Municipal Utility Board

NOTICE OF MEETING

REGULAR & EXECUTIVE SESSION AGENDA Municipal Utility Board

12:00 PM - Thursday, March 26, 2020Weatherford City Hall, City Council Chambers

303 Palo Pinto Street, Weatherford, TX

Paul Paschall, Mayor/Chair Place 1Jeff Robinson, Vice Chair/Place 2

Heidi Wilder, Place 3Lindsey Hester, Place 4

Ken Davis, Place 5Howard McClurkin, Place 6

Tom Novak, Place 7James Hotopp, City Manager

Brad Burnett, Assistant City Manager/CFOZellers & Zellers, City Attorney

Krista Peacock, Assistant City Secretary

In accordance with Section 551.042 of the Texas Government Code, this agenda has been posted at the Weatherford City Hall, distributedto the appropriate news media, and posted on the City website at http://www.weatherfordtx.gov within the required time frame. As a courtesy, theentire Agenda Packet has also been posted on the City of Weatherford website at www.weatherfordtx.gov/agendas . All meetings of the WeatherfordCity Council, Municipal Utility Board, and other boards/commissions/committees of the City of Weatherford are open to the public. Publicparticipation and written comments are invited on all open session business items.

The Mayor/Chair requests that all electronic devices be turned off or set to vibrate. Members of the audience are requested to step outsidethe Council Chambers to conduct a phone conversation. Weatherford City Hall is wheelchair accessible and special parking is available on thesouth side of the building. If special accommodations are required please contact the City Secretary at 817­598­4202 a minimum of 24 hours inadvance.

The City Council, Municipal Utility Board, and other boards/commissions/committees of the City of Weatherford, as allowed, reserve theright to adjourn into Executive Session at any time during the course of this meeting to discuss any of the matters listed below, as authorized by theTexas Government Code: Section 551.071­Consultation with Attorney; 551.072­Deliberations about Real Property; 551.073­Deliberations aboutGifts and Donations; 551.074­Personnel Matters; 551.076­Deliberations about Security Devices; 551.086­Certain Public Power Utilities; and551.087­Economic Development.

Unless a Work Session Agenda, or otherwise indicated, action may be taken on any of the following agenda items.

NOTICE REGARDING MEETING BY TELEPHONE CONFERENCEIn accordance with order of the Office of the Governor issued March 16, 2020, the City Council of the City of Weatherford may conduct the meetingscheduled at 6:30 p.m. on Tuesday, March 24, 2020 at Weatherford City Hall by telephone conference in order to advance the public health goal oflimiting face­to­face meetings (also called “social distancing”) to slow the spread of the Coronavirus (COVID­19).

This supplemental written notice, the meeting agenda, and the agenda packet, are posted online at www.weatherfordtx.gov/meetings.

There will be two remote­attendance modes: Listen­Only and Attendee­Comments:1. [Attendee­Comments] If you would like the option to make a comment during the meeting, please register here:https://attendee.gotowebinar.com/register/8476412621211034892 1

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2. [Listen­Only] If you would like to attend the meeting in Listen­Only mode, you may call toll­free 877­309­2074 and use the access­code296­297­059#. When prompted for an Audio PIN, just press #.

The public will be permitted to offer public comments telephonically as provided by the agenda and/or in public during the meeting as permitted bythe presiding officer.

A recording of the telephonic meeting will be made, and will be available to the public in accordance with the Open Meetings Act atwww.weatherfordtx.gov/meetings.

1. INVOCATION

2. CALL TO ORDER & ANNOUNCEMENT OF A QUORUM

3. PLEDGES OF ALLEGIANCE TO THE UNITED STATES & TEXAS FLAGS

4. ITEMS OF COMMUNITY INTERESTMayor and Board Reports on Items of Community Interest pursuant to Texas Government Code Section 551.0415 the Board may report on thefollowing items: (1) expression of thanks, congratulations or condolences; (2) information about holiday schedules; (3) recognition of individuals;(4) reminders about upcoming City events; (5) information about community events; and (6) announcements involving imminent threat to publichealth and safety.

5. CONSENT AGENDA ITEMSAll of the 'Consent Agenda Items' are considered to be routine and self­explanatory and will be enacted with one motion. There will be no separateconsideration of these items unless the Council or Board removes the item from Consent.

5.a. Discuss and consider authorizing the City Manager to execute a contract with Gupta andAssociates, Inc. for professional engineering and SCADA programming services for the WaterDistribution System SCADA Migration project. (Rick Shaffer, Director of Water Utilities)Suggested Action: Staff respectfully recommends approval to authorize the City Manager toexecute a contract with Gupta and Associates, Inc. for a fee not to exceed $80,800.00 forprofessional engineering and SCADA programming services for the Water DistributionSystem SCADA Migration project.Contract

5.b. Consider approval of the minutes of the Municipal Utility Board Regular and Executive Sessionsheld February 27, 2020. (Krista Peacock, Assistant City Secretary)Minutes.pdf

6. REGULAR AGENDA ITEMS

6.a. Consider and/or act upon acceptance of the annual audit report for the fiscal year ended September30, 2019, as presented by Pattillo, Brown & Hill, L.L.P.(Dawn Brooks, Assistant Finance Director)

Suggested Action: Staff respectfully requests Municipal Utility Board consideration andacceptance of the annual audit report for the fiscal year ended September 30, 2019, aspresented by Pattillo, Brown & Hill, L.L.P. Please note that this is not an approval, merelyan acceptance of the audit. 2

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Annual Financial Report 2019- MUS.pdfRequired Communication with Governance 2019- MUS.pdf

6.b. Update regarding delinquent lake lot licenses. (Rick Shaffer, Director of Water Utilities)Suggested Action: N/A. Lake Lots 314 315_20200316 Notice to Vacate.pdf

6.c. Consider and/or act upon suspension of Customer Service Policy 4.8 and 6.1.3, relating to theassessment of late penalties and non-payment disconnects. (Ashley Esquivel, Utility BillingManager)Suggested Action: Staff recommends approval

7. FUTURE AGENDA ITEMS

8. EXECUTIVE SESSION ITEMS

8.a. Pursuant to Chapter 551, Texas Government Code, VTCS, (Open Meetings Law): In accordancewith the authority contained in: Section 551.071 - Consultation with Attorney: on the matter in whichthe duty of the attorney to the governmental body under the Texas Disciplinary Rules ofProfessional Conduct of the State Bar of Texas clearly conflicts with this chapter: WholesaleWastewater Contract – City of Hudson Oaks.

9. ACTION ON EXECUTIVE SESSION ITEMS

9.a. To take action, if necessary, pursuant to Chapter 551, Texas Government Code, VTCS, (OpenMeetings Law): In accordance with the authority contained in: Section 551.071 - Consultation withAttorney: on the matter in which the duty of the attorney to the governmental body under the TexasDisciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with thischapter: Wholesale Wastewater Contract – City of Hudson Oaks.

10. CITIZEN COMMENTS ON NON-AGENDA ITEMSResidents may address the Council/Board/Commission/Committee regarding an item that is not listed on the agenda. Residents must complete aspeaker card and turn it in to the Secretary five (5) minutes before the start of the meeting. The Rules of Procedure states that comments are to belimited to three (3) minutes. Speaker rules are posted at the back of the Council Chambers. The Texas Open Meetings Act provides the following: (a) If, at a meeting of a governmental body, a member of the public or of the governmental body inquires about a subject for which notice has notbeen given as required by this subchapter, the notice provisions of this subchapter do not apply to: (1) A statement of specific factual information given in response to the inquiry; or (2) A recitation of existing policy in response to the inquiry. (b) Any deliberation of or decision about the subject of the inquiry shall be limited to a proposal to place the subject on the agenda for a subsequentmeeting.

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11. ADJOURNMENT

CERTIFICATIONI certify that this Notice of Meeting was posted on _____________________ at _____________ a.m. / p.m. as required by law in accordance withSection 551.042 of the Texas Local Government Code and that the appropriate news media was contacted. As a courtesy, this agenda is also postedon the city's website.

Posted By _______________________________ Title ___________________________________

Date/Time Removed _______________________

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Weatherford Municipal Utility BoardAGENDA REPORT

Meeting Date: March 26, 2020 Staff Contact: Rick Shaffer, Director of Water Utilities

Item Number: 2020-199-AR Phone: 817-598-4473

SUBJECT: Discuss and consider authorizing the City Manager to execute a contract with Gupta and Associates,Inc. for professional engineering and SCADA programming services for the Water DistributionSystem SCADA Migration project.

BACKGROUND/DISCUSSIONIn the late 1990’s, the Water Utility department developed a Supervisory Control and Data Acquisition (SCADA) system. SCADA provides utility staff the ability to remotely control and monitor the water plant, wastewater plant, water pumpstations, water tanks and wastewater lift stations. Over time, equipment and software can become outdated and obsolete,making portions of the system costly and difficult to maintain. In October 2014, TraC-n-trol, Inc. was retained to reviewand evaluate the City of Weatherford’s SCADA system, and then prepare a list of recommendations for upgrades to theSCADA system. The improvements in this project are a result of recommendations from this SCADA system evaluation,standardization of the City’s SCADA system infrastructure and programming, and coordination with staff from the City’sInformation Technology Department.

Staff from the City’s Water Utility and IT departments have been working together to overcome operational challengesand modernize the Water Utility’s SCADA infrastructure for both water and wastewater. The City is in the process oftransitioning from a narrowband radio communication network to a fiber optic high-speed broadband communicationinfrastructure at remote sites in the water distribution system. The City is also in the process of converting from theWonderware InTouch Human-Machine Interface (HMI) software to a new Ignition HMI application by InductiveAutomation. Conversions of the HMI software have already been completed at both treatment facilities.

Gupta and Associates, Inc. (GAI) has completed several SCADA upgrade projects for the City, including projects at theWater Purification Plant and most recently at the Wastewater Treatment Plant. GAI also provides emergency and on-callSCADA support services for the Water Utility. The scope of this project includes migrating all communications for thewater distribution system from radio to fiber optic; migrating all remote alarm notifications from Wonderware to Ignition;and migrating all calculations and reporting from Wonderware to Ignition.

FINANCIAL IMPACTThe project will be funded with currently available funds from Utility Rate Revenues.

SUGGESTED ACTIONStaff respectfully recommends approval to authorize the City Manager to execute a contract with Gupta and Associates,Inc. for a fee not to exceed $80,800.00 for professional engineering and SCADA programming services for the WaterDistribution System SCADA Migration project.

ATTACHMENTS Contract

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GAI Gupta & Associates, Inc.consulting engineers13717 Neutron RoadDallas, Texas 75244Tel: 972-490-7661

13 March 2020

City of Weatherford917 Eureka StreetWeatherford, Texas 76086Attn: Rick Shaffer

Director of Water UtilitiesTelephone: (817) 598-4473eMail: rshaffer@weatherfordtx.gov

Re: City of WeatherfordWater Distribution System SCADA Migration

Dear Rick,

Gupta and Associates, Inc. (GAI) is thankful for the opportunity to work with you on the Water Distribution System SCADA System Migration. This work will execute the process of transitioning from a narrowband radio communication network to a high-speed broadband communication infrastructure for its Water Distribution System and is intended to be executed as follows:

1. GAI has completed visits to each remote site to gather information regarding site conditions.2. GAI will self-perform all software work required to compete the migration.

This work will be executed under a separate contract between the City of Weatherford and GAI. A more detailed description of the work to be done is provided as part of the attached contract.

If this is acceptable, please sign the attached contract and return this for our notice to proceed.

Submitted by:

By:

George Luke, PE

Title: Engineering Manager

Date: 13 March 2020

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GUPTA AND ASSOCIATES, INC.PROFESSIONAL SERVICES AGREEMENT

Page 1 of 3

Project No. GAI-2327

This AGREEMENT is entered on the date of execution by and between Gupta & Associates, Inc., (PRIME CONSULTANT), and City of Weatherford, (OWNER).

OWNER INFORMATION PRIME CONSULTANT INFORMATIONCity of Weatherford Gupta & Associates, Inc.303 Palo Pinto 13717 Neutron RoadWeatherford, Texas 76086 Dallas, Texas 75214Attn: Rick Shaffer, P.E. Attention: V. K. Gupta, P.E.(817) 598-4473 (972) 490-7661

SCOPE: Provide Professional Services to assist with detailed design and construction phase services related to the Water Distribution SCADA System Migration. Specific services are identified in Attachment B “Scope of Services”.

TERMS: Terms and conditions of this Agreement are, as defined in Attachment A “Provisions”, unless otherwise agreed to in writing by all parties.

COMPENSATION: Compensation will be a time and material basis, with total compensation not to exceed $80,800 without prior approval from OWNER. Billing will be on a monthly basis based on CONSULTANT’S actual billing time in accordance with Attachment C “Subconsultant Per Diem Billing Rates”.

OTHER TERMS: OWNER will be responsible for furnishing information needed for CONSULTANT’S work.

The following conditions may result in work that may require additional compensation beyond the amount described above:

This AGREEMENT supersedes all prior AGREEMENTS and understandings and may only be changed by written amendment executed by both parties.

Acceptance for OWNER Approval for PRIME CONSULTANT

By: By:

George Luke, P.E.

Title: Title: Vice President

Date: Date: 13 March 2020

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GUPTA AND ASSOCIATES, INC.PROFESSIONAL SERVICES AGREEMENT

Page 2 of 3

ATTACHMENT APROVISIONS

1. Authorization to ProceedExecution of this AGREEMENT by the OWNER will be authorization for CONSULTANT to proceed with the work, unless otherwise provided for in this AGREEMENT.

2. Per Diem RatesCONSULTANT's Per Diem Rates, when the basis of compensation, are those hourly or daily rates charged for work performed on OWNER's Project by CONSULTANT's employees of the indicated classifications. These rates are subject to annual calendar year adjustments and include all allowances for salary, overheads, and fee, but do not include allowances for Direct Expenses. This provision is not applicable for assignments for which compensation is on a lump-sum basis.

3. Direct ExpensesCONSULTANT's Direct Expenses, when part of the basis of compensation, are those costs incurred on or directly for the OWNER's Project, including, but not limited to, necessary transportation costs, including CONSULTANT's current rates for CONSULTANT's vehicles; meals and lodging; laboratory tests and analyses; computer services; word processing services, telephone, printing, binding, and reproduction charges; all costs associated with outside consultants, subconsultants, subcontractors, and other outside services and facilities; and other similar costs. Reimbursement for Direct Expenses will be on the basis of actual charges when furnished by commercial sources and on the basis of current rates when furnished by CONSULTANT.

4. Cost OpinionsAny cost opinions or Project economic evaluations provided by CONSULTANT will be on a basis of experience and judgment; but, since it has no control over market conditions or bidding procedures, CONSULTANT cannot warrant that bids, ultimate construction cost, or Project economics will not vary from these opinions.

5. TerminationThis AGREEMENT may be terminated for convenience on 30 days' written notice by either party with or without cause. On termination, CONSULTANT will be paid for all work performed up to the termination date plus termination expenses, such as, but not limited to, reassignment of personnel, subcontract termination costs, and related closeout costs. If no notice of termination is given, relationships and obligations created by this AGREEMENT, except Articles 7 through 14, will be terminated upon completion of all applicable requirements of this AGREEMENT.

6. Payment to CONSULTANTInvoices will be submitted by the CONSULTANT to the OWNER on a monthly basis for the value of services performed under this AGREEMENT during the prior month. Payment of undisputed invoices will be due within 30 days of receipt of invoice by OWNER.

7. Independent ConsultantCONSULTANT agrees to perform all services as an independent consultant and not as an agent or employee of the PRIME CONSULTANT.

8. Litigation Assistance The CONSULTANT hereby indemnifies and holds harmless the OWNER and the OWNER’s employees and agents from and against claims, damages, losses, causes of action, suits, and liability, including, but not limited to, expenses of litigation, court costs, punitive damages, and attorneys’ fees, arising out of, or resulting from, the negligent performance or failure in performance of the CONSULTANT, its employees, and subcontractors under this Agreement.

In the event that both the CONSULTANT and the OWNER are found at fault, each shall be responsible for its own costs of litigation and pro-rata share of damages as determined by the proceedings. Such obligation of the CONSULTANT shall not be construed to negate, abridge, or otherwise reduce any other right or obligation of indemnity that would otherwise exist.

9. VenueAny legal proceeding brought to enforce this AGREEMENT or any provision hereof shall be brought in Parker County, Texas.

10. Severability and SurvivalIf any of the provisions contained in this AGREEMENT are held illegal, invalid or unenforceable, the enforceability of the remaining provisions shall not be impaired thereby. Limitations of liability and indemnities shall survive termination of this AGREEMENT for any cause.

11. InterpretationThe limitations of liability and indemnities will apply whether CONSULTANT's liability arises under breach of contract or warranty; tort, including negligence; strict liability; statutory liability; or any other cause of action, except for willful misconduct or gross negligence for limitations of liability and sole negligence for indemnification, and shall apply to

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GUPTA AND ASSOCIATES, INC.PROFESSIONAL SERVICES AGREEMENT

Page 3 of 3

CONSULTANT's officers, affiliated corporation, employees and subcontractors. The law of the state of Texas shall govern the validity of this AGREEMENT, its interpretation and performance, and any other claims related to it.

12. Liabilitya. CONSULTANT's services shall be governed by the negligence standard for professional services, measured as

of the time those services are performed.

b. The OWNER’s review, approval, or acceptance of, or payment for, any of these services shall not be construed to operate as a waiver of any rights under this AGREEMENT or of any cause of action arising out of the performances of this AGREEMENT, and the CONSULTANT shall be and remain liable in accordance with applicable law for all damages to the OWNER caused by CONSULTANT’s omissions or negligent performance of any of the services furnished under this AGREEMENT.

c. To the maximum extent permitted by law, CONSULTANT's liability for damages for any cause or combination of causes will, in the aggregate, not exceed the limits of CONSULTANT’s total compensation under this contract.

d. As used herein, CONSULTANT includes the corporation, subcontractors, and any of its or their officers, or employees.

e. Any contract claim must be brought within six months from the day following the act or omission giving rise to the breach of contract claim.

13. AssignmentNeither Party will assign all or any part of this Agreement without prior written consent to the other party.

14. InsuranceThe CONSULTANT shall obtain and maintain, throughout the term of the Project, and in the case of Professional Liability Insurance for an additional period of two years after completion of the Project, insurance of the types and in the minimum amounts set forth below.

Coverage Minimum Policy Limits of Liability

Description

$1,000,000 Bodily Injury by Accident$1,000,000 Bodily Injury / Disease – Each EmployeeEmployers’ Liability$1,000,000 Bodily Injury / Disease – Policy Limit$1,000,000 Occurrence Limit$2,000,000 General Aggregate$2,000,000 Products/Completed Operations Aggregate$1,000,000 Personal and Advertising Injury

Commercial General Liability

$1,000,000 Contractual LiabilityCommercial/Business Automobile Liability $1,000,000 Each Occurrence

$2,000,000 Per ClaimProfessional Liability $4,000,000 Annual Aggregate

15. Services During ConstructionThe parties agree that CONSULTANT shall be indemnified to the fullest extent permitted by law for all claims, damages, losses and expense including attorney's fees arising out of or resulting from the construction contractor's performance of work including injury to any worker on the job site.

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City of Weatherford Water Distribution SystemSCADA System Migration

BackgroundThe City of Weatherford Water Utilities Department (the City) is in the process of overcoming existing operational challenges to modernize the entire water distribution infrastructure for SCADA. To address these complex challenges, the initial step is to improve upon the existing radio communication network.

The City is in the process of transitioning from a narrowband radio communication network to a high speed broadband communication infrastructure for its Water Distribution System. A fiber optic infrastructure has been installed for all water distribution system remote sites. The City intends to utilize the new fiber optic network to communicate directly with all water distribution system remote sites from its Water Treatment Plant and the Service Center.

The City also intends to continue the migration from the Wonderware graphical user interface system. The City currently has a Win911 system that interfaces with the Wonderware Human-Machine Interface (HMI) system. It is the City’s desire to migrate the existing remote alarm notification feature to the City’s standard Ignition HMI platform. Moreover, there are some existing reports generated from Wonderware associated with equipment runtimes that are to be migrated to the Ignition system.

The existing water distribution system SCADA consists of sixteen remote sites including the two radio masters as Oakridge EST and Dubellette EST. The Dam repeater and Live Oak are two additional true repeater sites that relay information to the masters at Oakridge and Dubellette EST master sites.

Site Name Linked Site PLC Type Site Type Category

Service Center Oak Ridge Modicon Quantum Operation OperationWTP Oak Ridge SCADAPack357 Operation OperationDubellette EST MASTER SCADAPack32 Master WaterOak Ridge EST MASTER Modicon Quantum Master Water

Benbrook PS Verizon Cell Modicon M340 Remote WaterBenbrook Valve Controller Oak Ridge SCADAPack357 Remote WaterCollege PS Oak Ridge SCADAPack357 Remote WaterDam Repeater Oak Ridge None Repeater RepeaterDeer Field PS Dubellette EST SCADAPack334 Remote WaterDubellette EST Remote Oak Ridge SCADAPack32 Remote WaterFranklin EST Oak Ridge SCADAPack334 Remote WaterHarberger PS Oak Ridge SCADAPack334 Remote WaterHudson Oaks PS Oak Ridge SCADAPack334 Remote WaterLive Oak Sub Repeater Dubellette EST None Repeater RepeaterMiller EST Dubellette EST SCADAPack334 Remote/Repeater WaterRaw Water Intake Oak Ridge Modicon Micro Remote WaterWest Lake Booster Oak Ridge SCADAPack334 Remote WaterWest Lake SP Oak Ridge SCADAPack334 Remote WaterWest Park EST Dubellette EST SCADAPack357 Remote Water

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Site Investigation/Application Analysis:GAI has already begun the effort of gathering copies of the latest PLC programs from the various sites. These programs have been reviewed to understand the programming needs to transition the communications from radio to fiber optic and to transition the HMI from Wonderware to Ignition.

Implementation:GAI will self-perform the software implementation required to accomplish the following:

1. Migrate all communications from the Service Center, Water Treatment Plant, and remote sites from radio to fiber optic.

2. Migrate all remote alarm notification from Wonderware to Ignition.3. Migrate all equipment runtime calculations and associated reports from Wonderware to Ignition.

Runtime calculations will not be required to be implemented in the PLC.

The City will purchase any hardware/software needed for this migration effort. No hardware or software licenses are provided by GAI under this proposal.

All HMI and PLC programming modifications are to be performed during normal business hours. The City will provide appropriate staff to operate each remote facility in local manual while updated programs are downloaded to the PLCs.

GAI does not anticipate developing formal shop drawing submittals. There will be no factory testing as all equipment is currently operating in the field.

GAI anticipates the migration will be based on the following sequence:

1. Win911 Migration2. Reports Migration3. Equipment Runtime Script Migration4. Radio to Fiber Migration

For the radio to fiber migration, GAI will complete migration for the first, least critical remote site to monitor for continuous, reliable operation for 48 hours. When City Staff is satisfied with its performance, GAI will then proceed to the next least critical site. This critical step will be applied to the first cutover site to build confidence before migration proceeds to the remaining remote sites.

Fee:This work will be performed on a time and material basis following the fee structure shown below:

Description Fee

Project Management $1,987Engineering Programming Services $78,813Total $80,800

The following items apply to this proposal:

1. Opinions of Probable Construction Costs are engineering estimates and are not warranted.2. GAI has not included any hardware or software licenses in this proposal.3. This work will be performed under the terms and conditions set forth in the overriding master

agreement between GAI and the City.

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Gupta and Associates, Inc.2020 Standard Billing Rates

Gupta and Associates, Inc. (GAI) is an engineering design consulting firm offering services specializing in electrical distribution and controls as well as instrumentation and controls tailored for the municipal water/wastewater market. The following billing rates are specific for work performed for the City of Weatherford Water Utilities Department.

The table lists the direct labor rates for personnel by Classifications

Classifications Bill RatePrincipal $232.00 Project Manager $216.00 Engineer – Sr. $186.00 Engineer $139.00 Project Engineer $108.00 Designer – Sr. $145.00 Designer $96.00 CAD Technician – Sr. $93.00 CAD Technician $72.00 Accountant $88.00 Administrative $57.00

Terms and Conditions:

1. These rates are valid for work performed through the end of Calendar Year 2020. They are subject to renegotiation each year.

2. Invoicing will be on a monthly basis.

Additional Provisions:

1. Travel time will be invoiced at the base rate.2. Overtime (hours worked in excess of 8 per day and any hours worked on Saturday, Sunday or

GAI Holidays) will be invoiced at 1.4 times the base rate.3. Materials, Equipment, Rentals, Subcontracts will be invoiced at Cost Plus 10%4. Travel Expenses will be billed at Cost Plus 10%. Personal vehicle mileage will be billed at the

prevailing IRS mileage reimbursement amount (53.5¢/mile for 2018).

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MINUTES OF THE MUNICIPAL UTILITY BOARD REGULAR AND EXECUTIVE SESSIONS HELD FEBRUARY 27, 2020 IN THE CITY HALL COUNCIL CHAMBERS, 303 PALO PINTO STREET, WEATHERFORD, TEXAS. INVOCATION

Lance Gerry of First Baptist Church Weatherford led the invocation. CALL TO ORDER & ANNOUNCEMENT OF A QUORUM

Mayor/Chair Paul Paschall called the meeting to order at 12:01 p.m. Present were: Mayor/Chair Paul Paschall, Vice Chair Jeff Robinson, Lindsey Hester, Ken Davis, Howard McClurkin and Tom Novak. City staff included: City Manager James Hotopp, Assistant City Manager/CFO Brad Burnett, City Attorney Ed Zellers and Assistant City Secretary Krista Peacock. Absent: Board Member Heidi Wilder. PLEDGES OF ALLEGIANCE TO THE UNITED STATES & TEXAS FLAGS

Board Member Tom Novak led the pledges. ITEMS OF COMMUNITY INTEREST

The Rotary Club of Weatherford hosted its 64th Annual Pancake Supper on Tuesday, February 25. There were over 1200 people in attendance at that community event. PRESENTATIONS & PROCLAMATIONS

Service Awards • Erica Haney - Utility Billing - 5 years

APPROVAL OF THE MINUTES

Consider approval of the minutes of the Municipal Utility Board Regular and Executive Sessions held January 30, 2020.

On the motion of Ken Davis, second by Lindsey Hester, the board voted to approve the minutes. Motion carried 6 - 0. CONSENT AGENDA ITEMS

On the motion of Lindsey Hester, second by Ken Davis, the board voted to approve the following items on the Consent Agenda. Motion carried 6 - 0.

• Approved the Industrial Pretreatment Program - TCEQ Streamlining Rule Update. • Recommended approval to the Weatherford City Council of the assignment to the Lake

Weatherford Marina Lease agreement.

REGULAR AGENDA ITEMS Consider and/or act upon delinquent lake lot licenses.

On the motion of Lindsey Hester, second by Ken Davis, the board voted to accept payments and reinstate the lake lot licenses for lots 174-175, 252, 296, 404-405, 429 and 478-479 and that the

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MUB02272020 Page 2 of 3

board enter into a 6-month payment plan agreement with Julie Rosenthal for lot 93, Jimmy and Mary Harrod for lots 198-200, and William and Janine Strickland for lots 314-315, and suspend any further penalty fees for all three, provided that the agreement is executed prior to February 28, 2020. The board will allow staff more time to locate the heirs of Flint Hinrich for lake lot 98 to bring that license into compliance. Motion carried 6 – 0. Discuss and consider an amendment with Plummer for design modifications to the Dr. Paul Phillips Water Purification Plant - Taste and Odor Treatment project.

On the motion of Lindsey Hester, second by Ken Davis, the board voted to authorize the City Manager to execute an amendment with Plummer for a fee not to exceed $148,900 for professional engineering services for the Water Purification Plant Taste and Odor Treatment project. Motion carried 5 - 0. Vice Chair Jeff Robinson recused himself from this item. Discuss and consider the Municipal Utility Board April meeting schedule.

The April 30, 2020 meeting will be held at 8:00 a.m. FUTURE AGENDA ITEMS

None EXECUTIVE SESSION ITEMS

Pursuant to Chapter 551, Texas Government Code, VTCS, (Open Meetings Law): In accordance with the authority contained in: Section 551.072 Deliberations about Real Property: to deliberate the purchase, exchange, lease, or value of real property; a tract of land approximately 14 acres, located in the Michael McGwin Survey, Abstract 914, and being more particularly described in Vol 287, Page 241, Deed Records, Parker County, Texas.

Pursuant to Chapter 551, Texas Government Code, VTCS, (Open Meetings Law): In accordance with the authority contained in: Section 551.071 - Consultation with Attorney: on the matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with this chapter: Wholesale Wastewater Contract – City of Hudson Oaks.

The board convened in Executive Session at 12:41 p.m. They reconvened in Open Session at 1:18 p.m. Heidi Wilder joined the meeting at 12:53 p.m. ACTION ON EXECUTIVE SESSION ITEMS

To take action, if necessary, pursuant to Chapter 551, Texas Government Code, VTCS, (Open Meetings Law): In accordance with the authority contained in: Section 551.072 Deliberations about Real Property: to deliberate the purchase, exchange, lease, or value of real property; a tract of land approximately 14 acres, located in the Michael McGwin

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Survey, Abstract 914, and being more particularly described in Vol 287, Page 241, Deed Records, Parker County, Texas.

No action was taken on this item. To take action, if necessary, pursuant to Chapter 551, Texas Government Code, VTCS, (Open Meetings Law): In accordance with the authority contained in: Section 551.071 - Consultation with Attorney: on the matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with this chapter: Wholesale Wastewater Contract – City of Hudson Oaks.

No action was taken on this item. CITIZEN COMMENTS ON NON-AGENDA ITEMS

None ADJOURNMENT

On the motion of Lindsey Hester, second by Jeff Robinson, the board voted unanimously to adjourn the meeting at 1:21 p.m. Motion carried 7 - 0.

_____________________________

ATTEST: Paul Paschall, Mayor/Chair _______________________________ Krista Peacock, Assistant City Secretary

15

Weatherford Municipal Utility BoardAGENDA REPORT

Meeting Date: March 26, 2020 Staff Contact: Dawn Brooks, Assistant FinanceDirector

Item Number: 2020-190-AR Phone: 817-598-4130

SUBJECT: Consider and/or act upon acceptance of the annual audit report for the fiscal year ended September30, 2019, as presented by Pattillo, Brown & Hill, L.L.P.

BACKGROUND/DISCUSSIONChapter 103 of the Texas Local Government Code and Article VII, Sections 25 and 26 of the Weatherford City Charterrequire preparation of an annual financial statement in accordance with generally accepted accounting principles, and anaudit of the City’s financial records and accounts by an independent certified public accountant each fiscal year.

In accordance with applicable provisions of the Texas Local Government Code and the Weatherford City Charter, the firmof Pattillo, Brown, and Hill, L.L.P., have completed the annual audit for the fiscal year ended September 30, 2019. Representatives of the firm will be available at the meeting to present their audit findings and review the Annual FinancialReport.

FINANCIAL IMPACTAcceptance of this item has no financial impact on the City of Weatherford.

SUGGESTED ACTIONStaff respectfully requests Municipal Utility Board consideration and acceptance of the annual audit report for the fiscalyear ended September 30, 2019, as presented by Pattillo, Brown & Hill, L.L.P. Please note that this is not an approval,merely an acceptance of the audit.

ATTACHMENTS Annual Financial Report 2019- MUS.pdf Required Communication with Governance 2019- MUS.pdf

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MUNICIPAL UTILITY SYSTEM ANNUAL FINANCIAL REPORT

For The Year Ended September 30, 2019

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18

CITY OF WEATHERFORD, TEXAS MUNICIPAL UTILITY SYSTEM

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED SEPTEMBER 30, 2019

Page Number

INTRODUCTORY SECTION Message from the City Manager ................................................................................ i – ii

Organization Chart .................................................................................................. iii

Principal Officials .................................................................................................... iv FINANCIAL SECTION

Independent Auditor’s Report ................................................................................... 1 – 2 Financial Statements Comparative Statements of Net Position ................................................................. 3 – 4 Comparative Statements of Revenues, Expenses and

Changes in Net Position ..................................................................................... 5 Comparative Statements of Cash Flows .................................................................. 6 – 7

Notes to Financial Statements ............................................................................... 8 – 30

Required Supplementary Information Texas Municipal Retirement System Schedule of the Municipal Utility System’s

Proportionate Share of the Net Pension Liability .................................................... 31 – 32 Texas Municipal Retirement System

Schedule of the Municipal Utility System Contributions ........................................... 33 – 34

Schedule of Municipal Utility System’s Proportionate Share of the Total OPEB Liability – Supplemental Death Benefit Fund ...................... 35

Schedule of Municipal Utility System’s Proportionate

Share of the Total OPEB Liability – Retiree Health Benefit Plan ................................ 36

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Page Number

CAPITAL ASSETS SECTION Schedules of Capital Assets ................................................................................... 37 Schedule of Capital Assets by Function and Activity ................................................. 38 – 39 Schedule of Changes in Capital Assets by Function and Activity ................................. 40

STATISTICAL SECTION

Pledged Revenue Coverage .................................................................................. 41

Schedule of Electric Sales – Last Ten Fiscal Years .................................................... 42

Schedule of Retail Water Sales – Last Ten Fiscal Years ............................................. 43 Schedule of Wastewater Sales – Last Ten Fiscal Years ............................................. 44 Miscellaneous Statistics ....................................................................................... 45 – 46

Service Rate Schedules ........................................................................................ 47 – 48

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INTRODUCTORY SECTION

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i

MESSAGE FROM THE CITY MANAGER

During the fiscal year ended September 30, 2019, the Weatherford Municipal Utility System continued to experience moderate customer growth in the residential and commercial sector. From September 2018 to September 2019, customer kWh consumption showed a slight decrease, at 2.1% or 8.9M. Actual usage for customers were responsible for the slight decrease, as monthly consumption is down and average of 2%. In addition to its annual maintenance, the Electric Department completed the construction of 19 new commercial projects, 1 new commercial subdivision and 2 new residential subdivisions. Other system improvements of existing circuits as well as the construction of new circuits were continued to more efficiently utilize substation capacity and to build redundancy into the system. The replacement of HID street and security lighting on the electric system with LED lights continued with the current replacement amount of 56 percent. In an effort to diversify wholesale power suppliers and the percentage of Weatherford Electric’s load to be bid in the market in any given year, Weatherford Electric has entered into three wholesale power supply agreements with three different wholesale power suppliers: Garland Power and Light, Bryan Texas Utilities, and EDF Trading North America. Each supplier supplies one-third of Weatherford Electric’s power needs for differing contract term lengths: Garland Power and Light for five years, Bryan Texas Utilities for three years, and EDF Trading North America for four years. For the year, we received a total of 48.2 inches of rain, 13 inches above the 10-year average. The increased rainfall amounts resulted in a 12% decrease in water consumption. Gallons sold went from 1.39 billion in FY18 to 1.17 billion in FY19. Service connection increases accounted for an average of 1.5% increase between residential and commercial customer base. The Water Utility operates and maintains a water distribution system consisting of a water treatment facility, 288 miles of water pipelines, 9 water storage tanks and 4 pump stations. During fiscal year 2018-2019, the Water Utility replaced over 18,000 feet of aging water pipelines. The maintenance crews responded to over 2,200 work orders, which includes both minor tasks (such as checking for residential leaks) and major tasks (such as responding to water main breaks). One of the key projects during this time was the completion of design of a new 500,000-gallon elevated water storage tank to keep up with growth and serve customers on the western side of the city. Additionally, staff have begun using our new AMI metering system to proactively identify potential customer water leaks and notify those customers to help them conserve water and reduce their water bills. The Water Utility also operates and maintains a wastewater collection system consisting of a wastewater treatment facility, 213 miles of wastewater pipelines and 24 lift stations. During fiscal year 2018-2019, the Water Utility replaced over 13,000 feet of aging wastewater pipelines. Maintenance crews responded to over 1,400 work orders, which includes minor tasks (such as installing connections for new customers) to major tasks (such as responding to pipeline failures or customer stop ups). During this previous fiscal year, the Water Utility completed the TCEQ Sanitary Sewer Overflow Initiative program. This 10-year program is intended to identify and reduce potential wastewater overflows in the collection system. The Water Utility submitted a request to TCEQ, and has been approved to re-enter

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ii

the program, which is a benefit to our customers. Another key project involved upgrades and conversions of the SCADA system at the wastewater treatment facility to expand the capability to remotely monitor and control that facility. Aside from external operations, Weatherford utilities rely on internal service functions such as finance, human resources, and information technology which are housed in the City’s governmental funds. Because of this, Utility Administration and Engineering departments continued to provide support to other departments and the City, including contributing to other funds for these shared internal services. Additionally, public utilities are extremely capital intensive. Quality management, construction, operation, and maintenance demand a high degree of professionalism and dedication from employees and Utility Board Members. Training and development of these qualities continues to enhance teamwork and pay dividends for the ratepayers of the Weatherford Municipal Utility System. The employees are to be congratulated for their dedication to the overall development and cohesiveness of the Utility Department. The City of Weatherford values our employees and continues to invest in training that provides superior job, supervisory management, and customer service skills. Likewise, the dedication of the Weatherford Municipal Utility Board of Trustees has also paid many dividends for the citizens of Weatherford and the Utility’s ratepayers. This unselfish dedication of time and effort to make sure the Utility System, under their direction, is operated with foresight and vision has enabled the system to accommodate Weatherford’s expected growth. The Board’s commitment to policy direction is very much appreciated. James Hotopp City Manager

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Utility Billing

Finance Director

City Manager

AssistantCity Manager/

CFO

AssistantCity Manager

WeatherfordMunicipal Utility Board

ORGANIZATIONAL CHART WEATHERFORD MUNICIPAL UTILITIES

Director ofWater/Wastewater

& Engineering Utilities

WTP

Assistant Director Water/Wastewater Utilities

W/WW Distribution

W/WW ConstructionField Services

Meter ShopWWTP

Environmental Regulatory Comp

Water SCADA/Electronics

System Planning

Engineering Design and Support

System ModelingSurveying

Development Coordinator

Director ofElectric Utilities

Electric OH/URD

Fiber Optic

Electric SCADAPower Plant

MeteringDispatch

Warehouse Manager

Warehouse

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iv

CITY OF WEATHERFORD, TEXAS

MUNICIPAL UTILITY BOARD

PRINICIPAL OFFICIALS

YEAR ENDED SEPTEMBER 30, 2019

ELECTED

CITY COUNCIL

Paul Paschall – Mayor

Heidi Wilder – Mayor Pro Tem/Council Member

Jeff Robinson – Council Member

Curtis Tucker – Council Member

Kevin Cleveland – Council Member

APPOINTED/DESIGNATED

MUNICIPAL UTILITY BOARD

Paul Paschall – Mayor – Chair

Jeff Robinson – Vice Chair

Heidi Wilder – Designated Council Member

Howard McClurkin– Appointed Public Member

Ken Davis – Appointed Public Member

Lindsey Hester – Appointed Public Member

Tom Novak – Appointed Public Member

SENIOR STAFF

James Hotopp – City Manager

Brad Burnett – Assistant City Manager/Chief Financial Officer

ADVISORY/CONSULTATION

Malinda Nowell – City Secretary

Zellers & Zellers – City Attorney

OPERATIONS STAFF

Joe Farley – Director of Utilities - Electric

Rick Shaffer – Director of Utilities – Engineering, Water & Wastewater

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FINANCIAL SECTION

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INDEPENDENT AUDITOR’S REPORT

Municipal Utility System Board City of Weatherford, Texas

Report on the Financial Statements We have audited the accompanying financial statements of the Municipal Utility System Enterprise Fund of the City of Weatherford, Texas, as of and for the years ended September 30, 2019 and 2018, as listed

in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation

of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures

in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and

fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

for our audit opinions. Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Municipal Utility System of the City of Weatherford, Texas, as of September 30, 2019

and 2018, and the respective changes in financial position and cash flows thereof for the years then ended in

accordance with accounting principles generally accepted in the United States of America.

1

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2

Emphasis of Matter

As discussed in Note 1, the financial statements present only the Municipal Utility System of the City

of Weatherford, Texas, and do not purport to, and do not present fairly, the financial position of the City of

Weatherford, Texas, as of September 30, 2019 and 2018, and the changes in its financial position and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the pension and

OPEB information be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the

required supplementary information in accordance with auditing standards generally accepted in the United

States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Municipal Utility System Enterprise Fund of the City of Weatherford, Texas’ financial statements as a whole. The introductory, capital assets and statistical sections are presented for purposes of additional analysis and are not a required part of the financial statements.

The capital assets section is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and

certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation

to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in

the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Waco, Texas February 19, 2020

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FINANCIAL STATEMENTS

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2019 2018ASSETSCurrent assets: Unrestricted assets: Cash and cash equivalents 12,332,274$ 13,199,798$ Investments 31,534,889 26,690,748 Receivables: Accounts, net of allowances for uncollectible of $162,755 and $63,559 for 2019 and 2018, respectively 3,262,631 3,949,446 Earned but unbilled customer accounts 4,121,882 3,544,438 Other 92,663 137,744 Due from other governments 9,733 31,624

Prepaid items 580,203 465,845 Inventory 3,662,192 3,426,939 Restricted assets: Cash and cash equivalents

Revenue bond debt service 1,002,579 42,045

Revenue bond reserve 312,027 1,243,261

Construction 16,576,421 17,337,405 Investments: Revenue bond reserve 3,000,000 2,896,400

Rate stabilization 5,716,859 3,818,903

Accrued interest - 45,239

Total current assets 82,204,353 76,829,835

Noncurrent assets:

Capital assets:

Nondepreciable 10,844,598 12,129,180

Depreciable, net of accumulated depreciation 134,798,711 128,594,631

Total noncurrent assets 145,643,309 140,723,811

Total assets 227,847,662 217,553,646

DEFERRED OUTFLOWS OF RESOURCES Deferred charge on refunding 718,398 763,533 Deferred outflow related to pensions 1,656,983 553,573

Deferred outflow related to OPEBs 428,677 413,617

Total deferred outflows of resources 2,804,058$ 1,730,723$

CITY OF WEATHERFORD, TEXASMUNICIPAL UTILITY SYSTEM

COMPARATIVE STATEMENTS OF NET POSITION

SEPTEMBER 30, 2019 AND 2018

The accompanying notes are an integral

part of these financial statements. 3

33

2019 2018LIABILITIESCurrent liabilities: Accounts payable 3,464,001$ 2,660,363$ Accrued wages 131,454 125,445 Retainage payable 344,614 237,414 Accrued interest 7,368 8,984 Unearned revenue 1,334,542 1,617,116 Customer deposits 1,504,214 1,467,384 Notes payable - 37,632 Capital lease 37,300 36,362 Revenue bonds 3,103,750 2,984,583

Compensated absences 153,844 158,548 Total OPEB liability 113,163 106,450 Payable from restricted assets: Accrued interest 126,858 138,004

Revenue bonds payable 231,250 220,417

Total current liabilities 10,552,358 9,798,702

Noncurrent liabilities: Capital lease 289,480 326,779

Revenue bonds 39,312,310 42,890,282

Compensated absences 752,501 775,016

Net pension liability 3,810,966 1,841,550

Total OPEB liability 4,290,621 4,660,896

Total noncurrent liabilities 48,455,878 50,494,523

Total liabilities 59,008,236 60,293,225

DEFERRED INFLOWS OF RESOURCES

Deferred inflow related to pensions 136,326 747,339

Deferred inflow related to OPEBs 535,237 -

Total deferred inflows of resources 671,563 747,339

NET POSITION

Net investment in capital assets 114,690,767 105,934,942 Restricted for:

Construction 5,583,771 4,605,905

Debt service 3,956,496 3,823,285

Rate stabilization 5,716,859 3,818,903

Unrestricted 41,024,028 40,060,770

Total net position 170,971,921$ 158,243,805$

CITY OF WEATHERFORD, TEXASMUNICIPAL UTILITY SYSTEM

COMPARATIVE STATEMENTS OF NET POSITION

SEPTEMBER 30, 2019 AND 2018

4

34

2019 2018

OPERATING REVENUES Electric sales 35,886,741$ 35,822,817$

Electric services 456,735 547,575

Water sales 15,470,913 16,791,511

Water services 106,616 181,465

Wastewater services 6,772,614 7,232,787

Other 102,761 129,468

Total operating revenues 58,796,380 60,705,623

OPERATING EXPENSES

Personnel services 6,051,227 6,261,299

Contractual services 6,361,851 5,713,800

Purchased power 20,865,661 21,625,408

Materials and supplies 1,813,721 1,911,151

Depreciation 6,352,542 5,950,138

Total operating expenses 41,445,002 41,461,796

OPERATING INCOME 17,351,378 19,243,827

NONOPERATING REVENUES (EXPENSES)

Investment earnings 1,914,155 703,315

Intergovernmental 215,891 -

Rentals 1,263,035 1,220,240

Gain (loss) on sale of assets 209,118)( 593,842)(

Interest and other charges 1,463,602)( 1,649,911)(

Total nonoperating revenues (expenses) 1,720,361 320,198)(

INCOME BEFORE CONTRIBUTIONS AND TRANSFERS 19,071,739 18,923,629

Capital contributions 1,974,585 3,098,107

Transfers out 8,318,208)( 5,719,577)(

NET CHANGE IN NET POSITION 12,728,116 16,302,159

NET POSITION, BEGINNING 158,243,805 144,544,631

PRIOR PERIOD ADJUSTMENT - 2,602,985)(

NET POSITION, ENDING 170,971,921$ 158,243,805$

FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018

CITY OF WEATHERFORD, TEXAS

COMPARATIVE STATEMENTS OF REVENUES, EXPENSESAND CHANGES IN NET POSITION

MUNICIPAL UTILITY SYSTEM

The accompanying notes are an integral

part of these financial statements. 5

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2019 2018

CASH FLOWS FROM OPERATING ACTIVITIES

Cash received from customers 58,705,088$ 59,743,628$

Cash paid to employees for services 5,660,829)( 6,008,938)(

Cash paid to suppliers for goods and services 28,587,206)( 30,065,956)(

Net cash provided by operating activities 24,457,053 23,668,734

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES

Cash received from rentals 1,263,035 1,220,240

Cash received from other governments 215,891

Transfers to other funds 8,318,208)( 5,719,577)(

Net cash used by noncapital financing activities 6,839,282)( 4,499,337)(

CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES

Proceeds from disposal of capital assets 70,786 73,198

Proceeds from developers for contributions

in aid of construction 1,204,897 1,907,357

Principal payments on long-term debt 3,278,993)( 4,526,701)(

Acquisition and construction of capital assets 10,653,165)( 11,291,887)(

Interest and other charges on debt 1,674,201)( 1,861,961)(

Net cash used by capital and related

financing activities 14,330,676)( 15,699,994)(

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received 1,959,394 1,361,391

Purchase of investments 6,845,697)( 14,893,782)(

Net cash used by investing activities 4,886,303)( 13,532,391)(

NET INCREASE (DECREASE) IN CASH 1,599,208)( 10,062,988)(

CASH AND CASH EQUIVALENTS, BEGINNING 31,822,509 41,885,497

CASH AND CASH EQUIVALENTS, ENDING 30,223,301 31,822,509

RECONCILIATION OF TOTAL CASH AND CASH EQUIVALENTS

Current assets - cash and cash equivalents 12,332,274 13,199,798

Restricted assets - cash and cash equivalents 17,891,027 18,622,711

Total cash and cash equivalents 30,223,301$ 31,822,509$

CITY OF WEATHERFORD, TEXAS

COMPARATIVE STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018

MUNICIPAL UTILITY SYSTEM

The accompanying notes are an integral

part of these financial statements. 6

37

2019 2018

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET

CASH PROVIDED BY OPERATING ACTIVITIES

Operating income 17,351,378$ 19,243,827$

Adjustments to reconcile operating income (loss) to

net cash provided by operating activities:

Depreciation 6,352,542 5,950,138

(Increase) decrease in accounts receivable 731,896 935,927)(

(Increase) decrease in unbilled accounts 577,444)( 96,085)(

(Increase) decrease in inventory 235,253)( 146,084)(

(Increase) decrease in prepaids 114,358)( 128,917)(

(Increase) decrease in deferred outflows for benefits 1,118,470)( 595,598

Increase (decrease) in accounts payable 803,638 540,596)(

Increase (decrease) in accrued wages payable 6,009 123,519

Increase (decrease) in unearned revenue 282,574)( 4,446

Increase (decrease) in customer deposits 36,830 65,571

Increase (decrease) in compensated absences 27,219)( 1,040)(

Increase (decrease) in deferred inflows for benefits 75,776)( 520,442

Increase (decrease) in net pension liability 1,969,416 1,549,922)(

Increase (decrease) in net OPEB liability 363,562)( 563,764

Net cash provided by operating activities 24,457,053$ 23,668,734$

NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES

Contributions of capital assets 791,579$ 1,159,126$

Change in fair value of investments 521,332 135,664)(

MUNICIPAL UTILITY SYSTEM

CITY OF WEATHERFORD, TEXAS

COMPARATIVE STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018

7

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CITY OF WEATHERFORD, TEXAS MUNICIPAL UTILITY SYSTEM

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

These financial statements present only the Municipal Utility System, a separate fund of the City of Weatherford, Texas (the “City”). They are not intended to present the financial position, results of operations or cash flows of the City as a whole.

In accordance with Article IX of the City Charter, management, control and operation of the

municipal utility system is vested with the board of trustees. The Municipal Utility System (the “Utility System”) Board of Trustees, consisting of the Mayor, two Council members and four trustees appointed by the Council, exercises management control of the electric, water and

wastewater systems that serve the City. The Trustees are appointed by the City Council. The rates for user charges and bond issuance authorizations are also approved by the Council. The Municipal Utility Fund is used to account for the operations of the City’s electric distribution system, water treatment and distribution system and wastewater treatment and collection system.

B. Fund Accounting

The accounts of the Municipal Utility System are organized as an Enterprise Fund. The operations of the fund are accounted for with accounts that comprise its assets, deferred outflows, liabilities, deferred inflows, net position, revenues and expenses. Enterprise Funds are utilized to account for operations that are financed and operated in a manner similar to private business enterprises

where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges.

C. Basis of Accounting

The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. The Utility System is accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and deferred outflows and all liabilities and deferred inflows associated with the operation of these funds are included on the statement of net position. Total net position is segregated into the following categories: net investment in capital assets; restricted; and unrestricted. The Utility System operating statements present increases (e.g., revenues) and decreases (e.g., expenses) in net position.

Basis of accounting refers to when revenues and expenses are recognized in the accounts and reported in financial statements. The Utility System is accounted for using the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. Unbilled receivables for electric and water utility service are recorded at year-end. When both restricted and unrestricted resources are available for use, it is the Utility System’s policy to use restricted resources first, then unrestricted as they are needed.

The Utility System distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the Utility System’s principal ongoing operations. Operating expenses for the Utility System include the cost of personnel and contractual services, supplies, and depreciation on capital assets. All revenues and expenses not meeting this definition are

reported as nonoperating revenues and expenses.

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D. Cash, Cash Equivalents and Investments

Investments for the Utility System are reported at fair value, except for the position in investment pools. The Utility System’s investment in pools are reported at the net asset value per share

(which approximates fair value) even though it is calculated using the amortized cost method. The City maintains a cash and investment pool that is available for use by all funds of the City, including the Utility System’s funds. Each funds portion of this pool is allocated to each fund of the City, and the Utility System’s cash and investments are displayed on the statement of net position as cash and investments or restricted cash and investments.

For purposes of the statement of cash flows, the Utility System considers cash and other investments with maturities of three months or less from the date of purchase to be cash and cash equivalents.

E. Restricted Assets

Certain resources set aside for repayment of bonds are classified as restricted assets on the balance sheet because their use is limited by applicable bond ordinances. The rate stabilization restriction is used to report an amount billed to customers to subsidize potential future rate

increases due to an unexpected increase in future power costs.

F. Inventory

The Utility System inventory is valued at cost using the moving average cost method.

G. Capital Assets

Property, plant and equipment are recorded at cost, or, if contributed property, acquisition cost, which is the price that would be paid to acquire an asset with equivalent service potential at the acquisition date. Depreciation is recorded on each class of depreciable property utilizing the

straight-line method over the estimated useful lives of the assets. Estimated useful lives are as follows:

Assets Years

Buildings 40

Water, electric and sewer system 40 - 60

Machinery and equipment 5 - 10

Renewals and betterments of property and equipment are capitalized, whereas normal repairs and maintenance are charged to expense as incurred. Individual items with an initial cost greater than $5,000 and with estimated useful life of at least two years following the date of acquisition are capitalized.

H. Accumulated Unpaid Vacations, Sick Leave and Other Employee Benefit Amounts

Employees are paid for up to 720 hours of unused sick leave upon retirement or annually for one-half of the accumulated sick leave in excess of 720 hours. With the exception of sick leave for employees eligible for retirement, sick leave less than 720 hours is expensed when paid. Vacation

is earned in varying amounts. Employees may accrue up to 320 hours of vacation. If the employee reaches the maximum accrual limit future accruals will cease until the vacation balance is below

the established maximum amount. Full-time status employees hired after March 1, 2017 shall participate in the City’s Paid Time Off (PTO) program in lieu of traditional paid vacation and sick leave. Benefits will accrue as follows:

1 month thru 9 years: 13.34 hours/month 10 thru 19 years: 16.67 hours/month 20 years and over: 20 hours/month

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Upon termination of employment, an employee who has completed at least six months of continuous service and successful completion of an initiation period will be paid for all unused and accrued PTO up to 480 hours.

The Utility System has accrued for the estimated liability for compensated absences.

I. Long-term Obligations

In the Utility System financial statements, the long-term debt and other long-term obligations are reported as liabilities. Bond premiums and discounts are deferred and amortized over the life of the bonds.

J. Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will

not be recognized as an outflow of resources (expense/expenditure) until then. The Utility System has the following items that qualify for reporting in this category.

• Deferred charges on refunding – A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.

• Pension and OPEB contributions after measurement date – These contributions are deferred and recognized in the following fiscal year.

• Difference in actuarial assumptions and other inputs – This difference is deferred and

recognized over the estimated average remaining lives of all members determined as of the measurement date.

In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The Utility System

has items that qualify for reporting in this category.

• Difference in projected and actual earnings on pension assets – This difference is deferred and amortized over a closed five-year period.

• Difference in expected and actual pension and OPEB experience - This difference is deferred and recognized over the estimated average remaining lives of all members determined as of the measurement date.

K. Net Position

Net position represents the difference between assets, deferred outflows (inflows) of resources and liabilities. Net investment in capital asset consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used for the acquisition, construction or improvements of those assets, and adding back unspent proceeds. Net position is reported as restricted when there are limitations imposed on their use either through the enabling

legislations adopted by the Utility System or through external restrictions imposed by creditors, grantors or laws or regulations of other governments.

L. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles

requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates.

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M. Concentration of Credit Risk

The Utility System grants credit to utility customers located in the City and the surrounding area.

N. Reclassifications

Certain amounts presented for the prior year have been reclassified in order to be consistent with the current year’s presentation.

O. Prior Period Adjustment

During fiscal year 2018, the Utility System adopted GASB Statement No. 75, Accounting and Reporting for Post-Employment Benefits Other Than Pensions. With GASB 75, the Utility System must assume its total OPEB liability in connection with the TMRS SDBF and Retiree Health Insurance Plan. Adoption of GASB 75 required a prior period adjustment to report the effect of the standard retroactively. As such, beginning net position was restated by $2,602,985.

II. DETAILED NOTES ON ALL FUNDS

A. Deposits and Investments Interest Rate Risk: In compliance with the Utility System’s Investment Policy, the Utility System minimizes interest rate risk or the decrease in market value of securities in the Utility System’s

portfolio due to changes in interest through strong cash flow projections so that market value losses are reduced and through investments in short-term securities with maturity dates that do not exceed five years from the date of purchase with the exception of security purchases related to reserve funds or that are matched to other specific cash flows and by investing operating funds in short-term securities or government investment pools. By doing this, the Utility System avoids the need to sell securities in the secondary market prior to the maturity date.

Credit Risk: The Utility System has no formal policy addressing credit risk. However, safety of principal is the primary objective of the Utility System’s investment policy. In accordance with this objective, the Utility System limits its investments to those that have been issued one of the top ratings by a nationally recognized credit rating agency. As of September 30, 2019, the Utility

System’s investment in TexPool, TexStar, and Texas Class were rated AAAm by Standard & Poor’s and the U. S. Government Securities were rated AAA by Moody.

Concentration of Credit Risk: In accordance with the Utility System’s investment policy, the Utility System limits their exposure of concentration of credit risk by restricting investments in a single security type or financial institute to less than 50% of the Utility System’s total investment portfolio with the exception of U.S. Treasure and Agency Securities, depository C.D.’s, and authorized pools.

It is the Utility System’s policy to report all debt securities held at the end of the reporting period at fair value, regardless of the remaining maturity at time of purchase. The fair value of investments is based on quoted market prices for the same or similar security with like stated interest and maturity characteristics. The State Comptroller of Public Accounts exercises oversight responsibility over TexPool, the Texas Local Government Investment Pool. Oversight includes the ability to significantly influence

operations, designation of management, and accountability for fiscal matters. Additionally, the State Comptroller has established an advisory board composed of both participants in TexPool and other persons who do not have a business relationship with TexPool. The Advisory Board members review the investment policy and management fee structure. Finally, TexPool is rated AAAm by Standard & Poor’s. As a requirement to maintain the rating, weekly portfolio information must be submitted to Standard & Poor’s, as well as the office of the Comptroller of Public Accounts for

review. TexPool uses amortized cost rather than market value to report net assets to compute share prices. Accordingly, the fair value of the position in TexPool is the same as the value of TexPool shares.

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The Texas Short-term Asset Reserve Program, TexSTAR, is a local government investment pool created under the Interlocal Cooperation Act specifically tailored to meet Texas state and local government investment objectives of preservation of principal, daily liquidity and competitive yield. TexSTAR is overseen by a Governing Board consisting of individuals from participating

government entities in the pool. The business and affairs of TexSTAR are managed by the Board. J.P. Morgan Investment Management, Inc. provides investment management, fund accounting, transfer agency and custodial services for the pool and Hilltop Securities Inc. provides administrative, marketing and participant services. The fund seeks to maintain a constant dollar objective and fulfills all requirement of the Texas PFIA for local government investment pools. The fund is rated AAAm by Standard and Poor’s and maintains a maturity of 60 days or less, with a maximum maturity of 13 months for an individual security.

The Cooperative Liquid Assets Securities System – Texas (“CLASS”) is a public funds investment pool under Section 2256.016 of the Public Funds Investment Act, Chapter 2256, Texas Government Code. CLASS is created under an Amended and Restated Trust Agreement, dated as of May 1, 2001 (the “Agreement”) among certain Texas governmental entities investing in the pool (the “Participants”), Municipal Investors Services Corporation (“MBIA-MISC”) as program

administrator, and Wells Fargo as custodian. CLASS is not SEC-registered and is not subject to regulation by the State of Texas. Under the Agreement, however, CLASS is administered and supervised by a seven-member board of trustees (the “Board”), whose members are investment

officers of the Participants, elected by the Participants for overlapping two-year terms. In the Agreement and by resolution of the Board, CLASS has contracted with MBIA-MISC to provide for the investment and management of the public funds of CLASS. Separate financial statements for CLASS may be obtained by contacting MBIA Asset Management at 815-A Brazos Street, Suite 345,

Austin, Texas 78701-9996 or by calling (800) 707-6242. Each investment pool has a redemption notice period of one day and may redeem daily. The investment pool’s authorities may only impose restrictions on redemptions in the event of a general suspension of trading on major securities markets, general banking moratorium or national or state emergency that affects the pool’s liquidity.

The Utility System 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 significant other observable inputs; and Level 3

inputs are significant unobservable inputs.

The fair value methods used by the Utility System include documented trade history in exact security, present value of expected future cash flow model and option-adjusted discounted cash flow model.

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The Utility System’s investments as of September 30, 2019 and 2018, are shown below:

As of September 30, 2018:

Fair Value

Maturity Measurements Reported % of

Description Date Used Value Total

Local Government Investment

Pools:

TexPool N/A N/A 3,897,522$ 8.05%

TexStar N/A N/A 4,465,917 9.22%

Texas Class N/A N/A 6,660,141 13.75%

Total 15,023,580

Certificates of Deposit:

Legacy Texas 12/21/18 N/A 4,600,000 9.50%

Texas Bank 02/27/19 N/A 900,000 1.86%

Texas Bank 03/24/19 N/A 1,200,000 2.48%

Legacy Texas 09/05/19 N/A 3,000,000 6.19%

LegacyTexas 09/24/21 N/A 2,000,000 4.13%

Total 11,700,000

Municipal Securities:

Altoona WI-Municipal Bonds 12/18/18 Level 2 294,829 0.61%

Total 294,829

U.S. Government Securities:

US Treasury Bonds 3/31/19 Level 1 298,818 0.62%

US Treasury Bonds 10/31/19 Level 1 1,974,563 4.08%

Freddie Mac 10/2/19 Level 1 4,931,100 10.18%

Federal Farm Credit Bonds 11/16/18 Level 2 1,996,400 4.12%

Federal Home Loan Bank Bonds 9/11/20 Level 1 999,900 2.06%

Federal Home Loan Bank Bonds 7/14/21 Level 1 1,716,390 3.54%

Federal Home Loan Bank Bonds 6/28/19 Level 2 986,860 2.04%

Fannie Mae 11/30/20 Level 1 1,943,800 4.01%

Fannie Mae 10/7/21 Level 1 2,866,050 5.92%

Fannie Mae 8/24/20 Level 2 1,752,462 3.62%

Fannie Mae 10/9/19 Level 1 1,944,880 4.02%

Total 21,411,223

Total investments 48,429,632$ 100.00%

0.74

2.17

3.02

1.90

0.74

Weighted

0.22

2.99

Average

0.08

Maturity (Years)

0.09

0.14

0.14

0.48

0.93

1.01

2.79

0.17

0.50

1.08

0.13

1.95

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14

As of September 30, 2019:

Fair Value

Maturity Measurements Reported % of

Description Date Used Value Total

Local Government Investment

Pools:

TexPool N/A N/A 5,106,182$ 9.60%

TexStar N/A N/A 1,964,637 3.69%

Texas Class N/A N/A 7,864,328 14.79%

Total 14,935,147

Certificates of Deposit:

Texas Bank 11/26/19 N/A 1,500,000 2.82%

Legacy Texas 01/29/20 N/A 3,000,000 5.64%

Texas Bank 04/29/20 N/A 1,000,000 1.88%

Texas Bank 11/26/20 N/A 1,500,000 2.82%

Legacy Texas 09/24/21 N/A 2,000,000 3.76%

Total 9,000,000

U.S. Government Securities:

Freddie Mac 10/02/19 Level 1 4,999,850 9.40%

Fannie Mae 10/09/19 Level 1 1,998,960 3.76%

Fannie Mae 10/09/19 Level 1 4,636,752 8.72%

US Treasury Bonds 10/31/19 Level 1 1,998,820 3.76%

Private Export Funding 03/15/20 Level 1 3,026,502 5.69%

Fannie Mae 08/24/20 Level 2 1,793,808 3.37%

Federal Home Loan Bank Bonds 09/11/20 Level 1 4,037,678 7.59%

Fannie Mae 11/30/20 Level 1 1,992,920 3.75%

Federal Home Loan Bank Bonds 07/14/21 Level 1 1,782,558 3.35%

Fannie Mae 10/07/21 Level 1 2,982,990 5.61%

Total 29,250,838

Total investments 53,185,985$ 100.00%

0.01

1.99

Weighted

Average

Maturity (Years)

0.09

0.05

0.58

1.16

0.01

1.79

0.33

0.16

2.02

0.02

0.46

0.90

0.02

0.95

1.17

0.08

B. Interfund Transfers

Transfers of resources during 2019 and 2018 occurred between the Utility System and other funds of

the City as follows: 2019:

Transfers In Transfers Out Amount

City's General Fund Utility System 5,398,419$

TIRZ Utility System 33,238

Other Governmental Utility System 2,871,626

Storm Water Utility Utility System 14,925

Total Transfers 8,318,208$ 2018:

Transfers In Transfers Out Amount

City's General Fund Utility System 5,423,148$

Other Governmental Utility System 296,429

Total Transfers 5,719,577$

Transfers were used 1) to transfer franchise fees to the City’s General Fund from the Utility

System; and 2) to transfer funds from the Utility System to the City’s General Fund for return on investment of the City-owned utility system.

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C. Capital Assets

Capital asset activity for the years ended September 30, 2019 and 2018, was as follows:

Beginning Transfers/ Ending

Balance Additions Retirements Balance

September 30, 2019

Capital assets, not

being depreciated:

Land 2,877,235$ 394,706$ -$ 3,271,941$

Construction in progress 9,251,945 5,770,967 7,450,255)( 7,572,657

Total assets not being depreciated 12,129,180 6,165,673 7,450,255)( 10,844,598

Capital assets, being depreciated:

Buildings and improvements 19,181,985 - 626,688)( 18,555,297

Other improvements 190,054,882 4,639,674 7,449,006 202,143,562

Machinery and equipment 8,151,430 746,597 312,810)( 8,585,217

Total capital assets

being depreciated 217,388,297 5,386,271 6,509,508 229,284,076

Less accumulated depreciation:

Buildings and improvements 11,004,052)( 444,097)( 348,033 11,100,116)(

Other improvements 71,533,582)( 5,490,010)( - 77,023,592)(

Machinery and equipment 6,256,032)( 418,435)( 312,810 6,361,657)(

Total accumulated depreciation 88,793,666)( 6,352,542)( 660,843 94,485,365)(

Total capital assets being

depreciated, net 128,594,631 966,271)( 7,170,351 134,798,711

Municipal Utility

capital assets, net 140,723,811$ 5,199,402$ 279,904)$( 145,643,309$

Beginning Transfers/ Ending

Balance Additions Retirements Balance

September 30, 2018

Capital assets, not

being depreciated:

Land 2,745,492$ 131,743$ -$ 2,877,235$

Construction in progress 5,866,129 8,053,659 4,667,843)( 9,251,945

Total assets not being depreciated 8,611,621 8,185,402 4,667,843)( 12,129,180

Capital assets, being depreciated:

Buildings and improvements 19,181,985 - - 19,181,985

Other improvements 182,237,854 4,091,401 3,725,627 190,054,882

Machinery and equipment 7,985,009 271,855 105,434)( 8,151,430

Total capital assets

being depreciated 209,404,848 4,363,256 3,620,193 217,388,297

Less accumulated depreciation:

Buildings and improvements 10,554,116)( 449,936)( - 11,004,052)(

Other improvements 66,991,896)( 4,844,722)( 303,036 71,533,582)(

Machinery and equipment 5,699,657)( 655,482)( 99,107 6,256,032)(

Total accumulated depreciation 83,245,669)( 5,950,140)( 402,143 88,793,666)(

Total capital assets being

depreciated, net 126,159,179 1,586,884)( 4,022,336 128,594,631

Municipal Utility

capital assets, net 134,770,800$ 6,598,518$ 645,507)$( 140,723,811$

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D. Long-term Liabilities

Long-term liability activity for the years ended September 30, 2019 and 2018, was as follows:

Beginning Ending Due Within

Balance Additions Reductions Balance One Year

September 30, 2019

Bonds payable:

Revenue bonds 31,855,000$ -$ 2,675,000$ 29,180,000$ 2,805,000$

Revenue bonds-private

placement 10,130,000 530,000 9,600,000 530,000

Issuance premium/discount 4,110,282 - 242,972 3,867,310 -

Total bonds payable 46,095,282 - 3,447,972 42,647,310 3,335,000

State infrastructure loans 37,632 - 37,632 - -

Capital lease obligation 363,141 - 36,361 326,780 37,300

Compensated absences 933,564 357,432 384,650 906,345 153,844

Municipal Utility

long-term liabilities 47,429,619$ 357,432$ 3,906,615$ 43,880,436$ 3,526,144$

Beginning Ending Due Within

Balance Additions Reductions Balance One Year

September 30, 2018

Bonds payable:

Revenue bonds 35,780,000$ -$ 3,925,000$ 31,855,000$ 2,675,000$

Revenue bonds-private

placement 10,660,000 530,000 10,130,000 530,000

Issuance premium/discount 4,353,255 - 242,973 4,110,282 -

Total bonds payable 50,793,255 - 4,697,973 46,095,282 3,205,000

State infrastructure loans 73,886 - 36,254 37,632 37,632

Capital lease obligation 398,588 - 35,447 363,141 36,362

Compensated absences 934,604 454,850 455,890 933,564 158,548

Municipal Utility

long-term liabilities 52,200,333$ 454,850$ 5,225,564$ 47,429,619$ 3,437,542$

Bonds payable at September 30, 2019 and 2018, consist of the following individual issues:

2019 2018

$41,565,000 2015 Utility System Revenue Refunding &

Improvement Bonds, due in annual installments through

September 1, 2035, 2.00% - 5.00%. 29,180,000 31,855,000

$11,220,000 2016 Tax & Utility System Revenue COs, due in

annual installments through September 1, 2036, 0.00% -

1.74%. 9,600,000 10,130,000

38,780,000$ 41,985,000$

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The annual debt payment requirements for bonds payable as of September 30, 2019, are as follows:

Fiscal

Year Principal Interest Total

2020 2,805,000$ 706,344$ 3,511,344$

2021 2,950,000 636,219 3,586,219

2022 3,090,000 562,469 3,652,469

2023 2,455,000 485,219 2,940,219

2024 2,570,000 423,844 2,993,844

2025-2029 8,390,000 1,269,413 9,659,413

2030-2034 5,620,000 597,750 6,217,750

2035 1,300,000 32,500 1,332,500

29,180,000$ 4,713,758$ 33,893,758$

Fiscal

Year Principal Interest Total

2020 530,000$ 109,612$ 639,612$

2021 530,000 108,976 638,976

2022 530,000 107,545 637,545

2023 535,000 105,530 640,530

2024 535,000 102,589 637,589

2025-2029 2,755,000 436,535 3,191,535

2030-2034 2,940,000 249,456 3,189,456

2035-2036 1,245,000 32,441 1,277,441

9,600,000$ 1,252,684$ 10,852,684$

Revenue Bonds

Revenue Bonds-Private Placement

The revenue bonds are collateralized by the revenue of the combined utility system and the various special funds established by the bond ordinances. The ordinances provide that the revenue

of the system is to be used first to pay operating and maintenance expenses of the system and second to establish and maintain the revenue bond funds. Any remaining revenues may then be used for any lawful purpose. The ordinances also contain provisions which, among other items, restrict the issuance of additional revenue bonds unless the special funds noted above contain the required amounts and certain financial ratios are met. The Utility System is in compliance with these financial requirements.

Additionally, certain obligations that were marketed as private placements have been separately identified; however, the terms of these obligations are not significantly different than other obligations and do not have substantive acceleration clauses. Should the City default on these bonds, any registered owner of the obligations is entitled to seek a writ of mandamus from a court of proper jurisdiction requiring the City to make payment.

Below is a summary of the various restricted asset accounts required by the bond ordinances along with the actual cash reserved as of September 30, 2019 and 2018.

Required Actual Required Actual

Reserve fund 3,067,616$ 3,312,027$ 3,067,616$ 3,239,661$

Bond fund 404,775 1,002,579 405,087 942,045

2019 2018

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Defeased Debt Outstanding In prior years, the Utility System defeased certain bonds by placing the proceeds of new bonds in an irrevocable trust to provide all future debt service payments on the old bonds. Accordingly, the

trust accounts and the defeased bonds are not included in the Utility System’s financial statements. As of September 30, 2019, the Utility System does not have any bonds considered defeased. Notes Payable The following is a summary of notes payable as of September 30, 2019 and 2018:

2019 2018

Texas Department of Transportation:

March 2009, the City received a State Infrastructure Bank

Loan in the amount of $320,000, payable in 10 annual

installments of $39,061, including interest at 3.8%, to fund

utility relocations in connection with replacement of two

bridges over railroad tracks on US 180. -$ 37,631$

Description and Terms

Lease Agreements The Utility System has entered into a lease agreement as lessee for financing of building improvements. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of minimum lease payments as of the inception date.

The annual debt payment requirements for the capital leases as of September 30, 2019, are as follows:

Fiscal

Year Capital Lease

2020 45,731$

2021 45,731

2022 45,731

2023 45,731

2024 45,731

2025-2027 137,192

Total minimum lease payments 365,847

Less: amount representing interest 39,067)(

Present value of minimum lease payments 326,780$

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III. OTHER INFORMATION

A. Retirement Plan

Plan Description. The Utility System participates as one of 887 plans in the nontraditional, joint contributory, hybrid defined benefit pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agency multiple-employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the System with a six-member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board,

TMRS is not fiscally dependent on the State of Texas. TMRS’s defined benefit pension plan is a tax-qualified plan under Sections 401(a) of the Internal Revenue Code. TMRS issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.com. All eligible employees of the Utility System are required to participate in TMRS.

Benefits Provided. TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the Utility System, within the options available in the state statutes governing TMRS.

At retirement, the benefit is calculated as if the sum of the employee’s contributions, with interest, and the Utility System-financed monetary credits, with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven payment options.

Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member’s deposits and interest. The Utility System grants monetary credits for service rendered of a theoretical amount equal to two times what would have been contributed by the employee, with interest. Monetary credits, also known as the matching ratio, are 200% of the employee’s accumulated contributions and are

only payable in the form of an annuity. Beginning in 2000, the Utility System granted an annually repeating (automatic) basis monetary credit referred to as an updated service credit (USC) which is a theoretical amount that takes into

account salary increases or plan improvements. If at any time during their career an employee earns a USC, this amount remains in their account earning interest at 5% until retirement. At

retirement, the benefit is calculated as if the sum of the employee’s accumulated contributions with interest and the employer match plus employer-financed monetary credits, such as USC, with interest were used to purchase an annuity. Additionally, initiated in 2014, the Utility System provided on an annually repeating (automatic) basis cost of living adjustments (COLA) for retirees equal to a percentage of the change in the consumer price index (CPI). A summary of plan provisions are as follows:

Employee deposit rate 7%

Matching ratio (City to employee) 2 to 1

Years required for vesting 5

Service retirement eligibility 20 years to any age,

5 years at age 60 and above

Updated service credit 100% repeating

Annuity increase to retirees 50% of CPI repeating

Contributions. The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross earnings, and the government matching percentages are with 100%, 150%, or 200%, both as adopted by the governing body of the City and Utility System. Under the state law governing TMRS, the contributions rate for each city is determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost method. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year,

with an additional amount to finance any unfunded accrued liability.

Employees for the government were required to contribute 7% of their annual gross earnings during the fiscal year. The contribution rates for the government were 13.35% and 13.25% in calendar years 2018 and 2019, respectively. The Utility System’s contributions to TMRS for the year ended September 30, 2019, were $610,891 and were equal to the required contributions.

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Actuarial assumptions:

The total pension liability in the December 31, 2018 actuarial valuation was determined using the following actuarial assumptions:

Inflation 2.5% per year

Overall payroll growth 3.0% per year

Investment rate of return 6.75%, net of pension plan investment

expense, including inflation

Salary increases were based on a service-related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment, with male rates multiplied by 109% and female rates multiplied by 103%.

The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For disabled annuitants, the gender-distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment are used with males rates multiplied by 109% and female rates multiplied by 103% with a 3-year set-forward for both males and females. In addition, a 3% minimum mortality rate is applied to reflect the impairment for younger members who become disabled. The rates are projected on a fully generational basis by scale BB to account for future

mortality improvements subject to the 3% floor.

The actuarial assumptions were developed primarily from the actuarial investigation of the experience of TMRS over the four-year period from December 31, 2010 to December 31, 2014. They were adopted in 2015 and first used in the December 31, 2015 actuarial valuation. The post-retirement mortality assumption for healthy annuitants and Annuity Purchase Rate (APRs) are based on the Mortality Experience Investigation Study covering 2009 through 2011 and dated December

31, 2013. In conjunction with these changes first used in the December 31, 2013 valuation, the System adopted the Entry Age Normal actuarial cost method and a one-time change to the amortization policy. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short-term and long-term funding needs of TMRS. The long-term expected rate of return on pension plan investments was determined using a

building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each

major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. In determining their best estimate of a recommended investment return assumption under the various alternative asset allocation portfolios, GRS focused on the area between (1) arithmetic mean (aggressive) without an adjustment for time (conservative) and (2)

the geometric mean (conservative) with an adjustment for time (aggressive). The target allocation and best estimates of real rates of return for each major asset class are summarized in the following table:

Long-Term Expected

Target Real Rate of

Asset Class Allocation Return (Arithmetic)

Domestic equity 17.5% 4.30%

International Equity 17.5% 6.10%

Core Fixed Income 10.0% 1.00%

Non-Core Fixed Income 20.0% 3.39%

Real Return 10.0% 3.78%

Real Estate 10.0% 4.44%

Absolute Return 10.0% 3.56%

Private Equity 5.0% 7.75%

Total 100.0%

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Discount Rate

The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will

be made at the rates specified in statue. Based on that assumption, the pension plan’s Fiduciary Net Position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all period of projected benefit payments to determine the Total Pension Liability. The following presents the net pension liability of the Utility System, calculated using the discount

rate of 6.75%, as well as what the Utility System’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (5.75%) or 1-percentage-point higher (7.75%) than the current rate:

1% Decrease in 1% Increase in

in Discount Discount in Discount

Rate (5.75%) Rate (6.75%) Rate (7.75%)

December 31, 2018:

Utility System's proportionate share

of the net pension liability 7,480,455$ 3,810,966$ 805,177$

December 31, 2017:

Utility System's proportionate share

of the net pension liability/(asset) 5,443,702$ 1,841,550$ 1,223,348)$(

Pension Liability, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. At September 30, 2019 and 2018, the Utility System reported a liability of $3,810,966 and $1,841,550, respectively, of its proportionate share of the net pension liability. The net pension liability was measured as of December 31, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The Utility System’s proportion of the net pension liability was based on

the Utility System’s contributions to the pension plan relative to the contributions of all employers (the City and Utility System) to the plan for the period January 1, 2018 through December 31, 2018. At December 31, 2018 and 2017, the Utility System’s proportion was 20.81% and 21.39%,

respectively. For the year ended September 30, 2019 and 2018, the Utility System recognized pension expense

of $921,510 and $523,665, respectively. At September 30, 2019 and 2018, the Utility System reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred

Outflows Inflows

of Resources of Resources

September 30, 2019:

Differences between expected and actual economic experience -$ 136,326$

Changes in actuarial assumptions 41,510 -

Difference between projected and actual investment earnings 1,150,104 -

Contributions subsequent to the measurement date 465,369 -

Totals as of September 30, 2019 1,656,983$ 136,326$

September 30, 2018:

Differences between expected and actual economic experience -$ 157,686$

Changes in actuarial assumptions 82,191 -

Difference between projected and actual investment earnings - 589,653

Contributions subsequent to the measurement date 471,382 -

Totals as of September 30, 2018 553,573$ 747,339$

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22

$465,472 and $471,382 reported as deferred outflows of resources related to pension resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability for the year ending September 30, 2019 and 2018, respectively. Other amounts reported as deferred outflows and inflows of resources related to pensions will be

recognized in pension expenses as follows:

For the Year As of

Ended September 30, September 30, 2019

2020 383,855$

2021 127,394

2022 127,555

2023 416,485

For the Year As of

Ended September 30, September 30, 2018

2019 (45,931)$

2020 30,657)(

2021 294,325)(

2022 294,158)(

2023 77)(

A. Postemployment Benefits Other Than Pensions (OPEB) - TMRS Supplemental Death Benefits Fund

Plan Description. The City voluntarily participates in a single-employer other postemployment benefit (OPEB) plan administered by TMRS. The Plan is a group-term life insurance plan known as the Supplemental Death Benefits Fund (SDBF). The Plan is established and administered in accordance with the TMRS Act identically to the City’s pension plan. SDBF includes coverage for both active and retired members, and assets are commingled for the payment of such benefits. Therefore, the Plan does not qualify as an OPEB Trust in accordance with paragraph 4 of GASB Statement No. 75.

Benefits Provided. The SDBF provides group-term life insurance to the Utility System’s employees who

are active members in TMRS, including or not including retirees. The City Council opted into this program via an ordinance, and may terminate coverage under, and discontinue participation in, the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1.

Payments from this fund are similar to group-term life insurance benefits and are paid to the designated beneficiaries upon the receipt of an approved application for payment. The death benefit for active employees provides a lump-sum payment approximately equal to the employee’s annual salary (calculated based on the employee’s actual earnings for the 12-month period preceding the month of death). The death benefit for retirees is considered another employment benefit and is a fixed amount of $7,500.

Contributions. The Utility System contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation, which was 0.17% for 2019 and 0.18% for 2018, of which 0.04% and 0.04%, respectively, represented the retiree-only portion for each year, as a percentage of annual covered payroll. The rate is equal to the cost of providing one-year term life insurance. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death

benefit payments for the upcoming year; the intent is not to prefund retiree term life insurance during employees’ entire careers. The Utility System’s contributions to the SDBF for the years ended September

30, 2019 and 2018 were $6,092 and $1,721, respectively, representing contributions for both active and retiree coverage, which equaled the required contributions each year.

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Total OPEB Liability Actuarial Assumptions and Other Inputs. The Total OPEB Liability in the December 31, 2018 actuarial valuation was determined using the following actuarial assumptions:

Inflation rate 2.5% per annum

Actuarial cost method Entry age normal

Discount rate 3.71%

Projected salary increases 3.5% to 10.5% including inflation Administrative expenses for the SDBF are paid through the TMRS Pension Trust Fund and are wholly accounted for under the provisions of GASB Statement No. 68.

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

Combined Healthy Mortality Tables with Blue Collar Adjustment are used with male rates multiplied by

109% and female rates multiplied by 103% with a 3-year set-forward for both males and females. In addition, a 3% minimum mortality rate is applied to reflect the impairment for younger members who became disabled. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements subject to the 3% floor. The actuarial assumptions used in the December 31, 2018 valuation were based on the results of an

actuarial experience study for the period December 31, 2010 to December 31, 2014. The SDBF program is treated as an unfunded OPEB plan because the SDBF trust covers both actives and retirees and the assets are not segregated for these groups. As such, a single discount rate of 3.71% was used to measure the total OPEB liability. Because the plan is essentially a “pay-as-you-go” plan, the single discount rate is equal to the prevailing municipal bond rate. The source of the municipal bond rate was fixed-income municipal bonds with 20 years to maturity that include only federally tax-exempt

municipal bonds as reported in Fidelity Index’s “20-year Municipal GO AA Index” as of December 31, 2018. The discount rate changed from 3.31% at December 31, 2017 to 3.71% as of December 31,

2018.

Discount Rate Sensitivity Analysis. The following schedule shows the impact of the Utility System’s proportionate share of the total OPEB liability if the discount rate used was 1% less than and 1% greater than the discount rates that were used in measuring the total OPEB liability.

1% Decrease in Discount 1% Increase in

Discount Rate (2.71%) Rate (3.71%) Discount Rate (4.71%)

December 31, 2018:

Utility System's proportionate share

of total OPEB liability 267,329$ 225,590$ 193,101$

1% Decrease in Discount 1% Increase in

Discount Rate (2.31%) Rate (3.31%) Discount Rate (4.31%)

December 31, 2017:

Utility System's proportionate share

of total OPEB liability 268,429$ 222,475$ 186,776$ OPEB Liability. At September 30, 2019 and 2018, the Utility System reported a liability of $225,590

and $222,475, respectively of its proportionate share of the total OPEB TMRS SDBF liability. The total OPEB liability was measured as of December 31, 2018, and the total OPEB liability was determined by an actuarial valuation as of that date. The Utility System’s proportion of the total OPEB liability was based on the Utility System’s contributions to the pension plan relative to the contributions of all employers (the City and Utility System) to the plan for the period January 1, 2018 through December 31, 2018. At December 31, 2018 and 2017, the Utility System’s proportion was 21.39% and 20.81%, respectively.

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OPEB Expense and Deferred Outflows and Inflows of Resources Related to OPEB. For the year ended September 30, 2019, the Utility System recognized OPEB expense of $12,909. There were no changes of benefit terms that affected measurement of the total OPEB liability during the measurement period.

At September 30, 2019, the Utility System reported deferred outflows of resources related to TMRS – SDBF other post-employment benefits from the following sources:

Deferred Outflows Deferred Inflows

of Resources of Resources

September 30, 2019:

Differences between expected and actual economic experience 9,336$ -$

Changes in actuarial assumptions 11,925 13,049

Contributions subsequent to the measurement date 4,567 -

Totals as of September 30, 2019 25,827$ 13,049$

September 30, 2018:

Changes in actuarial assumptions 15,065$ -$

Contributions subsequent to the measurement date 1,412 -

Totals as of September 30, 2018 16,477$ -$

$4,567 and $1,412 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date will be recognized as a reduction of the total OPEB

liability for the years ending September 30, 2020 and September 30, 2019, respectively. Other amounts of the reported as deferred outflows of resources related to OPEB will be recognized in OPEB expense as follows:

For the Year As of

Ended September 30, September 30, 2019

2020 2,037$

2021 2,037

2022 2,037

2023 2,037

2024 318

Thereafter 255)(

For the Year As of

Ended September 30, September 30, 2018

2019 2,805$

2020 2,805

2021 2,805

2022 2,805

2023 2,805

Thereafter 1,040

B. Postemployment Benefits Other Than Pensions (OPEB) – Retiree Health Plan

Plan Description. The City offers its retired employees health insurance benefits through a single-employer defined benefit OPEB plan, under City policy. This plan is administered by the City and it has the authority to establish and amend the benefit terms and financing arrangements. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.

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Benefits and Contributions. After October 2000, the City began paying for 100 percent of the premiums of health, dental and vision care for employees who retire from full time service with the City. On March 1, 2007, the City changed this policy to only pay the medical premiums for those retirees who attain age 55 with 20 years of continuous service before retirement and meet

the requirements under TMRS. On September 23, 2008, eligibility was further limited to those employees that were hired regular, full time before October 1, 2008.

Therefore, under the existing plan, the City will pay 100% medical, dental and vision premiums for those retirees who were hired regular fulltime before October 1, 2008, retire after October 1, 2008, and meet the following qualifications:

1. Employed by the City of Weatherford in a fulltime status for a period of at least 20 years continuously prior to retirement;

2. Meet eligibility requirements under TMRS; and

3. Attain minimum age 55 at retirement date.

The City will not pay any portion of medical premiums for retirees hired after October 1, 2008.

Retirees are responsible for payment of premiums for any dependent coverage. Retirement under TMRS is attainment of 20 years of service, any age or five years of service and age 60. Only fulltime employees who attain age 55 with 20 years of continuous service with the City are eligible for health benefits. Employees retiring early under retirement conditions or who terminate

employment are not eligible for retiree health benefits. Survivors of employees who die while actively employed are not eligible for retiree health care benefits. Employees who retire under a disability retirement must meet the eligibility requirements stated above to be eligible for health care benefits. Spouses and the dependents of retired employees are eligible to continue health care, dental and vision benefits or Medicare Supplement with payment of 100% of premiums, until death of retiree. Upon death of retiree, all benefits cease. Retirees are required to enroll in Medicare Part A and B when eligible. Retiree pays full Medicare premiums with the City paying the

costs of the Medicare Supplement policy for retiree. The City does not offer life insurance coverage for retirees or their dependents. Retirees who decide to opt-out of the health care plan are not eligible to opt back.

Retirees are responsible for payment of premiums for any dependent coverage, and the City pays the retirees premiums. The Utility System’s contributions to the OPEB for the year ended September

30, 2019, were $107,071, which equal benefit payments for retirees.

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Actuarial Methods and Assumptions

Significant methods and assumptions were as follows:

Actuarial Valuation Date December 31, 2018

Actuarial Cost Method Individual Entry-Age Normal

Inflation Rate 2.50%

Salary Increases 3.50% to 10.50%, including inflation

Demographic Assumptions Based on the experience study covering the four year

period ending December 31, 2014 as conducted for the

Texas Municipal Retirement System (TMRS). The

standard TMRS retirement rates were adjusted to

reflect the impact of the City's retiree medical plan

design.

Mortality For healthy retirees, the gender-distinct RP2000

Combined Healthy Mortality Tables with Blue Collar

Adjustment are used with male rates multiplied by

109% and female rates multiplied by 103%. The rates

are projected on a fully generational basis by scale BB

to account for future mortality improvements.

Health care cost trend rates For Pre-65, initial rate of 7.20% declining to an

ultimate rate of 5.00% after 12 years; Ultimate trend

rate includes a 0.75% adjustment for the excise tax.

For post-65, initial rate of 6.50% declining to an

ultimate rate of 4.25% after 15 years.

Participation rates It was assumed that 90% of retirees who are eligible

for the City subsidy and 3% of those who are not

eligible for the City subsidy would choose to receive

health care benefits through the City.

Discount rate The discount rate changed from 3.31% as of

December 31, 2017 to 3.71% as of December 31,

2018.

Projections of health benefits are based on the plan as understood by the City and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the City

and its employees to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets.

A Single Discount Rate of 3.71% was used to measure the total OPEB liability. This Single Discount Rate was based on the municipal bond rates as of the measurement date. The source of the municipal bond rate was Fixed-income municipal bonds with 20 years to maturity that include only federally tax-exempt municipal bonds as reported in Fidelity Index’s “20-year Municipal GO AA Index” as of December 31, 2018. The discount rate changed from 3.31% at December 31, 2017 to 3.71% as of December 31, 2018.

Discount Rate Sensitivity Analysis

The following schedule shows the impact of the total OPEB liability if the discount rate used was 1% less than and 1% greater than the discount rates that were used in measuring the total OPEB liability.

1% Decrease in Discount 1% Increase in

Discount Rate (2.71%) Rate (3.71%) Discount Rate (4.71%)

December 31, 2018:

Utility System's proportionate share

of the Total OPEB liability 4,859,187$ 4,178,194$ 3,624,176$

1% Decrease in Discount 1% Increase in

Discount Rate (2.31%) Rate (3.31%) Discount Rate (4.31%)

December 31, 2017:

Utility System's proportionate share

of the Total OPEB liability 5,352,275$ 4,544,871$ 3,894,848$

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Healthcare Cost Trend Rate Sensitivity Analysis

The following schedule shows the impact of the total OPEB liability if the Healthcare Cost Trend Rate used was 1% less than and 1% greater than what was used in measuring the total OPEB liability.

Current Healthcare Cost

1% Decrease Trend Rate Assumption 1% Increase

December 31, 2018:

Utility System's proportionate share

of the net pension liability 3,546,470$ 4,178,194$ 4,981,226$

December 31, 2017:

Utility System's proportionate share

of the net pension liability 3,760,389$ 4,124,514$ 5,564,283$ OPEB Expense and Deferred Outflows and Inflows of Resources Related to OPEB

For the year ended September 30, 2018, the Utility System recognized OPEB expense of $256,871. At September 30, 2019, the Utility System reported deferred outflows of resources related to OPEB

from the following sources:

Deferred Outflows Deferred Inflows

of Resources of Resources

September 30, 2019:

Differences between expected and actual experience 8,073$ 522,188$

Changes in actuarial assumptions 309,257 -

Contributions subsequent to the measurement date 85,520 -

Totals as of September 30, 2019 402,850$ 522,188$

September 30, 2018:

Differences between expected and actual experience 9,163$ -$

Changes in actuarial assumptions 305,863 -

Contributions subsequent to the measurement date 82,114 -

Totals as of September 30, 2018 397,140$ -$

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$85,520 and $82,114 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date are due to benefit payments the Utility System paid with own assets and will be recognized as a reduction of the total OPEB liability for the years ending September 30, 2020 and September 30, 2019, respectively. Other amounts of the reported

as deferred outflows of resources related to OPEB will be recognized in OPEB expense as follows:

For the Year As of

Ended September 30, September 30, 2019

2019 21,243)$(

2020 21,243)(

2021 21,243)(

2022 21,243)(

2023 21,243)(

Thereafter 98,644)(

For the Year As of

Ended September 30, September 30, 2018

2019 37,480$

2020 37,480

2021 37,480

2022 37,480

2023 37,480

Thereafter 127,626

C. Deferred Compensation Plan The Utility System offers its employees a tax-deferred compensation plan meeting the requirements of Internal Revenue Code Section 457 through the City. The plan was established by City ordinance that appointed ICMA Retirement Corporation as plan administrator. The City’s

fiduciary responsibility is to remit employee deferred compensation to the administrator on a regular basis. The deferred compensation is not available to employees until termination,

retirement, death, or emergency.

D. Risk Management

The Utility System is exposed to various risks of loss related to theft or damage of assets, errors

and omissions, injuries to employees, and natural disasters. These risks are covered by the Utility System’s participation in the Texas Municipal League Intergovernmental Risk Pool (TMLIRP) for liability, property, and workers’ compensation and in the Texas Municipal League Intergovernmental Employee Benefits Pool (TMLIEBP). These are self-sustaining risk pools operated on a statewide basis for the benefit of several hundred Texas cities and other public entities. Annual premiums are paid to the TMLIRP, which retains risk of loss up to $3,000,000 and obtains independent coverage for losses in excess of that amount.

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The Utility System retains no risk except for the deductible amounts as shown below:

Limit Per Annual

Type of Coverage Occurrence Aggregate Deductible

General liability 2,000,000$ 4,000,000$ 5,000$

Law enforcement liability 2,000,000 4,000,000 5,000

Errors and omissions liability 2,000,000 4,000,000 50,000

Auto liability 2,000,000 N/A 5,000

Auto physical damage ACV* N/A 1,000

Real and personal property 94,368,342 94,368,342 2,500

Mobile equipment 3,622,078 3,622,078 1,000

Boiler and machinery 11,000,000 N/A 2,500

Sewage backup 50,000 N/A 500

*Actual cash value

There have been no reductions in coverage from the coverage in the previous three years, and there have been no settlements that exceeded coverage in the current or past four fiscal years.

The City has a self-insured employee and retiree health plans, effective January 1, 2018. TML Multistate Intergovernmental Employee Benefits Pool (IEBP) is the third-party administrator for the employee and pre-65 retiree health plans. Claims and other plan administration services are performed by TML Multistate IEBP. All participating funds make payments to an Internal Service Fund for their portion of health plan cost.

Financial responsibility in a self-insured funding arrangement is on the City, the risk of losses exceeding an affordable threshold is transferred to an insurance company through the purchase of stop-loss insurance with Companion Life Insurance Company. Stop-loss insurance protects the City from plan claims costs exceeding a specified deductible during the plan year. Specific and Aggregate Excess Loss Insurance

The City has specific excess loss insurance to cover specific claims incurred by plan participants. The City has a $125,000 specific deductible for each medical plan member. The City also has coverage for aggregate claims incurred under the self-insured health plan. Under this coverage, aggregate claims in excess of an estimate annual aggregate attachment point of $3,544,807 would be covered up to an aggregate benefit period reimbursement maximum of $1,000,000.

The City establishes the insurance claim liability based on estimates of the ultimate cost of claims reported but unsettled and of claims incurred but not reported. A claims payable was reported in the City’s governmental activities financial statements in the amount of $239,698.

E. Contingencies

There are various lawsuits pending in which the Utility System is involved. In the opinion of legal counsel and Utility System management, the settlement of these lawsuits will not have a material

adverse effect on the Utility System’s financial position.

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F. Power Wholesale Supplier Agreements and Derivative Instruments The City owns and operates its own electric distribution system and purchases all of its power from wholesale power suppliers. In an effort to mitigate the financial and market risk associated

with the purchase of energy and congestion risk in delivery, the City has established a risk management program. The program was authorized by the Weatherford Municipal Utility Board and is led by a Risk Management Committee. Under this program, the City enters into forward contracts for natural gas and congestion rights for the purpose of reducing exposure to 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. In order to hedge the City's price risk, the City has entered into corresponding power supply agreements with the entity’s wholesale power supplier to

hedge against energy price fluctuation in the market. 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 the City to hedge expected future congestion that may arise during a certain period. CRRs are purchased at auction, semi-annually and monthly at market value. These CRRs are expected to be

settled upon the City taking delivery of the commodity which meet the requirements of a normal purchase of the City. As of September 30, 2019, and 2018, the City held CRRs with a cost of $578,703 and $460,580, respectively, and are reported as prepaid items within the Utility System

Fund. The City has entered into a wholesale power supply agreement with Garland Power and Light (GP&L), Bryan Texas Utilities and EDF Trading North America, LLC, through 2021, 2020, and

2019, respectively. Under the terms of the agreements, the City purchases its full power requirements for its retail customer base. These contracts are considered normal purchase agreements and are reported when the exchange occurs. In July 2015, the City entered into an agreement with the City of Garland to invest in energy from a wind turbine electrical generation facility. As a result, the City agrees to purchase power generated by this facility in terms of the agreement for fourteen years beginning in December

2016. In April 2016, the City entered into an agreement with the City of Garland to invest in energy from a solar energy facility. As a result, the City agrees to purchase power generated by this facility in

accordance with the terms of the agreement for fifteen years beginning in April 2017.

G. New Accounting Principles

A significant new accounting standard not yet implemented by the Utility System includes the following.

Statement No. 87, Leases – This statement changes the recognition requirements for certain lease assets and liabilities for leases that are currently classified as operating leases. This statement will

become effective for the City in fiscal year 2021.

H. Subsequent Event

On January 14, 2020, the City Council approved the issuance of $27,845,000 of General Obligation Refunding Bonds, Series 2020. These obligations have a varying interest rate of 2.125% - 4.00% and will mature on March 2034. These obligations will be used to refund a portion of the City’s

outstanding debt and is secured by the City’s as valorem tax revenues.

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REQUIRED SUPPLEMENTARY INFORMATION

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64

Measurement Date December 31, 2014 2015

Municipal Utility System's proportion of

the net pension liability 22.36% 22.44%

Municipal Utility System's proportionate

share of the net pension liability 1,945,541$ 3,352,193$

Municipal Utility System's covered payroll 4,169,600 4,406,604

Municipal Utility System's proportionate

share of the net pension liability as a

percentage of its covered payroll 46.59% 76.07%

Plan fiduciary net position as a

percentage of the total pension liability 90.94% 85.50%

CITY OF WEATHERFORD, TEXAS

MUNICIPAL UTILITY SYSTEM

REQUIRED SUPPLEMENTARY INFORMATION

TEXAS MUNICIPAL RETIREMENT SYSTEM

SCHEDULE OF THE MUNICIPAL UTILITY SYSTEM'S PROPORTIONATE

SHARE OF THE NET PENSION LIABILITY

FOR THE YEAR ENDED SEPTEMBER 30, 2019

Note: This schedule is required to have 10 years of information, but the information prior to 2014 is not

available.

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2016 2017 2018

22.25% 21.39% 20.81%

3,391,472$ 1,841,550$ 3,810,966$

4,565,891 4,494,670 4,524,507

74.28% 40.97% 84.23%

86.05% 92.56% 85.00%

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Fiscal Year September 30, 2014 2015 2016

Contractually required

contribution 656,192$ 609,555$ 616,651$

Contributions in relation to the

contractually required

contribution 656,192)( 609,555)( 616,651)(

Contribution deficiency (excess) -$ -$ -$

Municipal Utility System's

covered-employee payroll 4,118,312$ 4,324,265$ 4,724,310$

Contributions as a percentage

of covered-employee payroll 15.93% 14.10% 13.05%

CITY OF WEATHERFORD, TEXAS

MUNICIPAL UTILITY SYSTEM

REQUIRED SUPPLEMENTARY INFORMATION

TEXAS MUNICIPAL RETIREMENT SYSTEM

SCHEDULE OF THE MUNICIPAL UTILITY SYSTEM CONTRIBUTIONS

FOR THE YEAR ENDED SEPTEMBER 30, 2019

Note: This schedule is required to have 10 years of information, but the information prior to 2014 is not

available.

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2017 2018 2019

624,225$ 608,941$ 610,891$

624,225)( 608,941)( 610,891)(

-$ -$ -$

4,709,359$ 4,560,581$ 4,602,079$

13.25% 13.35% 13.27%

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Measurement Date December 31, 2017 2018

Municipal Utility System's proportion of

the toal OPEB liability 21.39% 20.81%

Municipal Utility System's proportionate

share of the total OPEB liability 222,475$ 225,590$

Municipal Utility System's covered-employee payroll 4,494,670 4,524,507

Municipal Utility System's proportionate

share of the total OPEB liability as a

percentage of its covered-employee payroll 4.95% 4.99%

Notes to Schedule:

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF THE MUNICIPAL UTILITY SYSTEM'S PROPORTIONATE

SHARE OF THE TOTAL OPEB LIABILITY

SUPPLEMENTAL DEATH BENEFIT FUND

FOR THE YEAR ENDED SEPTEMBER 30, 2019

No assets are accumulated in atrust for the SDB plan to pay related benefits that meets the criteria in

paragraph four of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits

Other Than Pensions.

CITY OF WEATHERFORD, TEXAS

MUNICIPAL UTILITY SYSTEM

This schedule is required to have 10 years of information, but the information prior to 2017

is not available.

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Measurement Date December 31, 2017 2018

Municipal Utility System's proportion of

the toal OPEB liability 23.57% 23.57%

Municipal Utility System's proportionate

share of the total OPEB liability 4,124,514$ 4,178,194$

Municipal Utility System's covered-employee payroll 3,939,232 4,687,431

Municipal Utility System's proportionate

share of the total OPEB liability as a

percentage of its covered-employee payroll 104.70% 89.14%

Notes to Schedule:

No assets are accumulated in a trust for the SDB plan to pay related benefits that meets the criteria in

paragraph 4 of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits

Other Than Pensions.

This schedule is required to have 10 years of information, but the information prior to 2017 is not available.

CITY OF WEATHERFORD, TEXAS

MUNICIPAL UTILITY SYSTEM

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF THE MUNICIPAL UTILITY SYSTEM'S PROPORTIONATE

SHARE OF THE TOTAL OPEB LIABILITY

RETIREE HEALTH BENEFIT PLAN

FOR THE YEAR ENDED SEPTEMBER 30, 2019

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CAPITAL ASSETS

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2019 2018

Land 3,271,941$ 2,877,235$

Buildings and improvements 18,555,297 19,181,985

Other improvements 202,143,562 190,054,882

Machinery and equipment 8,585,217 8,151,430

Construction in progress 7,572,657 9,251,945

240,128,674 229,517,477

Less accumulated depreciation 94,485,365)( 88,793,666)(

Totals 145,643,309$ 140,723,811$

CITY OF WEATHERFORD, TEXAS

SCHEDULES OF CAPITAL ASSETS

SEPTEMBER 30, 2019 AND 2018

MUNICIPAL UTILITY SYSTEM

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Buildingsand

Function and Activity Total Land Improvements

Administration 5,646,419$ 529,942$ 3,431,676$

Water production 28,411,303 1,055,502 11,519,741

Water distribution 77,530,468 1,140,892 35,619

Wastewater 54,781,037 181,986 3,231,643

Electric production 1,192,894 11,334 336,618

Electric distribution 72,566,553 352,285 -

Total capital assets 240,128,674$ 3,271,941$ 18,555,297$

CITY OF WEATHERFORD, TEXAS

MUNICIPAL UTILITY SYSTEM

SCHEDULE OF CAPITAL ASSETS BY FUNCTION AND ACTIVITY

SEPTEMBER 30, 2019

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MachineryOther and Construction

Improvements Equipment in Progress

1,244,940$ 439,861$ -$

12,948,983 1,625,064 1,262,013

72,689,887 988,363 2,675,707

45,256,255 2,476,216 3,634,937

13,203 831,739 -

69,990,294 2,223,974 -

202,143,562$ 8,585,217$ 7,572,657$

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Balance Balance

Function and Activity 09/30/18 Additions Deletions 09/30/19

Administration 5,440,181$ 245,793$ 39,555)$( 5,646,419$

Water production 27,806,608 1,310,547 705,852)( 28,411,303

Water distribution 73,515,132 10,318,030 6,302,694)( 77,530,468

Wastewater 51,807,557 4,268,988 1,295,508)( 54,781,037

Electric production 1,192,894 - - 1,192,894

Electric distribution 69,755,105 2,988,856 177,408)( 72,566,553

Total capital assets 229,517,477$ 19,132,214$ 8,521,017)$( 240,128,674$

CITY OF WEATHERFORD, TEXAS

SCHEDULE OF CHANGES IN CAPITAL ASSETS

BY FUNCTION AND ACTIVITY

FOR THE YEAR ENDED SEPTEMBER 30, 2019

MUNICIPAL UTILITY SYSTEM

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STATISTICAL SECTION

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Less: Net

Fiscal Gross Operating Available

Year Revenues (1) Expenses (2) Revenue Principal Interest Coverage

2009/10 44,648,091 34,190,600 10,457,491 2,615,000 2,015,352 2.26%

2010/11 48,143,263 32,655,996 15,487,267 2,715,000 1,912,988 3.35%

2011/12 40,639,256 24,787,800 15,851,456 2,840,000 1,787,416 3.43%

2012/13 44,969,078 29,429,195 15,539,883 2,985,000 1,655,952 3.35%

2013/14 51,923,460 37,140,069 14,783,391 3,115,000 1,517,523 3.19%

2014/15 51,902,458 31,326,472 20,575,986 3,655,000 1,993,819 3.64%

2015/16 48,168,116 27,060,795 21,107,321 3,775,000 1,879,236 3.73%

2016/17 55,248,870 33,996,480 21,252,390 4,455,000 1,841,520 3.38%

2017/18 61,408,938 35,511,658 25,897,280 3,205,000 1,656,050 5.33%

2018/19 60,710,535 35,092,460 25,618,075 3,335,000 1,522,300 5.27%

Notes:

(1) Total operating revenues plus interest.

(2) Total operating expenses excluding depreciation and amortization.

(3) Principal and interest payments due for the following fiscal year.

Details regarding the City's outstanding debt can be found in the Notes to the Financial

Statements.

Debt Service (3)

Utility System Revenue Bonds

CITY OF WEATHERFORD, TEXAS

MUNICIPAL UTILITY SYSTEM

PLEDGED REVENUE COVERAGE

SEPTEMBER 30, 2019

(UNAUDITED)

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81

Year Power Daily System

Ended Sold Average Peak

September 30 (kwhr) (kwhr) (kw)

2010 365,673,529 1,001,845 90,289

2011 381,826,440 1,046,100 96,681

2012 371,081,397 1,016,661 92,705

2013 371,982,863 1,019,131 94,161

2014 389,421,402 1,066,908 100,111

2015 386,452,762 1,058,775 92,249

2016 387,044,014 1,060,395 96,067

2017 392,239,811 1,074,630 101,940

2018 432,494,992 1,184,918 114,570

2019 * 423,529,191 ** 1,160,354 *** 100,048

* 15.8% Increase since 2010 (KWHR)

** 15.8% Increase since 2010 (KWHR)

*** 10.8% Increase since 2010 (KWHR)

(UNAUDITED)

CITY OF WEATHERFORD, TEXAS

MUNICIPAL UTILITY SYSTEM

SCHEDULE OF ELECTRIC SALES

LAST TEN FISCAL YEARS

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Year Water Daily Peak

Ended Sold Average Day

September 30 (1,000 Gallons) (1,000 Gallons) (1,000 Gallons)

2010 1,107,183 3,033 7,316

2011 1,373,590 3,763 9,069

2012 1,289,037 3,532 9,003

2013 1,227,698 3,364 7,708

2014 1,179,691 3,232 6,997

2015 1,116,010 3,058 7,676

2016 1,214,712 3,328 8,616

2017 1,179,666 3,232 6,520

2018 1,389,963 3,808 8,544

2019 * 1,171,155 ** 3,209 *** 8,491

* 5.8% Increase since 2010

** 5.8% Increase since 2010

*** 16.1% Increase since 2010

25,250 pop. - 120.13 gals per day per person (2010)

31.836 pop. - 100.79 gals per day per person (2019)

(UNAUDITED)

CITY OF WEATHERFORD, TEXAS

MUNICIPAL UTILITY SYSTEM

SCHEDULE OF RETAIL WATER SALES

LAST TEN FISCAL YEARS

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Year Wastewater Daily Peak

Ended Treated Average Day

September 30 (1,000 Gallons) (1,000 Gallons) (1,000 Gallons)

2010 825,139 2,261 4,360

2011 778,677 2,133 5,490

2012 818,178 2,242 4,389

2013 772,133 2,115 3,964

2014 784,012 2,148 3,660

2015 801,228 2,195 4,762

2016 860,193 2,357 5,139

2017 773,025 2,118 3,884

2018 774,291 2,121 4,084

2019 * 903,310 ** 2,475 *** 5,349

* 9.5% Increase since 2010

** 9.5% Increase since 2010

*** 22.7% Decrease since 2010

25,250 pop. - 89.53 gals per day per person (2010)

31,836 pop. - 77.74 gals per day per person (2019)

(UNAUDITED)

CITY OF WEATHERFORD, TEXAS

MUNICIPAL UTILITY SYSTEM

SCHEDULE OF WASTEWATER SALES

LAST TEN FISCAL YEARS

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Date of incorporation January 2, 1858

Form of government Council/Manager

Number of full-time employees (excluding police and fire): 236

Area in square miles 28.96

Facilities and Services

Miles of streets 261.74

Number of street lights 2,028

Culture and Recreation: Public libraries 1

Total library holdings 94,069

Community centers 3

Parks 26

Park acreage 856.00

Swimming pools 1

Tennis courts 7

Soccer fields 11

Softball and baseball fields 12

Multi-purpose fields and courts 5

Fire Protection: Number of stations 3

Number of paid fire personnel and officers 60

Number of trucks 14

Number of calls answered 4,627

Police Protection: Number of stations 1

Number of police personnel and officers 86

Number of patrol units 27

Number of law violations:

Arrests 1,552

Violations other than parking 1,479

Parking violations 54

(UNAUDITED)

CITY OF WEATHERFORD, TEXASMUNICIPAL UTILITY SYSTEM

MISCELLANEOUS STATISTICS

SEPTEMBER 30, 2019

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Sanitary Sewer System: Miles of sanitary sewers 213.00 Number of treatment plants 1 Number of service connections 11,831 Daily average treatment in gallons 2,450 Permitted daily capacity of treatment plant in gallons 4,500,000

Water System: Miles of water mains 288.47 Number of service connections 12,304 Number of fire hydrants 1,678 Daily average consumption in gallons 3,253,200

Maximum daily capacity of plant in gallons 14,000 Total water storage capacity 7,600 Annual water sales in gallons 1,171,153,000

Electric Distribution System: Miles of distribution lines 363 Number of service connections 15,196 Total system peak demand (kw) 98,000 Annual kilowatt-hour sales (kwh) 421,511,975

Other Community Facilities: Education:

Number of elementary schools 7 Number of elementary school instructors 263 Number of secondary schools 4 Number of secondary school instructors 258 Number of community colleges 1

Hospitals: Number of hospitals 1 Number of patient beds 103

SEPTEMBER 30, 2019(UNAUDITED)

CITY OF WEATHERFORD, TEXASMUNICIPAL UTILITY SYSTEM

MISCELLANEOUS STATISTICS

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Residential $15.00 customer charge$0.0412 per KWH

Small General Service $19.55 customer charge(Demand does not exceed 20) plus $.0424 per KWH

Large General Service - 1 $42.50 customer charge(Demand 20 - 200) $3.96 per KW demand

$0.0232 per KWH

Large General Service - 2 $100.00 customer charge(Demand 200 - 1000) $4.65 per KVA demand

$0.0240 per KWH

Large General Service - 3 $195.00 customer charge(Demand 1000 or more) $4.75 per KVA demand

$0.0220 per KWH

MV Lighting $10.90 customer chargeEstimated usage 40 KWH

LGS-1, LGS-2 and LGS-3 customers are subject to minimum KW demand billing equal to 75% of highest

demand billed within last 12 months.

Power cost adjustment factor (PCAF) - The energy charges stated in all rate schedules for the current billing

month will be increased or decreased by the amount by which the average cost of purchased power plus

production costs per kilowatt hour sold for the previous month exceeds $0.0150.

ELECTRIC RATES - (Effective October 1, 2016 - Ordinance 695-2014-40)

(UNAUDITED)

CITY OF WEATHERFORD, TEXASMUNICIPAL UTILITY SYSTEM

SERVICE RATE SCHEDULES

SEPTEMBER 30, 2019

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RESIDENTIAL WATER CUSTOMERCustomer Charge (minimum) $20.76Per Cu. Ft. (0-1,000) $0.05597Per Cu. Ft. (1,001-3,500) $0.06992Per Cu. Ft. (3,501-5,000) $0.08752Per Cu. Ft. (all over 5,000) $0.10961

RURAL WATER CUSTOMER - Westridge/Southcrest Subdivisions Customer Charge (minimum) $31.14

Residential: Per Cu. Ft. (0-1,000) $0.09400 Per Cu. Ft. (1,001-3,500) $0.10830 Per Cu. Ft. (3,501-5,000) $0.12590 Per Cu. Ft. (all over 5,000) $0.14800

COMMERCIAL RATESCustomer Charge (minimum) $20.68Per Cu. Ft. $0.05574

OFFSITE COMMERCIAL/INDUSTRIAL Fire Hydrant Meters

Customer Charge (minimum) - FH 2 inch $165.40

Customer Charge (minimum) - FH 3 inch $361.82Per Cu. Ft. (all) $0.10565

RESIDENTIAL RATESCustomer Charge (minimum) $21.48Cu. Ft. Included in Minimum 400Per Cu. Ft. > 400 CF $0.05782(Maximum Billed - 2,000 CF)

COMMERCIAL RATESCustomer Charge (minimum) $21.48Cu. Ft. Included in Minimum 400Per Cu. Ft. > 400 CF $0.05782

Commercial volume based on percent of actual water billed each month.

WASTEWATER RATES - (Effective October 1, 2016 - Ordinance 695-2014-40)

Residential wastewater volume based on lower month's actual use or average of water billed during months

of December, January and February.

CITY OF WEATHERFORD, TEXASMUNICIPAL UTILITY SYSTEM

SERVICE RATE SCHEDULES

AS OF SEPTEMBER 30, 2019(UNAUDITED)

WATER RATES - (Effective October 1, 2016 - Ordinance 695-2014-40)

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Municipal Utility System Board City of Weatherford, Texas We have audited the financial statements of the Municipal Utility System Enterprise Fund of the City of

Weatherford, Texas for the year ended September 30, 2019, and have issued our report thereon dated February 19, 2020. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit

As communicated in our engagement letter dated July 12, 2019, our responsibility, as described by

professional standards, is to form and express an opinion about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities.

Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing 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 over financial reporting. Accordingly, as part of our audit, we considered the internal control of the Municipal Utility System Enterprise Fund solely for the purpose of determining our audit procedures and not to provide any assurance concerning

such internal control.

We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

Planned Scope and Timing of the Audit

We conducted our audit consistent with the planned scope and timing we previously communicated to you.

Compliance with All Ethics Requirements Regarding Independence

The engagement team, others in our firm, and, as appropriate, our firm have complied with all relevant ethical requirements regarding independence.

We will assist in preparing the financial statements and related notes to the financial statements of the Municipal Utility System Enterprise Fund in conformity with U.S. generally accepted accounting principles

based on information provided by you.

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You agree to assume all management responsibilities relating to the financial statements, related notes,

and any other nonaudit services we provide. You will be required to acknowledge in the management representation letter our assistance with preparation of the financial statements, and related notes and that you have reviewed and approved the financial statements and related notes prior to their issuance and have accepted

responsibility for them. Further, you agree to oversee the nonaudit services by designating an individual, preferable from senior management, with suitable skill, knowledge, or experience; evaluate the adequacy and results of those services; and accept responsibility for them. Qualitative Aspects of the Entity’s Significant Accounting Practices

Significant Accounting Policies

Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the Municipal Utility System Enterprise is included in Note 1 to the financial statements. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2)

the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Significant Accounting Estimates

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and

experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. The most sensitive accounting estimates affecting the financial statements are:

Management’s estimate of the allowance for uncollectible trade accounts receivable is based on a

historical rate of trade accounts receivable in excess of 90 days. We evaluated the key factors and assumptions used to develop the allowance for uncollectible trade accounts receivable in determining

that it is reasonable in relation to the financial statements taken as a whole. Management’s estimate of the useful lives of capital assets is based on the expected lifespan of the asset in accordance with standard guidelines. We evaluated the key factors and assumptions used to

develop the estimate of useful lives in determining that it is reasonable in relation to the financial statements taken as a whole. Management’s estimate of the annual OPEB and pension cost and net OPEB and pension obligation is based on actuarial studies and actual retirement expenditures. We evaluated the key factors and assumptions used to develop the estimate of the annual OPEB and pension cost and net OPEB and pension obligation in determining that it is reasonable in relation to the financial statements taken as a

whole. Financial Statement Disclosures

Certain financial statement disclosures involve significant judgment and are particularly sensitive

because of their significance to financial statement users. The most sensitive disclosures affecting the Municipal Utility System Enterprise Fund’s financial statements relate to: the TMRS pension liability. The

disclosures in the financial statements are neutral, consistent, and clear. Significant Difficulties Encountered during the Audit

We encountered no significant difficulties in dealing with management relating to the performance of

the audit.

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Uncorrected and Corrected Misstatements

For purposes of this communication, professional standards require us to accumulate all known and

likely misstatements identified during the audit, other than those that we believe are trivial, and communicate

them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. The attached schedule summarizes uncorrected financial statement misstatements whose effects in the current and prior periods, as determined by management, are immaterial, both individually and in the aggregate, to the financial statements taken as a whole and each applicable opinion unit.

In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures.

None of the misstatements identified by us as a result of our audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole or applicable opinion units.

Disagreements with Management

For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the Municipal Utility System Enterprise Fund’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit.

Representations Requested from Management

We have requested certain written representations from management, which are included in the attached letter dated February 19, 2020.

Management’s Consultations with Other Accountants

In some cases, management may decide to consult with other accountants about auditing and

accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters.

Other Significant Matters, Findings, or Issues

In the normal course of our professional association with the Municipal Utility System Enterprise Fund, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating and regulatory conditions affecting the entity, and operational plans and strategies that

may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the Municipal Utility System Enterprise Fund’s auditors.

New Accounting Pronouncements

The Governmental Accounting Standards Board (GASB) issued the following statements which become

effective for fiscal year 2021.

Statement No. 87, Leases – This Statement will improve the accounting and financial reporting for

leases by governments by requiring recognition of certain lease assets and liabilities previously classified as operating leases. It establishes a single model for lease accounting based on the principle that leases are financing the right to use an underlying asset. Under the Statement a lessee is required to recognize a lease liability and an intangible right-to-use asset, and a lessor is required to recognize a lease receivable and a

deferred inflow of resource, enhancing the relevance and consistency of information about leasing activities. This Statement will become effective for the City in fiscal year 2021.

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Other Audit Findings or Issues

In the normal course of our professional association with the City, we generally discuss a variety of

matters, including the application of accounting principles and auditing standards, operating and regulatory

conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the Utility System’s auditors.

This report is intended solely for the information and use of the City Council, Utility System Board and management of the Municipal Utility System Enterprise Fund and is not intended to be, and should not be, used by anyone other than these specified parties.

Waco, Texas February 19, 2020

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Weatherford Municipal Utility BoardAGENDA REPORT

Meeting Date: March 26, 2020 Staff Contact: Rick Shaffer, Director of Water Utilities

Item Number: 2020-200-AR Phone: 817-598-4473

SUBJECT: Update regarding delinquent lake lot licenses.

BACKGROUND/DISCUSSIONThe Weatherford Water Supply Reservoir Lake Lot License Agreement fee notice is sent to all holders on or beforeOctober 31 of each year, and is due payable on or before January 1 of each year. Fee notices were mailed on October 4,2019. Then on January 10, 2020, the City mailed 63 late notices. License fees that were then paid in full by January 31stwere automatically reinstated. Then on February 5, 2020, the City mailed 11 certified letters to license holders who stillhad an outstanding balance.

Payments received after January 31 require Utility Board approval to reinstate the license. According to the Agreement,"If Licensor fails to renew said license, the license shall cease and the Licensee shall vacate the premises within thirty (30)days from said date and Licensee shall be obligated to pay Licensor for all charges and arrears."

At the February 27, 2020 meeting, the Board authorized the Director of Water Utilities to enter into a 6-month paymentplan with William Strickland and Janine Speares, who had held a license agreement for lake lots 314-315 at 1309 E. LakeDrive. Staff spoke to Mr. Strickland on February 27th to discuss the requirements of the payment plan agreement, and acopy of the payment plan was emailed to Mr. Strickland on February 28th. Staff called and left a voicemail for Mr.Strickland again on March 2nd. As of March 16th, City staff have not received a response from either license holder; thepayment plan agreement has not been executed; and the first payment was not made as required.

Therefore, on March 16, 2020, a 30-day Notice to Vacate was sent by certified mail to the address on file and the lake lotaddress. A copy of the notice was also hand-delivered and placed on the front door of the home. Pursuant to the terms ofthe lake lot license agreement, the licensee has 30 days to vacate the premises. After that, the City shall have the right toremove and/or sell the improvements and remaining personal property, and apply the proceeds towards the payment ofunpaid fees. The licensee may claim the remaining proceeds within 90 days after the sale.

FINANCIAL IMPACTThe amount outstanding for Lake Lot 314-315 is $5,776.45, which includes a penalty fee assessed on March 2, 2020.

SUGGESTED ACTIONN/A.

ATTACHMENTS Lake Lots 314 315_20200316 Notice to Vacate.pdf

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WEATHERFORDTRUE TEXAS

March 16, 2020

William Strickland and Janine Speares 3643 Shelby Drive Fort Worth, TX 76109

CERTIFIED MAIL: 70183090000210779521

Re: Lake Lots 314 & 315; 1309 E. Lake Drive, Weatherford, TX 76086NOTICE TO VACATE (EFFECTIVE MARCH 16, 2020)

Mr. Strickland & Ms. Speares,

The purpose of this notice is to advise you that the license agreement for the above referenced lake lot(s) has ceased due to non-payment, and you are hereby ordered to vacate the premises within thirty (30) days.

The annual license fee was due on January 1, 2020, at which time the account became delinquent. Pursuant to the terms of the lake lot license agreement, license holders have an additional period of thirty (30) days to renew their license agreement, subject to penalty fees; after which the license shall automatically cease. At your request, the Municipal Utility Board approved the option of a 6- month payment plan, pending additional penalty fees and executing the payment plan agreement, with the first payment being due on March 1, 2020. However, the City has not received a signed payment plan agreement from you, nor was payment made.

Therefore, the license agreement for the above-referenced lake lots remains ceased, effective February 1, 2020, and you are hereby ordered to vacate the premises within thirty (30) days from March 16, 2020, and to remove any personal property. If you fail to vacate within the allotted time period, the City shall, without further notice, take possession of any personal property on said lot.

The amount due to the City of Weatherford as of March 16, 2020 is $5,776.45. The amount due will continue to accrue a 5% late penalty on the first of each month. Following the period to vacate, the City shall have the right to remove and/or sell any buildings or improvements on the property and apply the proceeds toward the payment of unpaid fees. You will have ninety (90) days after such sale to claim the remaining proceeds.

Please contact Rick Shaffer or Dahlia Wells if you have any questions regarding this notice tovacate.

Respectfully,

Richard Lee Shaffer Director of Water Utilities

303 Palo Pinto • P.O. Box 255 • Weatherford, TX 76086 • Phone (817) 598-4000

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WEATHERFORD

March 16, 2020

William Strickland and Janine Speares 1309 E. Lake Drive Weatherford, IX 76086

CERTIFIED MAIL: 70183090000210779538

Re: Lake Lots 314 & 315; 1309 E. Lake Drive, Weatherford, TX 76086NOTICE TO VACATE (EFFECTIVE MARCH 16, 2020)

Mr. Strickland & Ms. Speares,

The purpose of this notice is to advise you that the license agreement for the above referenced lake lot(s) has ceased due to non-payment, and you are hereby ordered to vacate the premises within thirty (30) days.

The annual license fee was due on January 1, 2020, at which time the account became delinquent. Pursuant to the terms of the lake lot license agreement, license holders have an additional period of thirty (30) days to renew their license agreement, subject to penalty fees; after which the license shall automatically cease. At your request, the Municipal Utility Board approved the option of a 6- month payment plan, pending additional penalty fees and executing the payment plan agreement, with the first payment being due on March 1, 2020. However, the City has not received a signed payment plan agreement from you, nor was payment made.

Therefore, the license agreement for the above-referenced lake lots remains ceased, effective February 1, 2020, and you are hereby ordered to vacate the premises within thirty (30) days from March 16, 2020, and to remove any personal property. If you fail to vacate within the allotted time period, the City shall, without further notice, take possession of any personal property on said lot.

The amount due to the City of Weatherford as of March 16, 2020 is $5,776.45. The amount due will continue to accrue a 5% late penalty on the first of each month. Following the period to vacate, the City shall have the right to remove and/or sell any buildings or improvements on the property and apply the proceeds toward the payment of unpaid fees. You will have ninety (90) days after such sale to claim the remaining proceeds.

Please contact Rick Shaffer or Dahlia Wells if you have any questions regarding this notice to vacate.

Respectfully,

Richard Lee Shaffer Director of Water Utilities

303 Palo Pinto • P.O. Box 255 • Weatherford, IX 76086 • Phone (817) 598-4000

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Weatherford Municipal Utility BoardAGENDA REPORT

Meeting Date: March 26, 2020 Staff Contact: Ashley Esquivel, Utility Billing Manager

Item Number: 2020-217-AR Phone: 817-598-4222

SUBJECT: Consider and/or act upon suspension of Customer Service Policy 4.8 and 6.1.3, relating to theassessment of late penalties and non-payment disconnects.

BACKGROUND/DISCUSSIONDue to the COVID-19 outbreak, we are requesting the approval to temporarily suspend the following Customer ServicePolicies for 90 days:

Policy 4.8 - Late Payment Penalty: Five percent (5%) penalty is added to all accounts with a minimum balance of $20.00on the delinquent date if the balance is not paid.

Policy 6.1.3 - If the customer fails or refuses to pay all or any portion of a bill for utility service within fifteen (15) calendardays from the date the bill is due (delinquent date) or failure to comply with terms of a deferred payment agreement oraverage payment plan service may be terminated.

FINANCIAL IMPACTOn average the City disconnects around 130 accounts per month due to non-payment. On average the City will assess 700penalties totaling $7700 monthly.

SUGGESTED ACTIONStaff recommends approval

ATTACHMENTS

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