined Transportation, Emergency and Communications Center Fund (CTECC) – Accounts for the operation of shared critical emergency communications and transportation management for the region. Employee Benefits Fund – Accounts for activities related to the health, dental, and life insurance costs of City employees. Fleet Maintenance Fund - Accounts for City vehicle and equipment services. Information Systems Fund – Accounts for the activities of the Communications and Technology Management Department. Liability Reserve Fund – Accounts for coverage of the City’s major claims liabilities. Support Services Fund - Accounts for the activities of the various support service departments. Wireless Communication Fund - Accounts for communication support activities. Workers’ Compensation Fund - Accounts for workers’ compensation costs.

187

YInternal Service Funds NCombining Statement of Net Position YSeptember 30, 2017 (In thousands) 02/24 10:50a

Capital Projects

Management CTECC Employee Benefits

Fleet Maintenance

Information Systems

ASSETS Current assets:

Cash --$ -- -- 1 -- Pooled investments and cash 574 504 56,312 15,319 11,643 Cash held by trustee - restricted -- -- 1,965 -- -- Accounts receivable, net of allowance 259 2,146 7,294 36 89 Receivables from other governments 2 -- 340 9 147 Inventories, at cost -- -- -- 1,801 -- Prepaid expenses 24 -- -- -- 134

Total current assets 859 2,650 65,911 17,166 12,013 Noncurrent assets:

Pooled investments and cash - restricted -- -- -- 4,447 -- Advances to other funds -- -- -- 3 -- Depreciable capital assets, net 429 20,267 -- 7,623 11,424 Nondepreciable capital assets -- 32 -- 327 --

Total noncurrent assets 429 20,299 -- 12,400 11,424 Total assets 1,288 22,949 65,911 29,566 23,437

DEFERRED OUTFLOWS OF RESOURCES -- -- -- 106 --

LIABILITIES Current liabilities:

Accounts payable 7 718 2,688 3,578 2,353 Accrued payroll 664 184 -- 680 994 Accrued compensated absences 964 297 -- 886 1,747 Claims payable -- -- 18,822 -- -- Due to other governments -- -- -- 3 -- Accrued interest payable from restricted assets -- -- -- 10 -- Bonds payable -- -- -- 335 -- Customer and escrow deposits

payable from restricted assets -- -- -- -- -- Other liabilities -- -- 1,859 -- --

Total current liabilities 1,635 1,199 23,369 5,492 5,094 Noncurrent liabilities, net of current portion:

Accrued compensated absences -- 52 -- -- -- Claims payable -- -- -- -- -- Bonds payable, net of discount and inclusive of premium -- -- -- 2,719 --

Total noncurrent liabilities -- 52 -- 2,719 -- Total liabilities 1,635 1,251 23,369 8,211 5,094

DEFERRED INFLOWS OF RESOURCES -- -- -- -- --

NET POSITION Net investment in capital assets 429 20,299 -- 4,896 11,424 Restricted for:

Capital projects -- -- -- 4,447 -- Unrestricted (deficit) (776) 1,399 42,542 12,118 6,919 Total net position (347)$ 21,698 42,542 21,461 18,343

188

City of Austin, Texas Exhibit G-1

Liability Reserve

Support Services

Wireless Communication

Workers' Compensation Total

ASSETS Current assets:

Cash -- 10 -- -- 11 Pooled investments and cash 6,371 27,017 181 34,997 152,918 Cash held by trustee - restricted -- -- -- -- 1,965 Accounts receivable, net of allowance -- 2 374 -- 10,200 Receivables from other governments -- 1,549 40 -- 2,087 Inventories, at cost -- -- 495 -- 2,296 Prepaid expenses -- 168 -- -- 326

Total current assets 6,371 28,746 1,090 34,997 169,803 Noncurrent assets:

Pooled investments and cash - restricted -- -- -- -- 4,447 Advances to other funds -- 4 -- -- 7 Depreciable capital assets, net -- 3,443 15,053 -- 58,239 Nondepreciable capital assets -- 21 262 -- 642

Total noncurrent assets -- 3,468 15,315 -- 63,335 Total assets 6,371 32,214 16,405 34,997 233,138

DEFERRED OUTFLOWS OF RESOURCES -- 1 -- -- 107

LIABILITIES Current liabilities:

Accounts payable 25 8,356 279 245 18,249 Accrued payroll -- 3,398 152 -- 6,072 Accrued compensated absences -- 4,852 257 -- 9,003 Claims payable 1,870 -- -- 5,661 26,353 Due to other governments -- -- -- -- 3 Accrued interest payable from restricted assets -- -- -- -- 10 Bonds payable -- 39 -- -- 374 Customer and escrow deposits

payable from restricted assets -- 1,758 -- -- 1,758 Other liabilities -- 655 156 -- 2,670

Total current liabilities 1,895 19,058 844 5,906 64,492 Noncurrent liabilities, net of current portion:

Accrued compensated absences -- 113 -- -- 165 Claims payable 3,105 -- -- 19,638 22,743 Bonds payable, net of discount and inclusive of premium -- 56 -- -- 2,775

Total noncurrent liabilities 3,105 169 -- 19,638 25,683 Total liabilities 5,000 19,227 844 25,544 90,175

DEFERRED INFLOWS OF RESOURCES -- 1 -- -- 1

NET POSITION Net investment in capital assets -- 3,369 15,315 -- 55,732 Restricted for:

Capital projects -- -- -- -- 4,447 Unrestricted (deficit) 1,371 9,618 246 9,453 82,890 Total net position 1,371 12,987 15,561 9,453 143,069

189

02/24 10:50a

Y Internal Service Funds N Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Y For the year ended September 30, 2017

(In thousands)

Capital Projects

Management CTECC Employee Benefits

Fleet Maintenance

Information Systems

OPERATING REVENUES

Billings to departments 21,162$ 14,488 151,496 46,225 56,794

Employee contributions -- -- 44,224 -- -- Operating revenues from other governments -- 3,912 -- -- --

Other operating revenues 2,541 -- 1,484 1,795 390

Total operating revenues 23,703 18,400 197,204 48,020 57,184

OPERATING EXPENSES

Operating expenses before depreciation 21,939 14,749 178,205 47,533 46,667

Depreciation and amortization 158 4,051 -- 752 2,798

Total operating expenses 22,097 18,800 178,205 48,285 49,465

Operating income (loss) 1,606 (400) 18,999 (265) 7,719

NONOPERATING REVENUES (EXPENSES)

Interest and other revenues -- 4 (111) 87 35

Interest on bonds and other debt -- -- -- (133) --

Other nonoperating revenues (expenses) (1) (6) -- (6,448) --

Total nonoperating revenues (expenses) (1) (2) (111) (6,494) 35

Income (loss) before contributions and transfers 1,605 (402) 18,888 (6,759) 7,754

Capital contributions -- 1,285 -- 29 2,347

Transfers in -- -- -- 10 --

Transfers out (144) (2,453) -- (1,018) (7,486)

Change in net position 1,461 (1,570) 18,888 (7,738) 2,615

Total net position, beginning (1,808) 23,268 23,654 29,199 15,728

Total net position, ending (347)$ 21,698 42,542 21,461 18,343

02/15 2:53p

190

City of Austin, Texas Exhibit G-2

Liability Reserve

Support Services

Wireless Communication

Workers' Compensation Total

OPERATING REVENUES

Billings to departments 4,061 117,666 11,004 12,453 435,349

Employee contributions -- -- -- -- 44,224 Operating revenues from other governments -- -- 498 -- 4,410

Other operating revenues 1,287 3,628 2,182 -- 13,307

Total operating revenues 5,348 121,294 13,684 12,453 497,290

OPERATING EXPENSES

Operating expenses before depreciation 4,852 113,762 10,559 9,530 447,796

Depreciation and amortization -- 523 3,317 -- 11,599

Total operating expenses 4,852 114,285 13,876 9,530 459,395

Operating income (loss) 496 7,009 (192) 2,923 37,895

NONOPERATING REVENUES (EXPENSES)

Interest and other revenues (16) 92 4 (76) 19

Interest on bonds and other debt -- (3) -- -- (136)

Other nonoperating revenues (expenses) -- (28) -- -- (6,483)

Total nonoperating revenues (expenses) (16) 61 4 (76) (6,600)

Income (loss) before contributions and transfers 480 7,070 (188) 2,847 31,295

Capital contributions -- 124 1,027 -- 4,812

Transfers in -- 23 2,896 -- 2,929

Transfers out -- (3,160) (5,593) -- (19,854)

Change in net position 480 4,057 (1,858) 2,847 19,182

Total net position, beginning 891 8,930 17,419 6,606 123,887

Total net position, ending 1,371 12,987 15,561 9,453 143,069

02/15 2:53p

191

Internal Service Funds Combining Statement of Cash Flows For the year ended September 30, 2017 (In thousands) 02/16 10:51a

Capital Projects

Management CTECC Employee Benefits

Fleet Maintenance

Information Systems

CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers 1,533$ 3,684 45,023 1,814 256

Cash received from other funds 21,162 14,488 151,496 46,225 56,794

Cash payments to suppliers for goods and services (1,323) (8,752) (10,835) (21,893) (16,282)

Cash payments to other funds (2,126) (941) (1,957) (6,478) (670)

Cash payments to employees for services (18,441) (5,278) -- (19,665) (27,907)

Cash payments to claimants/beneficiaries -- -- (160,180) -- --

Net cash provided (used) by operating activities 805 3,201 23,547 3 12,191

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES: Transfers in -- -- -- -- --

Transfers out -- (2,453) -- -- (7,486)

Net cash provided (used) by noncapital

financing activities -- (2,453) -- -- (7,486)

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES:

Principal paid on long-term debt -- -- -- (445) --

Interest paid on revenue bonds and other debt -- -- -- (147) --

Acquisition and construction of capital assets (231) (820) -- (6,891) (459)

Net cash provided (used) by capital and related

financing activities (231) (820) -- (7,483) (459)

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest on investments -- 4 (111) 87 35

Net cash provided (used) by investing activities -- 4 (111) 87 35

Net increase (decrease) in cash and cash equivalents 574 (68) 23,436 (7,393) 4,281

Cash and cash equivalents, beginning -- 572 34,841 27,160 7,362

Cash and cash equivalents, ending 574$ 504 58,277 19,767 11,643

192

City of Austin, Texas Exhibit G-3

Liability Reserve

Support Services

Wireless Communication

Workers' Compensation Total

CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers 1,287 2,079 2,589 -- 58,265

Cash received from other funds 4,061 117,666 11,004 12,453 435,349

Cash payments to suppliers for goods and services (881) (4,439) (6,196) (5,107) (75,708)

Cash payments to other funds (363) (9,138) (534) (1,845) (24,052)

Cash payments to employees for services -- (96,136) (4,252) -- (171,679)

Cash payments to claimants/beneficiaries (8,373) -- -- (3,082) (171,635)

Net cash provided (used) by operating activities (4,269) 10,032 2,611 2,419 50,540

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES: Transfers in -- -- 2,370 -- 2,370

Transfers out -- (3,138) (5,593) -- (18,670)

Net cash provided (used) by noncapital

financing activities -- (3,138) (3,223) -- (16,300)

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES:

Principal paid on long-term debt -- (40) -- -- (485)

Interest paid on revenue bonds and other debt -- (7) -- -- (154)

Acquisition and construction of capital assets -- (24) -- -- (8,425)

Net cash provided (used) by capital and related

financing activities -- (71) -- -- (9,064)

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest on investments (16) 92 5 (76) 20

Net cash provided (used) by investing activities (16) 92 5 (76) 20

Net increase (decrease) in cash and cash equivalents (4,285) 6,915 (607) 2,343 25,196

Cash and cash equivalents, beginning 10,656 20,112 788 32,654 134,145

Cash and cash equivalents, ending 6,371 27,027 181 34,997 159,341

(Continued)

193

02/16 10:51a

Internal Service Funds Combining Statement of Cash Flows For the year ended September 30, 2017 (In thousands) 02/28 3:46p

Capital Projects

Management CTECC Employee Benefits

Fleet Maintenance

Information Systems

RECONCILIATION OF OPERATING INCOME TO NET

CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) 1,606$ (400) 18,999 (265) 7,719 Adjustments to reconcile operating income to net cash

provided by operating activities: Depreciation and amortization 158 4,051 -- 752 2,798 Change in assets and liabilities:

(Increase) decrease in working capital advances -- -- -- -- -- (Increase) decrease in accounts receivable (1) (228) (685) (6) 13 (Increase) decrease in receivable from other governments (2) -- -- (9) (147) (Increase) decrease in due from other funds -- -- -- -- -- (Increase) decrease in inventory -- -- -- (249) -- (Increase) decrease in prepaid expenses and

other assets -- 6 -- -- 272 (Increase) decrease in deferred outflows related

to operations -- -- -- 24 -- (Increase) decrease in advance to other funds -- -- -- 34 -- Increase (decrease) in accounts payable (57) (264) 314 (296) 1,452 Increase (decrease) in accrued payroll and

compensated absences 112 36 -- 19 84 Increase (decrease) in claims payable -- -- 4,512 -- -- Increase (decrease) in due to other governments -- -- -- (1) -- Increase (decrease) in due to other funds (1,005) -- -- -- -- Increase (decrease) in other liabilities -- -- 407 -- -- Increase (decrease) in customer deposits (6) -- -- -- --

Total adjustments (801) 3,601 4,548 268 4,472 Net cash provided (used) by operating activities 805$ 3,201 23,547 3 12,191

NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES:

Capital assets contributed from other funds --$ 1,285 -- 6,448 2,347 Capital assets contributed to other funds -- -- -- (29) -- Amortization of bond discounts and premiums -- -- -- 38 -- Amortization of deferred gain (loss) on refundings -- -- -- (24) -- Gain (loss) on disposal of assets -- (6) -- (2) -- Transfers from other funds -- -- -- 10 -- Transfers to other funds (144) -- -- (1,018) --

194

City of Austin, Texas Exhibit G-3

(Continued)

Liability Reserve

Support Services

Wireless Communication

Workers' Compensation Total

RECONCILIATION OF OPERATING INCOME TO NET

CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) 496 7,009 (192) 2,923 37,895 Adjustments to reconcile operating income to net cash

provided by operating activities: Depreciation and amortization -- 523 3,317 -- 11,599 Change in assets and liabilities:

(Increase) decrease in working capital advances -- -- -- -- -- (Increase) decrease in accounts receivable -- -- (51) -- (958) (Increase) decrease in receivable from other governments -- (1,549) (40) -- (1,747) (Increase) decrease in due from other funds -- 1,005 -- -- 1,005 (Increase) decrease in inventory -- -- (210) -- (459) (Increase) decrease in prepaid expenses and

other assets -- (62) -- -- 216 (Increase) decrease in deferred outflows related

to operations -- -- -- -- 24 (Increase) decrease in advance to other funds -- 1 -- -- 35 Increase (decrease) in accounts payable (376) 1,086 103 (139) 1,823 Increase (decrease) in accrued payroll and

compensated absences -- 390 25 -- 666 Increase (decrease) in claims payable (4,389) -- -- (365) (242) Increase (decrease) in due to other governments -- -- -- -- (1) Increase (decrease) in due to other funds -- -- -- -- (1,005) Increase (decrease) in other liabilities -- 148 (341) -- 214 Increase (decrease) in customer deposits -- 1,481 -- -- 1,475

Total adjustments (4,765) 3,023 2,803 (504) 12,645 Net cash provided (used) by operating activities (4,269) 10,032 2,611 2,419 50,540

NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES:

Capital assets contributed from other funds -- 124 1,383 -- 11,587 Capital assets contributed to other funds -- (14) (356) -- (399) Amortization of bond discounts and premiums -- 3 -- -- 41 Amortization of deferred gain (loss) on refundings -- -- -- -- (24) Gain (loss) on disposal of assets -- (14) -- -- (22) Transfers from other funds -- 23 526 -- 559 Transfers to other funds -- (22) -- -- (1,184)

02/28 3:46p

195

196

Private-Purpose Trust Funds General Government Unclaimed Property Fund - Accounts for and reports unclaimed City of Austin checks. Transportation, Planning, and Sustainability Public School Energy Assistance Fund - Accounts for and reports contributions for the benefit of public schools energy bills. Contributions are received with electric bill payments. Voluntary Utility Assistance Fund - Accounts for and reports contributions for the benefit of indigent utility customers. Contributions are received with electric bill payments. Public Recreation and Culture First Step - A Community Project Fund - Accounts for and reports programs and activities that improve community relations. Science Fest Fund - Accounts for and reports all contributions, registration fees and other donations received for the Regional Science Festival. Urban Growth Management Leveraged Loan Pool Fund - Accounts for and reports funds that are held to leverage private capital and state or federal resources to stimulate business investments. Telecommunity Partnership Fund - Accounts for and reports the training needs of the Austin community and creating opportunities for individuals through partnerships with local employers.

FIDUCIARY FUNDS Fiduciary funds account for assets held by the City in a trustee capacity or as an agent for other agencies, individuals, private organizations, or governmental units. The City utilizes private-purpose trust funds and agency funds which are considered fiduciary funds. Private-purpose trust funds account for and report trust arrangements under which principal and interest income benefits individuals, private organizations, or other governments. Agency funds are purely custodial and thus do not involve measurement of results of operations. The City reports the following private-purpose trust funds and agency funds: Agency Funds Campaign Financing Fund - Accounts for and reports donations and fees for the Austin Fair Campaign Ordinance. Estancia Hill Country Debt Management Fund – Accounts for debt service payments made by the Trustee for special assessment debt issued for the Estancia Hill Country Public Improvement District. Indian Hills Debt Management Fund – Accounts for debt service payments made by the Trustee for special assessment debt issued for the Indian Hills Public Improvement District. Municipal Courts Fund - Accounts for and reports service fees collected at Municipal Court that will be remitted to the State Comptroller of Public Accounts. Neighborhood Revitalization Fund - Accounts for and reports escrow deposits and payments to loan recipients. Whisper Valley Debt Management Fund – Accounts for debt service payments made by the Trustee for special assessment debt issued for the Whisper Valley Public Improvement District.

Fiduciary Funds City of Austin, Texas Private-purpose Trust Funds Exhibit H-1 Combining Statement of Fiduciary Net Position September 30, 2017

Ye(In thousands)

Net

Pooled Position

Investments Other Total Other Total Held in

and Cash Assets Assets Liabilities Liabilities Trust

02FBA0010 02FBA0030 02FBL0040 02FBN0010 General government

Unclaimed Property 1,586$ -- 1,586 1,469 1,469 117

Total general government 1,586 -- 1,586 1,469 1,469 117

Transportation, planning,

and sustainability

Public School Energy Assistance 20 -- 20 -- -- 20 Voluntary Utility Assistance -- -- -- -- -- -- Total transportation, planning, and sustainability 20 -- 20 -- -- 20

Public recreation and culture First Step - A Community Project 14 -- 14 -- -- 14 Science Fest -- 79 79 -- -- 79 Total public recreation and culture 14 79 93 -- -- 93

Urban growth management Leveraged Loan Pool 449 121 570 -- -- 570 Telecommunity Partnership 16 -- 16 -- -- 16 Total urban growth management 465 121 586 -- -- 586

Total 2,085$ 200 2,285 1,469 1,469 816

2014 Total 1,829 120 1,949 1,191 1,215 734

LiabilitiesAssets

02/15 2:54p

197

Fiduciary Funds City of Austin, Texas Private-purpose Trust Funds Exhibit H-2 Combining Statement of Changes in Fiduciary Net Position For the year ended September 30, 2017

Ye(In thousands) #########

Additions Deductions Net Net

Interest Net Position Position

and Total Benefit Increase at Beginning at End

Contributions Other Additions Payments (Decrease) of Year of Year 02FIR0010 02FIR0020 02FIE0010

General government

Unclaimed Property -- $ 12 12 1 11 106 117

Total general government -- 12 12 1 11 106 117

Transportation, planning,

and sustainability

Public School Energy Assistance 20 -- 20 9 11 9 20

Voluntary Utility Assistance 1,565 -- 1,565 1,565 -- -- --

Total transportation, planning,

and sustainability 1,585 -- 1,585 1,574 11 9 20

Public recreation and culture

First Step - A Community Project -- -- -- -- -- 14 14

Science Fest 159 -- 159 80 79 -- 79

Total public recreation

and culture 159 -- 159 80 79 14 93

Urban growth management

Leveraged Loan Pool -- 3 3 -- 3 567 570

Telecommunity Partnership -- -- -- -- -- 16 16

Total urban growth

management -- 3 3 -- 3 583 586

Total 1,744$ 15 1,759 1,655 104 712 816

02/15 2:54p

198

Fiduciary Funds City of Austin, Texas Agency Funds Exhibit H-3 Combining Statement of Changes in Assets and Liabilities For the year ended September 30, 2017

Ye(In thousands) 02/15 2:54p

Balance Balance at Beginning at End

of Year Additions Deductions of Year

Campaign Financing Fund Assets Pooled investments and cash 62$ 27 65 24 Total assets 62 27 65 24

Liabilities Deposits and other liabilities 62 -- 38 24 Total liabilities 62 -- 38 24

Estancia Hill Country Debt Management Assets Investments held by trustee -- 3,336 1,332 2,004 Total assets -- 3,336 1,332 2,004

Liabilities Deposits and other liabilities -- 3,336 1,332 2,004 Total liabilities -- 3,336 1,332 2,004

Indian Hills Debt Management Assets Investments held by trustee -- 593 317 276 Total assets -- 593 317 276

Liabilities Deposits and other liabilities -- 593 317 276 Total liabilities -- 593 317 276

Municipal Courts Assets Pooled investments and cash 1,708 8,225 8,095 1,838 Total assets 1,708 8,225 8,095 1,838

Liabilities Accounts payable 1 7,500 7,446 55 Due to other governments 1,411 13,351 13,293 1,469 Deposits and other liabilities 296 2,335 2,317 314 Total liabilities 1,708 23,186 23,056 1,838

Neighborhood Revitalization Assets Pooled investments and cash 236 -- -- 236 Total assets 236 -- -- 236

Liabilities Deposits and other liabilities 236 -- -- 236 Total liabilities 236 -- -- 236

Whisper Valley Debt Management Assets Investments held by trustee -- 3,602 2,019 1,583 Total assets -- 3,602 2,019 1,583

Liabilities Deposits and other liabilities -- 3,602 2,019 1,583 Total liabilities -- 3,602 2,019 1,583

Total Agency Funds Assets Pooled investments and cash 2,006 8,252 8,160 2,098 Investments held by trustee -- 7,531 3,668 3,863 Total assets 2,006 15,783 11,828 5,961

Liabilities Accounts payable 1 7,500 7,446 55 Due to other governments 1,411 13,351 13,293 1,469 Deposits and other liabilities 594 9,866 6,023 4,437 Total liabilities 2,006$ 30,717 26,762 5,961

02/15 2:54p

199

200

DISCRETELY PRESENTED COMPONENT UNITS The City reports the following discretely presented component units: Austin-Bergstrom Landhost Enterprises, Inc. (ABLE) – This legally separate entity issues revenue bonds to finance the cost of acquiring, improving, equipping a full-service hotel on the airport property. Austin Convention Enterprises, Inc (ACE) – This legally separate entity owns, operates, and financies the Austin Convention Center Hotel. Waller Creek Local Government Corporation (WCLGC) – This legally separate entity was created to finance, design, construct, maintain and operate certain public improvements located around the Waller Creek Redevelopment Project district.

Y Discretely Presented Component Units City of Austin, Texas N Combining Statement of Net Position Exhibit I-1 Y September 30, 2017 02/16 10:54a

(In thousands)

Austin Bergstrom Landhost

Enterprises, Inc. (1)

Austin Convention Enterprises,

Inc. (1) Total ASSETS

Cash 290$ 3,935 4,225 Accounts receivable, net of allowance 228 3,682 3,910 Inventories, at cost 54 907 961 Prepaid expenses 103 525 628

Total current assets 675 9,049 9,724 Noncurrent assets:

Cash - restricted 3,000 -- 3,000 Investments- restricted -- 63,717 63,717 Investments held by trustee - restricted 2,168 -- 2,168 Cash held by trustee - restricted 353 -- 353 Depreciable capital assets, net 22,152 156,891 179,043 Nondepreciable capital assets -- 15,554 15,554 Other long-term assets -- 5,111 5,111

Total noncurrent assets 27,673 241,273 268,946 Total assets 28,348 250,322 278,670

DEFERRED OUTFLOWS OF RESOURCES -- 16,669 16,669

LIABILITIES Current liabilities:

Accounts payable 268 7,845 8,113 Accrued payroll 267 -- 267 Accrued interest payable from restricted assets 1,676 6,036 7,712 Bonds payable 60,944 5,820 66,764 Capital lease obligations payable 7 -- 7 Other liabilities 2,610 3,115 5,725

Total current liabilities 65,772 22,816 88,588 Noncurrent liabilities, net of current portion:

Bonds payable, net of discount and inclusive of premium -- 229,955 229,955 Other liabilities payable from restricted assets 3,000 3,000

Total noncurrent liabilities 3,000 229,955 232,955 Total liabilities 68,772 252,771 321,543

NET POSITION Net investment in capital assets (38,792) (21,693) (60,485) Restricted for:

Capital Projects 1,000 -- 1,000 Debt service -- 28,795 28,795

Unrestricted (2,632) 7,118 4,486 Total net position (40,424)$ 14,220 (26,204)

(1) Data as of December 31, 2016, the fiscal year end for this component unit. See Note 1 for additional information about how to obtain t

separately audited financial statements for this component unit.

201

Y Discretely Presented Component Units City of Austin, Texas N Combining Statement of Revenues, Expenses, and Changes in Net Position Exhibit I-2 Y For the year ended September 30, 2017

(In thousands) 02/16 10:58a

Austin Bergstrom Landhost

Enterprises, Inc. (1)

Austin Convention Enterprises,

Inc. (1) Total

OPERATING REVENUES User fees and rentals 16,853$ 78,900 95,753

Total operating revenues 16,853 78,900 95,753

OPERATING EXPENSES Operating expenses before depreciation 12,771 45,294 58,065 Depreciation and amortization 1,225 9,386 10,611

Total operating expenses 13,996 54,680 68,676 Operating income (loss) 2,857 24,220 27,077

NONOPERATING REVENUES (EXPENSES) Interest and other revenues 19 3 22 Interest on revenue bonds and other debt (4,827) (12,629) (17,456) Other nonoperating revenue (expense) -- (3,477) (3,477)

Total nonoperating revenues (expenses) (4,808) (16,103) (20,911)

Change in net position (1,951) 8,117 6,166

Total net position, beginning (38,473) 6,103 (32,370) Total net position, ending (40,424)$ 14,220 (26,204)

(1) Data as of the year ended December 31, 2016, the fiscal year end for this component unit. See Note 1 for additional information about how to obtain the separately audited financial statements for this component unit.

202

Y Discretely Presented Component Units City of Austin, Texas N Combining Statement of Cash Flows Exhibit I-3 Y For the year ended September 30, 2017

(In thousands) 02/26 9:21a

Austin Bergstrom Landhost

Enterprises, Inc. (1)

Austin Convention Enterprises,

Inc. (1) Total

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers 17,147$ 77,676 94,823 Cash payments to suppliers for goods and services (8,625) (26,469) (35,094) Cash payments to employees for services (3,963) (15,241) (19,204) Net cash provided (used) by operating activities 4,559 35,966 40,525

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Payment to primary government -- (3,476) (3,476) Net cash provided (used) by noncapital

financing activities -- (3,476) (3,476)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Principal paid on long-term debt (25) (9,205) (9,230) Interest paid on revenue bonds and other debt (4,077) (12,426) (16,503) Acquisition and construction of capital assets (3) (15,687) (15,690) Payment from primary government 3,000 -- 3,000 Net cash provided (used) by capital and related

financing activities (1,105) (37,318) (38,423)

CASH FLOWS FROM INVESTING ACTIVITIES: (Purchase) Sale of investment securities -- 4,561 4,561 Interest on investments 19 3 22 Net cash provided (used) by investing activities 19 4,564 4,583

Net increase (decrease) in cash and cash equivalents 3,473 (264) 3,209 Cash and cash equivalents, beginning 1,985 4,199 6,184 Cash and cash equivalents, ending 5,458$ 3,935 9,393

(Continued)

(1) Data as of the year ended December 31, 2016, the fiscal year end for this component unit. See Note 1 for additional information about how to obtain the separately audited financial statements for this component unit.

203

Discretely Presented Component Units City of Austin, Texas Combining Statement of Cash Flows Exhibit I-3 For the year ended September 30, 2017 (In thousands) (Continued)

Austin Bergstrom Landhost

Enterprises, Inc. (1)

Austin Convention Enterprises,

Inc. (1) Total

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:

Operating income (loss) 2,857$ 24,220 27,077 Adjustments to reconcile operating income to net cash

provided by operating activities: Depreciation and amortization 1,225 9,687 10,912 Change in assets and liabilities:

(Increase) decrease in accounts receivable 294 (1,224) (930) (Increase) decrease in inventory 1 17 18 (Increase) decrease in prepaid expenses and

other assets 32 (86) (54) Increase (decrease) in accounts payable (85) 1,543 1,458 Increase (decrease) in accrued payroll and compensated

absences 23 -- 23 Increase (decrease) in other liabilities 212 748 960 (Increase) decrease in deferred inflows related to operations -- 1,061 1,061

Total adjustments 1,702 11,746 13,448 Net cash provided (used) by operating activities 4,559$ 35,966 40,525

NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES:

Amortization of bond (discounts) premiums --$ (651) (651) Amortization of deferred loss on refundings -- 1,191 1,191 Capital appreciation bonds interest accreted 2,252 -- 2,252

(1) Data as of the year ended December 31, 2016, the fiscal year end for this component unit. See Note 1 for additional information about how to obtain the separately audited financial statements for this component unit.

204

SUPPLEMENTAL SCHEDULES

Budgetary General Fund City of Austin, Texas Supplementary Schedule of Revenues, Expenditures, and Changes in Exhibit J-1

Fund Balances--Budget and Actual-Budget Basis For the year ended September 30, 2017 (In thousands) 02/27 10:21a

Budgetary General Fund Actual- Variance (3) Adjustments Budget Positive

Actual (1) (2) Basis Original Final (Negative) REVENUES Taxes 646,918$ 100 647,018 650,538 650,538 (3,520) Franchise fees 36,057 153 36,210 36,717 36,717 (507) Fines, forfeitures and penalties 13,117 1 13,118 16,209 16,209 (3,091) Licenses, permits and inspections 61,076 (1) 61,075 50,799 50,799 10,276 Charges for services/goods 59,362 1,266 60,628 60,890 60,890 (262) Interest and other 15,487 (9,650) 5,837 4,396 4,396 1,441

Total revenues 832,017 (8,131) 823,886 819,549 819,549 4,337

EXPENDITURES General government

Municipal Court 22,337 186 22,523 22,514 22,514 (9) Public safety

Police 340,924 42,103 383,027 386,573 386,573 3,546 Fire 169,822 17,707 187,529 185,514 189,014 1,485 Emergency Medical Services 71,362 10,595 81,957 83,786 83,786 1,829

Public health: Health 79,691 3,194 82,885 83,175 83,175 290

Public recreation and culture Parks and Recreation 72,226 7,747 79,973 80,505 80,505 532 Austin Public Library 40,276 4,930 45,206 47,167 47,167 1,961

Urban growth management Neighborhood Planning and Zoning 37,744 6,824 44,568 45,167 45,167 599 Other urban growth management 2,976 36 3,012 5,798 5,798 2,786

General city responsibilities (4) 104,000 (97,493) 6,507 6,613 6,613 106

Total expenditures 941,358 (4,171) 937,187 946,812 950,312 13,125 Excess (deficiency) of revenues

over expenditures (109,341) (3,960) (113,301) (127,263) (130,763) 17,462 OTHER FINANCING SOURCES (USES) Transfers in 131,930 22,578 154,508 151,008 154,508 -- Transfers out (2,748) (36,085) (38,833) (23,745) (23,745) (15,088)

Total other financing sources (uses) 129,182 (13,507) 115,675 127,263 130,763 (15,088)

Excess (deficiency) of revenues and other sources over expenditures and other uses 19,841 (17,467) 2,374 -- -- 2,374

Fund balance at beginning of year 108,197 (81,913) 26,284 -- -- 26,284 Fund balance at end of year 128,038$ (99,380) 28,658 -- -- 28,658

(Continued)

(1) Includes adjustments to expenditures for current year encumbrances, payments against prior year encumbrances, compensated absences, and amounts budgeted as operating transfers.

(2) Includes adjustments to revenues/transfers required for adjusted budget basis presentation. (3) Variance is actual-budget basis to final budget. (4)

205

Actual expenditures include employee training costs and amounts budgeted as fund-level expenditures or operating transfers. Actual-budget basis expenditures include employee training costs and amounts budgeted as fund-level expenditures.

Budget

The General Fund, as reported in the financial statements, is comprised of nine separately budgeted funds in the City's legally adopted budget: the Budgetary General Fund (represented as the General Fund in the City's budget document) plus the Budget Stabilization Reserve, Community Development Incentives, Economic Development, Economic Incentives Reserve, Emergency Reserve, Long Center Capital Improvements, Music Venue Assistance Program, and the Property Tax Reserve Fund. RSI reflects the budgetary comparison for the consolidated General Fund. Below are the budgetary comparisons for each of the nine funds.

Budgetary General Fund City of Austin, Texas Supplementary Schedule of Revenues, Expenditures, and Changes in Exhibit J-1

Fund Balances--Budget and Actual-Budget Basis For the year ended September 30, 2017 (In thousands) 03/01 8:56a (Continued)

Budget Stabilization Reserve Actual- Variance (3) Adjustments Budget Positive

Actual (1) (2) Basis Original Final (Negative) EXPENDITURES General government

Municipal Court 49$ (28) 21 105 105 84 Public safety

Fire 2,498 (806) 1,692 1,694 1,694 2 Emergency Medical Services 644 (396) 248 250 250 2

Transportation, planning and sustainability Transportation, Planning and Sustainability 421 (421) -- -- -- --

Public health: Health 796 (324) 472 513 513 41

Public recreation and culture Parks and Recreation 226 76 302 324 324 22

Urban growth management Neighborhood Planning and Zoning 344 41 385 400 400 15

Other urban growth mangement 315 (185) 130 227 227 97 General city responsibilities (4) 259 (8) 251 350 350 99 Total expenditures 5,552 (2,051) 3,501 3,863 3,863 362

Excess (deficiency) of revenues over expenditures (5,552) 2,051 (3,501) (3,863) (3,863) 362

OTHER FINANCING SOURCES (USES) Transfers in 20,316 (282) 20,034 4,946 4,946 15,088 Transfers out (8,308) (3,067) (11,375) (7,868) (11,375) --

Total other financing sources (uses) 12,008 (3,349) 8,659 (2,922) (6,429) 15,088 Excess (deficiency) of revenues and other

sources over expenditures and other uses 6,456 (1,298) 5,158 (6,785) (10,292) 15,450 Fund balance at beginning of year 68,881 1,975 70,856 65,038 65,038 5,818 Fund balance at end of year 75,337$ 677 76,014 58,253 54,746 21,268

(Continued)

(1) Includes adjustments to expenditures for current year encumbrances, payments against prior year encumbrances, compensated absences, and amounts budgeted as operating transfers.

(2) Includes adjustments to revenues/transfers required for adjusted budget basis presentation. (3) Variance is actual-budget basis to final budget.

(4)

206

Budget

Actual expenditures include employee training costs and amounts budgeted as fund-level expenditures or operating transfers. Actual-budget basis expenditures include employee training costs and amounts budgeted as fund-level expenditures.

Budgetary General Fund City of Austin, Texas Supplementary Schedule of Revenues, Expenditures, and Changes in Exhibit J-1

Fund Balances--Budget and Actual-Budget Basis For the year ended September 30, 2017 (In thousands) 02/16 12:09p (Continued)

Community Development Incentives Actual- Variance (3) Adjustments Budget Positive

Actual (1) (2) Basis Original Final (Negative) EXPENDITURES Urban growth management

Other urban growth mangement 155$ 20 175 225 225 50 Total expenditures 155 20 175 225 225 50 Excess (deficiency) of revenues

over expenditures (155) (20) (175) (225) (225) 50 OTHER FINANCING SOURCES (USES) Transfers in -- 7 7 -- 7 -- Transfers out -- (159) (159) (159) (159) -- Total other financing sources (uses) -- (152) (152) (159) (152) -- Excess (deficiency) of revenues and other

sources over expenditures and other uses (155) (172) (327) (384) (377) 50 Fund balance at beginning of year (219) 1,046 827 834 834 (7) Fund balance at end of year (374)$ 874 500 450 457 43

Economic Development Actual- Variance (3) Adjustments Budget Positive

Actual (1) (2) Basis Original Final (Negative) REVENUES Interest and other 162$ -- 162 111 111 51 Total revenues 162 -- 162 111 111 51 EXPENDITURES Urban growth management

Other urban growth mangement 15,000 498 15,498 14,164 14,164 (1,334) Total expenditures 15,000 498 15,498 14,164 14,164 (1,334) Excess (deficiency) of revenues

over expenditures (14,838) (498) (15,336) (14,053) (14,053) (1,283) OTHER FINANCING SOURCES (USES) Transfers in 10,894 4,863 15,757 15,757 15,757 -- Transfers out (93) (1,821) (1,914) (1,914) (1,914) -- Total other financing sources (uses) 10,801 3,042 13,843 13,843 13,843 -- Excess (deficiency) of revenues and other

sources over expenditures and other uses (4,037) 2,544 (1,493) (210) (210) (1,283) Fund balance at beginning of year (4,475) 4,925 450 210 210 240 Fund balance at end of year (8,512)$ 7,469 (1,043) -- -- (1,043)

(Continued)

(1) Includes adjustments to expenditures for current year encumbrances, payments against prior year encumbrances, compensated absences, and amounts budgeted as operating transfers.

(2) Includes adjustments to revenues/transfers required for adjusted budget basis presentation. (3) Variance is actual-budget basis to final budget.

Budget

Budget

207

Budgetary General Fund City of Austin, Texas Supplementary Schedule of Revenues, Expenditures, and Changes in Exhibit J-1

Fund Balances--Budget and Actual-Budget Basis For the year ended September 30, 2017 (In thousands) 02/16 12:09p (Continued)

Economic Incentives Reserve Actual- Variance (3) Adjustments Budget Positive

Actual (1) (2) Basis Original Final (Negative) REVENUES Interest and other 100$ -- 100 -- -- 100 Total revenues 100 -- 100 -- -- 100 EXPENDITURES

Other urban growth management 13,667 (226) 13,441 13,910 13,910 469 Total expenditures 13,667 (226) 13,441 13,910 13,910 469 Excess (deficiency) of revenues

over expenditures (13,567) 226 (13,341) (13,910) (13,910) 569 OTHER FINANCING SOURCES (USES) Transfers in -- 11,637 11,637 11,637 11,637 -- Transfers out (976) -- (976) (976) (976) -- Total other financing sources (uses) (976) 11,637 10,661 10,661 10,661 -- Excess (deficiency) of revenues and other

sources over expenditures and other uses (14,543) 11,863 (2,680) (3,249) (3,249) 569 Fund balance at beginning of year (70,153) 80,577 10,424 16,869 16,869 (6,445) Fund balance at end of year (84,696)$ 92,440 7,744 13,620 13,620 (5,876)

Emergency Reserve Actual- Variance (3) Adjustments Budget Positive

Actual (1) (2) Basis Original Final (Negative) OTHER FINANCING SOURCES (USES) Transfers in 3,548$ -- 3,548 3,548 3,548 -- Total other financing sources (uses) 3,548 -- 3,548 3,548 3,548 -- Excess (deficiency) of revenues and other

sources over expenditures and other uses 3,548 -- 3,548 3,548 3,548 -- Fund balances at beginning of year 54,669 -- 54,669 54,669 54,669 -- Fund balance at end of year 58,217$ -- 58,217 58,217 58,217 --

(Continued)

(1) Includes adjustments to expenditures for current year encumbrances, payments against prior year encumbrances, compensated absences, and amounts budgeted as operating transfers.

(2) Includes adjustments to revenues/transfers required for adjusted budget basis presentation. (3) Variance is actual-budget basis to final budget.

208

Budget

Budget

Budgetary General Fund City of Austin, Texas Supplementary Schedule of Revenues, Expenditures, and Changes in Exhibit J-1

Fund Balances--Budget and Actual-Budget Basis For the year ended September 30, 2017 (In thousands) 02/26 12:37p (Continued)

Long Center Capital Improvements Actual- Variance (3) Adjustments Budget Positive

Actual (1) (2) Basis Original Final (Negative) EXPENDITURES Urban growth management

Other urban growth management 164$ 137 301 305 305 4 Total expenditures 164 137 301 305 305 4 Excess (deficiency) of revenues

over expenditures (164) (137) (301) (305) (305) 4 OTHER FINANCING SOURCES (USES) Transfers in -- 300 300 300 300 -- Total other financing sources (uses) -- 300 300 300 300 -- Excess (deficiency) of revenues and other

sources over expenditures and other uses (164) 163 (1) (5) (5) 4 Fund balance at beginning of year (585) 586 1 5 5 (4) Fund balance at end of year (749)$ 749 -- -- -- --

Music Venue Assistance Program Actual- Variance (3) Adjustments Budget Positive

Actual (1) (2) Basis Original Final (Negative) REVENUES Interest and other 5$ 24 29 33 33 (4) Total revenues 5 24 29 33 33 (4) EXPENDITURES Urban growth management

Other urban growth management 126 200 326 615 615 289 Total expenditures 126 200 326 615 615 289 Excess (deficiency) of revenues

over expenditures (121) (176) (297) (582) (582) 285 OTHER FINANCING SOURCES (USES) Transfers in -- 100 100 100 100 -- Total other financing sources (uses) -- 100 100 100 100 -- Excess (deficiency) of revenues and other

sources over expenditures and other uses (121) (76) (197) (482) (482) 285 Fund balance at beginning of year 174 305 479 465 465 14 Fund balance at end of year 53$ 229 282 (17) (17) 299

Property Tax Reserve Actual- Variance (3) Adjustments Budget Positive

Actual (1) (2) Basis Original Final (Negative)

Fund balance at beginning of year 4,500 -- 4,500 4,500 4,500 -- Fund balance at end of year 4,500$ -- 4,500 4,500 4,500 --

(1) Includes adjustments to expenditures for current year encumbrances, payments against prior year encumbrances, compensated absences, and amounts budgeted as operating transfers.

(2) Includes adjustments to revenues/transfers required for adjusted budget basis presentation. (3) Variance is actual-budget basis to final budget.

Budget

209

Budget

Budget

YesEnterprise Related Grants City of Austin, Texas No Combining Balance Sheet Exhibit J-2

September 30, 2017 (In thousands) 02/16 11:08a

Receivables Total from Other Total Other Total Fund Liabilities and

Governments Assets Liabilities Liabilities Balances Fund Balances AUSTIN ENERGY RELATED U.S. Department of Energy 1,158$ 1,158 1,158 1,158 -- 1,158 U.S. Department of Housing and Urban Development -- -- -- -- -- -- U.S. National Endowment for the Arts -- -- -- -- -- -- Texas Commission on Environmental Quality -- -- -- -- -- -- Texas Commission on the Arts -- -- -- -- -- -- American Public Power Association -- -- -- -- -- -- Total Austin Energy 1,158 1,158 1,158 1,158 -- 1,158

AIRPORT RELATED U.S. Department of Homeland Security 103 103 103 103 -- 103 U.S. Department of Transportation 765 765 765 765 -- 765 Federal Bureau of Investigation -- -- -- -- -- -- Total Airport 868 868 868 868 -- 868

DRAINAGE RELATED Texas Water Development Board 81 81 81 81 -- 81 Total Drainage 81 81 81 81 -- 81

AUSTIN RESOURCE RECOVERY RELATED U.S. Environmental Protection Agency 8 8 8 8 -- 8 Total Austin Resource Recovery 8 8 8 8 -- 8

Total grants, enterprise related 2,115$ 2,115 2,115 2,115 -- 2,115

NOTE: These grants have been reported in the enterprise fund financial statements.

Liabilities and Fund Balances

2 1

0

Yes Enterprise Related Grants City of Austin, Texas No Combining Schedule of Expenditures Exhibit J-3 0 From Inception to September 30, 2017

(In thousands) 02/26 5:38p

In-Kind In-Kind In-Kind In-Kind Grant Match Total Grant Match Grant Match Total Grant Match Total

AUSTIN ENERGY RELATED U.S. Department of Energy 29,617$ 1,197 30,814 1,144 1,161 30,761 2,358 33,119 33,379 5,026 38,405 U.S. Department of Housing and Urban Development 236 25 261 15 -- 251 25 276 251 1,511 1,762 U.S. National Endowment for the Arts 32 -- 32 1 -- 33 -- 33 35 -- 35 Texas Commission on Environmental Quality -- -- -- -- 1,533 -- 1,533 1,533 1,000 2,304 3,304 Texas Commission on the Arts 140 46 186 12 -- 152 46 198 163 46 209 American Public Power Association 16 -- 16 10 -- 26 -- 26 82 -- 82 Total Austin Energy 30,041 1,268 31,309 1,182 2,694 31,223 3,962 35,185 34,910 8,887 43,797

AIRPORT RELATED U.S. Department of Homeland Security 15,260 -- 15,260 587 -- 15,847 -- 15,847 17,104 -- 17,104 U.S. Department of Transportation 73,999 22,394 96,393 14,350 4,783 88,349 27,177 115,526 114,739 33,940 148,679 Federal Bureau of Investigation 22 -- 22 (1) -- 21 -- 21 25 -- 25 Total Airport 89,281 22,394 111,675 14,936 4,783 104,217 27,177 131,394 131,868 33,940 165,808

DRAINAGE RELATED Texas Water Development Board 99 -- 99 -- 90 99 90 189 498 301 799 Total Drainage 99 -- 99 -- 90 99 90 189 498 301 799

AUSTIN RESOURCE RECOVERY RELATED U.S. Environmental Protection Agency 159 -- 159 242 -- 401 -- 401 1,220 -- 1,220 Total Austin Resource Recovery 159 -- 159 242 -- 401 -- 401 1,220 -- 1,220

Total grants, enterprise related 119,580$ 23,662 143,242 16,360 7,567 135,940 31,229 167,169 168,496 43,128 211,624

NOTE: These grants have been reported in the enterprise fund financial statements.

211

BudgetCurrent YearBeginning of Year Total Expenditures at

End of Year Total Expenditures at

Schedule of General Obligation Bonds City of Austin, Texas Authorized and Unissued Exhibit J-4

Year ended September 30, 2017 (In thousands) 02/15 2:57p

Unissued Date Original Previously Issued During September 30,

Authorized Purpose Authorized Issued (1) Current Year 2017

10-22-83 Brackenridge 2000 50,000$ 40,785 -- 9,215

09-08-84 Parks improvements 9,975 9,648 -- 327

01-19-85 Cultural arts 20,285 14,890 -- 5,395

11-07-06 Cultural arts 31,500 27,500 -- 4,000

11-07-06 Public safety facility 58,100 53,100 -- 5,000

11-6-12 Transportation and Mobility 143,299 84,340 29,180 29,779

11-6-12 Park and Recreation improvements 77,680 25,135 18,755 33,790

11-6-12 Public safety facility improvements 31,079 15,120 2,345 13,614

11-6-12 Health and Human Service facility improvements 11,148 6,145 205 4,798

11-6-12 Library, museum, and cultural arts facility improvements 13,442 4,615 3,325 5,502

11-5-13 Affordable housing 65,000 20,000 10,000 35,000

11-8-16 Mobility Transportation 720,000 -- -- 720,000 1,231,508$ 301,278 63,810 866,420

Source: Bond Sale Official Statements

(1) This schedule displays only those previously issued bonds that relate to bond authorizations included herein.

It does not display all debt previously issued and still outstanding or refunding bonds. It includes general obligation

bonds reported in the government-wide governmental activities and in proprietary funds.

212

Schedule of Revenue Bonds Authorized, City of Austin, Texas Deauthorized and Unissued Exhibit J-5

Year ended September 30, 2017 (In thousands) 02/15 2:57p

Unissued Date Original Previously Issued During September 30,

Authorized Purpose Authorized Deauthorized Issued (1) Current Year 2017

AUSTIN ENERGY 10-22-83 Hydrogeneration power plant and electric

system 39,000$ -- 10,620 -- 28,380 03-01-84 Electric system, South Texas Nuclear

Project 605,000 -- 315,232 -- 289,768 09-08-84 Electric improvements (gas turbines) 32,775 -- 31,237 -- 1,538 09-08-84 Electric improvements (western coal plant) 47,725 -- 31,199 -- 16,526 09-08-84 Electric transmission and reliability

improvements 39,945 -- 20,040 -- 19,905 12-14-85 Transmission lines and substations 175,130 -- 96,017 -- 79,113 12-14-85 Overhead and underground distribution 76,055 -- 46,845 -- 29,210 12-14-85 Miscellaneous 25,891 -- 10,443 -- 15,448 08-10-92 Electrical distribution and street lighting 82,500 -- -- -- 82,500 Total Austin Energy 1,124,021 -- 561,633 -- 562,388

AUSTIN WATER UTILITY (Water) 09-11-82 Green water treatment plant, water lines and

reservoir 40,300 -- 28,885 -- 11,415 09-11-82 Ullrich water treatment plant, water lines and

reservoir 49,100 -- 42,210 -- 6,890 09-11-82 Davis water treatment plant, water lines and

reservoir 40,800 -- 32,274 -- 8,526 09-11-82 Waterworks system rehabilitation and

improvements 12,800 -- 9,164 -- 3,636 09-08-84 Waterworks north central, northeast, and east

service area 39,385 17,000 3,990 -- 18,395 09-08-84 Waterworks northwest service area 14,970 -- 11,430 -- 3,540 09-08-84 Water improvements in north central and

northwest service area 14,470 -- 2,745 -- 11,725 09-08-84 Waterworks system improvements 141,110 -- 36,513 -- 104,597 09-08-84 Ullrich water treatment plant improvements to

South Austin 47,870 -- 23,245 -- 24,625 09-08-84 Water lines, reservoir improvements to south

corridor area 12,570 -- 6,585 -- 5,985 09-08-84 Water lines, pump station improvements to

North Austin area 7,945 -- 7,765 -- 180 09-08-84 Waterworks system rehabilitation and

improvements 26,500 -- 3,665 -- 22,835 12-14-85 Northeast area improvements 37,950 10,000 7,493 -- 20,457 12-14-85 South/southeast area improvements 42,090 14,000 6,035 -- 22,055 12-14-85 Improvements/extensions 9,775 -- 3,689 -- 6,086 08-10-92 Improvements to meet EPA safe drinking

water act 23,000 -- -- -- 23,000 08-10-92 Improvements and replacement of deteriorated

water system facilities 5,000 -- -- -- 5,000 08-10-92 General utility relocation 2,000 -- -- -- 2,000 05-03-97 Improvements/extensions to City's waterworks

and wastewater system 35,000 -- -- -- 35,000 05-06-98 Improvements/extensions to City's waterworks

and wastewater system 65,000 -- -- -- 65,000 11-03-98 Water improvements, upgrade, replace 64,900 -- -- -- 64,900 11-03-98 Water expansion and improvement 49,940 -- -- -- 49,940 11-03-98 Water improvements and extensions 19,800 -- -- -- 19,800 Total Austin Water Utility (Water) 802,275$ 41,000 225,688 -- 535,587

(Continued) (1) This schedule displays only those previously issued bonds which relate to bond authorizations included herein. It does not display

all debt previously issued and still outstanding, refunding bonds, or commercial paper.

213

Schedule of Revenue Bonds Authorized, City of Austin, Texas Deauthorized and Unissued Exhibit J-5

Year ended September 30, 2017 (In thousands) 02/15 2:57p (Continued)

Unissued Date Original Previously Issued During September 30,

Authorized Purpose Authorized Deauthorized Issued (1) Current Year 2017

AUSTIN WATER UTILITY (Wastewater) 11-20-76 Sewer system improvements 46,920$ -- 38,920 -- 8,000 09-11-82 Govalle sewage treatment plant, sewer lines

and improvements to Canterbury lift station 28,300 -- 24,658 -- 3,642 09-11-82 Onion Creek sewage treatment plant and

sewer lines 57,000 -- 49,345 -- 7,655 09-11-82 Sewer lines for north central and northwest

Austin 20,700 -- 17,975 -- 2,725 09-11-82 Walnut Creek sewage treatment plant

additions 20,400 -- 17,971 -- 2,429 09-11-82 Sewer system rehabilitation and

improvements 4,800 -- 3,930 -- 870 09-08-84 Sewer system rehabilitation and

improvements 43,515 -- 36,950 -- 6,565 09-08-84 Onion Creek and Walnut Creek sewage

treatment plant improvements 44,795 -- 42,284 -- 2,511 09-08-84 Sewer system rehabilitation and

improvements 46,230 -- 14,925 -- 31,305 05-06-85 Sewer system improvements 54,000 -- 33,106 -- 20,894 12-14-85 Advanced wastewater treatment 34,500 -- -- -- 34,500 12-14-85 Northeast area improvements 47,035 32,300 1,857 -- 12,878 12-14-85 Southeast area improvements 9,200 4,200 757 -- 4,243 12-14-85 Improvements/extensions 24,725 -- 12,621 -- 12,104 12-14-85 Walnut Creek WWTP expansion 46,000 -- 13,717 -- 32,283 12-14-85 Bear Creek interceptor 1,840 1,511 265 -- 64 08-10-92 Improvement to Hornsby Bend beneficial

re-use program 11,000 -- -- -- 11,000 08-10-92 Replacement and rehabilitation of

deteriorated wastewater facilities 3,000 -- -- -- 3,000 11-03-98 Wastewater improvements, upgrades

and replacements 77,000 -- -- -- 77,000 11-03-98 Wastewater improvements and expansion 121,000 -- -- -- 121,000

Total Austin Water Utility (Wastewater) 741,960 38,011 309,281 -- 394,668

Total Utility 2,668,256 79,011 1,096,602 -- 1,492,643

AIRPORT

11-03-87 Relocation/construction of new airport 728,000 -- 30,000 -- 698,000

05-01-93 Construction of new municipal airport

at Bergstrom AFB site 400,000 -- 362,205 -- 37,795

Total Airport 1,128,000 -- 392,205 -- 735,795

CONVENTION CENTER

07-29-89 New convention center 69,000 -- 68,240 -- 760

Total Convention Center 69,000 -- 68,240 -- 760

Total revenue bonds 3,865,256$ 79,011 1,557,047 -- 2,229,198

Source: Bond sale official statements

(1) This schedule displays only those previously issued bonds which relate to bond authorizations included herein. It does not display

all debt previously issued and still outstanding, refunding bonds, or commercial paper.

214

STATISTICAL SECTION - UNAUDITED This section of the City of Austin’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial condition. 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. (Tables 1 - 5) Revenue Capacity These schedules contain information to help the reader assess the factors affecting the City’s ability to generate its property and sales taxes. (Tables 6 - 12) Debt Capacity These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. (Tables 13 - 17) 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 and to help make comparisons over time and with other governments. (Tables 18 - 19) Operating Information These schedules contain information about the City’s operations and resources to help the reader understand how the City’s financial information relates to the services the City provides and the activities it performs. (Tables 20 - 22) Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

Net Position by Component City of Austin, Texas Last Ten Fiscal Years (In thousands) B-1 Table 1 (Accrual basis of accounting) 02/15 3:09p

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

$ $ $ $ $ $ $ $ $ $ Governmental activities

Net investment in capital assets 1,526,481 1,545,216 1,544,834 1,562,046 1,666,653 1,649,431 1,621,208 1,645,359 1,719,704 1,709,146 Restricted 76,478 95,641 71,716 92,650 82,916 103,246 118,335 133,984 124,695 140,299 Unrestricted (deficit) 1,553 (56,971) (58,002) (164,152) (334,332) (397,244) (431,349) (1,117,293) (1,211,495) (1,394,092)

Total governmental activities net position 1,604,512 1,583,886 1,558,548 1,490,544 1,415,237 1,355,433 1,308,194 662,050 632,904 455,353

Business-type activities Net investment in capital assets 1,825,599 1,902,398 1,998,753 2,048,964 2,104,623 2,195,358 2,216,347 2,223,964 2,250,698 2,358,240 Restricted 497,927 488,413 502,211 550,516 554,215 535,490 524,653 642,052 690,459 702,749 Unrestricted 558,625 495,318 403,346 438,240 392,904 466,167 587,362 560,321 737,150 915,825

Total business-type activities net position 2,882,151 2,886,129 2,904,310 3,037,720 3,051,742 3,197,015 3,328,362 3,426,337 3,678,307 3,976,814

Primary government Net investment in capital assets 3,352,080 3,447,614 3,543,587 3,611,010 3,771,276 3,844,789 3,837,555 3,869,323 3,970,402 4,067,386 Restricted 574,405 584,054 573,927 643,166 637,131 638,736 642,988 776,036 815,154 843,048 Unrestricted (deficit) 560,178 438,347 345,344 274,088 58,572 68,923 156,013 (556,972) (474,345) (478,267)

Total primary government net position 4,486,663 4,470,015 4,462,858 4,528,264 4,466,979 4,552,448 4,636,556 4,088,387 4,311,211 4,432,167

Note: The City implemented GASB Statement No. 68 in fiscal year 2015, which significantly impacted the net position of the governmental activities.

Fiscal Year Ended September 30

2 1 5

Changes in Net Position City of Austin, Texas Last Ten Fiscal Years (In thousands) Table 2 (Accrual basis of accounting) #########

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $ $ $ $ $ $ $ $ $ $

Expenses Governmental activities:

General government 97,945 80,819 89,315 99,780 124,735 97,675 118,074 131,993 177,302 192,231 Public safety 440,345 442,690 455,760 485,611 536,132 580,074 576,118 601,112 657,846 719,032 Transportation, planning, and sustainability 49,426 79,840 65,565 74,835 64,247 78,594 83,971 77,349 66,739 72,517 Public health 102,188 81,773 63,215 61,865 75,799 73,186 80,796 85,326 100,195 119,278 Public recreation and culture 87,975 90,307 91,732 106,488 104,026 104,951 117,441 134,567 147,191 161,226 Urban growth management 123,115 121,237 143,884 129,258 93,593 137,478 136,110 135,386 179,081 156,180 Interest on debt 40,954 42,435 44,889 45,154 46,417 48,400 49,617 55,855 61,500 61,879

Total governmental expenses 941,948 939,101 954,360 1,002,991 1,044,949 1,120,358 1,162,127 1,221,588 1,389,854 1,482,343 Business-type activities:

Electric 1,070,999 1,089,632 1,086,470 1,136,850 1,133,951 1,132,476 1,251,599 1,203,729 1,226,585 1,277,623 Water 202,900 200,162 169,708 178,712 223,228 231,774 232,778 294,624 244,907 281,787 Wastewater 147,059 160,962 166,979 170,514 194,650 214,580 221,216 219,320 237,450 219,609 Airport 91,557 98,403 92,780 102,774 101,991 107,389 108,291 120,015 135,860 158,863 Convention 52,911 52,219 51,818 54,231 56,142 62,884 58,763 65,657 63,796 75,377 Environmental and health services 69,805 67,097 66,380 91,151 87,450 81,544 92,997 97,690 102,994 108,658 Public recreation 10,169 10,274 9,715 5,209 5,624 7,185 6,765 8,824 8,266 8,736 Urban growth management 84,886 89,306 106,618 110,996 114,270 129,583 125,983 135,360 173,360 183,532

Total business-type expenses 1,730,286 1,768,055 1,750,468 1,850,437 1,917,306 1,967,415 2,098,392 2,145,219 2,193,218 2,314,185 Total primary government expenses 2,672,234 2,707,156 2,704,828 2,853,428 2,962,255 3,087,773 3,260,519 3,366,807 3,583,072 3,796,528

Program Revenues Governmental activities:

Charges for services: General government 9,572 11,319 7,902 8,126 17,285 15,223 17,890 15,434 15,915 21,345 Public safety 45,880 51,710 47,530 52,998 51,009 53,826 62,832 65,221 65,087 57,728 Transportation, planning, and sustainability 3,531 3,960 3,792 3,823 4,158 4,431 5,214 5,006 4,572 1,698 Public health 43,122 25,181 7,561 7,592 5,106 9,510 9,720 10,351 9,160 12,374 Public recreation and culture 3,749 3,819 3,456 7,891 7,576 8,753 8,205 8,330 8,781 11,251 Urban growth management 43,840 45,000 38,895 21,305 28,613 32,917 37,848 56,366 78,530 72,244

Operating grants and contributions 65,782 54,022 66,831 66,348 57,818 48,567 50,333 45,470 47,430 45,162 Capital grants and contributions 3,652 85,085 50,546 51,182 35,880 64,781 66,856 70,484 95,486 90,256

Total governmental program revenues 219,128 280,096 226,513 219,265 207,445 238,008 258,898 276,662 324,961 312,058 Business-type activities:

Charges for services: Electric 1,217,735 1,162,286 1,147,676 1,249,139 1,179,872 1,288,259 1,367,155 1,351,436 1,370,228 1,362,132 Water 181,515 195,480 171,457 243,382 229,454 240,081 240,526 277,180 301,860 324,562 Wastewater 183,608 196,416 189,192 204,666 213,253 236,700 232,067 239,811 259,974 274,518

(Continued)

02/15 3:09p

2 1 6

Changes in Net Position City of Austin, Texas Last Ten Fiscal Years (In thousands) Table 2 (Accrual basis of accounting) (Continued)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $ $ $ $ $ $ $ $ $ $

Airport 102,519 96,618 100,223 106,978 114,318 123,021 128,766 142,353 159,866 178,433 Convention 17,572 16,258 14,784 18,486 19,200 22,783 25,087 28,657 33,221 40,196 Environmental and health services 49,190 65,940 74,399 75,981 75,499 81,833 84,655 96,622 103,420 109,274 Public recreation 9,760 10,119 8,864 5,260 5,239 6,069 5,849 5,736 6,480 6,705 Urban growth management 83,779 90,739 108,312 115,850 123,477 131,561 141,755 154,337 176,163 204,439

Operating grants and contributions -- -- -- -- 10,950 3,749 1,489 1,039 739 861 Capital grants and contributions 76,881 71,819 31,703 47,850 50,064 64,124 65,550 110,580 144,139 137,464

Total business-type revenues 1,922,559 1,905,675 1,846,610 2,067,592 2,021,326 2,198,180 2,292,899 2,407,751 2,556,090 2,638,584 Total primary government revenues 2,141,687 2,185,771 2,073,123 2,286,857 2,228,771 2,436,188 2,551,797 2,684,413 2,881,051 2,950,642

Net (Expense)/Revenue Governmental activities (722,820) (659,005) (727,847) (783,726) (837,504) (882,350) (903,229) (944,926) (1,064,893) (1,170,285) Business-type activities 192,273 137,620 96,142 217,155 104,020 230,765 194,507 262,532 362,872 324,399 Total primary government net expense (530,547) (521,385) (631,705) (566,571) (733,484) (651,585) (708,722) (682,394) (702,021) (845,886)

General Revenues and Other Changes in Net Position

Governmental activities: Taxes

Property taxes 268,802 309,888 341,812 355,185 381,582 420,000 448,083 476,439 507,485 554,631 Sales tax 154,445 139,795 144,710 151,125 164,193 176,198 189,464 204,029 212,634 218,790 Franchise fees and gross receipts tax 93,236 85,183 87,996 95,029 99,011 114,147 128,032 141,368 147,773 151,670 Grants and contributions not restricted to specific programs (1) 80,178 -- -- -- -- -- -- -- -- -- Interest and other 29,287 20,827 31,960 19,364 15,884 23,888 21,275 21,951 41,708 26,950

Special items -- -- -- -- -- -- 15,830 11,983 4,309 -- Transfers 73,163 82,686 96,031 97,100 101,527 87,761 62,215 70,865 121,838 40,693 Total general revenues and transfers 699,111 638,379 702,509 717,803 762,197 821,994 864,899 926,635 1,035,747 992,734

Business-type activities: Interest and other 59,028 27,938 13,935 11,274 11,529 2,269 5,717 10,498 10,936 14,801 Transfers (73,163) (82,686) (96,031) (97,100) (101,527) (87,761) (62,215) (70,865) (121,838) (40,693)

Total business-type activities (14,135) (54,748) (82,096) (85,826) (89,998) (85,492) (56,498) (60,367) (110,902) (25,892) Total primary government 684,976 583,631 620,413 631,977 672,199 736,502 808,401 866,268 924,845 966,842

Change in Net Position Governmental activities (23,709) (20,626) (25,338) (65,923) (75,307) (60,356) (38,330) (18,291) (29,146) (177,551) Business-type activities 178,138 82,872 14,046 131,329 14,022 145,273 138,009 202,165 251,970 298,507 Total primary government 154,429 62,246 (11,292) 65,406 (61,285) 84,917 99,679 183,874 222,824 120,956

Note: (1) Beginning in 2009, these amounts were assigned to the appropriate programs.

2 1 7

Program Revenues by Function/Program City of Austin, Texas Last Ten Fiscal Years (In thousands) ######## Table 3 (Accrual basis of accounting) #########

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $ $ $ $ $ $ $ $ $ $

Function/Program Governmental activities:

General government 13,338 15,524 11,831 17,491 31,179 29,603 29,150 24,715 29,665 29,022 Public safety 53,565 64,997 57,135 63,617 59,997 60,221 74,805 71,035 71,626 64,937 Transportation, planning, and sustainability 3,531 57,178 17,928 42,282 24,942 51,095 55,324 61,405 80,375 75,165 Public health 66,680 42,750 34,369 31,185 28,122 30,307 29,390 29,524 28,822 33,034 Public recreation and culture 5,253 7,846 9,536 11,544 13,145 14,343 17,233 15,390 17,685 23,050 Urban growth management 76,761 91,801 95,714 53,146 50,060 52,439 52,996 74,593 96,788 86,850

Subtotal governmental activities 219,128 280,096 226,513 219,265 207,445 238,008 258,898 276,662 324,961 312,058

Business-type activities: Electric 1,228,542 1,168,242 1,152,532 1,259,400 1,201,722 1,303,299 1,381,040 1,374,895 1,411,135 1,406,147 Water 216,654 225,881 180,918 257,346 241,205 262,212 264,265 312,102 349,195 369,506 Wastewater 189,823 211,080 190,625 213,339 221,561 249,564 246,569 261,680 290,717 304,260 Airport 113,368 112,804 108,022 112,457 124,042 128,301 134,208 151,368 163,432 193,769 Convention 17,572 16,258 14,784 18,499 19,234 23,149 25,138 28,657 33,221 40,196 Environmental and health services 50,311 66,592 75,033 77,008 78,694 83,080 84,807 96,674 103,538 109,546 Public recreation 11,134 11,268 12,809 5,410 5,404 6,776 6,626 6,206 6,701 6,995 Urban growth management 95,155 93,550 111,887 124,133 129,464 141,799 150,246 176,169 198,151 208,165

Subtotal business-type activities 1,922,559 1,905,675 1,846,610 2,067,592 2,021,326 2,198,180 2,292,899 2,407,751 2,556,090 2,638,584

Total primary government 2,141,687 2,185,771 2,073,123 2,286,857 2,228,771 2,436,188 2,551,797 2,684,413 2,881,051 2,950,642

2 1 8

Fund Balances, Governmental Funds City of Austin, Texas Last Ten Fiscal Years (In thousands) Table 4 (Modified accrual basis of accounting) ########

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

$ $ $ $ $ $ $ $ $ $

General Fund

Reserved 3,566 4,510 4,135 N/A N/A N/A N/A N/A N/A N/A

Unreserved 85,124 87,651 104,575 N/A N/A N/A N/A N/A N/A N/A

Nonspendable N/A N/A N/A 1,109 862 774 950 949 546 727

Assigned N/A N/A N/A 14,109 16,255 18,459 25,887 26,123 28,700 29,618

Unassigned N/A N/A N/A 119,035 113,046 127,859 156,659 150,091 131,743 141,469

Total general fund 88,690 92,161 108,710 134,253 130,163 147,092 183,496 177,163 160,989 171,814

All Other Governmental Funds

Reserved 106,399 134,194 174,820 N/A N/A N/A N/A N/A N/A N/A

Unreserved, reported in:

Special revenue funds 56,008 56,385 57,694 N/A N/A N/A N/A N/A N/A N/A

Capital projects funds 77,469 168,328 28,447 N/A N/A N/A N/A N/A N/A N/A

Permanent funds 844 819 764 N/A N/A N/A N/A N/A N/A N/A

Nonspendable N/A N/A N/A 1,040 1,040 1,040 1,052 1,070 1,070 1,070

Restricted N/A N/A N/A 175,522 174,773 160,483 162,000 175,977 186,395 214,582

Committed N/A N/A N/A 18,139 19,716 22,921 27,486 40,196 42,508 40,652

Assigned N/A N/A N/A 76,956 82,511 80,219 64,142 75,821 107,833 109,692

Unassigned N/A N/A N/A (36,582) (38,012) (47,512) (70,581) (51,622) (14,876) (25,369)

Total all other governmental funds 240,720 359,726 261,725 235,075 240,028 217,151 184,099 241,442 322,930 340,627

Note: The City implemented GASB Statement No. 54 in fiscal year 2011, which changes the reporting requirements for fund balances.

2 1

9

Changes in Fund Balances, Governmental Funds City of Austin, Texas Last Ten Fiscal Years (In thousands) Table 5 (Modified accrual basis of accounting)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 $ $ $ $ $ $ $ $ $ $

Revenues Property taxes 277,886 308,292 340,804 355,262 381,611 419,965 446,876 474,704 509,104 554,411 Sales taxes 154,445 139,795 144,710 151,125 164,193 176,198 189,464 204,029 212,634 218,790 Franchise fees and other taxes 93,236 85,183 88,321 94,920 98,903 114,039 128,032 141,368 147,773 151,670 Fine, forfeitures, and penalties 24,574 25,380 24,571 24,077 20,251 21,128 22,520 22,884 20,079 17,628 Licenses, permits, and inspections 24,268 20,531 15,716 18,653 22,664 28,669 33,719 39,805 50,186 61,450 Charges for services/goods 96,076 84,905 64,594 55,170 56,397 63,568 72,924 86,576 98,911 81,368 Intergovernmental 91,765 62,802 86,557 78,250 76,233 76,085 79,407 62,622 56,746 59,572 Property owners' participation and contributions 7,065 12,161 6,937 6,624 6,624 10,167 12,718 12,763 14,554 14,659 Interest and other 31,830 31,187 35,563 19,270 15,932 24,345 21,393 21,517 38,334 27,050 Total revenues 801,145 770,236 807,773 803,351 842,808 934,164 1,007,053 1,066,268 1,148,321 1,186,598

Expenditures Other (non-departmental & special projects) General government 67,597 53,000 66,287 69,024 74,846 84,504 91,668 102,222 118,773 128,708 Public safety 399,060 409,579 421,958 449,355 483,458 497,371 528,670 565,070 576,461 593,406 Transportation, planning, and sustainability 9,370 7,675 10,634 9,983 7,556 16,007 14,053 7,032 7,039 5,125 Public health 91,863 70,762 53,229 55,508 65,861 69,418 74,310 80,630 92,076 101,025 Public recreation and culture 72,760 74,477 74,089 86,595 80,818 92,282 99,780 110,745 116,531 126,599 Urban growth management 101,492 106,149 100,218 75,865 80,021 97,840 106,715 116,912 155,459 127,982 Debt service:

Principal 61,800 69,809 70,424 78,568 71,906 69,625 69,768 71,532 80,859 87,367 Interest 40,954 42,170 44,590 44,892 46,188 48,199 49,367 55,794 61,388 61,862 Fees and commissions -- 8 17 13 16 17 6 9 13 13

Capital outlay 119,290 96,342 166,491 160,682 178,380 214,294 257,420 186,870 142,822 130,783 Total expenditures 964,186 929,971 1,007,937 1,030,485 1,089,050 1,189,557 1,291,757 1,296,816 1,351,421 1,362,870

Excess (deficiency) of revenues over expenditures (163,041) (159,735) (200,164) (227,134) (246,242) (255,393) (284,704) (230,548) (203,100) (176,272)

Other financing sources (uses) Issuance of tax supported debt 104,060 191,310 15,000 118,778 145,175 131,499 154,444 159,939 142,775 130,665 Issuance of refunding bonds 156,038 -- -- 79,342 58,347 -- 107,923 -- 139,690 54,970 Bond premiums 15,090 1,897 -- 14,929 8,207 8,452 16,212 20,093 33,305 35,430 Payment to escrow agent (171,128) -- -- (94,271) (66,554) -- (113,836) -- (159,589) (68,744) Transfers in 173,627 175,250 197,669 179,476 178,768 209,161 221,868 239,666 248,331 222,540 Transfers out (96,014) (86,245) (93,957) (70,146) (76,838) (99,667) (114,385) (150,123) (140,407) (170,067) Total other financing sources (uses) 181,673 282,212 118,712 228,108 247,105 249,445 272,226 269,575 264,105 204,794 Special item -- -- -- -- -- -- 15,830 11,983 4,309 -- Net change in fund balances 18,632 122,477 (81,452) 974 863 (5,948) 3,352 51,010 65,314 28,522

Debt service as a percentage of noncapital expenditures 12.3% 13.6% 13.8% 13.6% 12.9% 11.5% 11.2% 11.3% 11.5% 11.9%

2 2 0

Tax Revenues by Source, Governmental Funds Table B-9 City of Austin, Texas Last Ten Fiscal Years (In thousands) 2/15/2018 15:11 Table 6 (Modified accrual basis of accounting)

Total $ $ $ $ $

2008 277,886 154,445 5,541 87,695 525,567

2009 308,292 139,795 5,651 79,532 533,270

2010 340,804 144,710 6,049 82,272 573,835

2011 355,262 151,125 6,367 88,553 601,307

2012 381,611 164,193 5,964 92,939 644,707

2013 419,965 176,198 6,941 107,098 710,202

2014 446,876 189,464 9,355 118,677 764,372

2015 474,704 204,029 10,352 131,016 820,101

2016 509,104 212,634 11,177 136,596 869,511

2017 554,411 218,790 11,588 140,082 924,871

Change

2008-2017 99.51% 41.66% 109.13% 59.74%

2 2

1

Sales Tax

Mixed Drink Tax

Franchise Fees and Gross

Receipts Tax

Fiscal Year

Ended Sept. 30

Property Tax

YesProperty Appraised Value, Taxable Value, Tax Rates, C-4 City of Austin, Texas No Tax Levies, and Tax Collections 3/1/2018 15:52 Table 7 yes Last Ten Fiscal Years #

Fiscal Ratio of Total Percent

Year Valuation Taxable Appraised Less Total of Growth Debt Percentage

Ended Date Value to Value Exemptions Taxable Value In Taxable General Service Change in

Sept. 30 (January 1) Appraised Value at January 1 (October 1) (October 1) Value Fund Fund Total Tax Rate % $ $ $ % $ $ $ %

2008 2007 85.81 80,103,507,188 11,366,716,262 68,736,790,926 13.59 0.2730 0.1304 0.4034 (2.23) 2009 2008 86.54 88,688,319,460 11,936,311,723 76,752,007,737 11.66 0.2749 0.1263 0.4012 (0.55) 2010 2009 87.63 92,388,003,449 11,427,462,473 80,960,540,976 5.48 0.2950 0.1259 0.4209 4.91 2011 2010 88.15 88,051,834,377 10,432,484,993 77,619,349,384 (4.13) 0.3262 0.1309 0.4571 8.60 2012 2011 87.04 91,015,898,946 11,796,118,067 79,219,780,879 2.06 0.3551 0.1260 0.4811 5.25 2013 2012 87.30 95,412,581,152 12,118,044,659 83,294,536,493 5.14 0.3821 0.1208 0.5029 4.53 2014 2013 86.94 102,102,789,438 13,336,691,278 88,766,098,160 6.57 0.3856 0.1171 0.5027 (0.04) 2015 2014 84.70 116,469,347,283 17,817,167,853 98,652,179,430 11.14 0.3691 0.1118 0.4809 (4.34) 2016 2015 81.06 136,703,100,149 26,177,073,750 110,526,026,399 12.04 0.3527 0.1062 0.4589 (4.57) 2017 2016 79.97 156,764,185,067 31,392,530,411 125,371,654,656 13.43 0.3399 0.1019 0.4418 (3.73) 2018 2017 (1) 80.65 172,884,147,799 33,459,059,613 139,425,088,186 11.21 0.3393 0.1055 0.4448 0.68

Fiscal Year Valuation Net Collections

Ended Date Total Tax Levy Percentage in Subsequent Percentage Percentage

Sept. 30 (January 1) (October 1) Amount of Levy Years Amount of Levy Amount of Levy

$ $ % $ $ % $ % 2008 2007 277,284,215 274,903,217 99.14 642,563 276,522,618 99.73 9,338,671 3.37 2009 2008 307,929,055 304,956,471 99.03 1,690,447 306,726,563 99.61 9,626,876 3.13 2010 2009 340,762,916 337,268,213 98.97 1,880,067 338,346,496 99.29 10,591,712 3.11 2011 2010 354,798,046 351,707,776 99.13 1,261,447 353,091,464 99.52 11,589,297 3.27 2012 2011 381,126,366 378,351,758 99.27 1,615,996 379,214,593 99.50 12,177,159 3.20 2013 2012 418,888,224 416,202,468 99.36 1,012,632 416,866,326 99.52 12,662,032 3.02 2014 2013 446,227,175 442,872,352 99.25 1,037,201 442,872,352 99.25 13,037,334 2.92 2015 2014 474,418,331 470,959,014 99.27 435,940 470,959,014 99.27 14,469,523 3.05 2016 2015 507,203,935 504,891,858 99.54 (953,938) 503,937,920 99.36 13,711,114 2.70 2017 2016 553,891,970 551,107,380 99.50 -- 551,107,380 99.50 13,903,694 2.51 2018 2017 (1) 620,162,792 ** ** ** ** ** ** **

** Information not yet available for fiscal year 2018.

Note: Appraisal district appraises property at market value. (1) Appraised value at January 1, 2017, is subject to change pending additional exemptions and appeals. Accordingly, the tax levy represents an estimate.

(2) The total amount of outstanding delinquencies for all prior years as of fiscal year end.

2 2

2 Delinquencies (2)

Tax Rate (per $100 Valuation)

Fiscal Year of the Levy Collected within the

Total Outstanding

Collections to Date Total

Assessed Taxable Property Value by Class C-1 City of Austin, Texas Last Ten Fiscal Years (In thousands) ########### Table 8

Fiscal Single Multi- Total Assessed Tax Rates

Year Family Family Commercial Personal Taxable (per $100

Sept. 30 Property Property Land Property Property Value Assessed Value)

$ $ $ $ $ $ $

2008 33,316,002 8,839,048 1,524,308 17,725,306 6,779,068 68,183,732 0.4034

2009 37,453,292 9,896,356 1,389,608 19,800,799 7,915,406 76,455,461 0.4012

2010 40,713,121 10,145,319 1,419,091 19,957,214 7,942,287 80,177,032 0.4209

2011 40,652,702 9,611,968 1,367,974 18,531,700 6,932,805 77,097,149 0.4571

2012 40,599,766 9,910,886 1,646,815 18,880,729 9,051,096 80,089,292 0.4811

2013 41,050,945 11,115,108 1,599,889 20,237,454 9,575,131 83,578,527 0.5029

2014 43,262,362 12,628,999 1,543,314 21,774,725 9,280,001 88,489,401 0.5027

2015 47,675,285 15,190,842 1,600,848 24,521,122 9,744,775 98,732,872 0.4809

2016 50,576,097 18,362,372 1,736,615 29,885,285 10,183,100 110,743,469 0.4589

2017 56,088,650 21,991,357 2,005,473 35,465,401 10,227,269 125,778,150 0.4418

Source: July certified tax rolls received from Travis, Williamson, and Hays Central Appraisal Districts. Excludes exemptions and appeal adjustments

made between January 1 appraisal date and July certified roll date.

Note: Does not reflect appeal adjustments between July and October 1 assessment date. See Table 7 for additional property tax information.22 3

Yes Property Taxes and Tax Levies for Direct and Overlapping City of Austin, Texas No Governments with Applicable Percentages Over 10% Table 9 yes Last Ten Fiscal Years C-2 02/15 3:11p

Government 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

$ $ $ $ $ $ $ $ $ $ City of Austin 0.4034 0.4012 0.4209 0.4571 0.4811 0.5029 0.5027 0.4809 0.4589 0.4418 Austin Community College 0.0958 0.0954 0.0946 0.0951 0.0948 0.0951 0.0949 0.0942 0.1005 0.1020 Austin Independent School District 1.1630 1.2020 1.2020 1.2270 1.2420 1.2420 1.2420 1.2220 1.2020 1.1920 Del Valle Independent School District 1.4800 1.4800 1.4800 1.5300 1.5300 1.5300 1.4700 1.4700 1.5300 1.5200 Eanes Independent School District 1.2025 1.2025 1.2025 1.2025 1.2125 1.2125 1.2125 1.2125 1.2125 1.2125 Leander Independent School District 1.3334 1.3792 1.4223 1.4548 1.4998 1.5119 1.5119 1.5119 1.5119 1.5119 Manor Independent School District 1.5150 1.5350 1.5150 1.5150 1.5150 1.5150 1.5150 1.5150 1.5150 1.5150 North Austin MUD #1 0.4180 0.4050 0.3801 0.3819 0.3719 0.3450 0.3450 0.3399 0.3170 0.2890 Northwest Austin MUD #1 (1) 0.2750 0.2525 0.2427 -- -- -- -- -- -- -- Northwest Travis County RD #3 (2) 0.1100 0.1100 0.1250 0.1450 0.1550 0.1300 0.1223 -- -- -- Pflugerville Independent School District 1.4700 1.4600 1.4600 1.4600 1.4800 1.5400 1.5400 1.5400 1.5400 1.5400 Round Rock Independent School District 1.3238 1.3324 1.3800 1.3800 1.3350 1.3800 1.3674 1.3375 1.3325 1.3325 Travis County (3) 0.4216 0.4122 0.4215 0.4658 0.4855 0.5001 0.4946 0.4563 0.4169 0.3838 Travis County Healthcare District 0.0693 0.0679 0.0674 0.0719 0.0789 0.0789 0.1290 0.1264 0.1178 0.1105

Government 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

$ $ $ $ $ $ $ $ $ $ City of Austin 277,284 307,929 340,763 354,798 381,126 418,888 446,227 474,418 507,204 553,892 Austin Community College 72,389 79,189 82,756 79,524 80,596 84,766 90,079 99,308 121,203 140,069 Austin Independent School District 732,434 704,839 735,582 730,909 746,896 775,231 834,029 918,306 1,030,642 1,174,333 Del Valle Independent School District 43,898 47,600 46,563 43,736 44,867 46,004 51,559 53,414 60,093 67,076 Eanes Independent School District 100,971 111,930 115,036 110,042 111,792 116,443 123,749 135,138 148,545 164,250 Leander Independent School District 142,085 173,078 185,502 185,883 195,248 204,896 219,988 248,089 273,849 305,591 Manor Independent School District 35,816 37,916 43,116 38,829 40,609 48,860 47,605 63,098 58,687 70,423 North Austin MUD #1 2,873 2,859 2,859 2,750 2,713 2,660 2,661 2,968 3,131 293 Northwest Austin MUD #1 (1) 1,230 1,216 1,173 -- -- -- -- -- -- -- Northwest Travis County RD #3 (2) 524 546 582 576 607 565 568 -- -- -- Pflugerville Independent School District 95,934 104,552 108,097 104,112 105,197 111,719 118,412 133,432 147,355 166,578 Round Rock Independent School District 247,325 272,758 284,082 273,120 268,675 287,687 288,217 332,436 360,251 360,251 Travis County (3) 361,662 391,696 417,426 441,859 466,691 503,068 529,149 543,863 568,520 592,824 Travis County Healthcare District 59,543 64,629 66,842 68,303 75,928 79,480 138,132 150,765 160,701 170,812

Source: Travis Central Appraisal District, Williamson Central Appraisal District, Hays Central Appraisal District, and taxing entities. Note:

(1) Northwest Austin MUD #1 discontinued in 2010. (2) Northwest Travis County RD #3 was dissolved in 2014. (3) Includes taxes and levies for Travis County and Farm to Market Roads.

2/15/2018 15:11

Tax Levies (in 000's) for Fiscal Year Ended September 30

2 2 4

Tax Rates (per $100 Assessed Value) for Fiscal Year Ended September 30

Principal Property Taxpayers City of Austin, Texas Current Year and Nine Years Ago 2/15/2018 15:11 Table 10

Percent of Percent of

January 1, Total Assessed January 1, Total Assessed

Type of 2016 Assessed Valuation of 2007 Assessed Valuation of

Taxpayer Property Valuation Rank 125,371,654,656 Valuation Rank 68,736,790,926

$ % $ %

Samsung Austin Semiconductor LLC Manufacturing 1,945,796,144 1 1.55 185,289,008 8 0.27

Columbia/St. Davids Health Care Hospital/Medical 547,944,382 2 0.44

Parkway San Jacinto Center LLC Commercial 466,413,166 3 0.37

Apple Manufacturing 384,000,000 4 0.31

Finley Company Commercial 350,843,445 5 0.28

CSHV-401 Congress LLC Commercial 335,534,992 6 0.27 176,565,956 9 0.26

Domain Retail Property Owner LP Commercial 301,942,549 7 0.24

IMT Capital II Riata LP Commercial 299,412,536 8 0.24

HEB Grocery Company LP Retail 292,658,781 9 0.23 163,182,221 10 0.24

CSHV-300 West 6th Street LLC Commercial 282,442,634 10 0.23

Freescale Semiconductor, Inc. Manufacturing 451,272,461 1 0.66

Dell Computer Corporation Manufacturing 400,048,046 2 0.58

Spansion LLC Manufacturing 294,064,149 3 0.43

IBM Corporation Manufacturing 260,454,949 4 0.38

AT&T Telephone Utility 215,966,774 5 0.31

Shopping Center at Gateway LP Commercial 213,795,973 6 0.31

Crescent Real Estate Commercial 193,818,716 7 0.28

Total assessed valuation 5,206,988,629 4.15 2,554,458,253 3.72

Source: Travis, Williamson and Hays Central Appraisal Districts

2 2 5

Fiscal Year Ended September 30

2017 2008

Direct and Overlapping Sales Tax Rates City of Austin, Texas Last Ten Fiscal Years 2/15/2018 15:11 Table 11

Fiscal Year City Capital State of

Ended Direct Metro Texas

Sept. 30 Rate (1) Rate (2) Rate (3)

% % %

2008 1.00 1.00 6.25

2009 1.00 1.00 6.25

2010 1.00 1.00 6.25

2011 1.00 1.00 6.25

2012 1.00 1.00 6.25

2013 1.00 1.00 6.25

2014 1.00 1.00 6.25

2015 1.00 1.00 6.25

2016 1.00 1.00 6.25

2017 1.00 1.00 6.25

Sources: Capital Metro, Comptroller of Public Accounts, and City of Austin

(1) City of Austin 1% sales tax levy effective January 1, 1968

(2) Capital Metro 1% sales tax levy effective October 1, 1985

(3) State of Texas 6.25% sales tax levy effective July 1, 1990

2 2

6

Taxable Sales by Category C-13 City of Austin, Texas Last Ten Fiscal Years (In thousands) Table 12

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (1)

$ $ $ $ $ $ $ $ $ $

Agriculture, forestry, fishing 7,609 6,929 5,914 4,680 4,212 4,804 5,510 7,214 4,915 4,488

Mining 6,537 4,034 2,854 2,264 6,549 15,455 52,267 30,534 3,594 3,512

Construction 452,770 352,053 368,296 389,154 471,658 551,199 628,533 685,990 749,861 836,779

Manufacturing 1,037,155 936,799 1,041,686 1,433,983 1,644,016 1,755,428 1,747,367 1,931,584 2,062,613 2,483,525

Transportation, communications, utilities 550,890 447,710 345,173 328,250 512,542 565,999 439,136 414,543 400,002 427,321

Wholesale trade 938,536 787,300 827,894 845,952 804,224 854,964 993,560 1,047,722 1,104,698 1,119,158

Retail trade 6,210,206 5,592,033 5,557,165 5,804,678 6,225,353 6,413,528 6,632,916 6,997,367 7,170,237 7,147,395

Finance, insurance, real estate 239,747 223,759 204,472 190,633 237,753 260,982 273,513 305,417 449,414 421,691

Services 1,355,771 1,233,310 1,189,812 1,257,576 1,395,058 1,510,025 1,555,087 1,657,188 1,824,561 2,011,728

Public administration 433,151 442,422 443,604 446,197 472,311 504,887 519,273 544,881 542,879 495,915

Other 2,170,937 2,128,184 2,150,840 2,361,381 2,659,739 2,987,068 3,299,444 3,616,962 3,879,965 4,114,151 Total taxable sales by category 13,403,309 12,154,533 12,137,710 13,064,748 14,433,415 15,424,339 16,146,606 17,239,402 18,192,739 19,065,663

Source: State of Texas Comptroller of Public Accounts

Note: Data subject to change as more precise numbers become available.2 2 7

Fiscal Year Ended September 30

(1) Data not available for third quarter of fiscal year 2017. For Mining, data not available for fourth quarter of fiscal year 2016 and for Agriculture, forestry, fishing, data not available for first and second quarter of fiscal year 2017. Figures are estimates.

Ratios of Outstanding Debt by Type 2/15/2018 15:12 City of Austin, Texas Last Ten Fiscal Years (In thousands except per capita) Table 13

Fiscal Year General Certificates Capital Total Ended Obligation of Contractual Lease Governmental Sept. 30 Bonds Obligation Obligations Obligations Activities

$ $ $ $ $ 2008 726,678 71,925 31,413 482 830,498 2009 845,741 78,525 28,456 468 953,190 2010 789,619 71,586 38,295 716 900,216 2011 842,708 62,426 32,994 433 938,561 2012 877,811 95,426 44,570 159 1,017,966 2013 902,750 114,798 67,788 -- 1,085,336 2014 974,855 135,829 85,036 -- 1,195,720 2015 1,030,680 165,350 102,396 -- 1,298,426 2016 1,108,558 166,201 101,012 -- 1,375,771 2017 1,109,766 214,394 111,868 -- 1,436,028

Fiscal Year General Certificates Other Tax Commercial Contract Capital Total Ended Obligation of Contractual Supported Paper Revenue Revenue Revenue Lease Business-type Sept. 30 Bonds Obligation Obligations Debt Notes Notes Bonds Bonds Obligations Activities

$ $ $ $ $ $ $ $ $ $ 2008 24,370 34,971 29,211 7,178 213,200 28,000 3,406,897 1,683 2,782 3,748,292 2009 21,510 42,877 60,195 6,650 339,999 28,000 3,442,342 914 1,981 3,944,468 2010 16,233 40,169 50,064 18,178 299,797 28,000 3,643,111 -- 1,628 4,097,180 2011 25,398 40,903 54,854 11,274 359,792 28,000 3,694,277 -- 1,258 4,215,756 2012 34,661 34,456 52,298 10,605 305,026 -- 3,944,795 -- 1,218 4,383,059 2013 31,381 33,658 55,508 9,915 193,991 -- 4,204,201 -- 1,176 4,529,830 2014 33,701 27,232 65,854 9,195 241,456 -- 4,298,643 -- 1,135 4,677,216 2015 28,852 40,695 54,686 8,450 200,581 -- 4,600,817 -- 1,089 4,935,170 2016 24,073 58,814 45,537 7,655 129,916 -- 4,578,492 -- 1,040 4,845,527 2017 20,303 55,242 32,895 7,116 146,097 -- 4,881,202 -- 989 5,143,844

Fiscal Year Total Percentage Debt Ended Primary of Personal Per Sept. 30 Government Income (1) Capita (1)

$ % $ 2008 4,578,790 0.12 6,137 2009 4,897,658 0.13 6,358 2010 4,997,396 0.14 6,419 2011 5,154,317 0.13 6,398 2012 5,401,025 0.14 6,578 2013 5,615,166 0.12 6,672 2014 5,872,936 0.12 6,689 2015 6,233,596 0.13 6,933 2016 6,221,298 0.11 6,722 2017 6,579,872 0.12 6,955

2 2 8

Governmental Activities

Business-type Activities

(1) Population and personal income statistics can be found in Table 18. Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

Ratios of Net General Bonded Debt Outstanding D-2 City of Austin, Texas Last Ten Fiscal Years (In thousands except per capita) Table 14

Resources Percentage of

Fiscal Restricted for Actual Net General

Year General Other Tax Repayment of Net Taxable Bonded Debt

Ended Obligation Supported Outstanding General Value of Per

Sept. 30 Bonds Debt Total Debt Principal Bonded Debt Property (1) Capita (2)

$ $ $ $ $ % $

2008 751,048 174,698 925,746 18,079 907,667 1.32 1,216.54

2009 867,251 216,703 1,083,954 18,389 1,065,565 1.39 1,383.32

2010 805,852 218,292 1,024,144 21,958 1,002,186 1.24 1,287.23

2011 868,106 202,451 1,070,557 20,806 1,049,751 1.35 1,302.97

2012 912,472 237,356 1,149,828 17,627 1,132,201 1.43 1,379.03

2013 934,131 281,667 1,215,798 17,068 1,198,730 1.44 1,424.26

2014 1,008,556 323,146 1,331,702 18,368 1,313,334 1.48 1,495.82

2015 1,059,532 371,577 1,431,109 21,725 1,409,384 1.43 1,567.52

2016 1,132,631 379,219 1,511,850 21,629 1,490,221 1.35 1,610.20

2017 1,130,069 421,515 1,551,584 24,587 1,526,997 1.22 1,614.03

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

(1) See Table 7 for property value data.

(2) Population data can be found in Table 18.

General Bonded Debt Outstanding

2/15/2018 15:12

2 2 9

Yes Direct and Overlapping Governmental Activities Debt City of Austin, Texas No As of September 30, 2017 2/15/2018 15:12 02/15 3:12p Table 15

Net Debt Amount Outstanding as Percent Applicable to

Name of of September 30, 2017 Applicable to City of Austin

Governmental Unit (in 000's) City of Austin (in 000's) $ $

Direct debt: Governmental activities debt General obligation bonds 1,109,766 Certificates of obligation 214,394 Contractual obligations 111,868 Capital leases --

Total direct debt 1,436,028 (1) 100.00 1,436,028 Overlapping debt

Greater than 10%: Austin Community College 297,584 70.35 209,350 Austin Independent School District 982,909 95.59 939,563 Avery Ranch Road District #1 7,755 99.39 7,708 Del Valle Independent School District 208,895 72.76 151,992 Eanes Independent School District 125,860 37.25 46,883 Leander Independent School District 992,698 12.07 119,819 Manor Independent School District 279,270 72.57 202,666 Northtown MUD 20,470 15.13 3,097 Northwoods Road District 8,520 100.00 8,520 Pearson Place Road District 5,315 100.00 5,315 Pflugerville Independent School District 455,775 35.00 159,521 Round Rock Independent School District 727,880 34.55 251,483 Travis County 684,531 79.81 546,324 Travis County Healthcare 10,380 73.63 7,643 Williamson County 872,280 11.46 99,963 Subtotal greater than 10% 5,680,122 2,759,847

Less than 10%: Hays County 436,200 0.05 218 Travis County Mud #8 6,351 2.39 152 Travis County WC & ID #10 45,970 3.86 1,774 Subtotal less than 10% 488,521 2,144

Total overlapping debt 6,168,643 2,761,991 Total direct and overlapping debt 7,604,671 4,198,019

Ratio of total direct and overlapping debt to assessed valuation (2) 3.35 % Per capita overlapping debt (3) $ 4,437.28

Source: Taxing jurisdictions, Travis, Williamson, and Hays Central Appraisal Districts and Municipal Advisory Council of Texas Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion

of the outstanding debt of those overlapping governments that is borne by the City residents and businesses. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping government.

(1) Excludes general obligation debt reported in proprietary funds. See Note 6. (2) Based on assessed valuation of $125,371,654,656 provided by the Travis, Williamson, and Hays Central Appraisal Districts. (3) Based on 2017 estimated population of 946,080.

%

2 3

0

Legal Debt Margin Information City of Austin, Texas Last Ten Fiscal Years (In thousands) 02/15 3:12p Table 16

Legal Debt Margin Calculation for Fiscal Year 2017

Assessed taxable value (1) 124,117,938$

Debt limit (2) 18,279,122

Debt applicable to limit: General obligation debt 1,425,780 Less: Amount set aside for repayment of general

obligation debt (24,587)

Total net debt applicable to limit 1,401,193

Legal debt margin 16,877,929$

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

$ $ $ $ $ $ $ $ $ $

Debt limit 10,021,785 11,190,400 11,804,005 11,316,858 11,550,204 12,144,302 12,942,046 14,383,428 16,114,633 18,279,122

Total net debt applicable to limit 878,798 1,043,671 971,250 1,020,759 1,102,536 1,163,822 1,253,012 1,332,360 1,387,051 1,401,193

Legal debt margin 9,142,987 10,146,729 10,832,755 10,296,099 10,447,668 10,980,480 11,689,034 13,051,068 14,727,582 16,877,929

Total net debt applicable to the limit as a percentage of debt limit 8.77% 9.33% 8.23% 9.02% 9.55% 9.58% 9.68% 9.26% 8.61% 7.67%

Note: Ad valorem tax limitations: The City is permitted by Article XI, Section 5 of the State of Texas Constitution to levy taxes up to $2.50 per $100 of assessed valuation for general governmental services, including payment of principal and interest on general obligation long-term debt. However, under the City Charter, a limitation on taxes levied for general governmental services, exclusive of payments of principal and interest on general obligation long-term debt, has been established at $1.00 per $100 per assessed valuation. A practical limitation on taxes levied for debt service of $1.50 per $100 of addressed valuation is established by referring to the State Statute and City Charter limitations.

(1) Assessed value 100% of estimated market value as of January 1, 2016, of $125,371,654,656 at a 99% collection rate. (2) Assuming the maximum tax rate for debt service of $1.50 on January 1, 2016, for collections on $124,117,938 results in tax revenues of $1,861,769.

This revenue could service the debt on $18,279,122 issued as 8% - 20-year serial bonds with level debt service payments.

Fiscal Year

2 3 1

Pledged-Revenue Coverage City of Austin, Texas Last Ten Fiscal Years (In thousands) Table 17

Fiscal Year Utility Less: Net Utility Less: Net

Ended Service Operating Available Coverage Service Operating Available Coverage Sept. 30 Charges (1) Expenses (2) Revenue Principal Interest (4) Charges (1) Expenses (2) Revenue Principal Interest (4)

$ $ $ $ $ $ $ $ $ $ 2008 1,260,817 840,898 419,919 81,366 61,834 2.93 367,444 145,101 222,343 56,091 87,544 1.55 2009 1,179,688 851,756 327,932 78,773 93,170 1.91 393,771 181,440 212,331 59,018 88,089 1.45 2010 1,159,295 866,914 292,381 65,823 99,786 1.77 361,342 166,907 194,435 54,413 101,265 1.25 2011 1,258,871 912,651 346,220 75,084 97,547 2.01 448,467 171,833 276,634 50,660 105,221 1.77 2012 1,190,798 875,675 315,123 75,772 92,959 1.87 443,028 178,891 264,137 67,295 110,872 1.48 2013 1,295,116 927,294 367,822 105,091 71,052 2.09 477,013 209,890 267,123 75,186 113,826 1.41 2014 1,375,294 1,028,794 346,500 83,151 60,101 2.42 472,717 218,071 254,646 98,245 105,901 1.25 2015 1,359,097 978,283 380,814 47,904 59,017 3.56 517,253 208,307 308,946 97,176 124,134 1.40 2016 1,378,749 989,768 388,981 65,132 62,599 3.05 563,066 217,457 345,609 79,564 105,186 1.87 2017 1,373,020 1,018,604 354,416 44,278 60,692 3.38 601,928 233,592 368,336 85,927 141,455 1.62

Fiscal Year Other Less: Net User Fees Less: Net

Ended Service Available Operating Available Coverage and Revenue Operating Available Coverage Sept. 30 Charges (1) Funds (5) Expenses (2) Revenue Principal Interest (4) Transfers (1) Expenses (2) Revenue Principal Interest (4)

$ $ $ $ $ $ $ $ $ $ $ 2008 91,271 4,550 49,965 45,856 6,545 11,654 2.52 59,951 29,791 30,160 3,440 12,047 1.95 2009 85,070 4,924 54,453 35,541 6,843 12,851 1.80 54,491 30,058 24,433 4,720 11,330 1.52 2010 85,156 3,673 57,773 31,056 7,168 7,522 2.11 51,226 30,520 20,706 8,215 9,238 1.19 2011 90,259 3,739 64,371 29,627 7,544 7,410 1.98 59,351 32,464 26,887 8,545 9,356 1.50 2012 96,344 3,594 65,689 34,249 7,473 6,902 2.38 63,345 35,640 27,705 9,450 8,423 1.55 2013 103,705 3,805 69,338 38,172 8,438 6,783 2.51 73,977 44,684 29,293 10,205 7,991 1.61 2014 109,263 3,620 73,822 39,061 8,520 5,960 2.70 82,971 41,142 41,829 10,750 7,278 2.32 2015 120,780 3,551 76,995 47,336 9,264 4,941 3.33 94,847 47,746 47,101 10,930 6,691 2.67 2016 137,826 3,700 82,330 59,196 9,616 5,184 4.00 106,037 45,306 60,731 11,740 6,352 3.36 2017 154,570 4,830 94,139 65,261 13,003 6,316 3.38 118,013 54,533 63,480 12,150 5,653 3.57

Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) Operating revenue, rental tax revenue, hotel tax revenue, and interest income. (2) Operating expenses other than interest on debt, depreciation, amortization, and year-end unfunded other postemployment benefit and pension expenses. (3) Debt service calculations are done on a cash basis rather than the accrual basis used in preparation of the financial statements. Airport excludes debt service amounts paid with passenger facility charge revenue and restricted bond proceeds applied to current interest payments. (4) Revenue bond coverage is equal to net revenue available for debt service divided by total principal and interest payments made during each fiscal year. Coverage includes prior, subordinate, and separate lien bonds only. For Austin Water Utility, this methodology does not follow exactly the coverage calculation required by the master ordinance. (5) Pursuant to bond ordinance, Airport is authorized to use "other available funds" in the calculation of revenue bond coverage to not exceed 25% of the debt service requirements.

2 3 2

Electric Revenue Bonds

Convention Center Revenue Bonds

Debt Service (3)

02/21 1:03p

Water and Wastewater Revenue Bonds

Airport Revenue Bonds

Debt Service (3)

Debt Service (3)Debt Service (3)

Demographic and Economic Statistics City of Austin, Texas Last Ten Fiscal Years 2/15/2018 Table 18

Fiscal Area of Income (MSA) Median Per Capita Year City of Austin Incorporation Population (thousands Household Personal Unemployment

Ended Population (Sq. Miles) MSA of dollars) Income Income Rate (MSA) Sept. 30 (1) (1) (2) (2) MSA (3) MSA (2) (4)

$ $ $ % 2008 746,105 298 1,633,870 65,153,669 46,340 39,877 4.3 2009 770,296 302 1,682,338 64,290,898 47,520 38,215 6.9 2010 778,560 306 1,727,743 69,124,528 48,460 40,009 7.0 2011 805,662 308 1,781,409 76,507,673 46,689 42,948 6.6 2012 821,012 319 1,834,319 84,319,550 46,818 45,968 5.7 2013 841,649 321 1,882,856 87,138,010 46,436 46,280 5.2 2014 878,002 321 1,941,389 95,067,019 49,227 48,969 4.2 2015 899,119 323 1,998,104 102,159,431 52,519 51,128 3.4 2016 925,491 326 2,056,405 106,040,064 56,163 51,566 3.2 2017 946,080 325 2,077,799 (6) 112,009,610 (5) 56,849 (6) 53,908 (5) 2.9

2008-2017 26.80% 9.03% 27.17% 71.92% 22.68% 35.19% Change

Note: Prior year statistics are subject to change as more precise numbers become available. (1) Source : City Demographer, City of Austin, Planning and Zoning Department based on full purpose area as of September 30. (2) Source: Bureau of Economic Analysis for all years except 2017 which will not be available until first quarter 2018. (3) Source: Claritas, a Nielsen company. (4) Source: Bureau of Labor Statistics, United States Dept. of Labor as of September 30. (5) Data not available for 2017. Figures are estimated. (6) Source: Nielsen SiteReports.

2 3 3

Principal Employers City of Austin, Texas Current Year and Nine Years Ago 02/26 5:36p Table 19

Percent Percent of MSA of MSA

10 Largest Employers Industry Rank Employees Total (1) Rank Employees Total (1) % %

State Government Government 1 38,353 (2) 3.73 1 37,192 4.68 The University of Texas at Austin Education 2 23,131 (4) 2.25 2 24,527 3.08 City of Austin Government 3 13,825 (5) 1.34 4 12,236 1.54 Federal Government Government 4 12,700 (6) 1.24 6 10,200 1.28 HEB Retail 5 12,198 (4) 1.19 7 6,746 0.85 Dell Computer Corporation Computers 6 12,000 (4) 1.17 3 17,000 2.14 Austin Independent School District Education 7 11,447 (3) 1.11 5 11,102 1.40 Seton Healthcare Network Healthcare 8 10,270 (4) 1.00 8 6,700 0.84 St. David's Healthcare Partnership Healthcare 9 8,598 (4) 0.84 10 6,219 0.78 Samsung Austin Semiconductor Manufacturer 10 6,074 (4) 0.59 IBM Corporation Computers 9 6,239 0.78

148,596 14.46 138,161 17.37

Notes: (1) Texas Workforce Commission - Total refers to a Metropolitan Statistical Area (MSA) employed work force of 1,028,100 for 2017 and 795,300 for 2008. (2) Texas State Auditor's Office: Regular and Part Time State Employees for 2017 in Bastrop, Caldwell, Hays, Travis and Williamson Counties. (3) Texas Education Agency 2016-2017 Texas Academic Performance Report for AISD Page 21. (4) Austin Chamber of Commerce - Top Employers for Austin MSA - Fall 2017. (5) FY2017-2018 Personnel Summary (FTE's) City of Austin Budget Volume I Page 646 Approved Budget (2016-17 Amended Budget Column). (6) Bureau of Labor Statistics Federal Government employees in Austin MSA in September 2016.

2017 2008 Fiscal Year Ended September 30

234

Full-time Equivalent Employees by Function/Program City of Austin, Texas Last Ten Fiscal Years 02/15 3:13p Table 20

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Function/Program

Governmental activities

General government 171 169 169 169 173 177 232 235 238 239

Public safety 3,959 3,938 3,938 4,046 4,117 4,219 4,281 4,401 4,523 4,664

Transportation, planning, and sustainability 5 5 4 4 4 7 9 14 14 14

Public health 953 484 517 517 520 513 513 532 575 592

Public recreation and culture 838 865 846 890 887 917 985 1,009 1075 1088

Urban growth management 373 373 378 387 378 386 411 417 449 472

Total governmental employees 6,299 5,834 5,852 6,013 6,079 6,219 6,431 6,608 6,874 7,069

Business-type activities

Electric 1,679 1,719 1,738 1,737 1,722 1,719 1,682 1,676 1,674 1,718

Water 481 521 530 535 535 553 592 587 590 604

Wastewater 555 536 540 535 534 541 566 560 558 566

Airport 348 352 345 345 347 351 362 379 415 456

Convention 221 241 244 239 239 239 251 250 266 277

Environmental and health services 448 463 461 461 467 499 523 522 546 573

Public recreation 91 88 88 41 33 33 38 41 41 41

Urban growth management 661 659 632 649 681 693 767 775 809 881

Total business-type employees 4,484 4,579 4,578 4,542 4,558 4,628 4,781 4,790 4,899 5,116

Internal Services (1) 1,453 1,502 1,450 1,482 1,487 1,524 1,570 1,579 1,598 1,640 Total full-time equivalent employees 12,236 11,915 11,880 12,037 12,124 12,371 12,782 12,977 13,371 13,825

Source: Budget Office

Notes:

(1) Internal service activities are allocated to other programs and functions on a government-wide basis.

2 3 5

Fiscal Year Ended September 30

Operating Indicators by Function/Program City of Austin, Texas Last Ten Fiscal Years Table 21

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Governmental activities

General government Municipal court cases filed 425,175 446,777 369,053 341,036 323,513 364,930 369,906 351,757 323,504 306,689 Central booking cases magistrated/arraigned 92,764 101,649 114,334 106,974 96,898 89,162 88,887 84,868 83,270 84,277 Number of cases docketed (excluding jail) 139,831 159,038 158,597 140,820 115,939 115,545 116,025 109,628 97,116 85,436 Number of warrants prepared 109,239 140,668 138,379 134,038 89,969 88,401 88,400 82,311 71,159 66,391 Jail cases prepared 119,140 125,406 134,018 122,279 103,126 93,949 96,744 92,765 92,946 95,145

Public safety

Number of incidents responded to by patrol officers N/A N/A N/A N/A 638,006 623,768 595,292 572,623 572,303 570,707

Number of arrests made N/A N/A N/A N/A 62,841 56,628 52,870 50,072 47,078 47,617

Number of citation violations issued by APD officers N/A N/A N/A N/A 152,971 187,033 184,254 156,088 143,173 128,925 Fire emergency responses 76,347 74,211 75,676 81,982 84,473 86,641 89,538 89,563 81,973 86,665 Fire responses 2,767 2,816 2,172 3,208 2,086 2,404 2,129 2,066 2,120 2,508 Fire inspections 26,834 25,523 25,622 25,368 23,837 29,602 32,619 35,154 36,259 36,393 EMS response units dispatched 116,897 113,410 115,637 122,701 128,334 133,160 138,881 157,827 159,992 145,489 EMS 911 calls received 108,478 106,477 110,703 114,625 117,310 127,772 126,638 140,212 143,804 146,448 EMS ground patient transports 55,738 56,127 61,267 71,577 75,510 75,123 76,791 82,987 78,725 78,164

Transportation, planning, and sustainability Number of school zone signals that rec'd preventive maintenance N/A N/A N/A N/A 218 723 61 316 238 219 Number of children receiving safety training 49,077 44,480 44,582 44,468 46,790 52,862 49,627 50,165 49,531 48,483 Injuries to children in school zones -- -- -- -- -- -- -- -- -- --

Public health Number of animals sheltered 24,663 22,150 24,026 19,752 19,392 19,760 19,137 18,630 17,431 17,284 Birth and death certificates 121,787 96,421 84,017 63,979 57,841 61,918 69,678 71,293 74,946 75,565 STD patient clinic visits 12,696 13,248 13,869 14,187 13,033 12,927 12,956 13,722 13,860 12,740 Number of Shots for Tots Clinics vaccine visits (ages 0-18) 15,628 12,380 17,084 9,934 7,960 6,994 7,583 7,541 8,156 8,373 Women and children service encounters 375,008 433,675 458,032 439,316 421,637 406,774 389,071 365,230 344,296 287,562 Participants receiving basic needs services 8,291 7,592 7,635 9,016 7,531 10,320 11,037 10,536 18,545 18,747 Food establishment permits issued 5,355 5,783 5,909 9,452 10,137 13,968 12,445 12,779 13,227 14,485 HIV clients 4,110 4,299 4,413 4,352 4,676 5,084 5,254 5,480 5,521 5,916

Public recreation and culture Volumes in library collection 1,469,288 1,455,793 1,465,765 1,454,103 1,480,479 1,464,512 1,425,914 1,725,535 1,869,385 1,919,511 Library volumes borrowed 3,791,515 4,197,963 4,316,785 4,663,483 4,845,067 5,129,759 5,392,446 5,572,268 5,921,193 5,762,874 Registered library borrowers 494,757 561,112 483,099 519,788 494,015 497,527 508,397 542,358 570,446 597,545 Meals served to senior citizens 119,224 64,821 64,032 63,299 65,965 62,053 63,718 78,147 79,183 81,452 Visits to educational and cultural facilities N/A N/A N/A N/A 388,650 302,778 329,734 256,526 307,136 356,389 Pool visits N/A N/A N/A N/A 1,098,545 1,312,941 1,202,587 1,253,624 1,115,800 1,403,260

Number of youth participating in out of school time activities N/A N/A N/A N/A 64,331 84,571 114,335 N/A (Continued)

2 3 6

Fiscal Year Ended September 30

Operating Indicators by Function/Program City of Austin, Texas Last Ten Fiscal Years, continued Table 21

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Urban growth management One-stop shop customers served by development assistance 30,447 26,531 26,597 28,983 32,362 31,477 33,116 32,273 36,036 35,237 Number of neighborhood plan amendments submitted per year N/A N/A N/A N/A N/A N/A 21 26 22 22 Zoning applications processed 232 101 145 137 129 140 149 169 139 144 Building inspections performed-development and regulation 226,841 177,854 150,228 161,519 186,737 220,881 228,576 240,632 277,246 138,459 One-stop shop building permits issued 111,735 92,396 91,996 96,205 108,494 109,492 101,012 70,432 74,902 67,504 Repair services provided to homeowners (1) N/A N/A N/A N/A 708 533 692 622 708 604 Svcs provided through housing/community development activities (1) N/A N/A N/A N/A 3,337 2,438 2,613 2,590 2,896 2,741

Business-type activities Electric

Electric sales (in millions of KWH) 12,184 12,103 11,976 12,779 12,534 12,305 12,572 12,674 12,874 12,983 Number of metered customers 397,100 407,926 413,870 417,865 422,375 430,582 439,403 450,479 461,345 472,701

Water Actual water pumpage (millions of gallons) 53,921 53,331 43,827 54,923 49,192 47,750 43,239 43,481 44,672 47,371 Average daily consumption (thousands of gallons) 145,386 129,600 108,600 135,576 120,438 114,631 118,464 119,084 122,055 129,810 Average daily consumption per capita 170 167 135 162 142 136 125 122 122 126 Peak daily capacity (thousands of gallons) 285,000 286,000 286,000 286,000 285,000 285,000 285,000 285,000 335,000 335,000

Wastewater Average daily sewage treatment (millions of gallons) 83 82 99 84 104 95 102 105 109 104 Combined daily capacity (thousands of gallons) 150,000 135,000 135,000 135,000 150,000 150,000 150,000 150,000 150,000 150,000

Airport Enplanements 4,671,819 4,150,710 4,257,715 4,524,641 4,662,738 4,928,979 5,275,464 5,792,387 6,180,464 6,729,108 Deplanements 4,463,154 4,111,620 4,240,086 4,510,247 4,654,823 4,928,279 5,244,569 5,769,778 6,161,240 6,676,658 Cargo (in millions of pounds) 211 161 156 152 155 157 156 158 168 189

Convention Convention contracts executed 285 281 251 307 303 306 353 292 279 247 Vehicles parked 488,916 539,098 429,993 467,908 509,313 548,221 648,970 726,759 730,279 761,756

Environmental and health services Tons of trash collected 143,950 128,519 130,851 126,497 129,653 124,183 127,924 130,784 129,266 131,815 Tons of recyclables collected 34,691 49,811 52,479 52,236 54,009 53,702 55,494 57,324 58,879 58,705 Tons of brush collected 7,380 7,683 7,350 6,853 7,720 7,359 6,692 7,776 8,460 7,367 Tons of bulk items collected 7,792 8,219 7,710 7,503 7,844 8,681 9,274 9,672 12,144 11,334 Tons of yard trimmings collected 24,027 19,497 22,456 24,777 21,712 25,898 27,357 28,680 32,605 34,316

Public recreation Golf rounds played 231,231 230,852 200,446 216,789 195,000 201,086 190,244 181,285 196,972 208,118 Youth sports participants N/A N/A N/A N/A N/A 18,475 23,769 26,165 22,196 14,581

(Continued)

2 3 7

Fiscal Year Ended September 30

Operating Indicators by Function/Program City of Austin, Texas Last Ten Fiscal Years, continued Table 21

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Urban growth management Storm water discharge permits issued to businesses 1,123 1,183 1,087 1,083 1,086 1,068 1,032 1,008 998 997 Litter and debris collection on Lady Bird Lake (in tons) 209 270 374 230 234 144 121 148 33 32 Feet of pipeline cleaned 77,283 74,164 51,627 70,235 61,099 72,669 69,380 83,716 79,606 78,106 Lane miles maintained N/A N/A N/A N/A 7,435 7,498 7,549 7,582 7,663 7,820 Signs installed/maintained N/A N/A N/A N/A 17,012 11,484 11,404 11,807 16,942 23,093 Traffic sign installations 28,002 23,144 31,754 1,812 3,834 4,308 2,037 2,025 3,673 3,143 Traffic counts performed N/A N/A N/A N/A 223 704 535 605 1,227 662

Internal services activities (2) Internal services

Vehicles/equipment auctioned off 326 306 473 247 340 319 379 491 361 307 Fleet work orders completed (1) N/A N/A N/A N/A N/A N/A N/A 48,968 49,878 51,087 Payment transactions processed 243,338 216,340 218,778 200,605 158,413 170,450 185,463 187,938 174,116 180,556 Payroll payments 434,578 435,034 425,679 444,255 432,216 438,945 453,686 466,928 474,170 487,292 Pieces of mail processed 2,251,672 1,939,554 1,849,811 1,838,809 1,840,326 1,891,966 1,965,527 2,027,927 2,957,604 2,765,905 Employees enrolled in medical benefit plans 7,730 7,693 10,770 10,916 11,049 11,219 11,551 11,873 11,991 12,365 Requests for council action processed 2,536 2,025 2,024 2,133 2,284 2,476 2,284 2,135 2,533 2,278 Active construction projects managed in-house 300 312 366 418 380 387 357 336 336 355 Land parcels acquired 242 218 244 169 104 135 160 264 250 122

Source: Various City departments; budget documents and performance reports N/A: Information not available (1) Newly implemented performance measure. (2) Internal service activities are allocated to other programs and functions on a government-wide basis.

2 3 8

Fiscal Year Ended September 30

Capital Asset Statistics by Function/Program ######## City of Austin, Texas Last Ten Fiscal Years Table 22

Function/Program 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Governmental activities

Public safety Police stations 5 8 5 5 5 5 5 5 5 5 Police zones 9 9 9 9 9 9 9 9 9 9 Patrol units 355 355 359 349 349 345 372 360 365 360 Fire stations 44 44 45 45 45 45 45 45 45 45 EMS stations 33 33 35 35 35 37 37 37 37 37

Public health Health facilities (sq. ft.) 331,462 331,726 400,426 404,059 381,806 383,306 383,306 383,306 389,221 389,221 Program vehicles 76 76 76 76 82 83 90 85 109 111

Public recreation and culture Libraries 22 22 23 23 23 23 22 22 22 22 District parks 11 13 13 13 14 15 15 15 15 14 Metropolitan parks 11 12 11 12 11 11 11 11 11 11 Natural preserves 13 13 15 15 15 15 15 15 14 14 Greenbelts 26 29 40 40 39 39 40 43 44 48 Neighborhood parks 90 96 96 79 79 82 84 85 86 90 Special parks (museums, etc.) 28 28 39 39 38 40 40 42 41 37 Youth entertainment complexes 1 1 1 1 1 1 1 1 1 1 Recreation centers 18 20 20 20 20 20 22 23 23 23 Open fields 90 89 93 103 105 100 101 101 101 78 Senior activity centers 3 3 3 3 3 3 3 3 3 3 Veloway (miles) 3 3 3 3 3 3 3 3 3 3 Hike and bike trails (miles) 117 117 193 199 199 185 203 208 227 234 Tennis courts 102 114 110 110 115 116 124 124 124 124 Swimming pools 46 50 51 52 52 52 51 51 51 51

Business-type activities Electric

Overhead distribution (miles) 5,489 5,493 5,475 5,450 5,403 5,361 5,263 5,104 5,017 4,961 Underground distribution (miles) 5,700 5,786 5,844 5,912 5,995 6,068 6,167 6,338 6,500 4,630

Water Treatment plants 2 2 2 2 2 2 2 3 3 3 Water mains (miles) 3,594 3,626 3,634 3,657 3,682 3,711 3,713 3,807 3,845 3,884 Booster pumps 45 45 46 45 41 41 39 40 44 44 Fire hydrants 31,348 32,232 32,576 33,533 33,839 34,041 36,217 37,518 38,265 39,445

Wastewater Sanitary sewers (miles) 2,607 2,634 2,650 2,650 2,664 2,692 2,692 2,776 2,806 2,848 Connections 191,297 196,842 198,116 199,005 202,444 202,690 204,378 212,760 214,373 215,879

(Continued)

2 3 9

Fiscal Year Ended September 30

Capital Asset Statistics by Function/Program ######## City of Austin, Texas Last Ten Fiscal Years, continued Table 22

Function/Program 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Business-type activities, continued

Airport Buildings maintained (sq. ft.) 2,306,130 2,306,130 2,306,130 2,306,130 2,306,130 2,306,130 2,306,130 2,361,831 2,361,831 2,361,831 Facility (terminal) maintained (sq. ft.) 1,016,000 1,016,000 1,016,000 1,016,000 687,940 687,940 687,940 743,641 743,641 743,641 Acres - air side 1,700 1,700 1,700 1,700 1,700 1,700 1,700 1,700 1,700 1,700

Convention Convention facilities (sq. ft.) 2,080,222 2,080,222 2,080,222 2,080,222 2.080,222 2,080,222 2,080,222 2,080,222 2,080,222 2,080,222

Environment and health services Refuse collection trucks 64 62 89 67 69 66 64 66 67 67 Recycle collection trucks 53 31 38 36 36 38 41 43 45 46

Public recreation Golf courses 5 5 5 5 5 5 6 6 5 6 Athletic fields 176 185 174 174 176 169 172 172 172 172 Softball fields 16 35 37 32 32 34 35 35 35 35

Urban growth management Residential ponds 630 710 803 820 840 860 865 873 894 994 Street (miles) 7,349 7,626 7,348 7,550 7,435 7,498 7,618 7,582 7,663 7,825 Bridges 366 424 427 438 438 438 447 450 450 436 Traffic signals 852 865 902 925 954 975 1,000 1,016 1,029 1,057 Metered parking spaces 3,772 4,017 5,026 5,076 5508 6015 6,072 7,300 7,600 8,217

Internal Services (1)

Fleet facilities (sq. ft.) 123,117 123,117 127,916 127,916 127,916 127,916 127,916 127,916 127,916 127,916 City facilities insured 1,101 1,129 1,193 1,040 1,052 1,060 1,134 1,134 1,253 1,241 Facilities maintained (sq. ft.) 1,621,921 1,539,244 1,539,244 1,539,244 1,539,244 1,539,244 1,539,244 1,539,244 1,539,244 1,539,244

Source: Various City departments; budget documents and performance reports (1) Internal service activities are allocated to other programs and functions on a government-wide basis.

2 4 0

Fiscal Year Ended September 30

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