Mercedes Renteria District 1

Scott SheleyDistrict 2

Brandon Capetillo Mayor ProTem

Terry SainDistrict 4

Robert HoskinsDistrict 5

David McCartneyDistrict 6

Fellow Baytonians,

On behalf of the Council and Staff of the City of Baytown, I am

proud to present Baytown’s 2012 Popular Annual Financial Report:

Building the Foundation for Future Generations. We’re happy to

report another successful year and believe that providing you with

a clear and concise look at how your city operates is of utmost

importance in maintaining the trust you’ve placed in us.

Like the rest of the nation, 2012 presented Baytown with many

financial challenges. A slow economy and limited growth left

municipalities feeling financial pressure on their ability to continue

providing quality services. Balancing a multi-million-dollar budget is difficult, even in the best

of times. Here in Baytown, hard work, creativity and careful stewardship of resources have

carried us through financially difficult times without sacrificing a balanced budget and with no

major reductions to service or staff.

Today Baytown sits on the brink of unprecedented growth in industry, population and

opportunity. Building the Foundation for Future Generations is an especially appropriate theme

for us this year as we lay the ground work for growth that will carry our city into a prosperous

future.

2012 was an exciting, yet demanding year. The City of Baytown met it’s financial challenges

and prospered. 2013 looks to be even better as sales tax, Industrial District Agreement (IDA)

revenues, and housing sales continue to show positive growth. The future is bright for Baytown.

Business, education and industry are thriving. Through smart growth and planning, Baytown is

leading the way.

I‘m proud to be part of such an incredible community and I am confident the City of Baytown

will continue to provide the best service possible to our customers, the citizens of Baytown.

Sincerely,

Stephen DonCarlos, Mayor

2

3

Where Baytown BeginsLocated 30 miles east of downtown Houston, Baytown is the third largest city in

Harris County, and is easily accessible via Interstate 10, a major gateway on the city’s northern border.

Visitors from the south enter the city via the scenic Fred Hartman Bridge. The city encompasses an area of 34 square miles and boasts a rich environment,

as well as a strong historical and economic heritage.

The City’s strategic location has encouraged a successful and diverse blend of employment opportunities and recreational activities centered around the area’s waterways. Located in the Texas Independence Trail region,

Baytown is rich in history. General Sam Houston was an early resident, and the area played a significant role in the Battle of San Jacinto in 1836. The region was also home to the Karankawa Indians; their

artifacts can still be found at the Baytown Nature Center.

Originally three separate towns, the City of Baytown combined Goose Creek (dating back to before 1850), and oil boom towns Pelly (established in the late 1910s), and East Baytown (early 1920s)

when it incorporated in 1948.

Baytown is a Home Rule City operating under the Council-Manager form of government, with a City Council composed of a Mayor (elected at large) and six single district Council members. The City Council

appoints a City Manager to act as the chief administrative and executive officer of the City.

4

Building a Culture of Service

Our Foundation for SuccessLive the City’s Core Values

• Leadership: show others the way • Integrity: we earn and honor the trust of others• Teamwork: we help each other succeed • Excellence: we understand our jobs and take pride in doing them well• Respect: we conduct our business with courtesy, kindness and fairness• Service: we anticipate our customers’ needs and provide solutions

Get better all the time• Innovate by learning from others and evaluating how we can improve

the way we provide services.• Ask customers and employees how we can improve.• Train employees to perform their jobs at higher levels.• Develop employees within their current positions and grow leaders from

within the organization.

Communicate• Always step back when making a decision and consider who needs to be involved and

who needs to be informed of what is happening, whether it’s the public or fellow employees.• Make every decision with the future in mind.• Will the decision make Baytown a better place to live, work and visit?• What impact will the decision have on Baytown in twenty years?• Will the decision have a positive impact on Baytown’s community spirit?

Give back• Positively impact the Baytown area as public servants and as members of the community.

The City of Baytown is proud to be an organization where character counts and service is more than a catch phrase.

Our Mission: To balance public resources and services in order to provide for the health, safety, and welfare of the community, enhance quality of life, and plan for the future.

Our Vision: To be a progressive community that values quality of life, diverse economic opportunities and civic pride as we honor our past and shape our future.

4

Building a Better CityEach of the City’s 800 employees works toward a common goal

- a vision for our community set out by the City Council outlining priority areas on which to focus our efforts.

These include: citizen safety, economic and financial health, development and redevelopment and infrastructure maintenance/improvement.

Building and sustaining a strong and vibrant community is always our first priority.

5

Parks Developed Park Acreage Undeveloped Park Acreage Splash Parks Baseball/Softball Diamonds Tennis Courts Community Centers Water parks Quick Soccer Courts

47967 117

4 224 122

73,41334 ft.

68.7o F77.9o F59.6o F53.8 in.$50,107

31

By the Numbers

Population Elevation Avg. Temp Avg. HighAvg. LowAvg. Precip.Med. IncomeMedian Age

Water & Sewer Customers 2011 2012WaterSewer

21,90321,086

22,10421,241

Police Statistics 2011 2012Arrests Accident reports Calls for service Citations Offense reports

6,880 1,900

15,186 13,352 49,024

6,806 1,899

16,120 14,800 46,175

Parks & Recreation Statistics

Welcoming Visitors

Be a Tourist in Your Own Backyard!

Want to spend the day in a serene environment observing nature? Visit the Eddie V. Gray Wetlands Center and the Baytown Nature Center, both on the Great Texas Birding

Trail. Then take a stroll along Baytown’s Goose Creek Stream Greenbelt Trail.

Want to learn more about our community’s heritage? Visit the Baytown Historical Museum, then head over to the Republic of Texas Plaza, and finish up with dinner on Texas Avenue near historic Goose Creek.

And don’t forget to visit the many historical markers throughout the community, including the marker dedicated to the property once owned by General Sam Houston.

Want to hear great music, see a performance or just stroll along looking at art? Get tickets for a production at the Baytown Little Theater or the Baytown Symphony Orchestra. Purchase tickets for a performance at Lee College’s Performing Arts Center or visit one of the galleries on Texas Avenue: the Baytown Art League’s

Gallery or Portrait of a Warrior Memorial Art Gallery!

Tourism plays an important role in a community’s economic development and stability. When hotels are full, restaurants do well, and retail gets a boost. The end result is increased municipal tax revenues,

which contribute to lower taxes for residents.

A great way to support tourism is to personally know your city’s assets. What better way to support our local economy than to be a tourist in our own backyard? A few things Baytown has to offer

are Nature tourism, Historical tourism and Cultural Tourism.

6

7

Building Blocks of the FutureBaytown sits on the brink of substantial growth. Significant expansions have been

announced by local industry, which will bring many new faces, as well as opportunities to our community. New restaurants and retail are making their way into the city.

To support the unprecedented growth coming to Baytown and to ensure that our community is strong for future generations, infrastructure growth, smart planning,

and increased investment in public safety must be priorities.

Communities across the country are coming back from the recession, with Baytown leading the charge. The City of Baytown has, and will continue, to make investments to support this growth in our community.

On the employment front, unemployment continues to drop. This pattern looks to continue with announced billion dollar expansion plans for local industry bringing thousands of construction jobs and hundreds of permanent positions to our community. New companies, including KIWI Golf, have announced their intentions of locating facilities in Baytown as well. Retail growth is also on the rise with the announce-ment of a new WalMart and retail complex locating at I-10 and State Highway 146.

As Baytown’s economy grows, so does the need for City services. In anticipation of this growth, the City expanded public safety with the building of Fire Stations 5 and 6; and hired an additional six fire fighters, six police officers, three paramedics, an additional 9-1-1 operator and an additional animal control officer.

Infrastructure was not ignored. With over $7 million allotted to street maintenance every year for the past few years, the City has been addressing mobility needs across town. New sidewalks, extended thorough-fares, and the Texas Avenue Streetscape project have made Baytown easier to navigate and more attractive. Water and wastewater capabilities have been improved and expanded; and multiple park projects, such as Pirates Bay, Calypso Cove, and Bayland Marina offer quality leisure opportunities to our residents.

The City’s financial health is strong. Sales tax revenue is up over 10% and Industrial District Agreement revenue continues to climb. The City operates with a balanced budget and maintains strong Bond ratings.

What does all this mean? It means that Baytown is uniquely poised to enter an era of great growth. Careful planning and good stewardship have prepared the City and the community for a strong future. And that is something we can all be proud of.

7

Statement of Net Assets 2011 2012Current and Other Assets Capital Assets, Net TotalAssets Long-Term Liabilities Other Liabilities TotalLiabilities NetAssets: Invested in Capital Assets, Net of Related Debt Restricted Unrestricted TotalNetAssets The Statement of Net Assets presents information on all of the City's assets and liabilities, with the difference between the two presented as net assets. The statement excludes the Baytown Area Water Authority (BAWA) and the Municipal Development District (MDD).

8

$ 132,133,321352,843,017484,976,338

205,717,865 20,761,790 226,479,655

220,390,220 17,652,246 20,454,217

$258,496,683

Solid Foundations Encourage Smart Growth

$ 114,559,267393,015,563507,574,830

211,229,41020,146,158 231,375,568

236,572,975 20,829,679 18,796,608

$276,199,262

(Accrual Basis of Accounting)Bond Ratings

Moody’s Aa2 Stable

• Ongoing development occurring within the city and industrial districts• Historically sound financial operations and healthy reserves • Sizeable tax base bolstered by

industrial district values

Standard & Poor’s AA Stable

• Deep and stable economy, with access to the stable Houston metropolitan statistical area• Steady payments from a payments-in-lieu-of-taxes (PILOTs) agreement with

industrial districts, which account for a significant portion of its revenue stream• Very strong financial position,

coupled with very strong reserves

Glossary of Financial Terms

AccrualBasisofAccounting- A method of accounting that recognizes the financial effect of transactions, events, and interfund activities when they occur, regardless of the timing of related cash flows.

CapitalAssets - Land, improvements to land, easements, buildings, building improvements, vehicles, machinery, equipment, works of art and historical treasures, infrastructure, and all other tangible or intangible assets that are used in operations and that have initial useful lives extending beyond a single reporting period.

InvestedinCapitalAssets,NetofRelatedDebt - This represents the City’s investment in its capital assets less accumulated depreciation and any outstanding debt due to the acquisition, construction, or improvement of capital assets.

RestrictedNetAssets - A component of net assets calculated by reducing the carrying value of restricted assets by the amount of any related debt outstanding.

UnrestrictedNetAssets - The portion of net assets that is neither restricted nor invested in capital assets (net of related debt).

9

GeneralRevenues Property Taxes Sales and Hotel/Motel Taxes Franchise Taxes Industrial District Payments Investment Income Miscellaneous TotalRevenues Governmental Activities General Government Public Safety Public Works Public Health Parks, Recreation & Culture Interest and Fiscal Agent Fees TotalGovernmentalActivities Business-Type Activities Water and Sewer Sanitation Bayland Island Development Aquatics Storm Water Utility TotalBusiness-TypeActivities NetRevenue(Expense)ChangeinNetAssets

2011

$18,470,910 15,576,815 3,994,547

25,496,842 853,393

2,472,446 66,864,953

(20,675,271)(32,572,042)(7,900,214)(1,222,715)(5,779,187)(2,888,909)(71,038,338)

11,405,963 146,309 (79,099)221,050 231,103

11,925,326

(59,113,012) $7,751,941

2012

$20,121,463 17,343,951 3,800,997

27,403,488 392,846

1,496,293 70,559,038

(20,284,651)(33,442,517)

5,487,020 (990,419)

(8,577,213)(3,229,968)(61,037,748)

7,586,635 281,364

(138,659)(255,358)

707,307 8,181,289

(52,856,459)$17,702,579

Statement of Activities(Accrual Basis of Accounting)

Top Ten Taxpayers PropertyTaxpayer 2012Taxable AssessedValue

CenterPoint Energy Inc. Sustainable Power Corp.Petroleum Wholesale Inc.PMD Enterprises, LLCGovinji Multiple Businesses, LLCDiscus JimmieOneal RobertRios Pedro M & Mary EGrohman Venture W-1 Ltd.Dykes Norman Source: Goose Creek ISD Tax Office and Chambers County Appraisal Districts. Top Ten Area Employers

Employer Employees Exxon Mobil Baytown Complex GCCISD San Jacinto Methodist Hospital Bayer Corporation City of Baytown Chevron Phillips Chemical Company Wal-Mart Distribution Center Lee College Home Depot Distribution Center TMK-IPSCO Source: Baytown Chamber of Commerce, City of Baytown and Lee College.

$10,712,3221,953,4371,851,6901,360,310

774,000723,160705,630576,690565,410563,940

$19,786,589

Smart Growth/Strong Communities

3,7853,0121,6871,100

800743685600355325

Have you ever considered what you get for your tax dollars? City taxes paid by the average household per year with a homestead exemption are $561.56. That’s about $1.54 a day. Less than the price of a

soda in a restaurant. What does the City provide for that $1.54?

24/7 Police and Fire Protection and Emergency Medical Services * Restaurant Inspections Neighborhood Protection &Animal Control Services * Maintenance of over 400 miles of paved streets

Maintenance of over 350 miles each of water and sanitary sewer lines * Over 40 Parks, including softball fields, skate parks, a bark-park and water parks * Building inspections and code enforcement *

Library Services

2012 Sales Tax Rate Breakdown

State of Texas 6.250%City of Baytown 1.000%Street Maintenance 0.250%Municipal Development District 0.500%Crime Control & Prevention District 0.125%Fire Control, Prevention & EMS District 0.125%TotalSalesTax 8.250%

$ 0.82203 0.39117

0.028090.01856

0.19216

0.00568 1.33213 0.25200

$3.04182

Taxing Entities/Tax RatesFY 2012 - Tax rates per $100 of assessed valuation

Source: Harris County Appraisal District City of Baytown Harris County Harris County Flood Control District Port of Houston Authority Harris County Hospital District Harris County Dept. of Education Goose Creek ISD Lee Junior College District Total

10

11

The Government Finance Officers Association of the United States and Canada (GFOA) has given an Award for Outstanding Achievement in Popular Annual

Financial Reporting to City of Baytown, Texas, for its Popular Annual Financial Report for the fiscal year ended September 30, 2011. The Award for Outstanding

Achievement in Popular Annual Financial Reporting is a prestigious national award recognizing conformance with the highest standards for preparation of state and local

government popular reports. In order to receive an Award for Outstanding Achievement in Popular Annual Financial Reporting, a government unit must publish a Popular Annual Financial Report, whose contents conform to program standards of

creativity, presentation, understandability and reader appeal.

An Award of Outstanding Achievement in Popular Annual Financial Reporting is valid for a period of one year only. We believe our current report continues to

conform to the Popular Annual Financial Reporting requirements, and we are submitting it to GFOA.

Recognized For Excellence

• Government Finance Officers Association (GFOA) Distinguished Budget Presentation Award • GFOA Certificate of Achievement for Excellence in Financial Reporting• Texas Comptroller Gold Leadership Circle 2012 – Third Year Award• Texas Recreation and Park Society Region IV 2011 Lone Star Programming Award – Liquid Science

Program• Texas Recreation and Park Society Region IV 2011 Maintenance Award – Port a Can Enclosures• Texas Recreation and Park Society Region IV 2011 Promotional Award – Pirates Bay• Harris/Galveston Area Council 2011 Parks and Natural Areas Award Planning Process Category -

Playbook 2020 – The Strategic Parks and Recreation Master Plan for the City of Baytown, Texas• Aquatics International Dream Designs 2011 – Waterpark – Pirates Bay Water Park• Texas Recreation and Park Society 2012 Outstanding Service Organization Award – The Rotary Club of

Baytown.• 2012 Sustainability Practices Award - Public Works• Governor’s Community Achievement Award for Sustained Excellence - Keep

Texas Beautiful.• Gold Star Award status - Keep Texas Beautiful • 1st Place Award, Daily Print Media category (Baytown Sun coverage of the

City of Baytown) - Keep Texas Beautiful• 2nd Place Award, Ebby Halliday & Maurice Acers Business Award Category

(Bayer Material Science) - Keep Texas Beautiful• Award of Recognition, Volunteer of the Year Award (Baytown Beautification

Advisory Commission Board Member Cindy Coker) - Keep Texas Beautiful• Citation of Merit, Government Award Category - Keep Texas Beautiful

2011-12 Awards and Recognitions

The Popular Annual Financial Report (PAFR) is intended to summarize and simplify the statistical, economical and financial information contained in the 2012 Comprehensive Annual Financial Report

(CAFR). The CAFR was presented in conformance with generally accepted accounting principles (GAAP) and was independently audited by Belt Harris Pechacek, LLLP. The PAFR, while unaudited, provides a brief analysis of where the City’s revenues come from and where the dollars are spent

as well as trends on the local economy. It is presented as a means of increasing public awareness about the City’s financial condition through a more user-friendly presentation. For a more detailed,

GAAP basis, full disclosure review of the individual funds and component units financial statements, one should refer to the City’s CAFR that is accessible through the City’s website: http://www.bay-town.org/content/financial-transparency-0. A free copy of this PAFR can be obtained at City Hall,

Sterling Municipal Library or online.

©2013 City of Baytown Public Affairs 2401 Market Street, Baytown, TX 77520

281-420-5311www.baytown.org

For more information on the City of Baytown, visit www.baytown.org, follow us on Facebook and Twitter or Baytown Television on Comcast Channel 16.