City Offices
18100 Upper Bay Road
P.O. Box 58448
Nassau Bay, TX 77258
281.333.4211

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The following data summarize the Fiscal Year 2007 budget for the City of Nassau Bay. The graph and the figures show the planned expenditures.

To see full budget

Fiscal Year 2007 held a number of important advances and great excitement for the City
of Nassau Bay. Our long standing goal of improving the values of under-performing commercial properties is finally being achieved. The Legislature and the Governor approved our request to create the NASA Area Management District. A highly regarded developer is investing heavily in our commercial area along NASA Parkway. We continue to be optimistic about future waterfront development. This is an exciting time and the City’s future is bright.

Evidence of this fact is most vividly seen in the sale of the Nassau Development, Inc.
portfolio: 12 office buildings on 27 acres, in the heart of our commercial area. These properties
are on our 2006 tax roll with a value of $8.1 million. At our current tax rate, that creates only
$51,000 annually in property tax revenue. Now, think forward a few years to a time when the
Griffin Partners’ redevelopment project is complete, with a tax roll value of $150 million. The
redeveloped property will create property tax revenue over $984,000 each year, assuming the
same tax rate. In addition, the Griffin project is expected to add 70,000 square feet of new retail operations in the City, with the attendant increase in sales tax revenue, and a new hotel will add more tourism revenue!

And, while the improvements in property tax revenue, sales tax and hotel tax revenue are
easiest to see, there are additional spin-off effects. The old Holiday Inn property was recently
sold, and it has been demolished with a view toward redevelopment of that important site.
CHRISTUS St. John Hospital, and its new partnership with M.D. Anderson Cancer Center,
continues to move forward with expansion plans. We expect that this year will see movement on the waterfront redevelopment that we have long sought. We might also see improvement in the Nassau Bay Shopping Village and other strip centers in Nassau Bay.

The City has worked hard to bring desired economic development tools to bear on our
redevelopment prospects. The recently approved NASA Area Management District, coupled
with the Tax Increment Reinvestment Zone (TIRZ) and Local Government Corporation which we are creating, will be powerful economic development tools, allowing the City to create publicprivate partnerships to enhance the City’s tax base. This background bodes well for Nassau Bay’s financial future. While there is much work ahead to achieve these improvements in our tax base, all of the signs are encouraging.

As we approach a period of growth in the tax base, the City has numerous challenges to
our budget. In preparing this proposed budget for Fiscal Year 2008, staff was cognizant that we have not yet realized significantly improved revenues. We attempted to keep the tax rate
unchanged for the third straight year, and our spending on par with previous years, and seek cost savings in a variety of areas. However, based on Council guidance at our final budget workshop and based on a better than expected growth on our certified tax toll, Staff recommends and this final version of the budget includes a tax rate reduction of 2.445 cents.

The relocation of City Hall and Fire Station operations into interim facilities is moving
apace. My guidance to staff has been to minimize the cost associated with the interim facilities.
For City Hall that means we will do very little to the facilities we will occupy at 18100 Upper
Bay Road while we await the construction of a new facility. We may be somewhat
uncomfortable during our stay at 18100 Upper Bay Road, but we will remain focused on
providing quality service to our community.

We are constructing a new building that will serve as an interim fire station at the old
Swan Lagoon water plant on Surf Court. This building will house the NBVFD and equipment
while we plan for and construct a new Public Safety facility to house the Fire Department, Police Department, and Emergency Medical Service. Eventually, the new building on Surf Court will serve as the City’s Public Works facility.

The FY08 Budget proposes to continue our work to upgrade critical City infrastructure,
while maintaining an exemplary quality of life environment for our citizens and for our
businesses. As always, Vision 2020 remains the desired future we are striving to achieve. This
Budget takes us closer to that goal.

Nassau Bay Receives a Clean Audit Report!

The City’s independent audit firm, Sandersen Knox and Belt, LLP represented by Robert Belt, CPA Managing Partner of the Houston Office, presented to City Council on February 25, 2008 a draft the City’s financial statements to review prior to final issuance.  The report was issued in final form later in the week and provided to the City’s financial advisors in connection the City’s Series 2008 bond issue. 

The auditors’ report reflects an unqualified opinion.  Mr. Belt stated their opinion was a “clean” unqualified opinion which is the highest level of assurance a CPA could provide that the City’s financial statements were materially correct and that all disclosures required by Generally Accepted Accounting Principles had been included. Furthermore, he stated to Council and to the public in attendance at the meeting that the City had a healthy General Fund balance compared to total General Fund expenditures, which is a common indicator used by professionals when evaluating the overall financial health of a local government.  He also made positive comments about the City’s overall positive budget variance.

Management had previously met with the auditors going over the results of the audit in detail.  Management has prepared an action list for policy items to be brought before Council during the next year to continue to improve the budget, accounting, and finance operations of the City. 

Financial highlights for the year include:

• The General Fund had revenue of $3.47 million and expenditures of $3.35 million which increased the fund balance by $116,818.
• Net Assets exceed liabilities by $10.97 million.  The largest portion of the City’s net assets (61%) reflects its investments in capital assets [e.g., fleet equipment, streets, and drainage systems].  Major capital asset events during the year included construction of street improvements ($176,812) and purchase of equipment ($180,888).  The City uses these capital assets to provide services to citizens.
• City management budgets each year such that the ratio of debt service to total General Fund expenditures shall not exceed 20% of total expenditures.  This ratio is calculated by dividing general obligation debt service expense by the sum of general fund operating and debt service expense.  This ratio as of September 30, 2007, was 15.9%, remaining below the 20% guideline.
• During the year, the City issued $945,000 in certificate of obligation notes for capital projects within the City.  During the same period, reductions in prior year debt issues [Series 2002, 2003, 2004, and 2006] totaled $531,224.

The City finished the year in a strong position with a long-term debt balance of $2.96 million.  In comparison, some cities target the ratio of net debt to total assessed valuation to not exceed 4.0%, and ratios from 1.0% to 4.0% are typical.  As of September 30, 2007, Nassau Bay’s ratio of total debt to assessed valuation was a healthy 0.75%.

Because of adherence to sound debt management financial principles, Nassau Bay leadership has been able to retain an excellent borrowing position even during periods of economic stress. As a consequence, the city will continue to receive low interest rates when entering the CO/bond markets.

The 2008 debt issue, for instance, was obtained at an attractive 3.15% interest rate.  And was part of an $8.4 million budget that incorporated a property tax decrease of 3.72% [reducing the tax rate from $0.65657 to $0.63212 per $100 of assessed value].

A complete copy of the annual audit is available for inspection at City Hall and is posted below.

To see the full audit