Comprehensive Annual Financial Report - San Antonio 2011 CAFR... · Comprehensive Annual Financial...

Comprehensive Annual Financial ReportFiscal Year Ended September 30, 2011

CITYOFSANANTONIO,TEXAS

ComprehensiveAnnualFinancialReportForFiscalPeriodEndedSeptember30,2011

Preparedby:DEPARTMENTOFFINANCE

BenGorzellJr.,CPAChiefFinancialOfficerTroyElliott,CPAFinanceDirectorMelanieSeale,CPAAssistantDirectorJuanitaMack,CPADisbursementandReceivablesAdministratorElizabethDrouillard,CPAFinancialReportingManagerJayBlackwellFinancialReportingManager

FinancialReportingGloriaAlvaradoKarenAttaCarlosBeechnerJacquelineBennett,CPADeniseFullerRandalynHarlanJosephKobilka,CPAMarkRamirezCurtisRuder,CPAPatriceWallaceWithAssistanceFrom:FinancialServicesMargaretVillegas,AssistantDirectorCappiArriola,FinancialManagementAdministratorAlejandroTijerina,FinancialManagerMikeMartinez,CollectionsManagerAccountingServicesVeronicaCarrillo,FiscalAdministratorDepartmentFiscalAdministratorsTomSchmidt,GeneralLedgerManagerKayGrant,AccountsPayableManagerFredMendoza,PayrollManagerEricLopez,AccountsReceivableManagerPublicUtilitiesMarionGee,CPA,AssistantDirectorJeffPullin,PublicUtilitiesAdministrator

CityofSanAntonio,Texas

IntroductorySection


ComprehensiveAnnualFinancialReportTableofContentsPeriodEndedSeptember30,2011INTRODUCTORYSECTION TitlePage TableofContents LetterofTransmittal________________________________________________________________________ixiv CertificateofAchievementforExcellenceinFinancialReporting_____________________________________ xv OrganizationalChart________________________________________________________________________ xvi ListofPrincipalOfficials _____________________________________________________________________xvii FINANCIALSECTION IndependentAuditorsReport ManagementsDiscussionandAnalysis(RequiredSupplementaryInformation)(Unaudited) ____________ 1 BasicFinancialStatements: GovernmentwideFinancialStatements: StatementofNetAssets ________________________________________________________________ 13 StatementofActivities _________________________________________________________________ 14 FundFinancialStatements: GovernmentalFundsFinancialStatements: BalanceSheet ______________________________________________________________________ 15 ReconciliationoftheGovernmentalFundsBalanceSheettotheStatementofNetAssets__________ 16 StatementofRevenues,Expenditures,andChangesinFundBalances _________________________ 17 ReconciliationoftheGovernmentalFundsStatementofRevenues,Expenditures, andChangesinFundBalancestotheStatementofActivities ______________________________ 18 ProprietaryFundsFinancialStatements: StatementofNetAssets ______________________________________________________________ 19 StatementofRevenues,Expenses,andChangesinFundNetAssets ___________________________ 20 StatementofCashFlows _____________________________________________________________ 21 FiduciaryFundsFinancialStatements: StatementofFiduciaryNetAssets ______________________________________________________ 22 StatementofChangesinFiduciaryNetAssets_____________________________________________ 23 DiscretelyPresentedComponentUnitsFinancialStatements: StatementofNetAssets ______________________________________________________________ 24 StatementofActivities _______________________________________________________________ 25 NotestoFinancialStatements _____________________________________________________________ 26


ComprehensiveAnnualFinancialReportTableofContentsPeriodEndedSeptember30,2011 RequiredSupplementaryInformationOtherThanMD&A(Unaudited): GeneralFund: BudgetaryComparisonSchedule _________________________________________________________ 181 PensionandPostemploymentSchedules: SchedulesofFundingProgress___________________________________________________________ 182 CombiningFinancialStatementsandSchedules: NonmajorGovernmentalFunds: CombiningBalanceSheet _______________________________________________________________ 186 CombiningStatementofRevenues,Expenditures,andChangesinFundBalances __________________ 187 SpecialRevenueFunds: CombiningBalanceSheetSpecialRevenue________________________________________________ 188 CombiningStatementofRevenues,Expenditures,andChangesinFundBalances SpecialRevenue ____________________________________________________________________ 189 CombiningBalanceSheetGrants ________________________________________________________ 190 CombiningStatementofRevenues,Expenditures,andChangesinFundBalancesGrants___________ 191 CombiningBalanceSheetOtherSpecialRevenue __________________________________________ 192 CombiningStatementofRevenues,Expenditures,andChangesinFundBalances OtherSpecialRevenue _______________________________________________________________ 193 CombiningBalanceSheetBlendedComponentUnits _______________________________________ 194 CombiningStatementofRevenues,Expenditures,andChangesinFundBalances BlendedComponentUnits ____________________________________________________________ 195 CapitalProjectsFunds: CombiningBalanceSheetCapitalProjects ________________________________________________ 196 CombiningStatementofRevenues,Expenditures,andChangesinFundBalances CapitalProjects _____________________________________________________________________ 197 CombiningBalanceSheetGeneralObligationBonds ________________________________________ 198 CombiningStatementofRevenues,Expenditures,andChangesinFundBalances GeneralObligationBonds_____________________________________________________________ 199 CombiningBalanceSheetCertificatesofObligationBonds ___________________________________ 200 CombiningStatementofRevenues,Expenditures,andChangesinFundBalances CertificatesofObligationBonds________________________________________________________ 201 CombiningBalanceSheetOtherCapitalProjects ___________________________________________ 202 CombiningStatementofRevenues,Expenditures,andChangesinFundBalances OtherCapitalProjects________________________________________________________________ 203 PermanentFunds: CombiningBalanceSheetPermanent____________________________________________________ 204 CombiningScheduleofRevenues,Expenditures,andChangesinFundBalances Permanent ________________________________________________________________________ 205


ComprehensiveAnnualFinancialReportTableofContentsPeriodEndedSeptember30,2011 CombiningFinancialStatementsandSchedules(Continued): SupplementaryBudgetandActualSchedulesforLegallyAdoptedFunds: GeneralFund ________________________________________________________________________ 206 DebtServiceFund_____________________________________________________________________ 212 SpecialRevenueFunds _________________________________________________________________ 213 PermanentFundCityCemeteries _______________________________________________________ 228 NonmajorEnterpriseFunds: CombiningBalanceSheet _______________________________________________________________ 229 CombiningStatementofRevenues,Expenses,andChangesinFundNetAssets____________________ 230 CombiningStatementofCashFlows ______________________________________________________ 231 InternalServiceFunds: CombiningStatementofNetAssets_______________________________________________________ 232 CombiningStatementofRevenues,Expenses,andChangesinFundNetAssets____________________ 233 CombiningStatementofCashFlows ______________________________________________________ 234 FiduciaryFunds: FireandPolicePensionandHealthCareFunds: CombiningStatementofFiduciaryNetAssets_____________________________________________ 235 CombiningStatementofChangesinFiduciaryNetAssets ___________________________________ 236 AgencyFunds: CombiningBalanceSheet _____________________________________________________________ 237 CombiningStatementofChangesinAssetsandLiabilities ___________________________________ 238 NonmajorComponentUnits: CombiningStatementofNetAssets_______________________________________________________ 241 CombiningStatementofActivities________________________________________________________ 242 CapitalAssetsUsedintheOperationofGovernmentalFunds: ScheduleofCapitalAssetsbySource ______________________________________________________ 243 ScheduleofCapitalAssetsbyFunctionandActivity __________________________________________ 244 ScheduleofChangesinCapitalAssetsbyFunctionandActivity _________________________________ 245 STATISTICALSECTION(UNAUDITED) FinancialTrends: NetAssetsbyComponent,LastTenFiscalYears______________________________________________ 246 ChangesinNetAssets,LastTenFiscalYears _________________________________________________ 247 FundBalances,GovernmentalFunds,LastTenFiscalYears _____________________________________ 248 ChangesinFundBalances,GovernmentalFunds,LastTenFiscalYears____________________________ 249 TaxRevenuesbySource,GovernmentalFunds,LastTenFiscalYears _____________________________ 250


ComprehensiveAnnualFinancialReportTableofContentsPeriodEndedSeptember30,2011 RevenueCapacity: AssessedValueandActualValueofTaxableProperty,LastTenFiscalYears________________________ 251 DirectandOverlappingPropertyTaxRates,LastTenFiscalYears ________________________________ 252 PrincipalPropertyTaxPayers,CurrentYearandNineYearsAgo _________________________________ 253 PropertyTaxLeviesandCollections,LastTenFiscalYears ______________________________________ 254 TaxableSalesbyCategory,LastNineCalendarYears __________________________________________ 255 DirectandOverlappingSalesandUseTaxRates,LastTenFiscalYears ____________________________ 256 DebtCapacity: RatiosofOutstandingDebtbyType,LastTenFiscalYears ______________________________________ 257 RatiosofGeneralBondedDebtOutstanding,LastTenFiscalYears _______________________________ 258 DirectandOverlappingGovernmentalActivitiesDebtasofSeptember30,2011____________________ 259 LegalDebtMarginInformation,LastTenFiscalYears__________________________________________ 260 PledgedRevenueCoverage,LastTenFiscalYears ____________________________________________ 261 DemographicandEconomicInformation: DemographicandEconomicStatistics,LastTenCalendarYears _________________________________ 264 PrincipalEmployers,CurrentYearandTenYearsAgo _________________________________________ 265 OperatingInformation: FullTimeEquivalentCityGovernmentEmployeesbyFunction/Program,LastTenFiscalYears_________ 266 OperatingIndicatorsbyFunction/Program,LastTenFiscalYears ________________________________ 267 CapitalAssetStatisticsbyFunction/Program,LastTenFiscalYears_______________________________ 268


LetterofTransmittal

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CITYSERVICES(Continued)The City provides a vast array ofmunicipal services. The full range of services provided to its constituentsincludesongoingprogramstoprovidehealth,welfare,art,cultural,andrecreationalservices;maintenanceandconstructionofstreetsanddrainage;publicsafetythroughpoliceandfireprotection;andurbanredevelopmentandhousing.TheCityalsoconsiders thepromotionofconventionand tourismandparticipation ineconomicdevelopmentprogramsashighpriorities.Thefundingsourcesfromwhichtheseservicesareprovidedincludeadvalorem, sales and use, and hotel occupancy tax receipts; grants; user fees; bond proceeds; tax incrementfinancing;andothersources.TheCitycontinues to support recreational improvements thatenhancecitizensqualityof lifeand recreationand fitness opportunities. For the third time, in November 2010 San Antonio voters approved a sales taxinitiative toprovideup to$135.0million tobeused toacquireandpreserve landor interests in land in theEdwardsAquiferrechargeandcontributingzonesandtobeused fortheacquisitionofopenspaceand linearparksalongSanAntonio'sCreekways.Atotalof32milesoflineargreenwaywalkingandbikingtrailshavebeenconstructed through two previous voterapproved sales tax initiatives. The City actively pursues outsideopportunitiesforgrantsandcommunitypartnershipstoleveragepublicfunds.TheCityhas twentysixentities thatare legallyseparate,butareconsideredpartof theCitysoperationsandthereforeareincludedinitsannualfinancialstatements.Fifteenoftheseentitiesareblendedcomponentunitsof theCity,while theother eleven entities arediscretelypresented. For additionaldetailson eachof theseentities and the basis for their respective presentation in our financial report, please refer to the FinancialSection,entitled,SummaryofSignificantAccountingPolicies.

ECONOMICCONDITIONSANDOUTLOOK

Asacommunity,SanAntoniohaspositioneditselfforlongtermgrowthandprosperitybysuccessfullyfollowingastrategy todiversify itseconomyand improvequalityof life forallcitizens.Theeconomicstrategy resultingfrom SA2020 emerges as the Citys roadmap to become a leader in job creation bymaintaining growth intraditionalindustrysectorswhilespecificallytargeting10.0%jobgrowthinthefollowingsectors:HealthcareandBiosciences,InformationTechnologyandInformationSecurity,Aerospace,andtheNewEnergyeconomy. TheCitysSA2020goalswillbepursuedthroughthenextdecadebyutilizingSanAntoniosuniqueassets,includingitshistoricalandculturalheritage,formidablelocalinstitutions(e.g.militarybases,universities,medicalcenter),andnaturalresourcessuchastheEagleFordShaleformationinSouthTexas.In addition to charting our course for continued economic prosperity, SA2020 also focuses on ongoinginfrastructure improvements, neighborhood revitalization andworkforce development initiatives, aswell asdowntowndevelopment. InFebruary2010, theCitypassed the InnerCityReinvestment InfillPolicy (ICRIP) tofurther support balanced and sustainable development throughout San Antonios innercity and southernsectors, which include Port San Antonio and Brooks CityBase. Both government and citizens are activelycommitted to increasing the caliber of educational and economic opportunities, expanding arts and leisurechoices, revitalizingolderneighborhoods,andplanning foroverallgrowth in theCity.TheCitys culturalandgeographic proximity to Mexico provides favorable conditions for international business relations. Alsoenhancing SanAntoniosbusinessappeal is thehighqualityof life theCityoffersanda costofliving that isbelow thenationalaverage. Inaddition to the favorableeconomicclimate,excellentweatherconditionsyearroundhelpencourageandenhancetheoperationofmanyofSanAntoniosmostimportantindustries.

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ECONOMICCONDITIONSANDOUTLOOK(Continued)Economic indicatorstellthestoryofaresilient2011forSanAntonioexemplifyingthecomparativestabilityofthe local economy as it outperformed comparable cities impacted by the national recession. According toresearch performed by the Brookings Institution, San Antonio is one of the 20 strongest performingmetropolitanareas (metros)outofthe100 largestmetros.TheBrookingsMetropolitanPolicyProgram issuesthequarterly series,MetroMonitor,whichprovidesanunderstandingofhow thecurrenteconomic recessionhasaffectedAmericasmetropolitaneconomies.TheBrookingsMetroMonitormeasuresoverallmetropolitanperformance as an aggregateof fourmeasures:percentemploymentchange,percentunemploymentratechange,percentGrossMetropolitanProduct(GMP)change andpercent change inHousingPrice Index (HPI). The September2011 report,which examineddatathroughoutthe2ndquarterofcalendaryear2011,showedSanAntonio inthetop20(strongestperformers) inincreasedemploymentandstablehousingpriceindex.Asofthe2ndquarterofcalendaryear2011,the100largestmetrosintheUnitedStatescontinuetostruggletoregain prerecession employment levels. San Antoniowas among the top cities that suffered a lessseveredeclineinoverallemployment.FromSanAntoniosprerecessionpeakemploymentquartertothe2ndquarterof2011,SanAntonioranked4thamongthetop100metroswithachangeof0.2%.San Antonios seasonally adjusted unemployment ratewas 8.1%, compared to the 100largestmetro areasaverage rate of 9.4%, and the national rate of 9.3%. Allmetros experienced a rise in unemployment ratesthroughtheonsetoftherecessionbutamongthe100metros,SanAntonioranked29thinthenation.Inadditiontoemploymentandunemploymentdata,GoodManufacturingPractice(GMP)isavaluablemeasureofthetotalvalueofgoodsandservicesproducedwithinametroarea.WhenmeasuringthepercentagechangeinGMPfromSanAntoniosrecessionpeakquartertothe2ndquarterof2011,SanAntonioranked25thwithanincreaseof2.9%.SanAntonioshousingmarketregisteredarelativelysmallnegative impactasaresultof thenationalhousingbubble. According to the September 2011 Multiple Listing Service report by the San Antonio Board ofREALTORS,eventhoughthenumberofsaleswasdownby2.0%yeartodate,themedianpriceofahomeroseto$151,500,a2.0%increasewhencomparedtoayearago.SanAntoniosresilienteconomywasfueledbyseveraltargeted industryprojects infiscalyear2011. TheCityutilizedacombinationoftaxabatements,grantandloanagreements,impactfeewaivers,andnominationsforState project designations that assisted in enticing the following businesses tomove to or remain in SanAntonio:SouthTexasResearchFacilityTheCityinvested$3.3millionintheconstructionofthe$150.0millionSouthTexasResearchFacilitythroughtheSan Antonio Economic Development Corporation (SAEDC), which entered into an economic developmentagreementwith theUniversityofTexasHealthScienceCenterSanAntonioon July28,2011.Thisprojectwillcreate at least 150 research jobs in the targeted bioscience industry andwill provide a potential return oninvestmentofupto$4.0millionthroughtheSAEDCsequityinvestmentinuniversityspinoutcompanies.

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ECONOMICCONDITIONSANDOUTLOOK(Continued)AdditionalentitiesthattheCityrecruitedtoorretainedwithinSanAntonioareincludedinthefollowingtable:

CompanyName No.ofJobs Investment($M)ArgoGroup 200 $BakerHughes 400 30.0Becton,Dickson 296 6.4Boeing 400 10.0Chevron 17 335.0ColdCar 50 10.0Consert 200 ConwayFreight 129 8.5Econtrols 275 FiberglassSystems 40 8.0GreenStar 38 40.0HVHC,Inc 350 J.Crew 270 1.7M7 450 PETCO 400 5.0Schlumberger 200 20.0SunEdison 42.5UTHSC 150 150.0Weatherford 200 18.0Total 4,065 685.1$

In addition to the targeted industry projects the following are furtherdetails regarding factors affecting thebusinessclimateandlocaleconomyfortheCity.BaseRealignmentandClosureandFortSamHoustonOneofthemostsignificantevents inSanAntoniosrecenteconomichistory isthe2005BaseRealignmentandClosure (BRAC). BRAC has had a major positive impact on military medicine in San Antonio resulting inapproximately$3.1billion in constructionand theadditionof12,500 jobs inSanAntonio in2011.This isanincreasefromthe$1.6billion inconstructionand11,500personnelprojected in2007.Currently,allU.S.Armycombatmedic training is conducted at Fort SamHouston.As a resultof the2005BRAC, allmilitary combatmedic training Army,Air Force,Navy,Marines andCoastGuard willbeundertaken at thenewMedicalEducationandTrainingCampusatFortSamHouston.TheSanAntonioMilitaryMedicalCenter (SAMMC)hasbeenestablishedasaresultofthe2005BRACandcombinestheLevel1TraumaelementsofWilfordHallandBrooke ArmyMedical Center (BAMC).Wilford Hall has been renamed SAMMCSouth and BAMC has beenrenamedSAMMCNorth.SAMMCNorth isdoubling itsLevel1 traumamissions fromSAMMCSouth.SAMMCSouth is an outpatient only facility that has received outpatientmissions from SAMMCNorth and will bereplacedby theLacklandAmbulatoryCareCenter.TheCareCenter isscheduled forcompletion in2013.This$486.0millionCareCenterwillprovideworldclassmedicalcareforthecommunity.

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ECONOMICCONDITIONSANDOUTLOOK(Continued)BaseRealignmentandClosureandFortSamHouston(Continued)In addition, San Antonio will receive new medical research missions. The U.S. Army Institute for SurgicalResearchlocatednexttoSAMMCNorthwilldoubleinsizeasaresultofnewBRACmissionsandwillberenamedtheJointCenterofExcellenceforBattlefieldHealthandTrauma.Thenewmissionwillcontinueitscuttingedgeresearch intheareasofrobotics,prostheticsandregenerativemedicine.AsaresultofBRAC,SanAntoniowillbecomealeaderinmilitarymedicaltraining,educationandresearch.PortSanAntonioPortSanAntonio(Port) isamultimodal logisticsplatformandaerospacecomplexonthe1,900acresiteoftheformerKellyAirForceBase.ItwascreatedbytheTexasLegislaturein2001followingtheclosureofthebaseandtaskedwithredevelopingandmanagingthepropertytoensurethatitcontinuesservingasaneconomicenginefortheregion.Thoughcreatedbythelocalgovernment,thePortisselfsustainingandoperateslikeabusinessreceiving its income from the properties it leases, services it provides, and reinvesting profits into furtherdevelopmentoftheproperty.ThePort istheregionssingle largestrealestatemanagementand leasingfirm,overseeing12.9millionsquarefeetof facilitiesand logisticsassets that includean industrialairport (KellyField,SKF)anda350acre railport(EastKellyRailport).Theentire site iscontainedwithina foreigntradezone (FTZ#8010)andhasquick roadconnectionstoInterstateHighways35,10and37.ThePortsredevelopmentefforts todatehaveattractedalmost80customers to itssite, includingaerospace,logistics andmilitary/governmental organizations. These customers employmore than 14,000 workers andgenerateover$4.0billioninregionaleconomicactivityeachyear.ThePorthasreceivednumerousrecognitionsfor its innovative work, including being named Redevelopment Community of the Year in 2010 by theAssociation of Defense Communities. A regional sustainability leader, since 2009 two of the Ports newlydevelopedpropertieshavebeenLEEDcertifiedbytheU.S.GreenBuildingCouncil(USGBC).Fourteen of the Ports customers are aerospacerelated firms, including industry leaders Boeing, LockheedMartin,StandardAero,Chromalloy,GoreDesignCompletionsandPratt&Whitney.Ofthe14,000workersatthePort,about5,000areemployedintheaerospacesector.ThePortreachedimportantmilestonesinfiscalyear2011,positioningitanditscustomersforfurthergrowthasanimportanteconomicenginefortheregion.

Intheaerospacesector,BoeingsPortfacilityusheredinaneweraofcommercialprojectsinthepastyear.Thecompany,whichhasbeenoperatingatKellyFieldsince1998withafocusonmaintenance,repairandoverhaul(MRO)ofmilitaryaircraft,welcomed itsfirst787Dreamliner inthespringof2011.Theairplane isoneoffourscheduledtoundergochangeincorporation(electronicsandsoftwareupgrades)atPortbeforefinalcompletionanddelivery to customersworldwide. Inaddition, the firstof sixnew7478 tankersarrivedatBoeingsPortfacilityin2011wherethey,too,willundergochangeincorporationthrough2013.

Similarly,GoreDesignCompletions,whichisNorthAmericaslargestoutfitterofcustominteriorsforwidebodyjetsandthethird largestsuchcompany intheworld,hasbeensteadilygrowingsince itsarrivalatthePort in2005.In2010Goreaddedover100,000squarefeettoitshangarandworkshopfacilitiesatKellyField,givingitthenecessaryroom todeliver luxury interiors foraBoeing767and its firstBoeing777completion to foreignheadsofstatein2011.Thecompanyadditionallytookintwonewaircrafttokeepitbusythrough2012.

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ECONOMICCONDITIONSANDOUTLOOK(Continued)PortSanAntonio(Continued)ElsewhereatthePort,effortstoupgradea450,000squarefootofficefacilityknownasBuilding171continuedin2011.Thefacilityaccommodates11AirForceagencyheadquartersand3,000personnel.Since2009thePorthasmanagedover$60.0millioninupgradestothepropertytomeetnewAntiTerrorismForceProtection(ATFP)standards thatensure the safetyof itsoccupantsand the sensitivework that takesplacewithin. In2012 thecompletionoffinalbayswillallowthe24thAirForce,alsoknownastheCyberCommand,tobecomethefinaloccupantof thebuilding. There, theunitwill leadoperations todefend theAir Forces information systemsworldwideagainstthenewfrontierinwarfarecyberattacks.Lookingahead, in2012 thePortwill reachan importantmilestoneas two roadconstructionphasesbegun in2011arecompleted.Theprojectextends36thStreetfromthePortsnorthwestentranceforalmosttwomilesinto theheartof theproperty, improvingaccess to thePortand,starting in2012,opening150acresatKellyFieldforthedevelopmentofnewairservedfacilities.Thenewsitesopenedbythe36thStreetextensionwillenabletheconstructionofnewhangarsandworkshopsthatcansupportanadditional8,000newjobsinthatpartofthePortalonefurtherpositioningtheregionasanimportantandthrivingaerospacecenter.TheprojectisheadedbytheCitysCapitalImprovementManagementServicesDepartment.Additionalprojectpartners include theMetropolitanPlanningOrganization (MPO),CPSEnergy,SanAntonioWaterSystem(SAWS)andtheTexasDepartmentofTransportation.BrooksCityBaseBrooksCityBase(BCB)continuestofosterthedevelopmentofitsbusinessandtechnologycenteronthesouthsideofSanAntoniothrough itsaggressivebusinessattractionandretentionefforts.Recognizedasoneofthemost innovative economic development projects in the United States, BCB is a 1,246 acre campus withapproximately350acresavailableforimmediatedevelopment.TheUnited StatesAir Force ceasedalloperations atBCBon September15,2011.TheBrooksDevelopmentAuthority (BDA) gates opened in May 2011 with the completion of South New Braunfels Phase 1. BDAcommissioneditsfirstEconomicImpactStudywithTheUniversityofTexasatSanAntonioInstituteforEconomicDevelopment.Constructionactivitieswereestimatedat$597.4millionindirectoutputand$1.0billionintotaloutput.BDA completed the acceptance of $17.0million in personal property from the Air Force. To date BDA hasdonated itemswithanestimatedvalueof$559.0 thousand to localnonprofitorganizationsandschools.BDAmovedto itsnewofficespaceat3201SidneyBrooks,aftera$300.0thousandrenovationofthe formerchildcarefacility.BDAsignedanumberofleaseagreementswiththefollowingcompanies.

Volt Information Sciences, Inc Fiveyear lease agreement signed on November 17, 2010 forapproximately 34,599 square feet in Building 532, for call center services. Volt expects to hire 600employeesoverthenextyear.

NuStar Energy Twoyear lease agreement with NuStar Refining, LLC signed on July 7, 2011 forapproximately12,615squarefeet.Thespacewillbeutilizedforofficeadministrationandlabtesting.

TexasA&MFiveyearleaseagreementsignedonJuly5,2011for77,648squarefeetofclassroomandofficespace.

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ECONOMICCONDITIONSANDOUTLOOK(Continued)BrooksCityBase(Continued)

SpineandPainCenterofSanAntonio,PLLC10yearleaseagreementwithSpineandPainCenterofSanAntonio,PLLConSeptember1,2011,forapproximately9,622rentablesquarefeetofmedicalofficespace.

Wyle Laboratories, IncTwoyear leaseagreement signedon July1,2011 forapproximately26,176total square feet in Buildings 160, 170 and 159 and the surrounding grounds and parking areas forcentrifugaltraining.

OnJune27,2011,theMissionTrailBaptistHospital,locatedon28acresatBCB,openeditsdoors.Thisfacilityconsists of three stories, with the capability of adding additional floors and square footage as needed. Itcurrentlyemploys567people.Also,constructionona300unitmultifamilyapartmentcomplexstartedJuly20,2011.ThedevelopmentwillbeownedbyBDAandtheNRPGroupwillbethecodeveloper.Thedevelopmentisslated to be completed in spring 2012. The apartmentswill be leased atmarketrate andwill offer all theconveniencesofmodern,urbanliving.To continue fostering economic activities in the south side, BDA has leveraged resources by applying fordesignationasanEB5RegionalCenterandobtainingmultipleStateEnergyConservationOffice (SECO) loans.TheEB5designationwillbenefitBDAfromaninfluxofforeigncapitalandwillimproveitsfinancialoperationsandcapitalprojects.TheSECO loanswereobtainedbyBDA forenergysavingupgrades tovarious residentialhousingunits,newchillersystemsforvariousbuildings,replacementofheating,ventilation,andairconditioningsystemsassociatedwithBuildings160and170,andupgradestoBuildings532,570,775,and150,forinstallationofrooftopsolarpanelsandthereplacementoftheHVACsystem.AerospaceIndustryDevelopmentSanAntonioInternationalAirport(SAT)has20airlines(9mainlineand11regional)providingnonstopflightstoatotalof30destinations,whichdonotincludeseasonalcharterflightstoMexicoavailableduringthespringandsummer.Duringfiscalyear2011,SATexperiencedan increase inenplanedpassengersdespiteweakeconomicconditions.At finalcount,4,057,000passengerswereenplaned in fiscalyear2011,an increaseof66,553 (or1.6%)over theprioryear.Both theUnitedmergerwithContinental (nowoperatingundera singleoperatingcertificate)andtheSouthwestmergerwithAirTranhavebeenapprovedbytheUSgovernmentwithnochangeinserviceatSAT.InNovember2011,VivaAerobusandInterjet(bothMexicancarriers)announcednewservicetoMexicoCity,MonterreyandTolucafromSanAntoniotobegininNovemberandDecember2011.SouthwestAirlinesannouncedservicefromSanAntoniotoMexicoCitytobegininMay2012toMexicoCityandCancun.OnNovember9,2010, the first flightsdeparted fromTerminalB.The225,000squarefoot terminalwillhaveeightgatesandfour levelsandreplacesthedemolishedTerminal2.Alsocompleted intimefortheTerminalBopeningwereaCentralUtilityPlantandaBaggageHandlingSystem.TheCentralUtilityPlantpowersTerminalsA&Bandgives theSAT thecapacity for futureexpansion,and theBaggageHandlingSystemconsolidatesallbaggagescreeningequipmentfrombothterminalstoasecuredlocationbehindthebuilding.InMarch2011,theVision2050MasterPlanforSATwasadoptedbyCityCouncil.Vision2050,whichupdatesthe1998MasterPlan, identifiesthedevelopmentoptionsregarding landuse, facilitiesandservicestoensurethatSATmeetsitsstrategicobjectivesandcanaccommodateexpectedlevelsofactivityoverthenext20years.

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ECONOMICCONDITIONSANDOUTLOOK(Continued)

InternationalTradeandOutlookAs part of the International RelationsOffice (IRO) and EconomicDevelopmentDepartment (EDD)s ongoingefforts to focus on core functions, the Citys international functions fit into two distinctive services:International Relationswhich encompasses Protocol and Sister City development including the Casas SanAntonio Program, and the Economic Development Departments International Business Developmentwhichfocusesonattracting foreigndirect investmentandassisting localcompanies toexpand into foreignmarkets.Thisredesignisanaturalevolutionfocusedonprovidingagreaterimpactinjobcreationandinvestment,drivenbyfocusedperformancemeasures.

IROdevelopsandmaintains foreignrelations for theCity, fosteringpartnerships that increaseglobalvisibility,culturalunderstandingandeconomicgrowth.Infiscalyear2011,vigorouscrosssectorfollowthroughonnewFriendshipCityAgreementswithChinaresultedinselecting theCityofWuxiasSanAntoniosnextsistercity.TheSisterCityAgreementwillbesigned inSanAntonio in early 2012, focusing upon exchanges in Tourism, Education, Culture,Healthcare, Investment andBusiness Development. The Korean Sister City, Gwangju, built an authentic Korean Pavilion at the DenmanEstatePark,andtheIndianDiwaliFestivalofLightsgrewto10,000attendees,promisingtobeanannualvisitordraw.TheCityhostedofficials fromArgentina,Canada,China,Germany,Mexico,Korea, India,Russia, Japan,Namibia, SlovakRepublic,USDepartment of State,UK, Singapore, Turkey, Taiwan, Italy, and Spain. OfficialforeignmissionsfromSanAntonioduringthisperiod includedMayorCastrosmeetingwithMexicanPresidentFelipeCalderonaswellasvisitstoIsrael,China,Korea,Taiwan,Spain,andGermany.Infiscalyear2011,theEDDbegandevelopinganinternationaleconomicdevelopmentstrategy,whichincludedaligning the Citys contractswith the Free Trade Alliance and the Economic Development Foundation. EDDcarried out a targeted foreign prospect development strategy hosting over 12 foreign site selectors from 6different countriesaswellasmeetingwith foreign site selectorsduring trademissionsabroad.This strategyresulted in increasedawarenessofSanAntonioasan idealforeign investmentdestinationandaugmentedthenumber of international prospects engaging EconomicDevelopment Foundation in location discussions. The11thAnnualSanAntonioExportLeadersProgramwascarriedoutinpartnershipwiththeHispanicChamberofCommerce,UTSAInternationalTradeCenter,USForeignCommercialService,andotherbusinessdevelopmentstakeholders. National prominence was achieved for this Program by working with the United StatedDepartmentofCommerce inWashingtonDC tohelp replicate theprogram inotherUSCities aspartof thePresidentsNationalExport Initiative.EDDworked in collaborationwith IRO and theConventionandVisitorsBureau(CVB)toprovidedsupporttotheChinaAdvisorySubcommitteeinthedevelopmentofanActionPlantoincreasetrade,foreigndirectinvestmentandculturaltieswithChina,includingourSisterCityofWuxi,China.AsofAugust31,2011,theNorthAmericanDevelopmentBankparticipatedinthedevelopmentandfinancingof152environmental infrastructureprojects,withapproximately$1.3billion in loansandgrants.Theseprojectsareestimated tocosta totalof$3.3billion tobuildandwillbenefitanestimated13millionborderresidentsthroughoutthe10statesthatcomprisetheU.S.Mexicoborderregion.SanAntoniocontinuestodevelop itselfasan InlandPortfor importsandexportswithMexico,LatinAmerica,India, Germany, China, Japan, Spain, and other regions of the world. This is accomplished throughtransportation,manufacturingandlogisticsfacilities;professionalservicesandvalueaddedservicesinvolvedinprocessing,marketingandmovingfreightwithintheSouthTexasRegion.Overthepast17years,theCityledthenationbyestablishingthreecommercialtradeofficesinMexicosprincipalcitiesandinTokyo,Japan.

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ECONOMICCONDITIONSANDOUTLOOK(Continued)InternationalTradeandOutlook(Continued)For27years,theIROstraderepresentativeinJapanhasattractedmultimilliondollaroperationstoSanAntonioincluding Toyota and its 24 suppliers, Takata Seat Belt, Sony Corporation,MyCom International, Hyatt HillCountryResort(amajorJapaneseinvestmentjointventure),andHiguchi.ThetraderepresentativecontinuestopromoteJapaneseinvestmentinSanAntoniobyconductingtrademissionstocitiesthroughoutJapan.CommunityDevelopmentCommunity development projects continue to play an important role in San Antonios economic success.Targeted redevelopment, neighborhood revitalization and smart growth strategies are shaping theway SanAntonio is growing and its citizens are living. The City is continuing its efforts to redevelop portions of thecommunityandinfluencedevelopmentofnewareasthroughtheICRIP.Throughincentivemechanismssuchasqualifiedfeewaivers,itpromotesgrowthanddevelopmentintheheartoftheCity,specificallyinareasthatarecurrentlyservedbypublicinfrastructureandtransit,butunderservedbyresidentialandcommercialrealestatemarkets.ItistheintentofthisPolicytocoordinatepublicinitiativeswithintargetedareasinordertostimulateprivateinvestmentinwalkableurbancommunitiesthatarethebuildingblocksofasustainableregion.InAugust2011,SanAntoniobecamethefirstmajorTexascitytopossessbothaUniversityofTexasSystemandaTexasA&MUniversitySystemdegreegrantingcampus,whenTexasA&MUniversitySanAntonioopenedasastandaloneuniversity.LeveragingtheeconomicmomentumsurroundingtheToyotamanufacturingplant,TexasA&MUniversitySanAntonio,andnewactivitysurrounding theEagleFordShale,aswellas implementing theHeritage South Sector Plan, City South Management Authority continues to foster economic growth andsustainabledevelopmentinthefarSouthSide.HospitalityIndustryTheCitysdiversifiedeconomy includesasignificantsector relating to thehospitality industry.A recentstudypreparedbyRichardV.Butler,Ph.D.andMaryE.Stefl,Ph.D.,bothprofessorsatTrinityUniversity,foundthatthehospitality industryhasaneconomic impactofnearly$11.0billion.Theestimatedannualpayroll for theindustry is$1.99billion,andthe industryemploysmorethan106,000workers. Also,this industrycontributesmorethan$153.4million intaxesandfeestotheCity,andmorethan$286.4milliontoall localgovernmentscombined.SanAntonioshospitalityindustryattracted26.0millionvisitorsin2010,and12.2millionwereovernightleisurevisitors,placingSanAntonioasoneofthetopleisuredestinationsinTexas.SanAntoniocontinuestorankhighas a top leisure and convention/group meeting destination. Recent fiscal year 2011 accomplishmentscontributingtooursuccess includegeneratingover$12.0million inpositivemediavalue forSanAntonioasatourismandconventiondestination;TopChefTexaswhichfeaturedSanAntonio in8episodesandshowcasestheCityasagrowingculinarydestination; implementingamarketingandcommunicationcampaign leveragingthe175thanniversaryof theBattleof theAlamo;and renovatedandbrandedourVisitor InformationCenteracrossfromtheAlamowhichservicesmorethan300,000visitors.The list of attractions in the SanAntonio area includes, amongmany others, theAlamo (and other sites ofhistoricsignificance),RiverWalkandtwomajorthemeparks(SeaWorldSanAntonioandSixFlagsFiestaTexas).

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ECONOMICCONDITIONSANDOUTLOOK(Continued)HospitalityIndustry(Continued)SanAntonioisalsooneofthetopconventioncitiesinthecountry.Infiscalyear2011,theCitysCVBlaunchedanicheCEOmarketingplanwhich raised awarenessof SanAntoniowith topbusinessexecutives,primarily toinfluencemeetingdestinationopportunities.Thus,theCVBsalesstaffbookedmorethan852,000roomnightsforcurrentandfutureyears.According toSmithTravelResearch, in2011, theCitysoverallperformance forhoteloccupancy increasedby3.4%.Theincreasewasattributedtorevenueperavailableroom(REVPAR)increasesof1.9%;totalroomnightssold increases of 5.8%; and hotel room supply increases of 2.3%; tempered by average daily rate (ADR)decreasesof1.5%.Convention,SportsandEntertainmentFacilitiesThecontinued successof theCitysvibranthospitality industrydepends significantlyon its inventoryofhighquality facilities to host conventions, meetings, and major sporting events. The Convention, Sports, andEntertainment FacilitiesDepartment (CSEF)operates theHenryB.GonzalezConventionCenter, the recentlyrenovatedLilaCockrellTheatre,theAlamodome,and(untilJune2011)theMunicipalAuditorium.After82yearsofoperationasaCityownedfacility,theMunicipalAuditoriumwasclosedandwillberedevelopedastheTobinCenterforthePerformingArts.Ownedandoperatedbyanonprofitentity,thenewfacilitywillreceivealmost$200.0million in renovationsand is scheduled toopen in2014. In thepastyear,more than570,000visitorsattended314eventsheldattheHenryB.GonzalezConventionCenter, including69eventsattheLilaCockrellTheatre.Significant conventions included theAmericanCollegeofGastroenterology,Association forFinancialProfessionals, Society of NuclearMedicine, Academy ofManagement, Society of Exploration Geophysicists,NationalConferenceofStateLegislators,andtheVeteransofForeignWarsoftheUS(VFW).TheCityalsohostedthe2011NCAAMensRegionalBasketballTournamentwithmorethan25,000inattendance.TheAlamodome,amultipurposesportsandgeneralassemblyfacility,hostedmorethan935,000visitorsover132 event days. Many varied and significant events were held at the Alamodome in 2011, including thefollowing: the Third Annual San Antonio Rock N Roll Marathon and Half Marathon, with over 30,000participants,whichgenerated$26.1million indirectvisitorspending; theDallasCowboysTrainingCampwith94,000attendeesoverthe13daycamp;the2010ValeroAlamoBowlfeaturingOklahomaStatevs.UniversityofArizona,withmorethan57,000fansattendingwhichgeneratedadirecteconomic impactof$32.6millionfortheCity;theinauguralgameforthenewUniversityofTexasSanAntonio(UTSA)FootballprogramfeaturedtheUTSARoadrunnersvs.NortheasternUniversity.Attendancesetanewmodernerarecord(56,000)foraseasonopenerbyafirstyearNCAADivisionIprogram.TheAlamodomealsodebutedthenewIllusionsTheaterofferingaconfigurationof3,78511,000seatsandstateoftheartcurtainandLEDlightingsystems.IntheCSEF2011Capital ImprovementPlan,theConventionCenterconstructedanewVisitorServicesCenter,enhancedbuildingsecuritywiththeadditionofanewbuildingaccesscontrolsystem,andupgradeditstechnicalinfrastructuretoenhancedigitalTVreception.Othercapital improvementsattheconventioncenter includeanewcomprehensivedigitalwayfindingandmeeting roomsignagesystem.Total improvements ina twoyearperiodattheConventionCenterhastotaledover$40.0million,withtheCityprojectedtorecoverover$30.2millionincapitalimprovementrelatedrebatesviatheStatesConventionEventTrustLegislation.FacilityenhancementstotheAlamodomeincludedesignandconstructionforanewHomeTeamLockerRoomand theopeningof twonew concessionsoutlets. Theseupgradeswill assist theCity in enticing future,highprofile clients, and improve fans experiences. The City is projected to recover over $4.1million in capitalimprovementrelatedrebatesviatheStatesSportingEventTrustLegislation.

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ECONOMICCONDITIONSANDOUTLOOK(Continued)DowntownDevelopmentProjectsCity Council approved economic development grants for center city projects that total $16.8million for theMosaic, 1111 AustinHighway, 1800 Broadway, Pearl ParkwayNorth and South, Steel House Lofts, CamdenMedicalOffice,andButterKrustRedevelopment.Theseprojectsrepresentatotalinvestmentof$162.8millionandwilladd770housingunitsand615jobstothecentercity.SinceOctober2010, theHemisFairParkAreaRedevelopmentCorporation (HPARC) focused itseffortson thecreation and implementationof aMasterPlan forHemisFairPark.HPARC selected Johnson Fain, Inc. as theconsultantfortheMasterPlan.Throughseveralcommunityworkshops,JohnsonFaindevelopedaFrameworkPlanthat identifiedmainpointsof focus forHemisFairPark.CityCouncilendorsedtheFrameworkPlanattheMay12,2011CityCouncilmeeting.Since itsendorsement,HPARChasrefinedtheFrameworkPlanto includemoredetail.TherefineddocumentwillserveasthefinalmasterplanforHemisFairPark.TheMasterPlan,usingtheFrameworkPlanas itsbasisoutlinessixbigideasfortheredevelopmentofHemisFairParktoincludethefollowing:

1. ExpandingtheConventionCentereastward;2. Developingmorepublicandopenspace;3. Incorporatingamultiuseamphitheaterintotheredevelopment;4. Integratingwaterfeaturesintothesite;5. Accommodatingthestreetcarlinethroughthesite;and6. RedevelopingtheSAlamoandCesarChavezCornertoaccommodateretailandamixofactivity.

Additionally,theMasterPlanincorporatesHPARCsguidingprincipleswhichaddressconnectivity,development,balance,preservation,andsustainabilityand includesseveralbig ideasthatresulted fromthepublicoutreachefforts.CityCouncilwilltakeactiononthefinalMasterPlaninfiscalyear2012.AmericanRecoveryandReinvestmentActPresidentObamasignedtheAmericanRecoveryandReinvestmentAct(ARRA) into lawonFebruary17,2009.ARRAwill provide a nationwide total of $787.0 billion in spending and tax cuts. The funding is temporary,intended to preserve and create jobs, and make investments in infrastructure, energy and science,unemploymentassistance,andstateandlocalstabilization.InordertotakefulladvantageofthefundingopportunitiesandadditionalservicesthatmaybeprovidedtotheCityofSanAntonioasaresultoftheARRA,CitystaffhasworkedcloselywithCityCounciltostrategizeandalignspecificCityCouncilrankedprojectstoindividualFederalandStateagencyfundedprograms.AsofFebruary2012,theCityhasbeenawardedover$139.6millioninARRAgrants.Thesegrantshaveandwillfund public safety, street projects, various child care programs, energy efficiency programs, and homelessassistance.

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FINANCIALINFORMATIONAccountingSystemandBudgetaryControlThemanagementof theCity is responsible forestablishingasystemof internalcontrols thataredesigned toprovidereasonableassurancethatassetsareprotectedfromloss,theft,ormisuse.TheCitysaccountingsystemsupports the internalcontrolsandprocedures,whichprovide reliable financial records forpreparing financialstatements in conformitywith U.S. generally accepted accounting principles. The internal control structureprovidesreasonableassurancethattheCitysassetsaresafeguardedaswellasthereliabilityoffinancialrecordsfor preparing financial statements. The concept of reasonable assurance first recognizes that the cost of acontrol shouldnotexceed thebenefits likely tobederived.Secondarily, theevaluationofcostsandbenefitsrequireestimatesandjudgmentsbymanagement.Budgetary compliance is a significant tool formanaging and controlling governmental activities, aswell asensuringconformancewiththeCitysbudgetarylimitsandspecifications.Theobjectiveofbudgetarycontrolsisto ensure compliancewith legal provisions embodied in the annual appropriated budget approved by CityCouncil.Levelsofbudgetarycontrol,thatisthelevelsatwhichexpenditurescannotlegallyexceedappropriatedamounts,areestablishedbydepartmentwithin individual funds.TheCityutilizesanencumbrance systemofaccountingasonemechanism toaccomplisheffectivebudgetarycontrol.Encumberedamounts lapseatyearendandare generallyappropriatedaspartof the following yearsbudget.Anotherbudgetary control is themonthly revenue and expenditure reports detailing budget and actual balances with variances that aregeneratedandreviewedbytheOfficeofManagementandBudget,FinanceandtheCityManagersOfficepriorto submission toCityCouncil.Aspartof the annual review and closeout process,CityCouncilwill approvedesiredbudgetadjustmentsandcarryforwardsforthenextfiscalyear.TheCityfurther implementedavailablebudgetcontrolswithinitssystemofrecordforcapitalprojectsandgrants.Thesystemwarnswhencumulativeexpenditures are within 75.0% of total budget. The system will not allow the processing of nonpayrolltransactionsinexcessofthebudget.EachyeartheCitypreparesafiveyearfinancialforecast(Forecast)priortotheadoptionoftheannualoperatingbudget. The Forecast is a financial and budgetary planning tool that provides a current and longrangeassessmentoffinancialconditionsandcostsforCityservices.TheForecastincludestheidentificationofservicedeliverypolicyissuesthatwillbeencounteredinthenextfiveyearsandthatwillhaveafiscalimpactupontheCitysprogramofservices.TheForecastalsoexaminesthelocalandnationaleconomicconditionsthathaveanimpactontheCityseconomyandultimately,itsbudget.The Forecast serves as a foundation for development of the proposed budget by projecting revenues andanticipatedexpendituresunderadefinedsetofassumptions.TheForecastenablestheCityCouncilandstafftoidentifyfinancialissuesinsufficienttimetodevelopaproactivestrategyinordertoaddressemergingstrategicissues.After obtaining the priorities of City Council, as well as conducting reviews of each City department, theproposedCitybudgetispresentedtoCityCouncil.TheproposedbudgetrepresentstheCitystaffsprofessionalrecommendationonhow toutilize revenues andexpenditures inorder to achieve abalancedbudget,whileoptimizingCityservicedeliveries.

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FINANCIALINFORMATION(Continued)AccountingSystemandBudgetaryControl(Continued)AspartoftheCityssoundfinancialplanning,theCityCounciladoptedabudgetthatisbalancedandenhancesservicesthataremost importanttothecommunitywhilemaintainingastrong financialposition. TheBudgetincluded reductions totaling $24.0million in theGeneral Fund thatwere achieved as a resultof technologyinvestments,indepthcomprehensivereviewandoperationalefficiencies.TheCityalsomaintainsanenhancedprocess for reviewingand justifying theneed to fillvacantpositions.TheCitysbudget further incorporatesastrategy, adopted by City Council, to maintain the financial reserves at 9.0%. The establishment andmaintenanceofappropriatereserveswithintheGeneralFund iscriticaltoprudentfinancialmanagementandprovides budgetary flexibility for unexpected events, financial emergencies, and the unusual fluctuation inrevenueexpenditurepatterns.TheseproactiveactionsassistedtheCity ingeneratinga favorableending fundbalanceforfiscalyear2011.TheCity also employs a comprehensivemultiyear, longterm capital improvementplanningprogram that isupdatedannually.Debtmanagementisamajorcomponentofthefinancialplanningmodelwhichincorporatesprojectedfinancingneedsfor infrastructuredevelopmentthat isconsistentwiththeCitysgrowthwhileatthesametimemeasuringandassessingthecostandtimingofeachdebtissuance.Infiscalyear2010,theCityachievedatripletriple,withthreenationalcreditratingagenciesawardingtheCityAAAstatusonitsGeneralObligationBonds,thehighestbondratingacitycanreceive.SanAntoniocontinuestobetheonlymajorU.S.city(withapopulationofmorethanonemillion)toberated'AAA'byallthreemajorratingagencies:Fitch,Moody's,andStandard&Poor's.These ratingson theGeneralObligationBondswerebased on the City's maintenance of strong financial reserves and continued diversification of the localeconomy.Overthelongterm,theimprovedratingswillresultinsavingstotheCityanditsresidentsasaresultoflowerinterestratesonthebondstheCitysells.Asdemonstratedbythestatementsandschedules intheFinancialSectionofthisreport,theCitycontinuestomeetitsresponsibilityforsoundfinancialmanagement.

FiscalManagementDebtAdministrationTheCityutilizesacomprehensivedebtmanagementfinancialplanningprogram,whichisupdatedannuallyandis amajor component of the Citys financial planning. Themodel projects financing needs,measuring andassessingthecostandtimingofeachdebtissuance.Itinvolvescomprehensivefinancialanalysis,whichutilizescomputer modeling, and incorporates variables such as interest rate sensitivity, assessed value changes,annexations,andcurrentadvaloremtaxcollectionrates.UseofthisfinancialmanagementtoolhasassistedtheCity inmeeting itsfinancingneedsby facilitatingtimelyandthoroughplanning,whichhasallowedtheCitytocapitalizeonmarketopportunities.TransparencyThe City actively pursues transparency of its operations. The status of voter approved $550.0million bondprojectsisavailableforpublicviewontheCityswebsite.Attheendoffiscalyear2010,theCitystreamlineditswebsiteforuserfriendlyaccesstotheCitysbudgetdocuments,quarterandannualreports,andcheckregister.January19,2012,theCitylaunchedanewwebsitetobemoreuserfocusedwithsubjectbasedcategorizationofinformation.TheCitywill,throughoutfiscalyear2012,convertalldepartmentalwebpagestothisnewdesign,andwillcontinuetoassesswaystoprovidethepublicwithamoretransparentgovernment.


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ComprehensiveAnnualFinancialReportPeriodEndedSeptember30,2011

CITYCOUNCILJulinCastroMayor

DiegoM.BernalDistrict1

IvyR.TaylorDistrict2

LeticiaOzunaDistrict3

ReySaldaaDistrict4

DavidMedina,Jr.District5

RayLopezDistrict6

CrisMedinaDistrict7

W.ReedWilliamsDistrict8

ElisaChanDistrict9

CarltonSoulesDistrict10

EXECUTIVELEADERSHIPTEAM

SherylL.Sculley

CityManager

PatDiGiovanni

DeputyCityManager

ErikJ.WalshDeputyCityManager

SharonDeLaGarzaAssistantCityManager

DavidEllisonInterimAssistantCityManager

PeterZanoniAssistantCityManager

EdBelmaresAssistantCityManager

BenGorzellJr.ChiefFinancialOfficer

MichaelBernardCityAttorney

IncorporatedDecember14,1837CharterAdoptedOctober2,1951

CouncilManagerFormofGovernment

MemberofTheGovernmentFinanceOfficersAssociationoftheUnitedStatesandCanada


FinancialSection


IndependentAuditorsReport


ManagementsDiscussionandAnalysis

(RequiredSupplementaryInformation)

(Unaudited)

CityofSanAntonio,Texas 1 Amountsareexpressedinthousands

MANAGEMENTSDISCUSSIONANDANALYSISTheCityofSanAntonio(City)presentsthefollowingdiscussionandanalysisoftheCitysfinancialperformanceduringthe fiscalyearendedSeptember30,2011.Thisdiscussionandanalysis is intended toassist readers in focusingonsignificantfinancial issuesandchanges intheCitysfinancialposition,and identifyinganysignificantvariancesfromthe adopted budget. We encourage readers to consider the information presented here in conjunction withadditionalinformationthatwehavefurnishedinourletteroftransmittalandthefinancialstatementsprovidedinthisreport.Allamounts,unlessotherwiseindicated,areexpressedinthousandsofdollars.FinancialHighlights

The assets of the City exceeded its liabilities by $2,964,940 (net assets). Of this amount, $115,493(unrestrictednetassets)maybeusedtomeetthegovernmentsongoingobligationstocitizensandcreditors.

The City implemented GASB Statement No. 54 Fund Balance Reporting and Governmental Fund TypeDefinitions. This new pronouncement enhances the usefulness of fund balance reporting by establishingfundbalanceclassificationswhichcanmoreconsistentlybeappliedandbyclarifyingexistinggovernmentalfundtypedefinitions.

As of the end of the current fiscal year, the Citys governmental funds reported combined ending fundbalancesof$928,648,adecreaseof$28,075comparedtothefiscalyear2010restatedfundbalance.Ofthisamount,$9,355isnonspendableand$919,293isspendable.Ofthetotalspendablefundbalance,$687,637isrestricted inuse,$115,821hasbeencommitted,$20,650 isassignedand$95,185 isunassigned,which isavailableforspendingatthegovernmentsdiscretion.

Attheendofthecurrentfiscalyear,unassignedfundbalancefortheGeneralFundwas$170,693or19.8%ofthetotalGeneralFundexpenditures.

Other governmental fundshad anegativeunassigned fundbalance totaling$75,508 asof theendof thecurrentfiscalyear,resultinginnetgovernmentalfundbalanceof$95,185.FormoreinformationseeNote16DeficitsinFundBalances/NetAssets.

OverviewoftheFinancialStatementsThis discussion and analysis is intended to serve as the introduction to the City of San Antonios basic financialstatements,whichhave threecomponents:1)governmentwide financialstatements,2) fund financialstatements,and3)notestothefinancialstatements.GovernmentwideFinancialStatementsThe governmentwide financial statements are designed to provide readerswith a broad overview of the Citysfinances,inamannersimilartoprivatesectorbusinessfinancialpresentation.Thestatementofnetassets isapresentationoftheCitysassetsand liabilities, includingcapitaland infrastructureassets,and longterm liabilities.This statement reports thedifferencebetweenassetsand liabilitiesasnetassets.Overtime,increasesordecreasesinnetassetsmayhelpdetermineorhelpindicatewhetherthefinancialpositionoftheCityisimprovingordeteriorating.Thestatementofactivitiespresentsinformationshowinghowthegovernmentsnetassetschangedduringthefiscalyear.Changesinnetassetsarerecordedwhentheunderlyingeventgivingrisetothechangeoccursregardlessofthetimingofthecashflows.Therefore,revenuesandexpensesreportedinthisstatementforsomeitemswillnotresultincash flowsuntil future fiscalperiods (e.g.,uncollectedtaxesandearnedbutunusedvacation leave).Bothofthegovernmentwide financialstatementsdistinguish functionsof theCity thatareprincipallysupportedby taxesandintergovernmental revenues (governmental activities) from other functions that are intended to recover all or asignificant portion of their costs through user fees or charges (businesstype activities). Governmental activitiesinclude general government, public safety, public works, sanitation, health services, culture and recreation,conventionand tourism,urban redevelopmentandhousing,welfare,andeconomicdevelopmentandopportunity.


The businesstype activities of the City include the airport system, development services,market square, parkingsystem,andsolidwastemanagement.In addition, the basic financial statements provide information regarding the Citys legally separate discretelypresentedcomponentunits.Discretelypresentedcomponentunitfinancial information isreportedseparatelyfromtheprimarygovernmentinthegovernmentwidefinancialstatements.FundFinancialStatementsTheaccountsoftheCityareorganizedonthebasisoffunds,eachofwhichisconsideredaseparateaccountingentity.Governmentresourcesareallocatedtoandaccountedforinindividualfundsbaseduponthepurposesforwhichtheyaretobespentandthemeansbywhichspendingactivitiesarecontrolled.Fundfinancialstatementsareusedtopresentfinancialinformationdetailingresourcesthathavebeenidentifiedforspecificactivities.The focusofthefund financialstatements isontheCitysmajorfunds,althoughnonmajorfundsarealsopresentedinaggregateandfurtherdetailedinthesupplementarystatements.TheCityusesfundaccountingto ensure and demonstrate compliance with requirements placed on resources. Funds are divided into threecategories:governmental,proprietary,andfiduciary.FundfinancialstatementsallowtheCitytopresentinformationregardingfiduciaryfunds,sincetheyarenotreportedinthegovernmentwidefinancialstatements.GovernmentalFundsGovernmentalfundsareusedforessentiallythesamefunctionsreportedinthegovernmentalactivities in the governmentwide financial statements. However, unlike the governmentwide statement,governmentalfundfinancialstatementsfocusonthenearterminflowsandoutflowsofspendableresources,aswellasonbalancesof spendable resources available at the endof the fiscal year. Such informationmaybeuseful inevaluatingagovernmentsneartermfinancingrequirements.Asthefocusofgovernmentalfundsisnarrowerthanthatofthegovernmentwidefinancialstatements,itisusefultocomparetheinformationpresentedinthegovernmentalfundswithsimilarinformationpresentedforgovernmentalactivities in thegovernmentwide financial statements.Bydoing so, readersmaybetterunderstand the longtermimpact of the governments nearterm financing decisions. Both the governmental fund balance sheet and thegovernmental fund statementof revenues,expenditures,andchanges in fundbalancesprovidea reconciliation tofacilitatethiscomparisonbetweengovernmentalfundsandgovernmentalactivities.TheCitymaintainsfive individualgovernmentalfundtypesforfinancialreportingpurposes.ThegovernmentalfundtypesareGeneralFund,SpecialRevenueFunds,CapitalProjectsFunds,DebtServiceFunds,andPermanentFunds.Informationispresentedseparatelyinthegovernmentalfundbalancesheetandinthegovernmentalfundstatementofrevenues,expenditures,andchangesinfundbalancesfortheGeneral,DebtService,CategoricalGrantInAid,2007GeneralObligationBondsandGeneralObligationProjectFundsallofwhichareconsideredtobemajorfunds.Datafromtheotherfundsarecombinedintoasingle,aggregatedpresentationlabeledNonmajorGovernmentalFunds.Individual fund data for each nonmajor governmental fund is provided in the form of combining statementselsewhereinthisreport.Proprietary Funds The Citymaintains two types of proprietary funds. Enterprise funds are used to report thefunctionspresentedinbusinesstypeactivitiesinthegovernmentwidefinancialstatements.TheCityusesenterprisefunds to account for its Airport System,Development Services,Market Square, Parking System, and SolidWasteManagement Funds. Internal Service Funds areused to accumulate and allocate costs internally among theCitysvarious functions, including, selfinsuranceprograms,other internal services, information technology services,andcapital improvements management services. The services provided by these funds predominantly support thegovernmentalratherthanthebusinesstypefunctions.Theyhavebeenincludedwithinthegovernmentalactivitiesinthe governmentwide financial statements and are reported alongside the enterprise funds in the fund financialstatements. Information is presented separately in the proprietary funds statement of net assets and in theproprietary funds statementof revenues, expenses, and changes in fundnet assets for theAirport System Fund,which is considered to be a major fund. The Internal Service Funds are combined into a single aggregated


presentationintheproprietaryfundfinancialstatements.Datafromtheotherenterprisefundsarecombinedintoasingle, aggregated presentation labeled Nonmajor Enterprise Funds. Individual fund data for each nonmajorenterprise fund and each internal service fund are provided in the form of respective combining statementselsewhereinthisreport.FiduciaryFundsFiduciaryfundsareusedtoaccountforresourcesheldforthebenefitofpartiesoutsidetheprimarygovernment.Fiduciaryfundsarenotreflectedinthegovernmentwidefinancialstatementsastheresourcesofthosefunds are not available to support the Citys programs and operations.With the exception of agency funds, theaccountingforfiduciaryfundsismuchlikethatusedfortheproprietaryfunds.NotestothefinancialstatementsThenotesprovideadditionalinformationthatisessentialtoafullunderstandingofthedataprovidedinthegovernmentwideandfundfinancialstatements.Other information In addition to the basic financial statements and the accompanying notes, this report alsopresentstherequiredsupplementaryinformationof(a)theCitysGeneralFundbudgetarycomparisonschedulethatdemonstrates compliance with its budget, and (b) schedules of funding progress related to pension andpostemploymentplans.TheDebtServiceFund,variousSpecialRevenueFundsandspecificPermanentFundbudgets,whichare legallyadoptedonanannualbasis,arealso included intheCAFRassupplementaryscheduleswithintheCombiningFinancialStatementsandSchedules.GovernmentWideFinancialStatementAnalysisThefollowingtables,graphsandanalysisdiscussthefinancialpositionandchangestothefinancialpositionfortheCityasawholeasofandfortheyearendedSeptember30,2011.

20112010

(Restated)*2011

2010(Restated)*

20112010

(Restated)*CurrentandOtherAssets 1,361,540$ 1,469,758$ 243,483$ 230,497$ 1,605,023$ 1,700,255$CapitalAssets 3,806,667 3,634,537 646,095 630,125 4,452,762 4,264,662TotalAssets 5,168,207 5,104,295 889,578 860,622 6,057,785 5,964,917

CurrentandOtherLiabilities 312,553 399,289 32,331 54,767 344,884 454,056LongtermLiabilities 2,269,674 2,179,737 478,287 453,397 2,747,961 2,633,134TotalLiabilities 2,582,227 2,579,026 510,618 508,164 3,092,845 3,087,190

NetAssets:InvestmentsinCapitalAssets,NetofRelatedDebt 2,364,212 2,238,834 273,108 273,344 2,637,320 2,512,178

Restricted 126,142 124,300 90,532 78,558 216,674 202,858Unrestricted 95,626 162,135 15,320 556 110,946 162,691TotalNetAssets 2,585,980$ 2,525,269$ 378,960$ 352,458$ 2,964,940$ 2,877,727$

* AmountshavebeenrestatedprimarilytocomplywiththeimplementationofGASBStatementNo.54asdiscussedinNote18PriorPeriodRestatement.

NetAssetsYearEndedSeptember30,2011

(WithComparativeTotalsforSeptember30,2010)

GovernmentalActivities

BusinessTypeActivities

TotalPrimaryGovernment

For theyearendedSeptember30,2011, totalassetsexceeded liabilitiesby$2,964,940.The largestportionof theCitysnetassets,$2,637,320(89.0%)representsitsinvestmentincapitalassetslessanyrelateddebtusedtoacquirethose assets that are still outstanding, and includes assets such as land, infrastructure, improvements, buildings,machineryandequipment,andintangibles.CapitalassetsareusedtoprovideservicestothecitizensofSanAntonioandarenotavailableforfurtherspending.AlthoughtheCitys investment incapitalassets isreportednetofrelateddebt,theresourcesneededtorepaythedebtmustbeprovidedfromothersources,ascapitalassetscannotbeusedtoliquidateliabilities.


Of the totalnetassets,$216,674 (7.3%)represents resources thataresubject toexternal restrictionsonhow theymaybeused. The remaining $110,946 (3.7%) representsunrestrictednet assets,which canbeused tomeet thegovernmentsongoingobligationstocitizensandcreditors.ThefollowingscheduleprovidesadetailofthechangestotheCitysnetassets:

20112010

(Restated)*2011

2010(Restated)*

20112010

(Restated)*Revenues:ProgramRevenues:ChargesforServices 151,344$ 155,336$ 205,396$ 181,173$ 356,740$ 336,509$OperatingGrantsandContributions 267,524 256,214 267,524 256,214CapitalGrantsandContributions 137,892 98,362 40,237 40,156 178,129 138,518

GeneralRevenues:PropertyTaxes 396,847 406,579 396,847 406,579OtherTaxes 343,804 328,928 343,804 328,928RevenuesfromUtilities 308,838 293,114 308,838 293,114InvestmentEarnings 6,184 6,954 772 823 6,956 7,777Miscellaneous 40,217 24,016 450 1,547 40,667 25,563

TotalRevenues 1,652,650 1,569,503 246,855 223,699 1,899,505 1,793,202

Expenses:PrimaryGovernment:GovernmentalActivities:GeneralGovernment 103,617 114,591 103,617 114,591PublicSafety 574,263 545,359 574,263 545,359PublicWorks 239,195 221,612 239,195 221,612Sanitation 20,015 8,385 20,015 8,385HealthServices 101,995 104,667 101,995 104,667CultureandRecreation 147,591 143,122 147,591 143,122ConventionandTourism 28,735 26,437 28,735 26,437UrbanRedevelopmentandHousing 13,696 26,486 13,696 26,486Welfare 185,600 177,819 185,600 177,819EconomicDevelopmentandOpportunity 90,844 104,964 90,844 104,964InterestonLongTermDebt,Net 87,792 70,945 87,792 70,945

BusinessTypeActivities:AirportSystem 105,708 83,109 105,708 83,109DevelopmentServices 20,195 19,570 20,195 19,570MarketSquare 2,215 251 2,215 251ParkingSystem 8,703 9,135 8,703 9,135SolidWasteManagement 82,128 85,058 82,128 85,058

TotalExpenses 1,593,343 1,544,387 218,949 197,123 1,812,292 1,741,510ChangeinNetAssetsBeforeTransfers 59,307 25,116 27,906 26,576 87,213 51,692

Transfers 1,404 5,429 (1,404) (5,429) NetChangeinNetAssets 60,711 30,545 26,502 21,147 87,213 51,692

Beginning,NetAssets(restated) 2,525,269 2,494,724 352,458 331,311 2,877,727 2,826,035

Ending,NetAssets 2,585,980$ 2,525,269$ 378,960$ 352,458$ 2,964,940$ 2,877,727$

*

Governmental

AmountshavebeenrestatedprimarilytocomplywiththeimplementationofGASBStatementNo.54asdiscussedinNote18PriorPeriodRestatement;andreclassifiedinordertobeconsistentwiththecurrentyear'spresentation.

CityofSanAntonio,TexasChangesinNetAssets

YearEndedSeptember30,2011(WithComparativeTotalsforSeptember30,2010)

ActivitiesBusinessType

ActivitiesTotalPrimaryGovernment

TheCitystotalrevenueswere$1,899,505 for fiscalyearendedSeptember30,2011.Revenues fromgovernmentalactivities totaled $1,652,650 and revenues from businesstype activities totaled $246,855. General revenuesrepresented57.8%oftheCitystotalrevenue,whileprogramrevenuesprovided42.2%ofrevenuereceivedinfiscalyear2011.ExpensesfortheCitytotaled$1,812,292.Governmentalactivityexpensestotaled$1,593,343,or87.9%oftotalexpenses.



GovernmentalActivitiesProgramRevenuesandExpenses

$0 $100,000

$200,000

$300,000

$400,000

$500,000

$600,000

GeneralGovernment

PublicSafety

PublicWorks

Sanitation

HealthServices

Culture&Rec.

Conv.&Tourism

UrbanRedev.&Housing

Welfare

Econ.Dev.&Opp.

Interest,Net

Revenues Expenses

GovernmentalActivitiesRevenuesbySource

18.7%

20.8%

9.2% 16.2%

8.3%

24.0%

2.4%0.4%

ChargesforServices

OperatingGrantsandContributions

CapitalGrantsandContributions

PropertyTaxes

OtherTaxes

RevenuesfromUtilities

InvestmentEarnings

Miscellaneous

GovernmentalActivitiesincreasedtheCitysnetassetsby$60,711.Thereasonforthechangeisasfollows:

GrantsandContributions revenues increasedby$50,840primarilydue to increasedcontributions receivedfortheConventionCenterHotel($20,416),fundingreceivedfromTXDOTandSAWSforvariouspublicworksstreetanddrainageprojects($23,650)andamountsreceivedforweatherization,energyefficiency,andCityretrofitprograms($9,573).

Thereductioninnettaxableassessedvaluesdecreasedfrom$72,743,219infiscalyear2010to$71,007,547infiscalyear2011wastheprimaryreasoncausingPropertyTaxesrevenuestobe$9,732lowerthantheprioryear. Although assessed values for new construction increased in fiscal year 2011, values for existingpropertiesdecreasedcausinganoverallreductionintaxablevalues.

OtherTaxes increasedby$14,876due toan improvement in the localeconomy from theprioryear.ThisimprovementcamefromanincreaseintourismandconventionbusinesscausingHotelOccupancyTaxesandSalesandUseTaxesto increaseby$13,344,and$3,234,respectively,fromtheprioryear. These increaseswere tempered by a $1,284 reduction in Gross Receipts Business Taxes due to a reduction intelecommunicationaccesslines.

CPSEnergyrevenuesincreasedby$14,128duetoa5.65%increaseinelectricsalesresultingfromanaboveaveragehotsummerin2011.RevenuesfromSAWSincreasedby$1,597duetoanincreaseofsalesresultingfromanextremedrought in2011,which increasedwaterusage.Theprecipitationduring fiscalyear2011was10.55comparedto52.22intheprioryear.

Miscellaneous Revenues increased by $16,201 as a result of $5,000 of Community Infrastructure andEconomicDevelopment(CIED)fundsreceivedfromCPSEnergyinfiscalyear2011,asubsidyforBuildAmericaBonds (BAB) in the amount of $4,148, and other miscellaneous revenues associated with confiscatedpropertyandotherdonationsreceivedfromprivatedonors.

GeneralGovernmentexpenseswere lowerby$10,974primarilydue to$7,588 inassetsexpensed in fiscalyear2010thatdidnotmeetthethresholdtobecapitalized.


The increase inPublicSafetyexpensesof$28,904fromthepriorfiscalyear ispartlyassociatedwithhighermotor fuel costs and police and fire accrued leave. Police also added additional Sergeant andDetectivepositions,alongwithequippingallpolicecruiservehicleswithincarvideosystems.Fireaddedpositionstocreateanadditionalfirebattalion,createdasecondHazardousMaterialsResponseTeamandsuppliedfiveenginecompanieswithequipmentneededtoprovideAdvanceLifeSupport(ALS)capabilitiesatalltimes.

PublicWorksexpenseswerehigherby$17,583asaresultofincreasedcapitalprojectactivityof$10,554forthe 36th Street Extension through Kelly USA project. The remainder of the increase is primarily due toincreasedactivityfromtheprioryearassociatedwithvariouscitywidedrainageprojects.

Expenses for Sanitation increased by $11,630 primarily due to three ARRA grants received for theWeatherizationAssistanceProgram,EnergyEfficiencyBlockGrant,andtheRetrofitRampUpProgram.

Urban Redevelopment and Housings reduction of $12,790 was due to a decrease of $6,789 in HOMEprogramexpendituresaslargerprogramshadnotreceivedtheirtaxcreditsasexpected.Thesedollarswerereprogrammed for projected expenses in fiscal year 2012. Additionally, due to the economy, less rentalrehabilitationmonieswereawarded tobe spent. Also, twomultiyeargrantsawarded in fiscalyear2009havedecreasingexpendituresdue to the closingof theirgrantperiod. In total,expenditures incurred forNeighborhood Stabilizing Program and Other Community Development Block Grants in fiscal year 2010totaled$8,800,whiledollarsexpendedinfiscalyear2011onlytotaled$2,800.

Welfare increased$7,781 from fiscalyear2010due tooverall increasedactivity fromgrants. CategoricalGrantInaidincreasedby$12,446duetoincreasedstaffingontheCCSandHeadStartgrant,whichtranslatedintohigher expenditures inmeeting grantobjectives. This increase in staffing costsweremitigatedby areductioninAmericanRecoveryReinvestmentActexpensesduetofundsbeingexhaustedinfiscalyear2011.

EconomicDevelopment andOpportunityexpensesdecreased$14,120 from fiscal year2010due to lowerspendingforHUD108inanticipationoftheloansexpiration.TheloanwassubsequentlyextendedthroughDecember2013withdollarsbeingreprogrammedtobespentthroughthefirstquarteroffiscalyear2014.

Net increases of $56,178 in bonds and certificates, $11,249 in capital leases, and $9,478 in unamortizedpremiumsanddiscountscausedtheexpensestoincreaseby$16,847inInterestonLongtermDebtfromtheprioryear.

BusinessTypeActivitiesProgramrevenuesfortheCitysBusinessTypeActivitiestotaled$245,633,whichis$24,304higherthanthepreviousfiscalyear.Theremainingrevenueswerearesultofinvestmentearningsandothermiscellaneousitems.ExpensesforBusinessTypeActivitieswere$218,949comparedtoprioryearsexpensesof$197,123.

BusinessTypeActivitiesExpensesandRevenues

$0 $25,000

$50,000

$75,000

$100,000

$125,000

SolidWaste

Parking

Mkt.Square

Dev.Services

Airport

Revenues Expenses

BusinessTypeActivitiesRevenuesbySource

0.5%

16.3%

83.2%

ChargesforServices

CapitalGrantsandContributions

Interest&Miscellaneous


BusinessTypeActivitiesincreasedtheCitysnetassetsby$26,502primarilybecauseofthefollowing:

Charges for Services increased by $24,223 primarily due to an increase in passenger travel through SanAntonio International Airport, resulting in $19,184more in Airport Systems revenues; SolidWaste feesincreasingby$2,179,mainlyduetoincreasedrecyclingactivityinfiscalyear2011;andDevelopmentServicesby$3,327astheCityexperiencedincreasesinbuildingpermitsandplanreviewrevenuesforbothresidentialandcommercialactivityinfiscalyear2011.

Airport System expenses increased by $22,955 primarily due to increased costs associatedwith the newterminalexpansionattheSanAntonioInternationalAirport.

Market Square expenses were higher in fiscal year 2011 by $1,604 as a result of increased repair andmaintenancecostsandhigherpersonnelcostsneededtooperateandmaintainthemarketsquarefacilities.

SolidWasteexpensesdecreasedby$2,930fromtheprioryearasthefinalpurchasesforcitywidetrashandrecyclebinsoccurredinfiscalyear2010.

FinancialAnalysisofGovernmentalFundsActivitiesofthePrimaryGovernmentsGeneralFund,SpecialRevenueFunds,DebtServiceFund,andCapitalProjectsFundsareconsideredgeneralgovernmentfunctions.TheGeneralFund istheCitysprimaryoperatingfund.SpecialRevenueFundsareusedtoaccountfortheproceedsofspecificrevenuesourcesthatarerestrictedorcommittedtoexpenditures for specific purposes other than debt service or capital projects. The Debt Service Fund is used toaccount for financial activity related to the Citys general bonded indebtedness, as well as other longtermobligations.TheCapitalProjectsFundsareusedtoaccountforfinancialactivityrelatedtotheCity indebtednessforCapitalProjects,otheragencycontributionsandtheoperatingactivitiesofthoseprojects.Revenuesfromtaxesincreasedby$5,144,whichisprimarilyattributableto:(1)a$4,660decreaseinpropertytaxandrelatedpenaltiesand interestrevenues intheGeneralFund,(2)a$11,504 increase insalesandusetaxrevenues intheGeneral Fund (3) a $2,794 decrease in property tax and related penalties and interest revenues in theDebtServiceFund,(4)a$3,204 increase inoccupancytaxesandrelatedpenaltiesand interestrevenues intheNonmajorGovernmentalFunds,and (5)a$1,136decrease inproperty tax revenue in theTax IncrementReinvestmentZoneFund.Thedecreases inproperty taxesarea resultofadecrease inassessedpropertyvalueswhile the increase insalesandusetaxesandoccupancytaxesareresultsofanupswingintheeconomyandincreasedactivityassociatedwithtourismandconventionbusiness.ThetotalfundbalanceoftheGeneralFundatyearendwas$232,692,anincreaseof$1,870fromthetotalrestatedfund balance of $230,822 in fiscal year 2010. The total spendable General Fund balance for fiscal year 2011 is$227,753, which represents $1,107 in restricted, $48,540 in committed, $7,413 in assigned and $170,693 inunassignedfundbalances.Theunassignedfundbalancerepresentsamountsavailableforadditionalappropriationsattheendofthefiscalyear.ThetotalfundbalanceoftheDebtServiceFundatyearendwas$93,569,adecreaseof$15,514fromthetotalfundbalanceof$109,083infiscalyear2010.Theentirefundbalanceisreservedforpaymentofdebtservice.The CategoricalGrantIn Aid Fund has a total deficit fund balance of $4,209 an increase of $394 from the totalrestateddeficitfundbalanceof$3,815,whichisaresultofprovidingadditionalprogramservicestothecommunitybeyondwhatmonieswereprovidedbygrantoragencies.TheuncollectibleamountswereincorporatedintotheCitysannual budget process to be funded over five years ofwhich the City has one year to fund. Remaining deficitamountswillbeincorporatedintofutureadoptedbudgetstofund.Thetotalfundbalanceofthe2007GeneralObligationBondsatyearendwas$217,775,adecreaseof$20,546fromthe total fundbalanceof$238,321 in fiscal year2010. This stems from capitalexpenditures associatedwith the$550,000bondapprovedbyvotersinfiscalyear2007.


ThefundbalanceintheGeneralObligationProjectFundhasadeficitfundbalanceof$46,836,anincreaseof$22,286fromtheprioryear.Thisisprimarilyduetothetimingdifferencebetweencapitalexpendituresassociatedwiththe20072012MunicipalBondProgramandthefinalbondissuancetofundthatprogram.GeneralFundBudgetaryHighlights

Original Final ActualBudget Budget Results

GeneralGovernment 107,560$ 89,243$ 81,729$PublicSafety 527,607 536,765 530,955PublicWorks 40,505 44,905 45,357HealthServices 72,194 74,826 76,619Sanitation 3,276 3,312 3,354CultureandRecreation 81,829 83,884 83,291Welfare 41,856 46,294 44,342EconomicDevelopmentandOpportunity 12,205 12,334 13,428

TransferstoOtherFunds 52,070 55,616 55,500Total 939,102$ 947,179$ 934,575$

VariancesinBudgetAppropriations(BudgetaryBasis)GeneralFund

Changes in original budget appropriations to the final amended budget appropriations resulted in a net $8,077increaseinappropriations.Thisincreasecanbesummarizedbythefollowing:

GeneralGovernmenthadan$18,317decrease,which isattributableto indirectcostreimbursements fromotherfundscausinga$9,459decrease;budgetcarryforwardscausinga$3,640 increase;andordinanceandanalystadjustmentsaccountingforadecreaseof$12,498.

PublicSafetycontributed$9,158totheoverallincrease,whichwascomprisedof$3,399inprioryearbudgetcarryforwardsand$5,759inordinanceandbudgetadjustments.

Ofthe$4,400increaseinPublicWorks,$3,921consistedofbudgetcarryforwardswhiletheremaining$479increaseconsistedofbudgetadjustments.

HealthServiceshadanincreaseof$2,632fromtheoriginalbudget,whichwasdueto$555addedforbudgetcarryforwardsand$2,077inbudgetadjustmentsduringfiscalyear2011.

Ofthe$4,438increaseinWelfare,$3,386camefrombudgetcarryforwardswhiletheremaining$1,052wasdecreasedviabudgetadjustments.

The increase inTransferstoOtherFundsconsistedof$8,038 inbudgetcarryforwardsreducedby$4,492 inbudgetadjustments.

FinalbudgetedappropriationsfortheGeneralFundwere$947,179,whileactualexpendituresonabudgetarybasiswere$934,575creatingapositivevarianceof$12,604.Significantvariancesareasfollows:

GeneralGovernmenthada$7,514positivevariance.TheCitybudgetedtheretireepayouts intheGeneralGovernmentfunctionwhileactualpayoutsarechargedacrossallfunctions.Salaryreserves,whicharemainlyusedforcostoflivingadjustmentsandstepincreasesforpay,represented$2,163infiscalyear2011.PublicSafetytypicallyreceives70%ofthesefunds.Furthersavingswereachievedacrossdepartmentsasaresultofhiringbeingdelayedduringthefiscalyear.

PublicSafetyhada$5,810positivevariancelargelyduetopositionvacanciesduringthefiscalyear.


ThefollowingchartsprovideacomparisonoftheCitysbudgetappropriations.

$

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

GeneralGovernment

PublicSafety

PublicWorks

HealthServices

Sanitation

Welfare

Cult&Rec

EcoDev&Opp

TrsftoOtherFunds

BudgetAppropriationsbyFunctionOriginalBudget/FinalBudget/ActualGeneralFund

OriginalBudget FinalBudget ActualResults

FinancialAnalysisofProprietaryFundsActivitiesofthePrimaryGovernmentsAirportSystem,DevelopmentServices,MarketSquare,ParkingSystem,andSolidWasteFundsareconsideredproprietaryfunds.TheAirportSystemhandlesoperationsatboththeSanAntonioInternational Airport and StinsonMunicipal Airport. Development Services supports the activities related to theregulation of City development. Market Square accounts for all revenues and expenses associated with themanagementandoperationoftheFarmersMarket,ElMercado,theMarketSquareparking lotandAlameda. TheParkingSystemhandlesoperationsof theCitysparkinggaragesand lots. SolidWasteManagementhandles trashcollectionoperations,recycling,andtheactivitiesoftheCityslandfills.Financialanalysisfortheproprietaryfundsisonthesamebasisasthebusinesstypeactivities.Seefurtheranalysisonthefundsoperationsatpages6and7.CapitalAssetsTheCitys investment in capitalassets for itsgovernmentalandbusinesstypeactivitiesasof September30,2011amountsto$4,452,762(netofaccumulateddepreciation).Thisinvestmentincapitalassetsincludesland,othernondepreciable assets, buildings, improvements, infrastructure, machinery and equipment, intangible assets andconstruction inprogress.Thenet increase in theCitys investment incapitalassets for thecurrent fiscalyearwas$188,100,whichcomprisesa$172,130 increase ingovernmentalactivitiesanda$15,970 increase inbusinesstypeactivities.


20112010

(Restated)*2011

2010(Restated)*

20112010

(Restated)*Land 1,371,289$ 1,364,382$ 14,385$ 14,385$ 1,385,674$ 1,378,767$OtherNonDepreciableAssets 575 500 575 500NonDepreciableIntangibleAssets 81,961 81,809 81,961 81,809DepreciableIntangibleAssets 2,711 109 2,711 109Buildings 434,600 454,417 291,449 139,354 726,049 593,771Improvements 359,593 272,961 262,642 134,372 622,235 407,333Infrastructure 847,588 817,171 847,588 817,171MachineryandEquipment 170,782 163,419 21,714 23,630 192,496 187,049ConstructioninProgress 537,568 479,769 55,905 318,384 593,473 798,153Total 3,806,667$ 3,634,537$ 646,095$ 630,125$ 4,452,762$ 4,264,662$

*AmountshavebeenrestatedprimarilytocomplywithGASBStatementNo.54asdiscussedinNote18PriorPeriodRestatement


TotalPrimaryGovernment


During fiscal year 2011, the City transferred $507,724 of construction in progress to land and depreciable assetclasses forcompletedcapitalprojectswhichweremainlycomprisedofcitywidestreetsanddrainageprojects,SanAntonioRiverWalkimprovements,terminalexpansionattheSanAntonioInternationalAirportandimprovementstotheCitysconventionandsportsfacilitiestoincludearenovationoftheLilaCockrellTheatre.ThefollowingscheduleprovidesasummaryoftheCityscapitalassets:

Governmental BusinessTypeActivities Activities Total

BeginningBalance(Restated) 5,801,230$ 844,119$ 6,645,349$Additions 314,315 49,443 363,758Deletions (22,870) (11,117) (33,987)AccumulatedDepreciation (2,286,008) (236,350) (2,522,358)EndingBalance 3,806,667$ 646,095$ 4,452,762$

ChangeinCapitalAssetsSeptember30,2011

AdditionalinformationontheCityscapitalassetscanbefoundinNote4CapitalAssets.DebtAdministrationLongTermDebtAt the end of the current fiscal year, the City had a total of $2,307,999 in bonds, certificates, and tax notesoutstanding, an increase of 3.2% over last year. Additional information on the Citys longterm debt, includingdescriptionsofthenewissues,canbefoundinNote6LongTermDebtandNote7CommercialPaperPrograms.


2011 2010*BondsPayable:TaxExemptGeneralObligationBonds 708,055$ 721,350$TaxableGeneralObligationBonds 191,550 191,550$TaxExemptCertificatesofObligation 356,870 303,635TaxableCertificatesofObligation 80TaxNotes 27,450 28,860CommercialPaper 14,370RevenueBonds 575,115 557,387CapitalAppreciationBonds(CAB) 23,239 20,077

Total 1,882,279$ 1,837,309$

2011 2010*BondsPayable:TaxExemptGeneralObligationBonds 1,310$ 1,345$TaxableGeneralObligationBonds 16,075 16,875$TaxExemptCertificatesofObligation 2,035 2,135TaxNotes 34,500RevenueBonds 406,300 344,525

Total 425,720$ 399,380$

*Reclassedinordertobeconsistentwiththecurrentyear'spresentation.

September30,2011and2010



GovernmentalActivitiesInJuly2011,theCity issuedadditional indebtednessforatotalof$176,635. Thiswascomposedof$59,485 intaxexemptgeneralobligationbonds,$79,780intaxexemptcertificatesofobligation,$9,445intaxnotesand$27,925inrevenuebonds.TheGeneralObligationBonds,Series2011were issuedtofinance improvementstostreets,bridges,sidewalks,anddrainage.TheCombinationTaxandRevenueCertificatesofObligation,Series2011were issued for thepurposeofprovidingfunds for, fireprotection,and lawenforcement facilities improvements,drainage facilities, sidewalks,bridges,andstreets improvements,parks,municipal facilities improvements,andpedestrianwalkway improvementsalongandwithintheSanAntonioRiverChannel.TheTaxNotes,Series2011were issued toprovide funding for improving theCitys technology infrastructureandbusinesssystemsbyrenovating,improving,andequippingvariousCityfacilities.InJuly2011,MunicipalFacilitiesCorporationissued$27,925inMunicipalFacilitiesCorporationLeaseRevenueBonds,Series2011,tofundtheconstructionofanewFireandPoliceEmergencyDispatchCenter,alsoknownasthePublicSafetyAnsweringPoint(PSAP)facility.BusinessTypeActivitiesInDecember2010, theCity issued$42,220 inAirportSystemRevenue ImprovementandRefundingBonds,Series2010A (2010AGARBs),$20,885 inAirportSystemRevenueRefundingBonds,TaxableSeries2010B (2010BTaxableGARBs),and$37,335 inPassengerFacilityChargeandSubordinateLienAirportSystemRevenue ImprovementandRefundingBonds,Series2010(2010PFCBonds).The2010AGARBswere issued to fundvariousairport system capital improvements includingPFCeligibleairportrelatedprojects,torefundaportionoftheCitysoutstandingindebtednessoriginallyissuedtofinanceAirportSystem


improvements,provide funds for capitalized interest,and topay the costsof issuance.The2010BTaxableGARBswereissuedtorefundcertainGARBobligationsandtopaythecostsofissuance.The2010PFCBondswereissuedtopaycostsrelatedtoconstructing,improving,renovating,enlargingandequippingairport projects that qualify and have been approved by the Secretary of the United States Department ofTransportation.ThePFCBondswerealsousedtorefundtheremainingportionofthe2010TaxNotesattributedtoPFCprojectsnotbeingrefundedbythe2010AGARBs,andtopaythecostsofissuance.Standard&Poors,Moodys,andFitchsunderlyingratingforCityobligationsduringfiscalyear2011wereasfollows:

Standard&Poor's Moody's Fitch

GeneralObligation/CertificatesofObligation/TaxNotes AAA Aaa AAA

HotelOccupancyTaxBonds(PriorLien)1 A+ Aa2 AAHotelOccupancyTaxBonds(SubordinateLienLongTerm) A+ Aa3 A+HotelOccupancyTaxBonds(VariableRateShortTerm) A+ Aa3 A+

HotelOccupancyTaxNotes2

AirportSystem A+ A1 A+AiportPFC A A2 AMunicipalDrainageUtilitySystemRevenueBonds AA+ Aa2 AA

SalesTaxRevenueCommercialPaperNotes3 A1+ P1 F1+

PrivatePlacementNotRated

1StandardandPoorselevatedtheCitysHotelOccupancyTaxBonds(PriorLien)ratinginDecember2011fromA+toAA.2TheHotelOccupancyTaxNoteswerenolongeroutstandingasofAugust15,2011.3TheratingsassignedtotheSalesTaxRevenueCommercialPaperNotesarebaseduponthecreditratingoftheLetterofCreditproviderandnoapplicationforanunderlyingratingontheNoteswassubmitted.

TheConstitutionof theStateofTexasand theCityCharter limit theamountofdebt theCitymay incur.FormoreinformationrelatedtotheselimitsseeNote6LongTermDebt.Thetotalgrossassessedvaluationforthefiscalyearended2011was$82,736,182,whichprovidesadebtceilingof$8,273,618.CurrentlyKnownFactsOn February 16, 2012, the City Council approved calling an election on Saturday,May 12, 2012, for the Citysproposed20122017BondProgram. Ifapproved,the$596,000140projectprogramwillbethe largest intheCityshistoryandwillnotrequireapropertytaxincreasetofundthedebtserviceobligations.Theseprojectswillbedividedintothefollowingfivecategories: Streets,BridgesandSidewalks:41projects$338,000 DrainageandFloodControl:17projects$128,000 Parks,RecreationandOpenSpace:68projects$87,000 Library,MuseumandCulturalArtsFacilities:11projects$29,000 PublicSafetyFacilities:3projects$14,000

Formoreinformationonothercurrentlyknownfacts,pleaseseeNote19SubsequentEvents.RequestsforInformationThisfinancialreportisdesignedtoprovideageneraloverviewoftheCityspositionforthosewithaninterestinthegovernmentsfinances.QuestionsconcerninganyoftheinformationprovidedinthisreportorrequestsforadditionalfinancialinformationshouldbeaddressedtotheFinanceDepartment,P.O.Box839966,SanAntonio,TX782833966.


BasicFinancialStatements

StatementofNetAssets

(InThousands)GOVERNMENTAL BUSINESSTYPE COMPONENT

ACTIVITIES ACTIVITIES TOTAL UNITSAssets:

CurrentAssets:CashandCashEquivalents 24,149$ 2,134$ 26,283$ 227,575$SecuritiesLendingCollateral 12,975 1,356 14,331 2,055Investments 261,354 27,322 288,676 311,327Receivables,Net 111,509 11,103 122,612 261,599DueFromOtherGovernmentalAgencies 21,703 21,703 12,732InternalBalances (1,343) 1,343 MaterialsandSupplies,atCost 6,761 706 7,467 151,771PrepaidExpenses 1,062 1,062 87,697OtherAssets 1,204Deposits 213 213RestrictedAssets:

CashandCashEquivalents 142,567 32,360 174,927 312,046SecuritiesLendingCollateral 24,982 6,744 31,726Investments 587,109 148,031 735,140 1,389,102Receivables,Net 116,669 2,228 118,897 46,655MaterialsandSupplies,atCost 75 75DeferredCharges 3,700Deposits 151 151PrepaidExpenses 459 459DueFromOtherGovernmentalAgencies 13,090 13,090

TotalCurrentAssets 1,323,485 233,327 1,556,812 2,807,463NoncurrentAssets:

CapitalAssets: NonDepreciable 1,991,393 70,290 2,061,683 1,567,278Depreciable,Net 1,815,274 575,805 2,391,079 9,297,005

AssetsHeldforResale 382Receivables,Net 3,716PrepaidExpenses 922,726NetOPEBAssetandPensionAsset 32,664OtherNoncurrentAssets 84,329UnamortizedBondIssuanceCosts 38,055 10,156 48,211 19,017

TotalNoncurrentAssets 3,844,722 656,251 4,500,973 11,927,117TotalAssets 5,168,207 889,578 6,057,785 14,734,580

Liabilities:

CurrentLiabilities:AccountsPayableandCurrentLiabilities 101,490 7,302 108,792 359,467UnearnedRevenue 8,448 1,774 10,222 8,053SecuritiesLendingObligation 12,975 1,356 14,331 2,055AccruedInterest 1 80 81DueToOtherGovernmentalAgencies 2,187 6 2,193 3,408RestrictedLiabilities:

AccountsPayableandCurrentLiabilities 79,355 9,618 88,973 41,169UnearnedRevenue 62,012 62,012SecuritiesLendingObligation 24,982 6,744 31,726AccruedInterest 15,638 5,451 21,089 26,986DueToOtherGovernmentalAgencies 5,465 5,465

TotalCurrentLiabilities 312,553 32,331 344,884 441,138NoncurrentLiabilities:

DueWithinOneYear 191,129 26,700 217,829 328,127DueinMoreThanOneYear 2,078,545 451,587 2,530,132 8,666,872

TotalNoncurrentLiabilities 2,269,674 478,287 2,747,961 8,994,999TotalLiabilities 2,582,227 510,618 3,092,845 9,436,137

NetAssets:InvestedinCapitalAssets,NetofRelatedDebt 2,364,212 273,108 2,637,320 4,266,136Restrictedfor:

DebtService 88,190 27,893 116,083 32,514CapitalProjects 20,674 62,639 83,313 450,533OperatingandOtherReserves

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