HomeMy WebLinkAboutR2019-086 2019-03-25 RESOLUTION NO. R2019-86
A Resolution of the City Council of the City of Pearland, Texas, accepting the
City's comprehensive annual financial report for fiscal year 2018 and the
accompanying independent audit as presented by the accounting firm of
Whitley Penn, LLP.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That certain comprehensive annual financial report for fiscal year 2018, a
copy of which is attached hereto as Exhibit "A" and made a part hereof for all purposes, is hereby
authorized and approved.
Section 2. That the City Council accepts the City's comprehensive annual financial report
for fiscal year 2018.
PASSED, APPROVED and ADOPTED this the 25th day of March, A.D., 2019.
TOM REID
MAYOR
ATTEST:
ROS'',
• NG Lr, , M =i` �/� y
Y SE 1�iETARY
APPROVED AS TO FORM: ""o`N````
C�1OL—
DARRIN M. COKER
CITY ATTORNEY
R2019-86
Exhibit "A"
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Fiscal Year 2018 Audit Results
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whitleypenn
CPAs and Professional Consultants
Engagement Team
Engagement Partner — Lupe Garcia, CPA
Concurring Partner — Tom Pedersen, CPA
f Senior Manager — Dan Hernandez, CPA
Senior — Alex Chaib, J . D.
0 Staff — Corbitt Nixon, David Reyes
2 U:
The Audit Process
Risk
Assessment
Substantive Auditor's Test of
Analytics Opinion Controls
\itVerification,
Confirmation,
and
Corroboration
3
Types of Auditor Opinions
1
• Clean Opinion
Unmodified • Highest Level of Assurance
(BEST)
• Qualified - Scope Limitation or departure from GAAP
Modified • Adverse Opinion - Scope Limitation or departure that is very material
and could mislead users
• Cannot express an opinion
= er • No assurance
(Worst)
4
Required Communications
Auditors' Responsibility Under Generally Accepted
Auditing Standards
The financial statements are the responsibility of
management.
• Our audit provides reasonable, rather than absolute,
assurance that the financial statements are free of
material misstatements.
• As a part of our audit, we obtained an understanding of
internal control sufficient to plan our audits and to
determine the nature and extent of testing performed .
5 WM
Required Communications
Significant Accounting Policies
Accounting policies and methods are appropriate and in
accordance with industry standards.
During fiscal year 2018 the City implemented
Government Accounting Standards Board ("GASB")
Statement No. 75, Accounting and Financial Reporting
for Postemployment Benefits Other Than Pensions.
6 �:
Required Communications
• Accounting Estimates
The preparation of the financial statements requires that
certain estimates and judgments be made by management.
These judgments and estimates include:
Allowances for doubtful accounts - Property tax
Allowances for doubtful accounts - Utility
Depreciation expense
,. Pension liability, deferred inflows and outflows of resources, and
pension expense
OPEB liability, deferred inflows and outflows of resources, and
OPEB expense
• We concluded that management has a reasonable basis for
significant judgments and estimates that impact the financial
statements.
7-7
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Required Communications
Difficulties Encountered in Performing the Audit
We encountered no difficulties in dealing with
management in performing and completing our audit
Corrected or Uncorrected Misstatements
There were no material misstatements that were
identified by us that required management's correction .
• Disagreements with Management
We had no disagreements with management over the
application of accounting principles or management's
judgments about accounting estimates.
Required Communications
Management Representations
We have requested certain representations from
management.
• Consultation with Other Accountants
We are not aware of any situations in which
management consulted with other accountants on
accounting or financial reporting matters.
Major Issues Discussed with Management Prior to
Retention
We discussed the application of accounting principles
and auditing standards, however, our responses were
not a condition to our retention .
Auditor's Report on Financial Statements
Page 1 of the Comprehensive Annual Financial Report
(CAFR)
Unmodified or "clean" opinion
Highest level of assurance that can be given on a set of
financial statements
Audit conducted in accordance with Government
Auditing Standards
Emphasis of Matter
Implementation of GASB No. 75
GASB Statement No . 75
Other Post- Em • to ment Benefits OPEB
• Implementing GASBS No. 75 resulted in a restatement of
beginning net position of $2 .3M
• $2.0M Governmental Activities
• $0.3M Business-type Activities
Note 14 to the financial statements
.7' Total OPEB Liability at 9/30/2017= $6.3M
$5.3M Self-funded Health Insurance
• $1.0M TMRS SDBF
Note 10 to the financial statements
s Total OPEB Liability at 9/30/2018= $5. 1M
$3.9M Self-funded Health Insurance
• $1.2M TMRS SDBF
• Note 10 to the financial statements
11 ` '
Statement of Net Position ( p . 19 )
Total Primary Government As of September As of September
(Governmental and Business-type) 30, 2018 30, 2017
Cash and investments $242,857,247 $245,070,233
Receivables/other 35,858,092 33,336,871
Capital assets, net 1,202,379,189 1,157,143,803
Total Assets (a) 1,481,094,528 1,435,550,907
Total Deferred Outflows of Resources (b) 18,365,661 24,271,989
Current liabilities (27,455,556) (33,296,280)
Long-term liabilities (704,921,598) (695,153,608)
Total Liabilities (c) (732,377,154) (728,449,888)
Total Deferred Inflows of Resources (d) (3,505,386) (196,345)
Total Net Position (e) $763,577,649 $731,176,663
Accounting formula: a + b - c — d = e
12
Long-term Liabilities
Total Primary Government
(Governmental and Business-type) September 30, 2018 September 30, 2017
Certificates of obligation $41,750,000 $37,505,000
Sales tax revenue bonds 12,845,000 13,750,000
General obligation bonds 278,175,000 283,140,000
Tax increment revenue bonds 85,180,000 83,465,000
Permanent improvement bonds 4,845,000 7,360,000
Water and sewer revenue bonds 214,705,000 196,200,000
Total OPEB liability 5,140,967 -0-
Net pension liability 18,055,593 25,237,928
Bond premiums 34,741,033 35,226,997
Other 9,484,005 13,268,683
Total $704,921,598 $695,153,608
13 a•
Statement of Revenues, Expenditures, and
Changes in Fund Balances — General Fund ( p . 26)
Year Ended
September 30,
Total Revenues $74,161,257
Total Expenditures 77,343,285
Deficiency of Revenues Over Expenditures (3,182,028)
Other Financing Sources, net 2,806,665
Net Change in Fund Balance (375,363)
Fund Balance — Beginning 14,363,005
Fund Balance — Ending $13,987,642
I.
14
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General Fund Unassigned Fund Balance ( $ M )
$25.00
$20.00 $19.66
$17.86
$16.78
$15.00
$12.31
$11.26
$10.00
$5.00
$0.00
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
15 U•
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General Fund Unassigned Fund Balance ( Days)
140
120 114
109
100
86
80
60 58
52
40
20
0
FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
16 11•
■1
Statement of Revenues, Expenses, and Changes in Net
Position — Water and Sewer Fund ( p . 30)
Year Ended
September 30, 201 :
Operating revenues $55,592,837
Operating expenses 35,080,378
Non-operating revenues (expenses), net (4,235,009)
Capital contributions 4,613,449
Transfers, net (3,102,692)
Change in net position 17,788,206
Net Position — Beginning, restated 228,055,804
Net Position — Ending $245,844,010
17 '•
■I
Net Position Enterprise Fund
Fir FY 2016 FY 2017 FY 2018
Investment in capital assets $187,936,743 $205,827,189 $210,674,024
Restricted for debt service 2,811,650 3,321,884 4,325,106
Restricted for capital projects 13,040,291 10,649,796 10,199,712
Unrestricted 12,942,728 7,336,481 20,645,168
Total Net Position $216,731,412 $227,135,350 $245,844,010
Unrestricted net position at 9/30/2018 represents 85% of operating
expenses (excluding depreciation) or 311 days of operating expenses
(excluding depreciation).
18 I•
Auditor's Report on Internal Control and
Com • liance
Internal control over financial reporting
No material weakness identified
No significant deficiencies reported
No instances of noncompliance material to the
financial statements were noted .
Auditor's Report on Compliance for Each Major
Program and On Internal Control Over Compliance
Federal Major Programs:
20.205 Highway Planning and Construction Cluster
Mykawa Road
Green Tee Trail
Shadow Creek Ranch Trail
Max Road
Fite Road
14.218 Community Development Block Grant
State Major Programs:
STP Metro Mobility: Bailey Road
McHard Road
Smith Ranch Road
20 ��
Auditor's Report on Compliance for Each Major
Program and On Internal Control Over Compliance
Internal controls over major programs
No material weakness identified
No significant deficiencies reported
Unmodified opinion on compliance for major
program
No instances of noncompliance or questioned costs
were noted
21
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_= r- • CITY OF PEARLAND
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-; _ COMPREHENSIVE ANNUAL ' , i�- W
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FINANCIAL REPORT
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CITY OF PEARLAND, TEXAS
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COMPREHENSIVE ANNUAL
FINANCIAL REPORT
Fiscal Year Ended
September 30, 2018
Prepared by:
Finance
Department
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
Page
Introductory Section
Letter of Transmittal i
Principal Officials xiv
Organizational Chart xv
GFOA Certificate of Achievement xvi
Financial Section
Report of Independent Auditors 1
Management's Discussion and Analysis 7
Basic Financial Statements:
Government-Wide Financial Statements:
Statement of Net Position 19
Statement of Activities 20
Fund Financial Statements:
Balance Sheet- Governmental Funds 22
Reconciliation of the Balance Sheet of Governmental Funds to the
Statement of Net Position 25
Statement of Revenues, Expenditures, and Changes in Fund Balances-
Governmental Funds 26
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances of Governmental Funds to the Statement of Activities 28
Statement of Net Position - Proprietary Funds 29
Statement of Revenues, Expenses and Changes in Fund Net Position -
Proprietary Funds 30
Statement of Cash Flows- Proprietary Funds 31
Notes to the Financial Statements 33
Required Supplementary Information:
General Fund - Schedule of Revenues, Expenditures, and Changes in Fund
Balances - Budget and Actual 78
Notes To Required Supplementary Budget Information 79
Schedule of Changes in Net Pension Liability and Related Ratios 80
Schedule of Contributions-Texas Municipal Retirement System 81
Schedule of Changes in the Total OPEB Liability - Texas Municipal Retirement
System Supplemental Death Benefits Fund 82
Schedule of Changes in the Total OPEB Liability - City of Pearland Retiree
Health Care Plan 83
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS(Continued)
Financial Section (Continued) Page
Other Supplementary Information:
Combining and Individual Fund Statements and Schedules
Combining Balance Sheet- Non-Major Governmental Funds 90
Combining Statement of Revenues, Expenditures, and Changes in Fund
Balances - Non-Major Governmental Funds 94
Schedules of Revenues, Expenditures, and Changes in Fund Balance-
Budget
and Actual:
Debt Service Fund 98
Hotel/Motel Tax Fund 99
Court Security Fund 100
City-Wide Donations Fund 101
Court Technology Fund 102
Street Assessments 103
Park Donations Fund 104
Police Seizure Fund 105
Parks and Recreation Development Fund 106
Sidewalk Fund 107
Grant Fund 108
Traffic Impact Improvements 109
Juvenile Management Fund 110
Regional Detention Fund 111
Educational TV Fund 112
U of H Fund 113
Capital Projects Fund 114
Combining Statement of Net Position - Internal Service Funds 116
Combining Statement of Revenues, Expenses, and Changes in Net
Position - Internal Service Funds 117
Combining Statement of Cash Flows- Internal Service Funds 118
Long-Term Debt Amortization Schedules:
Combining Schedule of Governmental Activity Long-Term Debt 120
Combining Schedule of Enterprise Fund Long-Term Debt 128
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS(Continued)
Statistical Section (Unaudited) Page
Net Position by Component 136
Changes in Net Position 138
Fund Balances of Governmental Funds 142
Changes in Fund Balances of Governmental Funds 144
Spending and Growth Analysis 146
Assessed Value and Estimated Actual Value of Taxable Property 148
Direct and Overlapping Property Tax Rates 150
Property Tax Levies and Collections 152
Principal Property Taxpayers 153
Principal Property Taxpayers - Total Taxes 154
Taxable Sales by Category 156
Outstanding Debt by Type 158
Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per
Capita 161
Direct and Overlapping Governmental Activities Debt 162
Pledged Revenue Coverage 164
Demographic and Economic Statistics 165
Principal Employers 167
Full-time Equivalent City Government Employees by Function/Program 168
Operating Indicators by Function/Program 170
Capital Asset Statistics by Function/Program 177
City of Pearland FY 2018 CAFR
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City of Pearland FY 2018 CAFR
Introductory Section
City of Pearland FY 2018 CAFR
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City of Pearland FY 2018 CAFR
City of Pearland
of
NO
$+ 7s. 3519 Liberty Drive
cs Pearland, Texas 77581
Tel: 281.652.1600
x AS
pearlandtx.gov
Est. 1 011
March 25, 2019
Honorable Mayor, Members
of City Council, and Citizens of the
City of Pearland, Texas USA
The Comprehensive Annual Financial Report (CAFR) of the City of Pearland, Texas (the "City")
for the fiscal year ending September 30, 2018, is hereby submitted as mandated by both local
and state statutes. These ordinances and statutes require that the City issue an annual report on
its financial position and activity and that an independent firm of certified public accountants audit
this report.
Management assumes full responsibility for the completeness and reliability of the information
contained in this report, based upon a comprehensive framework of internal control that it has
established for this purpose. Because the cost of internal control should not exceed anticipated
benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial
statements are free of any material misstatements.
Whitley Penn, LLP, Certified Public Accountants, have issued an unmodified (or "clean") opinion
on the City of Pearland's financial statements for the year ending September 30, 2018. The
independent auditor's report is located at the front of the financial section of this report.
Management's discussion and analysis (MD&A) immediately follows the independent auditor's
report and provides a narrative introduction, overview, and analysis of the basic financial
statements. MD&A complements this letter of transmittal and should be read in conjunction with
it.
PROFILE OF THE GOVERNMENT
The City of Pearland, Texas was incorporated in December 1959 and adopted a Home Rule
Charter on February 6, 1971, and is a home-rule City operating under a Council-Manager form of
government. Policy-making and legislative authority are vested in a governing Council consisting
of the mayor and 7 other members. The Mayor and Council members are elected at-large, and
each of them hold office for a period of three consecutive years. Council members are limited to
two full consecutive terms in office, and there is no term limitation on the office held by the Mayor.
Cit of Pearland FY 2018 CAFR
The City Manager is appointed by Council and is responsible for implementation of Council
priorities and day-to-day management of all City operations. The City is located across the
northern end of Brazoria County and shares a common border with Houston, Texas to the north.
The City also extends into Fort Bend and Harris Counties. The City of Pearland, encompassing
approximately 48 square miles, is the fastest growing city in Brazoria County, increasing from
approximately 18,000 residents in 1990 to 125,198 residents estimated as of January 2018 with
an estimated growth of an additional 58,000 residents by 2032.
A full range of municipal services is provided by the City of Pearland including public safety
(police, fire, and emergency medical services); solid waste; water and wastewater utilities; public
improvements; repair and maintenance of infrastructure; recreational and community activities;
convention and visitor services; and general administrative services. In addition, the City provides
planning for future land use, traffic control, building codes, and health inspections, and plans for
new infrastructure and rehabilitation of infrastructure to meet the needs of the citizens today, as
well as tomorrow. The City is authorized to issue debt, subject to certain limitations, for the
purpose of financing its capital projects and the City is empowered to levy a property tax on real
property within its boundaries.
Activities of the general, debt service, water and sewer, solid waste, capital project funds, and
special revenue funds such as hotel/motel tax are included in the City's annual appropriated
budget. Capital project funds are budgeted for project length. The legal level of control for each
budget is at the fund level, which is to say that total expenditures for each fund should not exceed
total budgeted expenditures for that fund. The City Manager is authorized to transfer budgeted
amounts within and among departments. The City Council must approve any budget amendment
that increases appropriations by fund. The City amends the budget at the end of each fiscal year
to reflect current year projections for revenues and expenditures/expenses.
As an independent political subdivision of the State of Texas, the City is considered a primary
government. Pursuant to standards established by the Governmental Accounting Standards
Board (GASB), the City also reports for all funds for which the City, as the primary government,
is financially accountable. As such, this report includes financial activities of three component
units as follows: The Pearland Economic Development Corporation was created by the City in
1995 under the Texas Development Corporation Act of 1979 to promote, assist, and enhance
economic and related development activities on behalf of the City.
The Tax Increment Reinvestment Zone (TIRZ #2) was created in 1998 for the purposes of
development and redevelopment in the Zone Area, better known as Shadow Creek Ranch. The
City participates in the Zone by contributing a portion of tax increments produced in the Zone to
the Tax Increment Fund. The Development Authority of Pearland was created in 2004 to provide
financing for the development of TRIZ #2. All these component units are considered blended
component units and have been included as major funds in the Governmental Funds.
ii
Cit of Pearland FY 2018 CAFR
ECONOMIC CONDITIONS
Local Economy
Located 20 minutes away from downtown Houston, Texas, the nation's second largest seaport,
the world-renowned Texas Medical Center, and NASA-Johnson Space Center, Pearland is a
premier location for residential and commercial growth. With abundant land, business facilities, a
sound infrastructure, and a diverse workforce supported by educational programs, Pearland's
growth has been consistent and will continue to be sustained over time with continued residential
and commercial development.
Energy, healthcare and life sciences, and manufacturing have been key areas of interest for
Pearland for over ten years, Combined with a mix of reinforcing land uses, urban planning, key
entertainment and cultural attractions, public spaces, and walkability and connectivity will provide
for livable sustainable developments.
As noted later in the Economic Development section, Pearland Economic Development
Corporation (PEDC) and the City worked on several major projects in 2017, including
Endress+Hauser, Lonza, Tool-Flo and Rex Supply.
The total of all new construction permitted during the 2018 calendar year was approximately$433
million, a significant decrease in value from 2017's $580 million, due partially to the lack of any
multi-family projects being built. New single-family housing permits totaled 818 with a construction
value of $165 million. There were no multi-family housing permits issued in 2018. Although
Pearland's economy continues to grow, during FY 2018, the building permit revenues decreased
by $1.1 M or 40% as compared to FY 2017 revenue collections. In addition, revenues from
electrical, plumbing & gas, and mechanical permits combined decreased by $171,358, from
$894,573 in FY 2017 to $723,215 in FY 2018, a 19.2% decrease. The building plan check fee
revenues decreased by $95,967, from $1,094,691 to $998,724, an 8.8% decrease for the fiscal
year. The total reported valuation of all commercial projects for 2018 is $147,418,698. In fiscal
year 2018, 817 single-family home permits were issued, and in the previous fiscal year 1,017
were issued. This is a 19.6% decrease, which continues a downward trend since fiscal year 2015.
The total valuation being reported for new single-family residential was $166,543,854 as
compared to $210,001,992 in fiscal year 2017. The average construction value of a new single-
family home was $202,460 in fiscal year 2018 as compared to $251,801 in fiscal year 2017. This
is a decrease of $49,341 per home. This does not include the price of the land or any builder
markup.
Despite the impact of Hurricane Harvey in 2018, the Houston Association of Realtors reported
that the Houston real estate market set new record highs in 2018. During the final weeks of 2018,
home sales throughout greater Houston continued to outpace the sales of 2017 in conjunction
with a strong job market created a healthy real estate climate for the metro-area. On a year-to-
date basis, Sales of all property types (single-family, duplexes, townhomes, condos, and
residential lots) were up 3.7% over 2017. According to the Houston Association of Realtors, the
Houston housing market remains on track for another record year. The Houston Association of
Realtors reported 82,177 single family home sales for 2018, up 3.8% from the 79,143 sales in
2017. The average price of a single family home rose 1.1% from $280,290 in 2015 to $283,133
in 2016. Indications are that the Houston area will continue to have a healthy market with a
iii
immiCityof Pearland FY 2018 CAFR
balanced supply of housing inventory and strong pricing — conditions that put Houston metro in
an enviable position compared to other markets around the country.
Houston is the world's energy capital, however the oil and gas industry is still in recovery. Crude
oil averaged $66.34 per barrel for the first 11 months of 2018, which is a 32% increase from
$50.25 for the same time span in 2017. It's projected that crude oil will be $54 per barrel in 2019.
Baker Hughes reports an upward trend in the rig count since 2017 with 1,075 rigs operating during
the early part of December 2018. According to the Greater Houston Partnership, Houston has
emerged from one of the worst energy downturns of the past 35 years. Oil prices fell by 75
percent, the rig count by 80 percent and exploration budgets by 62 percent. One in every four
energy jobs in Houston was lost. In previous downturns, a collapse in energy prices would have
devastated the entire economy. This time, Houston held up quite well. Job losses in energy were
offset by job gains elsewhere. Maybe the jobs didn't pay as well as the ones lost, but they did
offer opportunities for employment. It's believed that crude oil needs to stay at $50 or more per
barrel to sustain a drilling program.
Pearland's unemployment rate was 3.3% in September 2018, down from 3.4% in September
2017. This is compared to the national unemployment rate of 3.7% and the State of Texas
unemployment rate of 3.8% as of September 2018. The Metro-Houston job growth for 2018 was
3.5 % over 2017, as reported by the Greater Houston Partnership. Metro-Houston is able to
survive downturns with minimal impact because its ties to the domestic and global economies are
just as strong as its ties to the oil and gas industry. As such,the Partnership is anticipating another
71,000 jobs will be created in 2019, a 2.2% increase over 2018. This job growth is expected to
be in a variety of industries such as manufacturing, construction, administrative support and waste
management, wholesale trade, retail trade, finance and insurance, real estate, business,
healthcare, and entertainment. Office leasing is down, but retail construction is up. Houston-area
sales tax collections increased 8.5% and vehicle sales increased 4.5% over 2017.
Metro Houston, and the State of Texas, is built on businesses, on jobs, and on economic
opportunities with Pearland poised to take advantage of those opportunities. Energy, healthcare
and life sciences, retail, and manufacturing have been key areas of interest for Pearland for over
ten years. Pearland has created livable and sustainable developments through the mix of
reinforcing land uses, urban planning, key entertainment and cultural attractions, public spaces,
and walkability and connectivity.
Pearland is a regional shopping destination and the economy has turned around since the
recession of 2010 and 2011, but has slowed in 2016. The City saw a resurgence of spending in
2012, which continued through 2015, then slowed in 2016. As such, the City projected a 3.8%
growth in sales tax for fiscal year 2019. Retail sales nationally is expected to grow in 2019, at a
steady pace in line with fiscal year 2018. The City's sales tax for fiscal year 2018 totaled $33.8
million, an increase of $3.29 million or 10.8% over fiscal year 2017. Of the $33.8 million, $22.6
million went to the City's General Fund for operations and $11.2 million went to the City's
Economic Development Corporation for specific economic development programs and activities.
The City's General Fund is 29%funded by sales tax, an elastic revenue stream that will fluctuate
iv
Cit of Pearland FY 2018 CAFR
g 1 xx,
'Stela r �
with the economy. As such, the City closely monitors sales tax and the economy.
Long-Term Financial Planning
The City adopts a one-year operating budget, including a five-year capital improvement program
(CIP). Even though a one-year budget is adopted, the budget implements strategies, both
financial and operational, to meet existing challenges and to plan for the future.
The City's Five-Year CIP for fiscal year 2018 through fiscal year 2022 totals $566 million and
continues to implement the $162 million bond program approved by the voters in May 2007. In
an effort to complete projects within a three to five year time frame, the 2018 -2022 CIP includes
a bond election in 2019 for $70,757,000. Projects include drainage ($12M), streets ($117M),
facilities($73M), parks($38M),water and wastewater($326M). Projects in the CIP have identified
funding sources or potential funding sources. Funding for these projects comes from the issuance
of debt through Certificates of Obligation, General Obligation Bonds, and Revenue Bonds, as well
as impact fees, cash, and contributions from the State, County, and other sources.
The Debt Service Fund can meet all current and future obligations based on the City's Multi-Year
Forecast and Five-Year CIP. The issuance of debt is factored in based on the Five-Year CIP. All
new debt issued is assumed to be issued with a 20-year maturity level principal payment.Although
new projects were still being financed, the Debt Service tax rate decreased by $0.01 from the FY
2017 tax rate of$0.44 to $0.43 for FY 2018. In order to reduce the tax rate in FY 2018, the City
dedicated fund balance from the Debt Service Fund. The Debt Service tax rate will need to
increase by $0.03 from the FY 2018 tax rate of$0.43 to the forecasted FY 2020 tax rate of$0.46
to fund obligations and implement the fiscal year CIP. From FY 2018 to FY 2019, total revenues
are anticipated to increase approximately 6.8%
The City completes a Water/Sewer Cost of Service Rate Study annually for the forecast. The
study is built around the Five-Year CIP, operating budget, and future needs. Due to funds on hand
for pay-as-you go capital improvements,the rates for FY 2017 and FY 2018 increased moderately
each fiscal year. FY 2018 experienced a 10% revenue increase in order to fund the additional
costs for labor, chemicals, system upgrades, expansion, and maintenance. For FY 2019, the
rates remain the same as FY 2018. The City's utility system continues to be self-supporting and
financially sound.
Relevant Financial Policies/Guidelines
Financial Policies guide the development and implementation of the budget and are a framework
for fiscal decision making and that ensure financial resources are available to meet the current
and future needs of the City. The policy statements address areas of reporting and auditing,
budgeting, revenues, capital improvements, debt, and grants to name a few. Some of the most
relevant policies are:
• Recurring revenues fund recurring expenditures/expenses
V
Cit of Pearland FY 2018 CAFR
• Non-recurring funds fund non-recurring expenditures/expenses
• General Fund Operating Reserves should be a minimum of two months of operations
• Water and Wastewater Operating Reserves shall strive to be maintained at 25% of
operations
• Budget revenues on a conservative basis
• Fund existing services at current service levels
• Enterprise Funds must be self-supporting
• Leverage City dollars by seeking outside funding sources
• Maintain stable property tax rates
Major Initiatives
The City Council, staff, and community share a vision that combines progress and innovation with
prudent controls to shape Pearland's future, as it becomes one of the largest suburbs in the
Houston area. Some of the major initiatives are as follows:
Public Safety
Quality of life is always a draw for new residents in Pearland. Among numerous other reasons,
families move to Pearland for a feeling of personal safety and the low crime rate. Pearland City
Council continues to emphasize public safety, and the City delivers services in the areas of law
enforcement, emergency management, emergency medical services, and fire protection.
The Pearland Police Department has focused its attention on the strategic priority of Safe
Community. Several programs were enhanced to provide continuing public safety efforts. The
K9 program has added the capability of patrol apprehension. Public Safety currently utilizes a
policing operational model called Data-Driven Approaches to Crime and Traffic Safety(DDACTS).
This policing model was developed by the Department of Transportation's National Highway
Traffic Safety Administration in conjunction with the Department of Justice, the Bureau of Justice
Assistance, and the National Institute of Justice. The premise of DDACTS is to integrate location-
based calls for service, crime, traffic crash, and enforcement data to establish the most effective
and efficient methods for deploying law enforcement resources. The goal of DDACTS is to reduce
crime, crashes, traffic violations, and social harm in local communities. After successes in Zone
1, DDACTS added Zone 2, an area near Pearland Parkway and Broadway. Patrol allocation was
adjusted based on call volume and trend data. 90th percentile response times for priority one calls
(the most significant calls taken)for 2018 were down to 6:39, a significant decrease from the 2017
average time of 7:24. The Uniform Crime Reporting (UCR) Program administered by the Federal
Bureau of Investigations, collects data about Part I offenses in order to measure the level and
scope of crime across the country. Part I offenses are divided into two categories: violent and
property crimes. The City's 2018 UCR Part 1 crime rate was down 9% city wide and down 19%
compared to the five year average.
Community policing efforts have included a continuation of successful programs such as National
Night Out, the Citizens Police Academy, Teen Citizen Police Academy, Youth Leadership
Academy, Rape Aggression Defense, Police Explorers, and "Coffee with a Cop" programs to
name a few. Along with other training efforts,the Police Department successfully trained all police
officers in de-escalation, officers are trained in identifying and responding to persons in mental
health crisis and all officers are trained to respond to active shooter events, utilizing a national
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Cit of Pearland FY 2018 CAFR
.axa
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standard approach. The Police Department has also provided CRASE (Citizen Response to
Active Shooter Events) training to both private and public entities. One of the biggest successes
was the training of Pearland ISD school campuses.
Fire Station 1, currently located at the corner of Orange Street and Old Alvin Road, will relocate
in early 2019 to provide quicker response times. The new station is under construction at the
corner of Old Alvin Road at McHard. At approximately 9,500 sq. ft., the station will house one fire
engine, and one ambulance.
Fire Station 8, to be located at the northwest corner of Shadow Creek Parkway and Reflection
Bay Drive., is nearing design completion with construction anticipated to begin in early 2019. This
station will be approximately 18,000 sq. ft. and initially house one fire engine, one ladder truck,
and one ambulance. A second engine will be added in the future based on service demand and
available funding.
Economic Development
The Pearland Economic Development Corporation (PEDC) is a non-profit Type B Corporation
under the Texas Development Corporation Act and is primarily funded by a half-cent sales tax in
the City of Pearland. PEDC is committed to enhancing the community's economic vitality through
the attraction, retention and expansion of primary employers. PEDC works to ensure Pearland's
business climate and built environment strongly support these efforts by focusing on aesthetics,
infrastructure, quality of life, image, workforce and quality development and redevelopment of key
Pearland districts and corridors.
PEDC works with the City to generally promote the City and to utilize various tools such as tax
abatement and the authority granted the City under Chapter 380 of the Local Government Code
to encourage new jobs and investment in the community. The following highlights a few of PEDC's
Fiscal Year 17/18 attraction and retention projects.
In April 2018, Lonza celebrated the grand opening of its 300,000 square-foot state-of-the-art
manufacturing facility in Pearland's Lower Kirby District. The first-of-its-kind facility has the
capacity to produce treatment for thousands of patients suffering from rare genetic disorders or
life-threatening diseases. At 300,000 square-feet, it is the largest dedicated cell-and-gene
therapy manufacturing facility in the world. Lonza broke ground on the initial phase of this project,
a 100,000+ square-foot clinical manufacturing and R&D facility, in March 2016. Later that year,
the company announced plans to add approximately an additional 200,000-square-foot
expansion to the facility intended to produce commercial quantities of viral gene and cell
therapies. The facility is currently home to 200 employees and is on track to reach 300 full-time
staff by the end of 2019.
Endress+Hauser, a Swiss-based instrumentation and process automation company, announced
in October 2018 that it selected Pearland as the site for its new Gulf Coast Regional Center.
PEDC began working with the company, who manufactures instrumentation and devices to
provide solutions for more than 100,000 customers worldwide, in early 2018 on the project. The
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Cit of Pearland FY 2018 CAFR
100,000 square-foot facility, located on a 17-acre site on the southeast corner of Beltway 8 and
Kirby Drive, will serve as a regional headquarters for the company and include areas for
calibration and repair, along with office and training space. It will be home to approximately 110
employees when it opens. Construction is expected to begin in early 2019.
Construction on Tool-Flo Manufacturing's headquarters, training and manufacturing facility in
Pearland Lower Kirby District was completed in December 2018. The company manufactures
precision carbide, metal-working tools and products for the oil/gas, automotive and medical
industries. Tool-Flo Manufacturing is owned by IMC Group, a Berkshire Hathaway company and
one of the world's largest companies for metalworking products and metal removal technology.
The 80,000 square-foot facility, located on a 15-acre site on the southeast corner of Kirby Drive
and N. Spectrum Boulevard is home to 150 employees, including management, engineering,
sales, operations and administrative personnel.
Rex Supply also completed construction on its warehouse facility in the Lower Kirby District in
late 2018. The company is one of the top 100 suppliers of industrial tools in the United States and
is owned by IMC Group, a Warren Buffett, Berkshire Hathaway Company. The 46,000 square-
foot facility is adjacent to Tool-Flo Manufacturing's new headquarters facility on the 15-acre site
on the southeast corner of Kirby Drive and N. Spectrum Boulevard. The facility will employ 43
and will serve as a new headquarters location for Rex Supply and a new distribution center for
Production Tool Supply Co., LLC.
PEDC, along with local partners in government, education, healthcare and business, continued
to work on implementation of the Pearland 20/20 community strategic plan. The long-term
strategic community and economic development plan that was created in 2012 incorporates nine
strategies to ensure a shared vision for the community's future growth and an action plan to
achieve it. The plan's steering committee completed a mid-course update to the plan in 2015 to
get a big-picture sense of key successes and challenges. The nine strategies are 1) Economic
Development Marketing, 2) Mobility, 3) Corridors and Character Districts, 4) Recreation and
Culture, 5) Beautification and Gateways, 6) Lower Kirby District, 7) Multi-Use Event Center, 8)
Education and Workforce, and 9) Internal Marketing. As it has been five years since the Pearland
20/20 community strategic plan was formally adopted in 2013, PEDC will be developing a new
community economic development strategic plan in 2019.
One of the City's prime areas for development, the Lower Kirby District, a 1,200 acre mixed-use
development located at Hwy 288 and Beltway 8, has infrastructure needs that make it more
difficult to develop. The PEDC continually works with area Municipal Management Districts,
developers, and the City on the development of regional detention, infrastructure projects, corridor
enhancements, and the installation of underground electricity that will serve developable sites
within the District. In July 2017, construction to extend N. Spectrum Boulevard to the TxDOT
ditch was completed. In November 2017, PEDC, Lower Kirby Pearland Management District
(LKPMD) and Mitsubishi Heavy Industries Compressor Corporation completed construction of
Hooper Road, allowing for additional traffic flow from area developments. Also in 2017, PEDC
partnered with (LKPMD and Pearland Municipal Management District No. 1 (PMMD1)to construct
entryway and corridor enhancements on Kirby Drive. PEDC and LKPMD also worked with
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immiCityof Pearland FY 2018 CAFR
developers to update the Lower Kirby District Master Park Plan, which includes infrastructure
improvements. PEDC and the City also began working with the Ivy District Developer, America
Modern Green, to develop the space around Lower Kirby's regional detention pond into a public
park. Construction to extend South Spectrum West from Promenade to Kirby Drive is expected
to start in February 2019 and should last about a year. The $6.1 million project includes design
and construction of: paving, water, sewer, storm drainage, traffic signal, intersection modifications
on Kirby Drive, sidewalks, culvert crossing enhancement, landscaping and irrigation, and right-of-
way acquisition.
Another key initiative outlined in the Pearland 20/20 Community Strategic Plan is to optimize the
development potential of Pearland's principal commercial corridors. The State Highway 35
Redevelopment Strategy was developed in 2016 to build upon the Strategic Plan suggestions
and provide the "big picture" strategic actions that are needed to encourage more investment in
the corridor. In late 2018, construction began on SH 35 Entryway and Corridor Enhancements
project. This project, stemming from the State Highway 35 Redevelopment Strategy, includes
new entryway monuments on the north side of Clear Creek near the city limits and various
streetscaping improvements along the corridor from Beltway 8 to Broadway. The project, which
will be funded and maintained by PEDC, focuses on the entryway at Beltway 8, including two
Pearland entryway monument signs near Clear Creek, planting the medians with canopy trees,
enhancing pedestrian areas at major intersections, and framing the roadway with smaller street
trees along the right-of-way. Additionally, the project will create a more desirable walking
environment in the Old Town section by extending the sidewalk to the back of the right-of-way
adding shrubbery as space in the road right-of-way allows.
PEDC continues to promote Pearland and is working with a myriad of companies on future
relocations and site visits as well as working with existing businesses on future expansions.
Convention and Visitor's Bureau
The City's Convention and Visitors Bureau (CVB),funded by hotel occupancy taxes, also focuses
on economic development through tourism and attracting leisure and business visitors into the
City of Pearland. In late 2012, the City Council authorized the creation of a city department for the
Convention and Visitors Bureau, service that had been previously contracted out. In fiscal year
2013, an Executive Director and staff were hired. The proximity of Pearland in the Gulf Coast
Region of Texas, makes Pearland a perfect destination for visitors. The time has come for
Pearland to complement and support its development with cultural and lifestyle amenities to
include a multi-use events center. This need has been noted in multiple Pearland planning
processes as an enhancement to make the city more competitive for employers and residents.
Annual hotel occupancy taxes total $1.5 million dollars and the funds ending balance is $4.5
million as of September 30, 2018_
Land Use Plan/Annexation
Land use planning seeks to order and regulate the use of land in an efficient and ethical way, thus
preventing land use conflicts. Land use planning is the systematic assessment of land,
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Cit of Pearland FY 2018 CAFR
alternatives for land use, and social and economic conditions in order to select and adopt the best
land use options. Its purpose is to select and put into practice those land uses that will best meet
the needs of the people while safeguarding resources and ensuring sustainability.
Capital Improvement Projects and Planning
With continued residential and commercial development, and to plan for the future, the need to
build new infrastructure and maintain existing infrastructure is a priority and will be implemented
through an aggressive capital improvement program. The City's Five-Year CIP 2018-2022 totals
$566 million. Projects include drainage ($12M), streets ($117M), facilities ($73M), parks ($38M),
water and wastewater($326M).
Major drainage improvements include Southeast Quadrant of Old Townsite Drainage, a sub-
regional drainage and detention plan to serve the 71.4 acre area, and PER for Future Bond
Referendum.
Major street projects include Old Alvin Road Widening from Plum Street to McHard Road, Hughes
Ranch Road (CR 403) from Cullen to Smith Ranch Road, Max Road Expansion from Hughes
Ranch to Reid Boulevard, Smith Ranch Road Extension (CR 94) from Hughes Ranch Road to
Broadway, PER for Future Bond Referendum, and Intersection Improvements.
Facility projects include the relocation and construction of Fire Station #1, construction for a new
office facility at Orange Street Service Center; a new 12,000 square foot administration Building
and new parking are to house approximately 50 staff; and the Fiber Backbone project, which will
extend and build out the fiber network to reach all city facilities. Also, the design of Fire Stations
#7 and #8, PER for Future Bond Referendum and PER for a new Animal Shelter.
Parks projects include the construction of the Shadow Creek Ranch Trail, a 10 foot wide hike and
bike trail along the southern bank of Clear Creek beginning on the east side of Kinglsey Drive and
extending east approximately 1,300 feet terminating at Kirby Drive. The Green Tee Terrace Trail
extends approximately 8,000 LF of 10 foot wide hike and bike trail along the Clear Creek Corridor
from Broadway through Province Village to Clear Creek over the creek to Hughes Road in
conjunction with Gehan Homes and PER for Future Bond Referendum.
Major projects for water improvements include the installation of FM 521 Waterline from Broadway
to Mooring Pointer, McHard Waterline Phase II from Cullen Parkway to Mykawa Road, design of
10 MGD Surface Water Plant Phase, construction of FM 521 Ground Storage Tank Expansion,
Water Meter Change-out, Underground Piping Infrastructure at water facilities, Transite Waterline
Replacement, construction of FM 1128 16" Water Line from Bailey to CR 100, CR 100 16" Water
Line from Veterans Drive to FM 1128, and Veterans Drive 16"Water Line from Bailey Road to CR
128.
Wastewater projects include the construction of McHard Road Trunk Sewer from Garden to
Southdown WWTP, expansion of Barry Rose WRF and JHEC WRF, relocation of the Mykawa
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Cit of Pearland FY 2018 CAFR
Lift Stations, the iv installation of the Green Tee 1 to Riverstone Waste Water Diversion in the
Longwood service area, design of the Waste Water Master Plan, installation of the Reflection Bay
Lift Station Bar Screen, lift station rehabilitation and sanitary sewer rehabilitation.
Transportation Improvements and Strategic Planning
Charged with planning, establishing, and maintaining an effective transportation system, the City
of Pearland is involved in numerous activities to face this challenge. The$84 million transportation
bond program (passed in 2007) assisted in the construction of major projects mentioned
previously.
The City is also involved in regional efforts for long-range transportation planning and funding.
The Mayor is the Secretary for H-GAC's Transportation Policy Council (TPC), with the Deputy
City Manager serving as an alternate. The Assistant City Manager is the 1st Vice-Chair of the
Technical Advisory Committee (TAC), a sub-committee of the TPC, a member of the
Transportation Improvement Program (TIP) Subcommittee, and a member the Regional
Transportation Plan (RTP) Subcommittee.
The City submitted several proposed roadway projects from its Capital Improvement Program for
possible funding in the region's Transportation Improvement Program (TIP) for 2015- 2018 and
five of the City's projects were selected for funding. The projects are Mykawa Road (FM518 to
Beltway), Hughes Ranch Road (Smith Ranch to Cullen Parkway), SH288 Northbound Frontage
Road (CR59 to FM518), Clear Creek Trail (Hughes Road to University of Houston Clear Lake,
Pearland Campus) and Safe Routes to School (including Carleston Elementary, Cockrell
Elementary and Jr High South)These projects will receive State and federal funding in the amount
of 80% totaling $60,367,000 with the City providing 20% matching funds. These project are
scheduled for completion between 2018 and 2022. These projects are in addition to the five
projects selected in 2013 totaling $63,251,113 and the four projects that received funding in 2011
totaling $20,180,901. These projects are either in design or in construction as of 2018.
With the growth in population along the Highway 288 corridor and the number of Pearland
residents that rely on Hwy 288 to commute to Houston and the Texas Medical Center, the City
along with Brazoria County have been meeting and working with the Texas Department of
Transportation to provide traffic relief on the corridor through managed toll lanes. Harris County
began construction in 2017 on the four new toll lanes on Texas 288 north of the Brazoria-Harris
County line to the Texas Medical Center. Brazoria County partnered with Texas Department of
Transportation (TxDOT) to continue the managed toll lanes from the county line south to County
Road 58. The construction of the Brazoria County project for the new four managed toll lanes
began construction in 2018. In addition, the County has secured TIP funds to reconstruct the
SH288 overpass at FM518, widen FM518 under SH288 and reconstruct associated frontage road
approaches to the intersection,which will assist in relieving congestion issues at the City's busiest
intersection. The TIP funds will provide 80% of the funds and the Texas Department of
Transportation (TxDOT) is providing the 20% matching funds. This project is in currently under
construction with the toll lane project.
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Cit of Pearland FY 2018 CAFR
The Gulf Coast Center operates a transportation program known as Connect Transit. Connect
Transit provides "curb cab" service to Pearland. Services are shared ride services with pick-up
and delivery from curb to curb by reservation. The City funds approximately $20,000 for this
service annually to its citizens meeting the eligibility requirements; seniors, person with
disabilities, or low-income. This is a way to provide those needing transportation to grocery stores,
doctor visits, etc.
Fiscal Responsibility and Sustainability
Fiscal sustainability can be defined as "the extent to which patterns of Government spending do
not undermine the capability of the Government to continue to spend to achieve its public
purposes." City Council takes a proactive stance in ensuring the fiscal health and sustainability of
the City. Council adopted a set of Financial Management Policy Statements and receives
quarterly Finance "Snapshot" presentations, which includes economic indicators. The City also
prepares a Five-Year Forecast for the City's major funds to see how the spending decisions made
today affect the future as well as to identify any issues/concerns that are forthcoming and to put
strategies in place today to address those issues/concerns for the future.
Since fiscal year 2013, we have seen a turnaround in the economy and growth; however, during
2016, the economy has slowed compared to prior years with mixed indicators. The moderate
growing Houston area economy and the City's increasing population played major roles in the
development of the fiscal year 2019 budget. The healthy local economy will most likely result in
continued growth in revenues in the current fiscal year, 2019, most noticeably in sales tax and
property tax, but perhaps at a slower pace. Through the first quarter, sales tax revenue for fiscal
year 2019 is up 8.2% over the prior year. The fiscal year 2019 Adopted Budget includes an
increase of 3.8% over fiscal year 2018.
Property Tax revenue is projected to maintain the strong levels that have developed during fiscal
year 2018. The Adopted Budget for fiscal year 2019 projects an increase of 5.4% over last year's
budget mainly due to increased valuations and new property added to the roll. The Adopted
Budget includes a $.0241 increase in the property tax rate from $0.6851 to $0.7092. Of the total
adopted tax rate of $0.7092 per $100 of valuation, the operating tax rate increased to $0.2792
per$100 of valuation with the debt service tax rate remaining at $0.4300.
While about half-way into the 2019 fiscal year, the City is already beginning to prepare for the
2020 budget process and up-coming forecast with the same goal of being fiscally responsible to
our citizens.
AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association of the United States and Canada(GFOA) awarded
a Certificate of Achievement for the Excellence in Financial Reporting to the City of Pearland,
xii
Cit of Pearland FY 2018 CAFR
Texas, for its Comprehensive Annual Financial Report for the year ended September 30, 2017.
This was the 41st consecutive year that the City has received this prestigious award. In order to
be awarded a Certificate of Achievement, a governmental unit must publish an easily readable
and efficiently organized comprehensive annual financial report. This report must satisfy both
generally accepted principles and applicable legal requirements. A Certificate of Achievement is
valid for a period of one year only. City staff believe that our current comprehensive annual
financial report continues to meet the Certificate of Achievement Program's requirements, and we
are submitting it to GFOA to determine its eligibility for another certificate.
This is the first year (in 2018) that the Government Treasurers' Organization of Texas (GTOT)
awarded the Certificate of Distinction to the City of Pearland for its Investment Policy. The
certification is good for a two-year period ending in 2020. The City of Pearland received its
Certificate of Investment Policy award for developing an investment policy that meets the
requirements of the Public Funds Investment Act and standards for prudent public investing
established by the Government Treasurers' Organization of Texas.
The City has also received the GFOA's Distinguished Budget Presentation Award for its annual
budget document. In order to qualify for the Distinguished Budget Presentation Award, the
government's budget document had to be judged proficient as a policy document, a financial plan,
an operations guide, and a communications device.
The preparation of this report was accomplished with the dedicated service of the Accounting staff
of the Finance Department. We express our sincere appreciation to these individuals who have
continually demonstrated the core beliefs of the City and who assisted and contributed to the
preparation of this report. We also thank the Mayor and members of the City Council for their
support in planning and conducting the financial operations of the City in a responsible manner.
Respectfully submitted
!ss„.„„4.,. A\•\._41....3.J.._,..Q. ,N,
Clay J Pe son, City Manager Jon Branson, Deputy City Manager
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Cynthia Pearson, Director, Finance Rhonda Daugherty, Asst. Director, Finance
City of Pearland FY 2018 CAFR xiii
CITY OF PEARLAND, TEXAS
PRINCIPAL OFFICIALS
As of September 30, 2018
Term
Expire
Elected Officials Position s May
Torn Reid Mayor 2020
Trent Perez Mayor Pro Tern 2019
Tony Carbone Councilmember- Position 1 2019
Derrick Reed Councilmember- Position 2 2021
Gary Moore Councilmember- Position 3 2020
Adrian Hernandez Councilmember- Position 4 2021
J. David Little Councilmember- Position 5 2019
Woody Owens Councilmember- Position 7 2020
Appointed Officials Position
Clay Pearson City Manager
Darrin Coker City Attorney
Letitia Farnie Municipal Court Judge
City Management Position
Jon Branson Deputy City Manager
Trent Epperson Assistant City Manager
Matt Buchanan PEDC President
Cynthia Pearson Director of Finance
Young Lorfing City Secretary
Clarence Wittwer Director of Public Works
Michelle Graham Director of Human Resources
Daniel McGhinnis Chief Information Officer
Johnny Spires Police Chief
Chris Orlea Director of Parks and Recreation
Vance Riley Fire Chief
John McDonald Director of Community Development
Kim Sinistore Executive Director, CVB
Joshua Lee Director of Communications
Jennifer Huhn Municipal Court Administrator
Robert Upton Director of Engineering and Capital Projects
xiv
City of Pearland FY 2018 CAFR
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T City Manager
-< City of Pearland, Texas
Organization Chart Strategic Priorities
co Deputy City
D Manager • Sustainable Infrastructure
• Fiscally Responsible Government
Parks& Finance & • Healthy Local Economy
Recreation Purchasing
• Engaged Community
City Secretary HRlOrganizational Safe Community
j Development
• Quality parks,recreation and events
x
Communications) Convention &
II Visitor's Bureau
Municipal Court
Assistant City
f Command Chief Information
/ Y `� PEDC President Development Officer
t Manager Pearland Fire Police
----_ _--`l Economic
Development Fire Animal
En neenn Public ' . Corporation Planning Marshal Services IT/GIS
9 l Works _ ____----
Permits & Code &Health
Water& Inspections Enforcement
Projects Operations Sewer
Traffic
Engineering Operations Facilities
Right of
aY Organizational chart of departments and selected operation groups for illustrative purposes
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Pearland
Texas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2017
GL4 P 2&-i,tAlei
Executive Director/CEO
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City of Pearland FY 2018 CAFR
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City of Pearland FY 2018 CAFR
Houston Office
i. 3737 Buffalo Speedway
Suite 1600
w h i t l e y p e n n■ Houston,
Texas 77098
713.621.1515 Main
whitleypenn.com
REPORT OF INDEPENDENT AUDITORS
To the Honorable Mayor and Members
of the City Council
City of Pearland, Texas
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of City
of Pearland, Texas (the "City") as of and for the year ended September 30, 2018, and the
related notes to the financial statements, which collectively comprise the City's basic financial
statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant
to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An
audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
A member of 1
Q , �earland FY 2018 CAFR
To the Honorable Mayor and Members
of the City Council
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the City, as of September 30,
2018, and the respective changes in financial position and, where applicable, cash flows thereof
for the year then ended in accordance with accounting principles generally accepted in the
United States of America.
Emphasis of Matter
As discussed in Note 1 and Note 14 to the financial statements, the City adopted the provisions
of Government Accounting Standards Board ("GASB") Statement No. 75, Accounting and
Financial Reporting for Postemployment Benefits Other Than Pensions, as of September 30,
2018. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis on pages 7 through 16, budgetary comparison
information on pages 78 through 79, and pension system supplementary information and other
post-employment benefit supplementary information on page 80 through 83 be presented to
supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of
inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The introductory section, combining
and individual fund statements and schedules, other supplementary information, budgetary
comparison schedules and statistical section are presented for purposes of additional analysis
and are not a required part of the basic financial statements.
The combining and individual fund statements and budgetary comparison schedules are the
responsibility of management and were derived from and relate directly to the underlying
accounting and other records used to prepare the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such
2
City of Pearland FY 2018 CAFR
To the Honorable Mayor and Members
of the City Council
information directly to the underlying accounting and other records used to prepare the basic
financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the combining and individual fund statements and schedules, other
supplementary information, and budgetary comparison schedules are fairly stated, in all material
respects, in relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we do not express an
opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
March 2019, on our consideration of the City's internal control over financial reporting and on
our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing
of internal control over financial reporting and compliance and the results of that testing, and not
to provide an opinion on internal control over financial reporting or on compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards in
considering City's internal control over financial reporting and compliance.
UJh •+i P‘. L LP
r
Houston, Texas
March 25, 2019
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City of Pearland FY 2018 CAFR
Management's Discussion and Analysis
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City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the City of Pearland (the "City"), we offer readers of the City's financial statements
this narrative overview and analysis of the financial activities of the City for the fiscal year ended
September 30, 2018.
FINANCIAL HIGHLIGHTS
• The assets and deferred outflows of resources of the primary government of the City exceeded
its liabilities and deferred inflows as of September 30, 2018, by $763.6 million (net position). Of
this amount, $665.3 million is invested in capital assets, net of related capital debt and $81.8
million restricted for capital improvements, debt service, community development projects,
public safety, and economic development.
• At the close of the current fiscal year, the City's governmental funds reported combined ending
fund balances of $115.7 million, a decrease of $6.5 million in comparison with the prior year.
Approximately $101.8 million of the $115.7 million is considered restricted and primarily consists
of $44.6 million for economic development and $43.9 million attributable to unspent bond
proceeds for capital projects.
• As of September 30, 2018, the unassigned fund balance for the General Fund was $12.3 million
or 16% of total General Fund expenditures. The total fund balance for the General Fund is
$14.0 million or 18% of General Fund expenditures.
• The City's long-term liabilities increased by $9.8 million due to the issuance of new debt.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City's basic financial
statements. The City's basic financial statements are comprised of three components: (1)
government-wide financial statements, (2) fund financial statements and (3) notes to the financial
statements. This report also contains other supplementary information in addition to the basic financial
statements themselves.
Government-wide Financial Statements - The government-wide financial statements are designed to
provide readers with a broad overview of the City's finances, in a manner similar to a private-sector
business.
The Statement of Net Position presents information on all of the City's assets, deferred outflows of
resources, liabilities, and deferred inflows of resources, with the difference between the four reported as
net position. Over time, increases or decreases in net position may serve as a useful indicator of
whether the financial position of the City is improving or deteriorating.
The Statement of Activities presents information showing how the City's net position changed during
the fiscal year. All changes in net position are reported when the underlying event giving rise to the
change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are
reported in this statement for some items that will only result in cash flows in the future fiscal periods
(e.g., uncollected taxes and earned but unused compensated absences).
Both of the government-wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenues (governmental activities) from functions that are
intended to recover all or a significant portion of their costs through user fees and charges (business-
type activities). The governmental activities of the City include general government, public safety,
public works, community services and parks and recreation. The business-type activities of the City
include water, sewer, and solid waste. The government-wide financial statements can be found on
pages 19 through 21 of this report. The government-wide financial statements include not only the City,
itself (known as the primary government), but also a legally separate Economic Development
7
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
Corporation, Tax Increment Reinvestment Zone (TIRZ #2) and the Development Authority of Pearland
for which the City is financially accountable. Financial information for these blended component units is
reported together with the financial information presented for the primary government.
Fund Financial Statements - A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. The City, like other state
and local governments, uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements. All funds of the City can be divided into two categories - governmental
funds and proprietary funds.
Governmental Funds - Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statement focus on current sources
and uses of spendable resources, as well as on balances of spendable resources available at the end
of the fiscal year. Such information may be useful in evaluating a government's near-term financing
requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, readers may better understand the long-term impact of the government's near-term financing
decisions. Both the governmental funds balance sheet and the governmental fund statements of
revenues, expenditures, and changes in fund balance provide a reconciliation to facilitate this
comparison between governmental funds and governmental activities.
Beginning on page 22 of this report, information is presented separately in the Governmental Fund
Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures, and Changes in
Fund Balances for the General, Debt Service, Capital Projects, Pearland Economic Development
Corporation, Tax Increment Reinvestment Zone #2, and Development Authority of Pearland, which are
considered to be major funds. Data from the non-major governmental funds are combined into a
single, aggregated presentation. Individual fund data for each of these non-major governmental funds
is provided in the form of combining statements elsewhere in this report.
The City adopts an annual appropriated budget for its General Fund. A budgetary comparison
statement has been provided for the General Fund to demonstrate compliance with the budget.
Proprietary Funds - The City maintains two types of proprietary funds. Enterprise Funds are used to
report the same functions presented as business-type activities in the government-wide financial
statements. The City uses an Enterprise Fund to account for its Water and Sewer Fund and Solid
Waste Fund. Additionally, the City maintains an Internal Service Fund to account for the financing of
goods or services provided by one department or agency to other departments or agencies of the City
on a cost reimbursement basis. The Internal Service Fund is included in governmental activities for
government-wide reporting purposes.
Proprietary funds provide the same type of information as the government-wide financial statements,
only in more detail. The basic proprietary fund financial statements, which begin on page 29 of this
report, provide separate information for the Water and Sewer and Solid Waste Enterprise Funds since it
is considered to be a major fund of the City. The basic proprietary fund financial statements can be
found on pages 29 through 32 of this report.
8
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
Notes to the Financial Statements - The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The notes to
the financial statements can be found beginning on page 33 of this report.
Other Information - In addition to the basic financial statements and accompanying notes, this report
also presents other required supplementary information as well as combining and individual fund
statements and schedules that further support the information in the financial statements. This
information is presented immediately following the notes to the financial statements beginning on page
78 of this report.
Government-wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government's financial
position. In the case of the City, assets and deferred outflows of resources exceeded liabilities by
$763.6 million at the close of the most recent fiscal year.
By far the largest portion of the City's net position (87%) reflects its investment in capital assets (e.g.,
land, infrastructure, buildings, machinery, and equipment), less any related debt used to acquire those
assets that is still outstanding. The City uses these capital assets to provide services to citizens;
consequently, these assets are not available for future spending. Although the City's investment in its
capital assets is reported net of related debt, it should be noted that the resources needed to repay this
debt must be provided from other sources, since the capital assets themselves cannot be used to
liquidate these liabilities.
COMPARATIVE SCHEDULE OF NET POSITION
September 30,2018 and 2017
Amounts in(000's)
Governmental Activities Business-type Activities Totals
2018 2017 2018 2017 2018 2017
Assets
Current and other assets $ 149,705 $ 154,379 $ 129,011 $ 124,028 $ 278,715 $ 278,407
Capital assets 843,762 822,835 358,618 334,308 1,202,379 1,157,143
Total Assets 993,466 977,214 487,628 458,336 1,481,095 1,435,550
Total Deferred Outflows
of Resources 16,477 21,861 1,888 2,411 18,366 24,272
Liabilities
Other liabilities 17,668 16,785 9,788 16,512 27,456 33,297
Long-term liabilities
outstanding 470,705 477,710 234,217 217,443 704,922 695,153
Total Liabilities 488,372 494,495 244,005 233,955 732,377 728,450
Total Deferred Inflows
of Resources 3,090 175 415 21 3,505 196
Net position
Net investment in capital
assets 454,670 449,141 210,674 205,827 665,344 654,968
Restricted 67,263 60,310 14,525 13,972 81,788 74,282
Unrestricted (3,452) (5,045) 19,898 6,972 16,446 1,927
Total Net Position $518,481 $504,406 $245,097 $226,771 $ 763,578 $ 731,177
9
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
COMPARATIVE SCHEDULE OF CHANGES IN NET POSITION
For the Years Ended September 30,2018 and 2017
Amounts in(000's)
Governmental Activities Business-type Activities Totals
2018 2017 2018 2017 2018 2017
Revenues
Program revenues:
Charges for services $ 27,278 $ 28,774 $ 63,435 $ 58,093 $ 90,713 $ 86,867
Operating grants and
contributions 6,127 13,035 6,127 13,035
Capital grants and
contributions 19,241 10,107 4,613 2,027 23,854 12,134
Property taxes 83,803 76,687 83,803 76,687
Sales and use taxes 35,437 31,976 35,437 31,976
Franchise taxes 7,358 7,263 7,358 7,263
Investment earnings 1,651 622 1,360 396 3,011 1,018
Other 4,691 3,108 7 66 4,698 3,174
Total Revenues 185,586 171,572 69,415 60,582 255,001 232,154
Expenses
General Government 20,360 20,121 20,360 20,121
Public Safety 43,275 44,344 43,275 44,344
Public Works 53,271 49,221 53,271 49,221
Community Services 4,509 5,107 4,509 5,107
Parks and Recreation 7,194 8,823 7,194 8,823
Economic Development 29,521 31,293 29,521 31,293
Interest on long-term debt 14,441 14,422 14,441 14,422
Water and Sewer 41,683 41,475 41,683 41,475
Solid Waste 7,441 7,059 7,441 7,059
Total Expenses 172,572 173,331 49,124 48,534 221,696 221,865
Increase(decrease)in net
position before special
item and transfers 13,014 (1,759) 20,291 12,048 33,305 10,289
Transfers 3,103 2,417 (3,103) (2,417)
Increase in net position 16,117 658 17,188 9,631 33,305 10,289
Net position-beginning 504,406 503,748 226,771 217,140 731,177 720,888
Prior period adjustment (2,041) 1,137 (904)
Net position-ending $518,482 $504,406 $245,096 $226,771 $ 763,578 $ 731,177
The increase in Total Net Position from the prior year is $33.3 million, which is primarily attributable to
the increase in capital grants and contributions as a result of infrastructure contributed by developers.
Governmental activities - Governmental activities increased the City's net position by $16.1 million,
thereby accounting for 48% percent of the total increase in the net position of the City. Key elements
of this increase are as follows:
• Property taxes, sales and use taxes, and franchise taxes totaled $83.8 million, $35.4 million,
and $7.4 million, respectively. These revenues increased by $10.7 million from prior year
primarily as a result of an increase in taxable assessed values.
• Capital grants and contributions totaled $19.2 million as a result of infrastructure contributed
by developers.
• The revenues were offset by expenses for general government, public safety, public works,
and economic development of $20.4 million, $43.3 million, $53.3 million, and $29.5 million,
respectively.
10
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
Expenses and Program Revenues- Governmental Activities
$60 is Expenses
■Pro gam Revenues
i.j.::,
$40
q 4)'
N '.
O 11111111
$20.4 '
$20 �;aw r ,
$10 4
' i $4.5 $6.8 $7.2
$28
$-
`
.
N. � � � er
e\ \e °� •G° 0\P �o� ``e� a �\ Q
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Revenues by Source - Governmental Activities
$100
$83.8
$80
a $60
c $35.4
o $40 $25.4
E
$27.3
$20 $7.4 $6.3
$-
\Ge5 0�5 +e5 +e5 +e5 r6
• J,� �a ,`a ,`a a`
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Ora
Business-type activities - Business-type activities increased the City's net position by $17.2 million,
thereby accounting for 52% percent of the total increase in the net position of the City. Key elements of
this increase are as follows:
• Charges for services of $63.4 million increased approximately $5.3 million over the prior year
primarily due to rate increases.
11
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
• Capital grants and contributions of $4.6 million increased $2.6 million from the prior year
mainly due to an increase in contributions from developers for impact fees.
• The revenues listed above were offset by expenses of $41.7 million and $7.4 million,
respectively, for Water and Sewer and Solid Waste. Expenses increased from prior year by
$0.6 million.
Expenses and Program Revenues- Business-type Activities
$80 -
$60.2
$60 ■Expenses
$41 7 ■Program Revenues
jsrkto $40
c
0
E $20
$7.4 $7.8
$-
Water and Sewer Solid Waste
Revenues by Source - Business-type Activities
Grants and Other
contributions 2%
7%
Charges for
services
91%
12
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, fund accounting is used to demonstrate and ensure compliance with finance-related legal
requirements.
Governmental Funds - The focus of the City's governmental funds is to provide information of near-term
inflows, outflows, and balances of spendable resources. Such information is useful in assessing the
City's financing requirements. In particular, unassigned fund balance may serve as a useful measure
of the City's net resources available for spending at the end of the fiscal year.
The City's governmental funds reflect a combined fund balance of $115.7 million. A portion of the
combined fund balance, or$12.3 million, is unassigned and available for day-to-day operations of the City;
$43.9 million is restricted for capital projects; $44.6 million for economic development and the remaining
balance is restricted for debt service and other programs.
There was a decrease in the combined governmental fund balance of $6.5 million from the prior year.
The decrease in fund balance includes decreases in the General Fund of $0.4 million, Capital Projects
Fund of $15.5 million, and the Development Authority of Pearland of $1.6 million. These decreases in
fund balance were partially offset by increases in fund balance in the Debt Service Fund of $0.9 million,
Pearland Economic Development Corporation of $6.6 million, and the Tax Increment Reinvestment Zone
#2 of$2.8 million. The General Fund's fund balance totaled $14.0 million at year end.
The Pearland Economic Development Corporation, Tax Increment Reinvestment Zone #2, and
Development Authority of Pearland, the City's component units blended with the primary government, had
expenditures totaling $40.5 million, leaving an ending fund balance of$27.1 million, $9.0 million, and $8.5
million, respectively, all considered restricted.
Proprietary Funds- The City's business-type activities contain two activities (water and sewer, and solid
waste). The City's proprietary funds provide the same type of information found in the government-
wide financial statements business-type activities. Total net position in the Internal Service Fund was $3.5
million at year end, a $0.4 million increase from the prior year.
GENERAL FUND BUDGETARY HIGHLIGHTS
During the year, there was a $2.5 million increase in appropriations between the adopted and
amended budget. The increase in appropriations is attributable to carryover funding from prior-year
encumbrances and projects and to reflect projections during the 2018-2019 budget process.
Actual revenues of $74.2 million were $0.9 million over the amended budget mainly in charges for
services. Actual expenditures of $77.3 million were under the amended budget by $2.8 million, resulting
in the year-end fund balance of$14.0 million, in excess of budget by $2.1 million.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets - At the end of fiscal year 2018, the City's governmental activities and business-type
activities had invested $843.8 million and $358.6 million, respectively, in a variety of capital assets and
infrastructure, as reflected in the following schedule. This represents a net increase of$20.9 million, or 2.5
percent over the end of last fiscal year for the governmental activities and a net increase of$24.3 million or
7.3 percent over the end of last fiscal year for business-type activities.
13
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
Amounts in(000's) Governmental Activities Business-Type Activities Totals
2018 2017 2018 2017 2018 2017
Land $ 31,161 $ 31,161 $ 3,796 $ 3,796 $ 34,958 $ 34,957
Construction in progress 110,736 77,706 84,111 53,339 194,847 131,045
Infrastructure 619,102 626,675 224,300 228,593 843,402 855,268
Buildings and improvements 71,506 74,812 24,518 25,253 96,024 100,065
Machinery and equipment 8,304 8,973 1,542 1,603 9,845 10,576
Furniture and fixtures 2,953 3,508 15 13 2,968 3,521
Contractual water rights 20,336 21,711 20,336 21,711
Total Capital Assets $843,762 $822,835 $358,618 $334,308 $1,202,379 $1,157,143
Construction in progress at year-end represents numerous ongoing projects, the largest of which relate
to street, parks, and water/sewer projects. Additional information on the City's capital assets can be
found in Note 4 to the financial statements.
Long-Term Debt - At the end of the current fiscal year, the City had total bonds, certificates of
obligation, and capital leases outstanding of$673.7 million. Of this amount, $283.0 million is composed
of general obligation bonds, $41.8 million is composed of certificates of obligation and $312.7 million
represents revenue bonds secured solely by specified revenue sources.
Amounts in(000's) Governmental Activities Business-Type Activities Totals
2018 2017 2018 2017 2018 2017
General obligation bonds $ 278,175 $ 283,140 $ 4,845 $ 7,360 $ 283,020 $ 290,500
Certificates of obligation 41,750 37,505 41,750 37,505
Revenue bonds 98,025 97,215 214,705 196,200 312,730 293,415
Unamortized amount for
issuance premium/
(discount) 23,844 25,832 10,897 9,395 34,741 35,227
Capital leases payable 1,282 1,838 173 257 1,455 2,095
$443,076 $ 445,530 $ 230,620 $ 213,212 $ 673,696 $ 658,742
The City's general obligation bonds and certificates of obligation debt for governmental activities
decreased to $319.9 million. The decrease is due to scheduled principal payments offset by new debt
issued. The City's debt for business-type activities increased to $219.6 million, a net increase of$16.0
million from the previous year, which was a result of new debt issued offset by scheduled principal
payments.
Current credit ratings on debt issues are as follows:
Standard Moodys
and Investor
Poor's Fitch Services
General obligation bonds AA AA Aa2
Revenue bonds AA- AA Aa3
Both the Pearland Economic Development Corporation (PEDC) and the Development Authority of
Pearland (DAP), component units of the City, have issued debt. The PEDC bonds are rated Al from
Moody's. The DAP bonds are rated A- by Standard and Poor's. Additional information on the City's
long-term debt can be found in Note 5 to the financial statements.
14
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES
The City of Pearland continues with its forward momentum in FY 2019, less in terms of population and
more in terms of growing value. The City's sales tax revenue is expected to continue strongly, providing
$22.8 million in FY 2019 with 3.8% growth. Sales tax revenue actually provides substantially to
General Fund operations in addition to being the funding source for our Pearland Economic
Development Corporation for another $11.1 million in FY 2019. The City also saw $373 million or 3.5%
increase in added taxable value in FY 2019. The combination of rooftops and retailers in Pearland
helps the local economy with jobs and investment and obviously provides tremendous value to our local
government operations.
The City received positive ratings from Moody's Investor Services and Fitch Ratings, Inc. in August for
its 2018 bond issuances. The City's Permanent Improvement Bonds Series 2018 for $7.3 million and
the Certificates of Obligation Series 2018 for $6.9 million were assigned a rating of `AA' by Fitch and
'Aa2' by Moody's. Separately, our enterprise fund Water and Sewer System Revenue Bonds-Series
2018E for $18.9 million were assigned `AA-' by Fitch and 'Aa3' by Moody's. These ratings demonstrate
strong creditworthiness relative to other U.S. municipal or tax-exempt issuers or issues. The City,
however, is significantly leveraged, which was necessary to allow the City to grow successfully.
Debt to Assessed Value(AV)Compared to General Obligation(GO)Debt*
$350
$300
4.0'0
$250
a 3.0% _o
o $200
E
a c
0
2.0% _ $150 0
O
l7
$100
1.0%
$50
0.0% $0 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18
GO Debt Debt to AV 4.8% 4.7% 4.4% 4.0% 3.8% 3.3% 3.1%
GO Debt $304.73 $308.75 $306.10 $307.23 $322.71 $328.01 $324.77
•Ge neral Obligation Debt i ncludes General Obligation Bonds and Certificates of Obligation. AGO Debt Debt to AV -GO Debt
••FY20 a nd FY21 are projected based on estimated future issuances from OP. Note:Figure does not include potential bond a lection.
The City's growth, however, allows debt service payments to be spread over a larger tax base,
steadying the debt service rate while continuing moderate new debt issuances for capital investment
projects. The debt service rate small reduction is atop the reduction we had in FY 2018, to 0.4300 from
.4400 in FY 2017. The significantly reduced debt service rate for two years is even as new projects are
being financed (general obligation and certificates of obligation). The debt service rate of $0.43 for FY
2019 remained unchanged from the $0.43 tax rate for FY 2018. In 2018, the City approved the
calculated effective tax rate for the City's property tax rate instead of the calculated rollback tax rate.
The rollback tax rate would have created a slight tax increase. Instead the effective tax rate was
adopted which generated the same amount of revenue that last year's property tax rate generated in
15
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
2017. As of September 30, 2018 the City had $319.5 million in General Obligation and Certificates of
Obligation outstanding being paid back primarily by property taxes. Our financial obligations will
continue to be met, and the City will continue to grow, but knowing that the heavy investments both
past and future may limit our resources for ongoing operations and innovations.
With a recovering Houston area economy and the continued growth in value and population, the City
General Fund revenues and other sources are projected to increase from $78,845,653 in FY 2018 to
$80,793,874 in FY 2019, an increase of $1,948,221, or 2.5%, mainly due to an increase in Property
Tax, Sales Tax, and Charges for Services. Property Tax revenues increased in 2019 by 4.3% over FY
2018 year-end amended revenue, resulting in steady property tax revenue as a percent of total
revenues, from 26% in FY 2018 to 26% in FY 2019, and a slight increase in the overall property tax rate
from $0.6851 to $0.7092 per$100 valuation.
FY 2019 total expenditures are $80,424,112, 1.1% less than the FY 2018 Amended Budget. Salaries
and benefits remain the major expenditure for FY 2019, at 73.1% of the total. The FY 2019 Adopted
Budget salaries and benefits represented 73.1% of total expenditures. Police and Fire remained the
main focus of the supplemental funding. The Police Department will be adding four new Police Officers.
The Fire Department will be continuing the process of "continuous onboarding" by bringing on six new
firefighters. A 2% increase in salary is included for all personnel, to support recruitment and retention
efforts. On April, 2018, the compensation and classification study recommendations were funded at
100% of the market rates. This is in addition to the annual 3% step increases for Certified Police
Officers.
The General Fund meets reserve requirements and the fund is structurally in balance for FY 2019
whereby operating revenues are greater than expenditures. The adopted FY 2019 fund balance over
policy is $73,929, with the adopted ending fund balance of$12,255,769 for FY 2019.
REQUESTS FOR INFORMATION
The financial report is designed to provide our citizens, customers, investors and creditors with a general
overview of City's finances. If you have questions about this report or need any additional financial
information, contact Cynthia Pearson, Director of Finance, at 3523 Liberty Drive, Pearland, Texas 77581, or
call (281) 652-1600. The report and general information can be found on the City's website at
www.pearlandtx.gov.
16
City of Pearland FY 2018 CAFR
Basic Financial Statements
17
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
STATEMENT OF NET POSITION
September 30, 2018
Primary Government
Governmental Business-type
Activities Activities Total
Assets
Cash and equivalents $ 34,686,162 $ 10,372,266 $ 45,058,428
Investments 85,922,888 11,535,028 97,457,916
Receivables, net of allowance
for uncollectibles 27,691,825 8,030,068 35,721,893
Internal balances 1,267,452 (1,267,452)
Inventories 123,504 123,504
Prepaid items 12,695 12,695
Restricted cash and cash equivalents 45,089,201 45,089,201
Restricted investments 55,251,702 55,251,702
Capital assets:
Capital assets not subject
to depreciation 141,896,869 87,907,650 229,804,519
Capital assets, net of
accumulated depreciation 701,864,789 270,709,881 972,574,670
Total Capital Assets 843,761,658 358,617,531 1,202,379,189
Total Assets 993,466,184 487,628,344 1,481,094,528
Deferred Outflows of Resources
Deferred charge on refunding 10,838,065 1,148,016 11,986,081
Deferred outflows related to OPEB activities 383,278 63,083 446,361
Deferred outflows related to pension activities 5,255,849 677,370 5,933,219
Total Deferred Outflows of Resources 16,477,192 1,888,469 18,365,661
Liabilities
Accounts payable and accrued liabilities 12,335,451 7,423,142 19,758,593
Accrued interest 1,158,109 514,966 1,673,075
Unearned revenues 1,787,407 1,787,407
Customer deposits 2,386,736 1,849,745 4,236,481
Long-term liabilities:
Due within one year 28,760,145 11,256,116 40,016,261
Due in more than one year 421,565,086 220,143,691 641,708,777
Total OPEB liability 4,416,579 724,388 5,140,967
Net pension liability 15,962,963 2,092,630 18,055,593
Total Liabilities 488,372,476 244,004,678 732,377,154
Deferred Inflows of Resources
Deferred inflows related to pension activities 3,090,013 415,373 3,505,386
Total Deferred Inflows of Resources 3,090,013 415,373 3,505,386
Net Position
Net investment in capital assets 454,669,972 210,674,024 665,343,996
Restricted for:
Capital improvements 3,100,314 10,199,712 13,300,026
Debt service 13,335,297 4,325,106 17,660,403
Community development programs 5,971,293 5,971,293
Public safety 506,084 506,084
Economic development 44,350,141 44,350,141
Unrestricted (3,452,214) 19,897,920 16,445,706
Total Net Position $518,480,887 $ 245,096,762 $763,577,649
See Notes to Financial Statements. 19
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2018
Program Revenue
Capital Grants
Charges for Operating Grants and
Functions/Programs Expenses Services and Contributions Contributions
Primary Government
Governmental Activities:
General Government $ 20,360,141 $ 10,414,273 $ $
Public Safety 43,274,991 3,776,857 10,945
Public Works 53,271,478 252,783 5,883,978 19,241,477
Community Services 4,509,434 6,566,263 232,411
Parks and Recreation 7,194,480 2,765,631
Economic Development 29,521,206 3,501,993
Interest on long-term debt 14,441,112
Total Governmental Activities 172,572,842 27,277,800 6,127,334 19,241,477
Business-type activities:
Water and Sewer 41,682,731 55,592,837 4,613,449
Solid Waste 7,441,289 7,841,800
Total Business-Type Activities 49,124,020 63,434,637 4,613,449
Total Primary Government $ 221,696,862 $ 90,712,437 $ 6,127,334 $ 23,854,926
General Revenues:
Taxes:
Property taxes
Sales and use taxes
Franchise taxes
Unrestricted investment earnings
Miscellaneous
Transfers
Total General Revenues and Transfers
Change in net position
Net position-beginning
Prior period adjustment
Net position-ending
See Notes to Financial Statements.
20
City of Pearland FY 2018 CAFR
Net(Expense) Revenue and Changes in Net Position
Primary Government
Governmental Business-type
Activities Activities Total
$ (9,945,868) $ $ (9,945,868)
(39,487,189) (39,487,189)
(27,893,240) (27,893,240)
2,289,240 2,289,240
(4,428,849) (4,428,849)
(26,019,213) (26,019,213)
(14,441,112) (14,441,112)
(119,926,231) (119,926,231)
18,523,555 18,523,555
400,511 400,511
18,924,066 18,924,066
(119,926,231) 18,924,066 (101,002,165)
83,802,830 83,802,830
35,436,955 35,436,955
7,357,997 7,357,997
1,651,113 1,360,710 3,011,823
4,690,758 6,806 4,697,564
3,102,692 (3,102,692)
136,042,345 (1,735,176) 134,307,169
16,116,114 17,188,890 33,305,004
504,405,720 226,770,942 731,176,662
(2,040,947) 1,136,930 (904,017)
$ 518,480,887 $ 245,096,762 $ 763,577,649
21
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2018
Pearland
Economic
General Capital Development
Fund Debt Service Projects Corporation
Assets
Cash and cash equivalents $ 907,541 $ 391,240 $ 4,507,424 $ 9,103,321
Investments 12,350,517 6,622,539 43,219,747 16,335,894
Receivables, net of allowance
for uncollectibles 6,918,771 8,645,694 2,005,108 6,215,067
Due from other governments
Due from other funds 1,394,444
Inventories 123,504
Prepaid items 12,483 212
Total Assets $21,707,260 $15,659,473 $49,732,279 $ 31,654,494
Liabilities
Accounts payable $ 2,734,373 $ 71,668 $ 5,848,681 $ 174,166
Accrued expenditures 1,321,875 132,080 1,585,046 52,682
Deposits 2,348,403 38,333
Due to other funds
Unearned revenue 649,955 1,137,452
Total Liabilities 7,054,606 1,341,200 7,433,727 265,181
Deferred Inflows of Resources
Unavailable revenue 665,012 7,521,159 4,256,492
Total Deferred Inflows
of Resources 665,012 7,521,159 4,256,492
Fund Balances
Non-spendable
Inventories 123,504 212
Prepaid items 12,483
Restricted
Debt service 6,797,114
Capital improvements 42,298,552
Community development programs
Public safety
Economic development 27,132,609
Assigned
Encumbrances 1,538,066
Unassigned 12,313,589
Total Fund Balances 13,987,642 6,797,114 42,298,552 27,132,821
Total Liabilities, Deferred
Inflows of Resources,
and Fund Balances $21,707,260 $15,659,473 $49,732,279 $ 31,654,494
See Notes to Financial Statements.
22
City of Pearland FY 2018 CAFR
Tax Increment Development Non-major Total
Reinvestment Authority of Governmental Governmental
Zone #2 Pearland Funds Funds
$ 6,661,784 $ 6,640,175 $ 2,883,509 $ 31,094,994
2,351,494 5,042,697 85,922,888
2,005,933 25,790,573
1,851,060 1,851,060
1,394,444
123,504
- 12,695
$ 9,013,278 $ 8,491,235 $ 9,932,139 $ 146,190,158
$ 2,168 $ 799 $ 246,856 $ 9,078,711
43,465 3,135,148
2,386,736
126,992 126,992
1,787,407
2,168 799 417,313 16,514,994
1,486,878 13,929,541
1,486,878 13,929,541
123,716
12,483
6,797,114
1,613,436 43,911,988
5,960,721 5,960,721
505,732 505,732
9,011,110 8,490,436 44,634,155
1,538,066
(51,941) 12,261,648
9,011,110 8,490,436 8,027,948 115,745,623
$ 9,013,278 $ 8,491,235 $ 9,932,139 $ 146,190,158
23
City of Pearland FY 2018 CAFR
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24
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO
THE STATEMENT OF NET POSITION
September 30, 2018
Total fund balance, governmental funds $ 115,745,623
Amounts reported for governmental activities in the Statement of Net Position are
different because:
Capital assets used in governmental activities are not financial resources and,
therefore, are not reported in the funds. 843,761,658
Deferred outflows represent a consumption of net position that applies to future
periods and therefore will not be recognized as an outflow of resources until then.
Deferred charge on refunding 10,838,065
Deferred outflows relating to OPEB activities 383,278
Deferred outflows relating to pension activities 5,255,849
Other long-term assets (property taxes receivable and adjudicated court fines
receivable) are not available to pay current period expenditures and, therefore,
are reported as unavailable revenue in the funds. 13,929,541
Long-term liabilities, including bonds payable, are not due and payable in the
current period, therefore, are not reported in the funds.
Bonds and capital leases payable (443,075,737)
Compensated absences (7,249,485)
Accrued interest governmental activity debt (1,158,109)
Total OPEB liability (4,416,579)
Net pension liability (15,962,963)
Deferred inflows represent a consumption of net position that applies to future
periods and therefore will not be recognized as an inflow of resources until then. (3,090,013)
Internal service funds are used by management to charge the cost of property
insurance and employee benefits to individual funds. The assets and liabilities of
the internal service funds are included in the governmental activities in the
statement of net position. 3,519,759
Net Position of Governmental Activities in the Statement of Net Position $ 518,480,887
See Notes to Financial Statements.
25
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended September 30, 2018
Pearland
Economic
General Capital Development
Fund Debt Service Projects Corporation
Revenues
Property taxes $20,383,959 $34,190,351 $ $
Sales and use taxes 22,662,007 11,177,690
Franchise fees 7,097,567
Licenses and permits 4,145,497
Fines and forfeitures 2,322,399
Charges for services 16,051,689 459,996
Investment earnings 193,334 217,443 620,468 304,643
Intergovernmental 7,779,656 12,000
Other 1,304,805 813,537 106 3,650,059
Total Revenues 74,161,257 35,221,331 8,400,230 15,604,388
Expenditures
Current:
General government 10,298,777
Public safety 40,950,030
Public works 13,326,696 3,577,346
Community services 4,024,727
Parks and recreation 5,816,980
Economic development 2,311,058
Debt Service:
Principal 556,677 15,245,000 905,000
Interest and other charges 34,922 12,619,329 212,265 324,500
Capital outlay 2,334,476 41,193,320 552,659
Intergovernmental 7,168,372
Total Expenditures 77,343,285 35,032,701 44,982,931 4,093,217
Excess (deficiency)of revenues
over expenditures (3,182,028) 188,630 (36,582,701) 11,511,171
Other Financing Sources(Uses)
Revenue bonds issued
Certificates of obligation issued 7,085,000
Permanent improvement bonds issued 7,440,000
Premium on debt issued 1,143,159
Transfers in 3,816,116 697,023 6,432,944
Transfers out (1,009,451) (1,006,954) (4,918,673)
Total Other Financing Sources(Uses) 2,806,665 697,023 21,094,149 (4,918,673)
Net change in fund balances (375,363) 885,653 (15,488,552) 6,592,498
Fund balances-beginning 14,363,005 5,911,461 57,787,104 20,540,323
Fund balances-ending $13,987,642 $ 6,797,114 $42,298,552 $ 27,132,821
See Notes to Financial Statements.
26
City of Pearland FY 2018 CAFR
Tax
Increment Development Non-major Total
Reinvestment Authority of Governmental Governmental
Zone #2 Pearland Funds Funds
$ 28,910,060 $ $ $ 83,484,370
1,597,258 35,436,955
260,430 7,357,997
4,145,497
145,488 2,467,887
290,701 16,802,386
137,373 6,425 120,299 1,599,985
539,284 8,330,940
1,395,894 7,164,401
29,047,433 6,425 4,349,354 166,790,418
15,903 1,048,396 11,363,076
330,946 41,280,976
93,548 16,997,590
288,679 4,313,406
143,452 5,960,432
12,444,514 14,439,353 29,194,925
6,840,000 23,546,677
2,622,491 15,813,507
240,991 44,321,446
7,168,372
12,444,514 23,917,747 2,146,012 199,960,407
16,602,919 (23,911,322) 2,203,342 (33,169,989)
8,555,000 8,555,000
7,085,000
7,440,000
1,143,159
13,758,032 24,704,115
(13,758,032) (1,573,312) (22,266,422)
(13,758,032) 22,313,032 (1,573,312) 26,660,852
2,844,887 (1,598,290) 630,030 (6,509,137)
6,166,223 10,088,726 7,397,918 122,254,760
$ 9,011,110 $ 8,490,436 $ 8,027,948 $ 115,745,623
27
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2018
Net change in fund balances-total governmental funds: $ (6,509,137)
Amounts reported for Governmental Activities in the Statement of Activities are different
because:
Governmental funds report outlays for capital assets as expenditures. However, in the
Statement of Activities, the cost of these assets is allocated over their estimated useful
lives as depreciation expense.
This is the amount by which capital outlays of$40,851,250 exceeded depreciation of
$39,166,428 in the current period. 1,684,822
Governmental funds report only the proceeds from the disposal of capital assets and not
the difference between the carrying value and the accumulated depreciation of the asset.
This is the amount by which the carrying value exceeded the accumulated depreciation.
Capital assets acquired as a result of in-City development. 19,241,477
Governmental funds do not present revenues that are not available to pay current
obligations. In contrast, such revenues are reported in the Statement of Activities when
earned. 469,866
Pension and OPEB contributions made after the pension plan measurement date are
reported as expenditures in the governmental funds and are reported as deferred outflows
on the face of the statement of net position 5,476,493
Governmental funds report bond proceeds as current financial resources. In contrast, the
Statement of Activities treats such issuance of debt as a liability. Governmental funds
report repayment of bond principal as an expenditure, In contrast, the Statement of
Activities treats such repayments as a reduction in long-term liabilities. This is the amount
by which proceeds exceeded repayments. (3,685,270)
Some expenses reported in the Statement of Activities do not require the use of current
financial resources and, therefore, are not reported as expenditures in governmental funds:
Accrued interest 63,250
Deferred charge on refunding 1,797,635
Bond premiums/discounts 1,987,980
Compensated absences (700,272)
Capital lease activity 556,677
Other post-employment benefit expense 1,222,092
Pension expense (5,907,507)
The internal service funds are used by management to charge the costs of property
insurance and employee benefits to individual funds. The net revenue(expense) of certain
activities of internal service funds is reported with governmental activities. 418,007
Change in net position of governmental activities $ 16,116,114
See Notes to Financial Statements.
28
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
September 30,2018
Governmental
Business-type Activities-Enterprise Funds Activities-
Water and Sewer Solid Waste Internal
Fund Fund Total Service Funds
Assets
Current assets:
Cash and cash equivalents $ 10,372,266 $ $ 10,372,266 $ 3,591,168
Investments 11,535,028 11,535,028
Accounts receivable,net of allowance for
doubtful accounts 6,860,776 1,169,292 8,030,068 50,184
Restricted cash and cash equivalents 45,089,201 45,089,201
Restricted investments 55,251,702 55,251,702
Total current assets 129,108,973 1,169,292 130,278,265 3,641,352
Non-current assets:
Capital assets:
Land and improvements 3,796,382 3,796,382
Construction in progress 84,111,268 84,111,268
Contractual rights to water supply 34,511,428 34,511,428
Infrastructure 351,804,043 351,804,043
Buildings 32,268,698 32,268,698
Machinery and equipment 5,649,502 5,649,502
Less Accumulated depreciation (153,523,790) (153,523,790)
Total non-current assets 358,617,531 358,617,531
Total Assets 487,726,504 1,169,292 488,895,796 3,641,352
Deferred Outflows of Resources
Deferred charge on refunding 1,148,016 1,148,016
Deferred outflows relating to OPEB activities 63,083 63,083
Deferred outflows relating to pension activities 677,370 677,370
Total Deferred Outflows of Resources 1,888,469 1,888,469
Liabilities
Current liabilities:
Accounts payable and accrued expenses 6,774,053 649,089 7,423,142 121,593
Accrued interest payable 514,966 514,966
Due to other funds 1,267,452 1,267,452
Customer deposits 1,849,745 1,849,745
Compensated absences-current portion 175,454 175,454
Bonds and permanent improvement payable-current portion 10,995,000 10,995,000
Capital lease-current portion 85,662 85,662
Total current liabilities 20,394,880 1,916,541 22,311,421 121,593
Non-current liabilities:
Compensated absences 604,702 604,702
Capital lease obligation 87,166 87,166
Total OPEB Liability 724,388 724,388
Net pension liability 2,092,630 2,092,630
Bonds and permanent improvement payable 219,451,823 219,451,823
Total non-current liabilities 222,960,709 222,960,709
Total Liabilities 243,355,589 1,916,541 245,272,130 121,593
Deferred Inflows of Resources
Deferred inflows relating to pension activities 415,373 415,373
Total Deferred Inflows of Resources 415,373 415,373
Net Position
Net investment in capital assets 210,674,024 210,674,024
Restricted for debt service 4,325,106 4,325,106
Restricted for capital projects 10,199,712 10,199,712
Unrestricted 20,645,168 (747,249) 19,897,919 3,519,759
Total Net Position $ 245,844,010 $ (747,249) $ 245,096,761 $ 3,519,759
See Notes to Financial Statements.
29
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
STATEMENT OF REVENUES,EXPENSES AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
For the Year Ended September 30,2018
Governmental
Business-type Activities-Enterprise Funds Activities-
Water and Solid Waste Internal
Sewer Fund Fund Total Service Funds
Revenues
Charges for services $ 55,592,837 $ 7,874,104 $ 63,466,941 $ 7,895,258
Total operating revenues 55,592,837 7,874,104 63,466,941 7,895,258
Operating Expenses
Personnel services 7,340,800 7,340,800 42,763
Supplies and materials 7,354,320 7,354,320
Contractual services 5,366,373 8,473,436 13,839,809 8,131,861
Repairs and maintenance 4,085,993 4,085,993
Other expenses 99,078 99,078 18,755
Depreciation and amortization 10,833,814 10,833,814
Total Operating Expenses 35,080,378 8,473,436 43,553,814 8,193,379
Operating income(loss) 20,512,459 (599,332) 19,913,127 (298,121)
Non-Operating Revenues(Expenses)
Earnings on investments 1,360,695 15 1,360,710 51,128
Miscellaneous revenue(expense) 6,806 6,806
Bond Issuance Costs (447,732) (447,732)
Interest expense (5,154,778) (5,154,778)
Total Non-Operating Revenues(Expenses) (4,235,009) 15 (4,234,994) 51,128
Income(loss)before contributions and transfers 16,277,450 (599,317) 15,678,133 (246,993)
Capital contributions 4,613,449 4,613,449
Transfers in 487,109 487,109 665,000
Transfers out (3,589,802) (3,589,802)
Change in net position 17,788,206 (599,317) 17,188,889 418,007
Total net position-beginning 227,135,350 (364,408) 226,770,942 3,101,752
Prior period adjustment 920,454 216,476 1,136,930
Total net position-ending $ 245,844,010 $ (747,249) $245,096,761 $ 3,519,759
See Notes to Financial Statements.
30
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS Page 1 of 2
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended September 30,2018
Governmental
Business-type Activities-Enterprise Funds Activities-
Water and Solid Waste Internal
Sewer Fund Fund Total Service Funds
Cash Flows from Operating Activities
Receipts from customers and users $ 51,922,630 $ 7,689,189 $59,611,819 $
Receipts from interfund charges for insurance activities 7,860,760
Disbursed for personnel services (8,632,518) (8,632,518) (42,763)
Disbursed for goods and services (21,805,030) (7,689,204) (29,494,234) (8,556,373)
Net cash provided(used)by operating activities 21,485,082 (15) 21,485,067 (738,376)
Cash Flows from Noncapital Financing Activities
Transfers in 487,109 487,109 665,000
Transfers out (3,589,802) (3,589,802) -
Cash received from non-operating revenues 6,806 _ 6,806
Net cash provided by(used by)noncapital
financing activities (3,095,887) (3,095,887) 665,000
Cash Flows from Capital and Related Financing Activities
Proceeds from the issuance of debt 29,763,159 29,763,159
Principal payments on debt (11,710,000) (11,710,000)
Principal payments on leases (84,216) (84,216)
Bond issuance costs (447,732) (447,732)
Interest paid (5,114,653) (5,114,653)
Acquisition and construction of capital assets (28,233,764) (28,233,764)
Net cash provided by capital and related
financing activities (15,827,206) (15,827,206)
Cash Flows from Investing Activities
Purchase of investments (6,556,401) (6,556,401)
Interest received 1,360,695 15 1,360,710 51,127
Net cash provided by(used by)investing activities (5,195,706) 15 (5,195,691) 51,127
Net increase(decrease)in cash and equivalents (2,633,717) (2,633,717) (22,249)
Cash and equivalents,beginning 58,095,183 58,095,183 3,613,417
Cash and equivalents,end $ 55,461,467 $ $55,461,467 $ 3,591,168
1 _ 1
Unrestricted cash and equivalents $ 10,372,266 $ $10,372,266 $ 3,591,168
Restricted cash and equivalents 45,089,201 45,089,201
$ 55,461,467 $ $55,461,467 $ 3,591,168
See Notes to Financial Statements.
31
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS Page 2 of 2
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended September 30,2018
Governmental
Business-type Activities-Enterprise Funds Activities-
Water and Solid Waste Internal
Sewer Fund Fund Total Service Funds
Reconciliation of operating income to net cash
provided by operating activities
Operating income(loss) $ 20,512,459 $ (599,332) $19,913,127 $ (298,121)
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation and amortization 10,833,814 10,833,814
(Increase)decrease in accounts receivable (1,980,691) (184,915) (2,165,606) (34,498)
(Increase)decrease in deferred outflows relating to
OPEB activities (442,974) (442,974)
(Increase)decrease in deferred outflows relating to
pension activities 519,449 519,449
Increase(decrease)in accounts payable (4,899,266) (175,114) (5,074,380) (405,757)
Increase(decrease)in salaries payable 206,816 206,816
Increase(decrease)in due to other funds 959,346 959,346
Increase(decrease)in customer deposits (1,689,516) (1,689,516)
Increase(decrease)in total OPEB liability (1,127,609) (1,127,609)
Increase(decrease)in net pension liability (841,277) (841,277)
Increase(decrease)in deferred inflows relating to
pension activities 393,877 393,877
Net cash provided by(used by)operating activities $ 21,485,082 $ (15) $21,485,067 $ (738,376)
Summary of non-cash transactions
Contributed capital assets $ 4,613,449 $ $ 4,613,449 $
See Notes to Financial Statements.
32
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies
The City of Pearland, Texas (the "City") was incorporated in December 1959 and adopted a "Home Rule
Charter" February 6, 1971. The Charter, as amended, provides for a Council-Manager form of government
and provides services authorized by its charter. Presently, these services include police, fire and emergency
medical, water and sewer services, drainage, sanitation, building and code inspection, planning, zoning,
engineering, street repair and maintenance, park maintenance, recreational activities for citizens, and
general administrative services. Fire protection is provided through a combination full-time part-
time/volunteer department. The City is governed by an elected mayor and seven-member Council.
The Mayor and all members are elected at large. The Mayor is allowed to vote only in case of a tie vote.
The Mayor and each Council member hold office for a period of three years and until his/her successor is
elected and qualified. Council members shall be limited to two full consecutive terms of office and there is
no limitation on the office of the Mayor. The City Manager is appointed by Council and is responsible for
implementation of Council policy, execution of the laws, and all day-to-day operations of the City.
A. Financial Reporting Entity
The City is an independent political subdivision of the State of Texas governed by an elected council and
a mayor and is considered a primary government. As required by accounting principles generally accepted
in the United States of America, these financial statements have been prepared based on considerations
regarding the potential for inclusion of component units, which are other entities or organizations that are
financially accountable to the City. Blended component units are component units that are considered so
closely related to the legal entity that the blended component unit funds appear as funds that are integral
parts of the primary government. The City's financial statements include the following blended
component units: the Pearland Economic Development Corporation (PEDC); the Tax Increment
Reinvestment Zone (TIRZ #2); and the Development Authority of Pearland (DAP). No other entities
have been included in the City's reporting entity. Additionally, as the City is considered a primary
government for financial reporting purposes, its activities are not considered a part of any other
governmental or other type of reporting entity.
Considerations regarding the potential for inclusion of other entities, organizations, or functions in the
City's financial reporting entity are based on criteria prescribed by generally accepted accounting
principles. These same criteria are evaluated in considering whether the City is a part of any other
governmental or other type of reporting entity. The overriding elements associated with prescribed criteria
considered in determining that the City's financial reporting entity status is that of a primary government
are that it has a separately elected Governing body; it is legally separate; and it is fiscally independent of
other state and local governments.
The financial reporting entity consists of the City and its component units. Component units are legally
separate organizations for which the City is financially accountable or other organizations whose nature
and significant relationship with the City are such that exclusion would cause the City's financial
statements to be misleading. Financial accountability is defined as the appointment of a voting majority of
the component unit's board, and (i) either the City's ability to impose its will on the organization or (ii) there
is potential for the organization to provide a financial benefit to or impose a financial burden on the City.
The basic financial statements include blended component units. The blended component units, although
legally separate entities are, in substance, part of the City's operations and so data from these units are
combined with data of the primary government.
33
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 -Summary of Significant Accounting Policies (continued)
A. Financial Reporting Entity (continued)
For financial reporting purposes, the City's basic financial statements include all financial activities that are
controlled by or are dependent upon actions taken by City Council. The component units do not issue
separate financial statements.
Blended Component Units:
Pearland Economic Development Corporation (PEDC)
In 1995, the citizens of Pearland established the Pearland Economic Development Corporation (PEDC)
to help the citizens and public officials of Pearland attract new businesses and to help existing businesses
to expand. The mechanism to fund the operations of the corporation is through a sales tax levy at a rate
of one-half of one percent (1/2%). The PEDC is governed by a board appointed by the City Council.
Although it is legally separated from the City, the PEDC relies upon the primary government for
appointing the board, also City Council must approve the PEDC's budget and any debt issuances. The
PEDC provides services entirely, or almost entirely, to the City or otherwise exclusively, or almost
exclusively, benefits the City even though it may not provide services directly to it.
Tax Increment Reinvestment Zone (TIRZ#2)
In 1998, the Tax Increment Reinvestment Zone (TIRZ#2)was established for a period of 30 years or until
dissolved by the City. The TIRZ#2 provides tax-assisted property development and/or redevelopment in
specific geographic areas in accordance with applicable state laws. The TIRZ#2 is governed by a board
appointed by the City Council. Although it is legally separated from the City, the TIRZ #2 is fiscally
dependent upon the primary government because the City Council must also approve any debt issuances
done on behalf of the TIRZ. A major land owner within the City sits on the Board of Directors for the
TIRZ #2. TIRZ #2 provides services entirely, or almost entirely, to the City or otherwise exclusively, or
almost exclusively, benefits the City even though it may not provide services directly to it.
Development Authority of Pearland
In 2004, the City created the Development Authority of Pearland to provide financing for the development of
the TIRZ #2. Proceeds from bond sales are to be used to reimburse developers and fund a debt service
reserve. The Development Authority of Pearland is governed by a board appointed by the City Council.
Although it is legally separated from the City, the Development Authority of Pearland is fiscally dependent
upon the primary government because the City Council must also approve any debt issuances done on
behalf of the Development Authority of Pearland. The Development Authority of Pearland provides
services entirely, or almost entirely, to the City or otherwise exclusively, or almost exclusively, benefits the
City even though it may not provide services directly to it.
34
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 -Summary of Significant Accounting Policies (continued)
B. Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Position and the Statement of
Changes in Net Position) report information about the City as a whole. These statements include all
activities of the primary government and its component units. For the most part, the effect of interfund
activity has been eliminated from the government-wide statements. Exceptions to this general rule are
charges between the City's business-type and governmental funds. Elimination of these charges would
distort the direct costs and program revenues reported for the various functions concerned.
Governmental activities, which normally are supported by taxes and intergovernmental revenues, are
reported separately from business-type activities, which rely to a significant extent on fees and charges
for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function or
segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a
specific function or segment. Program revenues include 1) charges to customers or applicants who
purchase, use or directly benefit from goods, services, or privileges provided by a given function or
segment and 2) grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function or segment. Taxes and other items not properly included among
program revenues are reported instead as general revenues.
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements and all proprietary funds are reported using the economic
resources measurement focus and the accrual basis of accounting. Revenues are recognized when
earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash
flows. With this measurement focus, all assets and all liabilities associated with the operations of these
activities are included on the statements of net position. Proprietary fund-type operating statements
present increases (i.e., revenues) and decreases (i.e., expenses) in net total assets. Furniture and
equipment capitalized in the Proprietary Fund Types are valued at cost.
The governmental fund financial statements are presented on a current financial resources measurement
focus and modified accrual basis of accounting. This is the manner in which these funds are normally
budgeted. Revenues are recognized as soon as they are both measurable and available. Measurable
means that the amount of the transaction can be determined and available means collectible within the
current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City
considers revenues to be available if they are collected within 60 days of the end of the current fiscal
period. Revenues susceptible to accrual include property taxes, sales and use taxes, franchise fees,
charges for services and interest on temporary investments. Other receipts become measurable and
available when cash is received by the government and are recognized as revenue at that time.
Under modified accrual accounting, expenditures are recognized in the accounting period in which the
liability is incurred, if measurable, except for interest on general long-term debt, which is recognized when
due. Since the governmental fund statements are presented on a different measurement focus and basis
of accounting than the government-wide statements' governmental column, a reconciliation is presented
which briefly explains the adjustments necessary to reconcile fund-based financial statements with the
governmental column of the government-wide presentation.
35
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 -Summary of Significant Accounting Policies (continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (continued)
In the fund financial statements, the accounts of the City are organized on the basis of funds, each of
which is considered a separate accounting entity. The operations of each fund are accounted for with a
separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and
expenditures or expenses, as appropriate. Following is a description of the various funds:
Governmental funds are those funds through which most governmental functions are typically financed. The
City reports the following major governmental funds:
The General Fund is used to account for all financial transactions not properly includable in other funds.
The principal sources of revenues include local property taxes, sales and franchise taxes, licenses and
permits, fines and forfeitures, and charges for services. Expenditures include general government, public
works, parks and recreation, community services, and public safety.
The Debt Service Fund is used to account for the payment of interest and principal on all general
obligation bonds and other governmental long-term debt of the City. The primary source of revenue for
debt service is local property taxes. The Debt Service Fund is considered a major fund for reporting
purposes.
The Capital Projects Fund is used to account for the expenditures of resources accumulated on a pay-
as-you-go basis and the sale of bonds and related interest earnings for capital improvement projects.
The Capital Projects Fund is considered a major fund for reporting purposes.
The Pearland Economic Development Corporation is used to account for the revenues and expenditures
associated with the half-cent sales tax for economic development approved by the voters in 1995. Use
of the funds are governed by State Law.
The Tax Increment Reinvestment Zone #2 fund is used to account for the incremental property tax
revenues in the specific geographical area and use thereof from the participating taxing entities in the
Zone. The Tax Increment Reinvestment Zone#2 is considered a major fund for reporting purposes.
The Development Authority of Pearland fund is used to account for the financing of the development of
the TIRZ#2. The Development Authority of Pearland is considered a major fund for reporting purposes.
The City's Business type activities consist of the following funds:
The Enterprise Funds are used to account for the operations that provide water and sewer utility services as
well as solid waste collection services to the public. The services are financed and operated in a manner
similar to private business enterprises where the intent of the governing body is that the costs (expenses
including depreciation) of providing goods or services to the general public on a continuing basis will be
financed or recovered primarily through user charges.
Additionally, the city maintains Internal Service Funds used to account for the financing of goods or
services provided by one department or agency to other departments or agencies of the City on a cost-
reimbursement basis. Services provided by the Internal Service Funds include property and liability
insurance coverage, employee benefits, and health claims. The Internal Service Funds is included in
governmental activities for government-wide reporting purposes.
36
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 -Summary of Significant Accounting Policies (continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (continued)
All assets, deferred outflows of resources, liabilities, equities, revenues, expenses and transfers relating
to the government's business activities are accounted for through proprietary funds. The measurement
focus is on determination of net income, financial position and cash flows.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial
statements. Exceptions to this general rule are charges between the City's water and sewer function and
various other functions of the government. Elimination of these charges would distort the direct costs and
program revenue reported for the various functions concerned.
Amounts reported as program revenues include: (1) charges to customers or applicants for goods,
services, or privileges provided, (2) operating grants and contributions, and (3) capital grants and
contributions, including special assessments. Internally dedicated resources are reported as general
revenues rather than as program revenue. Likewise, general revenue includes all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the
City's Enterprise Funds are charges to customers for sales and services. Operating expenses for
Enterprise Funds include the cost of sales and services, administrative expenses, and depreciation on
capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenue
and expense.
D. Net Position Flow Assumption
Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond
or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted
net position and unrestricted net position in the government-wide and proprietary fund financial
statements, a flow assumption must be made about the order in which the resources are considered to
be applied. It is the City's policy to consider restricted net position to have been depleted before
unrestricted net position is applied.
E. Fund Balance Flow Assumption
Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted
resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the
amounts to report as restricted, committed, assigned, and unassigned fund balance in the
governmental fund financial statements, a flow assumption must be made about the order in which the
resources are considered to be applied. It is the City's policy to consider restricted fund balance to have
been depleted before using any of the components of unrestricted fund balance. Further, when the
components of unrestricted fund balance can be used for the same purpose, committed fund balance is
depleted first, followed by assigned fund balance. Unassigned fund balance is applied last.
F. Fund Balance Working Capital Policies
Governmental Funds are presented in the financial statements as follows:
Nonspendable —Amounts that cannot be spent either because they are not in a spendable form or
because they are legally or contractually required to be maintained intact.
37
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 - Summary of Significant Accounting Policies (continued)
F. Fund Balance Working Capital Policies (continued)
Restricted — Amounts that can be spent only for specific purposes because of the City Charter,
City Code, State or Federal laws, or externally imposed conditions by grantors or creditors.
Committed — Amounts than can be used only for specific purposes determined by ordinances
passed by City Council, the City's highest level of decision making authority. Commitments may be
modified or rescinded only through ordinances approved by City Council.
Assigned — Amounts that are intended to be used for a specific purpose, but do not meet the
definition of restricted or committed fund balance. Under the City's policy, amounts can be
assigned by the City's Director of Finance.
Unassigned — Amounts that are available for any purpose. Positive amounts are reported only in
the General Fund.
City Council has authorized the Director of Finance as the official authorized to assign fund balance to
a specific purpose. City Council has established fund balance and working capital policies under which
the City shall maintain the fund balance and working capital of the various operating funds at the
following levels:
General Fund Unassigned Fund Balance
The City shall maintain the General Fund unassigned fund balance equivalent to 2 months of
recurring operating expenditures, based on current year expenditures. If the fund balance exceeds
this amount, funding non-recurring expenditures in the following fiscal year may be used to draw
down the balance.
Water/Sewer Unreserved Working Capital
The City shall maintain a working capital sufficient to provide for reserves for emergencies and
revenue shortfalls. A cash equivalent operating reserve will be established and maintained at 25%
of the current year's budget appropriation for recurring operating expenses.
The cash operating reserve is derived by dividing the total cash equivalents balance by recurring
operating expenses.
Use of Fund Balance/Working Capital
Fund balance/Working Capital shall only be used for emergencies, non-recurring
expenditures/expenses or major capital purchases that cannot be accommodated through current
year savings. Should such use reduce balances below the level established as the objective for
that fund, restoration recommendations will accompany the request/decision to utilize said
balances.
Debt Service Fund Total Fund Balance
The City shall maintain the debt service fund balance at 10% of annual debt service requirements
OR a fund balance reserve as required by bond ordinances, whichever is greater.
Property Liability Insurance Fund Unrestricted Net Position
The Property Liability Insurance Fund accounts for uninsured and deductible claims for the City's
property and liability insurance. Claims cannot be reasonably predicted and budgeted for; therefore
the fund will maintain a balance that approximates the prior average annual expense for the last
three years, excluding extra-ordinary expenses in the fund.
38
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 - Summary of Significant Accounting Policies (continued)
F. Fund Balance Working Capital Policies (continued)
The Employee Benefits Fund and Health Claims Fund are funded through City and employee
contributions. Estimated costs shall be determined during each budget year and the contributions
adjusted accordingly. There is no minimum balance for this fund as it relates to employee benefits.
Economic Development Corporation
As sales tax revenue fluctuates due to changes in economic conditions, the PEDC shall maintain a
fund balance of no less than 10% of budgeted sales tax revenues.
Water/Sewer Revenue Debt Coverage Reserves
Revenues shall be maintained at 1.15 times coverage in a fiscal year where the water/sewer fund is
not issuing additional debt and 1.4 times coverage in a year where debt is anticipated to be issued.
Bond Issuance Reserves
Debt service reserves should be maintained for each bond issue as required by bond covenants.
Contingency Fund
Pursuant to the City Charter, a provision shall be made within the annual budget for a contingency
fund in an amount not more than seven percent of the total budget (General Fund) to be used in
case of unforeseen items of expenditure.
G. Cash and Cash Equivalents
The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-
term investments with original maturities of three months or less from the date of acquisition. For the
purpose of the statement of cash flows, the Proprietary Fund Types consider temporary investments with
maturity of three months or less when purchased to be cash equivalents.
The City pools cash resources of its various funds to facilitate the management of cash. Cash applicable to
a particular fund is readily identifiable. The balance in the pooled cash accounts is available to meet current
operating requirements. Cash in excess of current requirements is invested in various interest-bearing
accounts and securities and disclosed as part of the City's investments.
The City pools excess cash of the various individual funds to purchase these investments. These pooled
investments are reported in the combined balance sheet as Investments in each fund based on each
fund's share of the pooled investments. Interest income is allocated to each respective individual fund,
monthly, based on their respective share of investments in the pooled investments.
H. Investments
Investments consist of Local Government Investment Pools, United States (U.S.) Government Agency
securities, and Certificates of Deposit with original maturities greater than three months from the date of
acquisition. The City reports all investments at fair value, except for investment pools. The City's
investment pools are valued and reported at amortized cost, which approximates fair value.
39
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 -Summary of Significant Accounting Policies (continued)
H. Investments (continued)
The City categorizes fair value measurements of its investments based on the hierarchy established by
generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the
valuation inputs used to measure an asset's fair value: Level 1 inputs are quoted prices in active markets for
identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant
unobservable inputs. The City's local government investment pools are recorded at amortized costs as
permitted by GASB Statement No. 79, Certain Investment Pools and Pool Participants.
I. Receivables
All receivables are reported at their gross value, and where appropriate, are reduced by the estimated
portion that is expected to be uncollectible. Trade accounts receivable in excess of 120 days comprise
the trade accounts receivable allowance for uncollectibles.
J. Due to and Due from Other Funds
Interfund receivables and payables arise from interfund transactions and are recorded by all funds
affected in the period in which the transactions are executed. These receivables and payables are
classified as "due from other funds" or "due to other funds". Interfund receivables and payables which
are not expected to be paid within 12 months are classified as loans from/loans to other funds.
K. Inventories and Prepaid Items
Inventory, which consists of fuel and auto parts for use in the City's vehicles, is stated at cost (first-in, first-
out method). Expenditures are recognized as the fuel and auto parts are consumed rather when
purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both the government-wide and fund financial statements. The cost of
prepaid items is recorded as expenditures/expenses when consumed rather than when purchased.
L. Restricted Assets
Certain proceeds of the Water and Sewer Enterprise Fund revenue bonds and certain resources set aside
for their repayment are classified as restricted assets on the balance sheet because their use is limited by
applicable bond covenants. Certain resources are also set aside for repayment of Pearland Economic
Development Corporation Bonds and are reported as restricted assets.
M. Capital Assets
Capital assets which include property, plant, equipment and infrastructure, are reported in the applicable
governmental or business-type activities columns in the government-wide financial statements. The City
defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated
useful life of three years or more. Such assets are recorded at historical cost or estimated historical cost
if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of
donation. The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets' lives are not capitalized.
40
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 - Summary of Significant Accounting Policies (continued)
M. Capital Assets (continued)
Property, plant, and equipment are depreciated using the straight-line method over the following useful
lives:
Asset Years
Buildings and improvements 10-45
Machinery and equipment 3-15
Infrastructure 10-50
Intangible Assets - Water Rights 25
N. Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused vacation, sick and holiday pay
benefits.
Employees hired prior to October 1, 2005 earn vacation leave at the rate of 15 days per year from 1 to 15
years of service, 20 days per year for service of 16 to 19 years, and 25 days per year for service of 20
years or more. Employees, who are non-exempt and are hired after October 1, 2005 earn vacation at a
rate of 10 days per year from 1-4 years of service, 15 days per year for 5-14 years of service and 20 days
for 15 and over years of service. Employees, who are exempt and are hired after October 1, 2005 earn
vacation at a rate of 15 days per year from 1-14 years of service, and 20 days for 15 and over years of
service. Certified police personnel earn 15 days of vacation after 1 year and 20 days of vacation after 15
years. Effective October 1, 2011 certified fire fighter personnel earn 168 hours of vacation from 1-4 years,
241 hours of vacation for 5-14 years and 312 hours after 15 years. Employees are required to use their
vacation in the year it is earned. Employees may carry over a maximum of 40 (48 for certified shift Fire
employees) hours of vacation a year.
City employees receive 10 paid holidays per year. In addition to providing paid time off for the City-
observed holidays, the City permits regular full-time employees to take up to two (2) paid personal days
(designated holidays) annually. Employees required to work on a City-observed holiday may be paid or
may elect to receive compensatory time off for the holiday. Overtime is earned at one and one-half times
the regular rate of pay for non-exempt employees. Employees may be paid or receive compensatory time.
The maximum accrual for Compensatory Time is 120 hours, including employees involved in public safety.
All sick leave benefits are accumulated and paid to employees upon separation from the City not to
exceed 720 hours for employees hired prior to July 24, 2006, and 360 hours for employees hired after.
Vacation, sick and holiday pay benefits are accrued when incurred in the government-wide and proprietary
fund financial statements. A liability for these amounts is reported in governmental funds only if they have
matured, for example, as a result of employee resignations and retirements.
O. Estimates
The preparation of financial statements, in conformity with generally accepted accounting principles,
requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the
reported amounts of revenues and expenditures during the reporting period. Actual results could differ
from those estimates.
41
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 - Summary of Significant Accounting Policies (continued)
P. Comparative Data and Reclassifications
Comparative data for the prior year have been presented in certain sections of the accompanying
financial statements in order to provide an understanding of changes in the City's financial position and
operations. Also, certain amounts presented in the prior year data have been reclassified in order to be
consistent with the current year's presentation.
Q. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for
deferred outflows of resources. This separate financial statement element, deferred outflows of
resources, represents a consumption of net position or fund balance that applies to a future period(s)
and thus, will not be recognized as an outflow of resources (expense/expenditure) until then. The City
has only three items that qualify for reporting in this category.
• Deferred outflows of resources for refunding - Reported in the government-wide statement of
net position, this deferred charge on refunding results from the difference in the carrying value
of refunded debt and its reacquisition price. This amount is deferred and amortized over the
shorter of the life of the refunded or refunding debt.
• Deferred outflows of resources for pension - Reported in the government-wide financial
statement of net position, this deferred outflow results from pension plan contributions made
after the measurement date of the net pension liability and the results of 1) differences between
projected and actual earnings on pension plan investments; 2) changes in actuarial
assumptions; 3) differences between expected and actual actuarial experiences and 4) changes
in the City's proportional share of pension liabilities. The deferred outflows of resources related
to pensions resulting from City contributions subsequent to the measurement date will be
recognized as a reduction of the net pension liability in the next fiscal year. The deferred
outflows resulting from differences between projected and actual earnings on pension plan
investments will be amortized over a closed five year period. The remaining pension related
deferred outflows will be amortized over the expected remaining service lives of all employees
(active and inactive employees) that are provided with pensions through the pension plan.
• Deferred outflows of resources for other post-employment benefits (OPEB) - Reported in the
government wide financial statement of net position, these deferred outflows result from OPEB
plan contributions made after the measurement date of the net OPEB liability and the results of
changes in assumptions and other inputs. The deferred outflows of resources resulting from City
contributions subsequent to the measurement date will be recognized as a reduction of the total
OPEB liability in the next fiscal year. The other OPEB related outflow will be amortized over the
expected remaining service lives of all employees (active and inactive employees) who are
provided with OPEB benefits.
42
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 - Summary of Significant Accounting Policies (continued)
Q. Deferred Outflows/Inflows of Resources
In addition to liabilities, the statement of financial position will sometimes report a separate section for
deferred inflows of resources. This separate financial statement element, deferred inflows of resources,
represents an acquisition of net position or fund balance that applies to a future period(s) and so will not
be recognized as an inflow of resources (revenue) until that time. The City has two items that qualify for
reporting in this category.
• Deferred inflows of resources for unavailable revenues - Reported only in the governmental
funds balance sheet, unavailable revenues arise under the modified accrual basis of
accounting. These amounts are deferred and recognized as an inflow of resources in the period
that the amounts become available.
• Deferred inflows of resources for pension - Reported in the government wide financial statement
of net position, these deferred inflows result primarily from changes in actuarial assumptions.
These pension related deferred inflows will be amortized over the expected remaining service
lives of all employees (active and inactive employees) that are provided with pensions through
the pension plan
R. Pensions
For purposes of measuring the net pension liability, pension related deferred outflows and inflows of
resources, and pension expense, City specific information about its Fiduciary Net Position in the Texas
Municipal Retirement System (TMRS) and additions to/deductions from the City's Fiduciary Net
Position have been determined on the same basis as they are reported by TMRS. For this purpose,
plan contributions are recognized in the period that compensation is reported for the employee, which is
when contributions are legally due. Benefit payments and refunds are recognized when due and
payable in accordance with the benefit terms. Investments are reported at fair value. Information
regarding the City's Total Pension Liability is obtained from TMRS through a report prepared for the
City by TMRS consulting actuary, Gabriel Roeder Smith & Company, in compliance with Governmental
Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for
Pensions, as superseded by GASB Statement No. 71.
S. Other-Post Employment Benefits (OPEB)
The City provides its retirees the opportunity to maintain health insurance coverage by participating in
the City's insurance plan. The City reports the total liability for this plan on the government-wide and
proprietary fund financial statements. The actual cost recorded in the governmental fund financial
statements is the cost of the health benefits incurred on behalf of the retirees less the premiums
collected from the retirees. Information regarding the City's total liability for this plan is obtained through
a report prepared by HUB International, the City's third-party actuary, in compliance with GASB
Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than
Pensions.
Additionally, the City participates in a defined-benefit group-term life insurance plan, both for current
and retired employees, administered by the Texas Municipal Retirement System (TMRS). The City
reports the total liability for this plan on the government-wide and proprietary fund financial statements.
Information regarding the City's total OPEB liability is obtained from TMRS through a report prepared
for the City by TMRS' consulting actuary, Gabriel Roeder Smith & Company, in compliance with GASB
Statement No. 75.
43
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 -Summary of Significant Accounting Policies (continued)
T. New Accounting Standards
In the current fiscal year, the City implemented the following new standards:
GASB Statement No. 69, Government Combinations and Disposals of Government Operations,
establishes accounting and financial reporting standards related to government combinations
and disposals of government operations. This Statement requires measurements of assets
acquired and liabilities assumed generally to be based upon their acquisition values.
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits
Other Than Pensions (OPEB). This Statement replaces the requirements of Statement 45 and
requires governments to report a liability on the face of the financial statements for the OPEB
that they provide. Statement 75 requires governments in all types of OPEB plans to present
more extensive note disclosures and required supplementary information (RSI) about their
OPEB liabilities. Among the new note disclosures is a description of the effect on the reported
OPEB liability of using a discount rate and a healthcare cost trend rate that are one percentage
point higher and one percentage point lower than assumed by the government. The new RSI
includes a schedule showing the causes of increases and decreases in the OPEB liability and a
schedule comparing a government's actual OPEB contributions to its contribution requirements.
GASB Statement No. 85, Omnibus 2017. This Statement establishes accounting and financial
reporting requirements for blending component units, goodwill, fair value measurement and
application, and postemployment benefits (pensions and other postemployment benefits).
Note 2 - Deposits (Cash) and Investments
Authorization for Deposits and Investments
The Texas Public Funds Investment Act (PFIA), as prescribed in Chapter 2256 of the Texas
Government Code, regulates deposits and investment transactions of the City.
In accordance with applicable statutes, the City has a depository contract with an area bank
(depository) providing for interest rates to be earned on deposited funds and for banking charges the
City incurs for banking services received. The City may place funds with the depository in interest and
non-interest bearing accounts. State law provides that collateral pledged as security for bank deposits
must have a market value of not less than the amount of the deposits and must consist of: (1)
obligations of the United States or its agencies and instrumentalities; (2) direct obligations of the State
of Texas or its agencies; (3) other obligations, the principal and interest on which are unconditionally
guaranteed or insured by the State of Texas; and/or (4) obligations of states, agencies, counties, cities,
and other political subdivisions of any state having been rated as to investment quality by a nationally
recognized investment rating firm and having received a rating of not less than A or its equivalent. City
policy requires the collateralization level to be at least 102% of market value of principal and accrued
interest.
44
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 2 - Deposits (Cash) and Investments (continued)
Authorization for Deposits and Investments
The Council has adopted a written investment policy regarding the investment of City funds as required
by the Public Funds Investment Act (Chapter 2256, Texas Government Code). The investments of the
City are in compliance with the City's investment policy. The City's investment policy is more restrictive
than the PFIA requires. It is the City's policy to restrict its direct investments to obligations of the U.S.
Government or U.S. Government Agencies, obligations of states, counties, and cities, fully
collateralized certificates of deposit, bankers' acceptances, mutual funds, repurchase agreements and
local government investment pools. The maximum maturity allowed is five years from date of
purchase. The City's investment policy does not allow investments in collateralized mortgage
obligations.
The City's cash and investments are classified as: cash and cash equivalents, investments, and
restricted cash and investments. The cash and cash equivalents include cash on hand, deposits with
financial institutions, and short-term investments, which have maturities at purchase of less than three
months, consisting mainly of certificates of deposit. The restricted cash and investments are assets
restricted for specific use. The restricted cash and investments include cash on deposit with financial
institutions. For better management of cash, the City pools the cash, based on the City's needs, into
either bank/sweep accounts, or in longer-term investments in U.S. Government Securities. However,
each fund's balance of cash and investments is maintained in the books of the City.
Deposit and Investment Amounts
The deposit and investment policies for the Pearland Economic Development Corporation, TIRZ No. 2
and Development Authority of Pearland are substantially the same as the City.
The following schedule shows the City's recorded cash and investments at year-end:
Total Fair Value
Cash $ 90,147,627
Temporary Investments
Texas CLASS 97,561,971
TexSTAR 5,453,232
FAMC discount note 10,869,214
FFCB discount note 2,955,700
FHLB discount note 5,935,317
FHLMC discount note 7,564,695
FNMA discount note 2,973,503
Certificates of deposit 19,395,988
$ 242,857,247
At September 30, 2018, the City reported cash deposits in the amount of $85,060,959. The entire
amount was covered by federal depository insurance and by pledged collateral held by the City's agent
in the City's name.
45
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 2 - Deposits (Cash) and Investments (continued)
Deposit and Investment Amounts (continued)
Quoted market prices are the basis of the fair value for U.S. Treasury and Agency securities. The
amount of increase or decrease in the fair value of investments during the current year is included in
the City's investment income as follows:
Total Fair Value
Interest income $ 3,593,165
Unrealized gain (loss) on
temporary investments (581,342)
Investment earnings $ 3,011,823
The City's investments' fair value measurements are as follows at September 30, 2018:
Fair Value Measurement Using
Investments Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs
U.S Agency Securities $ 30,298,429 $ $ 30,298,429 $
Certificates of deposit 19,395,988 19,395,988
Interest Rate Risk
At year-end, the City had the following investments subject to interest rate risk disclosure, under U.S.
generally accepted accounting principles:
Weighted
Average
Total Fair Value Maturity (days)
Temporary Investments
Texas CLASS $ 97,561,971 52
TexSTAR 5,453,232 43
FAMC discount note 10,869,214 544
FFCB discount note 2,955,700 761
FHLB discount note 5,935,317 405
FHLMC discount note 7,564,695 477
FNMA discount note 2,973,503 344
Certificates of deposit 19,395,988 524
$ 152,709,620
Portfolio weighted average maturity 201
The City's investment policy specifies a maximum weighted average maturity for the portfolio of 900
days or 30 months based on the stated maturity date of the investments. When including cash
investments the weighted average maturity for the City is 132 days.
To the extent possible, the City attempts to match investments with anticipated cash flow requirements.
The City does not directly invest in securities with a stated maturity date more than five years or 1,825
days from date of purchase. The settlement date is considered the date of purchase.
46
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 2 - Deposits (Cash) and Investments (continued)
Concentration of Credit Risk
With the exception of U.S. Treasury Securities and interest-bearing checking accounts that are fully
collateralized, no more than 75 percent of the City's total investment portfolio will be invested in a single
security type.
Percentage of
Total
Investment
Investment Type Total Fair Value Portfolio
Texas CLASS $ 97,561,971 64%
TexSTAR 5,453,232 4%
FAMC discount note 10,869,214 6%
FFCB discount note 2,955,700 2%
FHLB discount note 5,935,317 4%
FHLMC discount note 7,564,695 5%
FNMA discount note 2,973,503 2%
Certificates of deposit 19,395,988 13%
Total $ 152,709,620 100%
Credit Risk
Federal National Mortgage Association, Federal Home Loan Bank, Federal Home Loan Mortgage
Corporation, Federal Farm Credit Bank and the Federal National Mortgage Association Discount Notes
were rated AA+ by Standard & Poor's, AAA by Fitch Ratings, and Aaa by Moody's Investors Service.
All credit ratings meet acceptable levels required by guidelines prescribed by both the PFIA and the
City's investment policy. A public fund investment pool must be continuously rated no lower than AAA
or AAAm or no lower than investment grade by at least one nationally-recognized rating service and
have a weighted average maturity no greater than 90 days. Investments with minimum required ratings
do not qualify as authorized investments during the period the investment does not have the minimum
rating.
In accordance with GASB Statement No. 79, Certain External Investment Pools and Pool Participants,
the Local Government Investment Pools do not have any limitations and restrictions on withdrawals
such as notice periods or maximum transaction amounts. These pools do not impose any liquidity fees
or redemption gates.
47
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 2 - Deposits (Cash) and Investments (continued)
Restricted Assets
The Enterprise Funds have restricted certain cash and investments for customer deposits, reserve and
emergency expenses, capital improvements, cash restricted for others, and revenue bond debt service.
Because of certain bond covenants, the Enterprise Funds are required to maintain prescribed amounts of
resources that can be used only to service outstanding debt. Some of the proceeds from debt or from
funds received from acquisition of Municipal Utility Districts are restricted for use on capital projects.
Revenue bond debt service $ 4,840,072
Customer deposits 3,772,991
Capital improvements 91,727,840
Total $ 100,340,903
Note 3 -Receivables
Receivables at September 30, 2018, consisted of the following:
Primary Government:
Governmental Funds:
Pearland
Capital Economic Non-major
General Debt Service Projects Development Governmental
Fund Fund Fund Corporation Funds Total
Receivables
Property taxes,including
penalties and interest $ 670,957 $ 1,134,095 $ $ $ $ 1,805,052
Lease receivable 7,537,926 7,537,926
Sales and other taxes 5,296,987 1,912,148 358,476 7,567,611
Interest 28,364 3,589 15,511 38,518 1,384 87,366
Other 940,215 1,989,597 4,264,401 1,646,073 8,840,286
Allowance for
uncollectibles (17,752) (29,916) (47,668)
$ 6,918,771 $ 8,645,694 $ 2,005,108 $ 6,215,067 $ 2,005,933 $25,790,573
Governmental funds report receivables for revenues that are not considered to be available to liquidate
liabilities of the current period. At the end of the current fiscal year, the various components of unavailable
and unearned revenue reported in the governmental funds were as follows:
Unavailable Unearned
Delinquent property taxes receivable-general fund $ 665,012 $
Delinquent property taxes receivable- debt service fund 1,120,685
Lease revenues-principal 6,400,474
Street assessments 1,486,878
Other 4,256,492
Lease interest revenues 1,137,452
Grants and revenues prior to meeting all eligibility requirements 649,955
Total $13,929,541 $ 1,787,407
48
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 3 -Receivables (continued)
Proprietary Funds:
Governmental
Business-type Activities-Enterprise Funds Activities-
Water and Solid Waste Internal Service
Sewer Fund Fund Total Fund
Receivables
Customer accounts $ 6,852,657 $ 1,187,346 $ 8,040,003 $
Interest 69,630 69,630
Other 37,013 37,013 50,184
Allowance for
uncollectibles (98,524) (18,054) (116,578)
$ 6,860,776 $ 1,169,292 $ 8,030,068 $ 50,184
Property Taxes
Property taxes are levied by October 1 in conformity with Subtitle E, Texas Property Tax Code. Taxes are
due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year
in which imposed. On January 1 of each year, a tax lien attaches to property to secure the payment of all
taxes, penalties, and interest ultimately imposed. The Central Appraisal District ("CAD") of Brazoria
County, Harris County, and Fort Bend County, Texas, establishes appraised values. Taxes are levied by
the City Council based on the appraised values and operating needs of the City. The City contracts billing
and collection of tax levies with the Brazoria County Tax Assessor-Collector.
Note 4 - Capital Assets
A summary of changes in the primary government's capital assets for the year ended September 30, 2018,
follows:
Balance (Decreases) Balance
September 30, and September 30,
2017 Increases Reclassifications 2018
Governmental Activities
Capital assets not being depreciated:
Land $ 31,161,169 $ $ $ 31,161,169
Construction in progress 77,706,426 33,029,274 110,735,700
Total capital assets not being depreciated 108,867,595 33,029,274 141,896,869
Other capital assets:
Infrastructure 993,312,200 24,824,639 1,018,136,839
Buildings and improvements 109,220,249 590,708 109,810,957
Machinery and equipment 22,923,664 1,236,585 (734,440) 23,425,809
Furniture and fixtures _ 7,731,346 411,521 (23,555) 8,119,312
Total other capital assets 1,133,187,459 27,063,453 (757,995) 1,159,492,917
Less accumulated depreciation for:
Infrastructure (366,637,472) (32,397,450) (399,034,922)
Buildings and improvements (34,407,985) (3,896,962) (38,304,947)
Machinery and equipment (13,950,713) (1,905,765) 734,440 (15,122,038)
Furniture and fixtures (4,223,526) (966,250) 23,555 (5,166,221)
Total accumulated depreciation (419,219,696) (39,166,427) 757,995 (457,628,128)
Other capital assets,net 713,967,763 (12,102,974) 701,864,789
Totals $ 822,835,358 $ 20,926,300 $ $843,761,658
49
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 4 - Capital Assets (continued)
Balance (Decreases) Balance
September 30, and September 30,
2017 Increases Reclassifications 2018
Business-type Activities
Capital assets not being depreciated:
Land $ 3,796,382 $ $ $ 3,796,382
Construction in progress 53,339,041 30,772,227 84,111,268
Total capital assets not being depreciated 57,135,423 30,772,227 87,907,650
Other capital assets:
Water and sewer system 347,830,320 3,973,723 351,804,043
Buildings and improvements 32,268,698 32,268,698
Machinery and equipment 5,272,337 390,350 (140,706) 5,521,981
Furniture and fixtures 120,922 6,599 127,521
Contractual water rights 34,511,428 34,511,428
Total other capital assets 420,003,705 4,370,672 (140,706) 424,233,671
Less accumulated depreciation for:
Water and sewer system (119,237,468) (8,266,409) (127,503,877)
Buildings and improvements (7,015,630) (735,269) (7,750,899)
Machinery and equipment (3,669,042) (451,996) 140,706 (3,980,332)
Furniture and fixtures (107,687) (5,070) (112,757)
Contractual water rights (12,800,856) (1,375,069) (14,175,925)
Total accumulated depreciation (142,830,683) _ (10,833,813) 140,706 (153,523,790)
Other capital assets,net 277,173,022 (6,463,141) 270,709,881
Totals $ 334,308,445 $ 24,309,086 $ $358,617,531
Depreciation was charged to programs as follows:
General government $ 2,229,205
Public safety 2,299,614
Public works 32,906,866
Community services 199,073
Parks and recreation 1,531,669
Total Governmental Activity $ 39,166,427
Water and sewer $ 10,833,813
Total Business-Type Activity $ 10,833,813
50
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 4 - Capital Assets (continued)
The City had active construction projects as of September 30, 2018. The projects included various
improvements to streets, drainage and facilities as well as and water and sewer improvements. At
year-end, the City's contractual commitments on projects were as follows:
Total In Remaining
Project Description Contract Progress Commitment
Drainage Improvement $ 15,258,616 $ 10,951,478 $ 4,307,138
Building Improvements 27,211,998 15,605,691 11,606,307
Street Improvement 116,713,054 63,657,679 53,055,375
Park Improvements 30,668,854 20,520,852 10,148,002
Total Governmental Activities 189,852,522 110,735,700 79,116,822
Water and Sewer Improvements 171,510,976 84,111,268 87,399,708
Total Primary Government $ 361,363,498 $ 194,846,968 $ 166,516,530
Note 5 - Long-Term Debt
A. Governmental Activity Debt
The City issues general obligation bonds and certificates of obligation, and upon annexation and dissolution
of Municipal Utility Districts, assumes unlimited tax and revenue obligations. The assumed obligations were
used to acquire and construct major capital facilities. General obligation bonds, certificates of obligation, and
assumed obligations from dissolved and annexed areas are for both governmental and business-type
activities. The bonds are reported in the Proprietary Funds only if they are expected to be repaid from
proprietary revenues. The general long-term bonds, certificates of obligation and assumed obligations are
paid through the Debt Service Fund from tax revenues.
The City's component units, which are considered blended components units, have revenue bonds used to
acquire and construct or to reimburse developers for major capital improvements. Revenue bonds are paid
through the Pearland Economic Development Corporation from sales tax and through the Development
Authority of Pearland from property tax increment.
The Tax Increment Contract Revenue Bonds, Series 2017 were issued in December 2017 in the
amount of $8,555,000 for developer reimbursements of TIRZ infrastructure improvements. The bonds
bear an all cost true interest rate of 3.13 percent and are due in installments ranging from $420,000 to
$820,000 through September 1, 2029.
The Certificates of Obligation, Series 2018 were issued in September 2018 in the amount of
$7,085,000 for construction and improvements to certain streets, roads, intersections, parks and trails,
fire stations, an animal services shelter, and improvements to drainage facilities. The certificates bear
interest from 2.00 percent to 5.00 percent and are due in annual installments ranging from $350,000 to
$355,000 through March 1, 2038.
The Permanent Improvement Bonds, Series 2018 were issued in September 2018 in the amount of
$7,440,000 for construction and improvements to City streets and the City drainage system. The bonds
bear interest from 2.00 percent to 5.00 percent and are due in annual installments ranging from
$370,000 to $375,000 through March 1, 2038.
51
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5 - Long-Term Debt (continued)
A. Governmental Activity Debt(continued)
The following is a summary of changes in the City's total governmental long-term liabilities for the year
ended September 30, 2018. In general, the City uses the General and Debt Service funds as well as the
Economic Development Corporation and Development Authority to liquidate governmental long-term
liabilities.
Balance Balance Amounts
September 30, September 30, Due Within
2017 Additions (Reductions) 2018 One Year
Governmental Activities
Bonds payable:
General obligation bonds $ 283,140,000 $ 7,440,000 $ (12,405,000) $ 278,175,000 $15,370,000
Certificates of obligation 37,505,000 7,085,000 (2,840,000) 41,750,000 3,290,000
Sales tax revenue bonds 13,750,000 (905,000) 12,845,000 930,000
Tax increment revenue bonds 83,465,000 8,555,000 (6,840,000) 85,180,000 7,305,000
Unamortized premium/
(discount) 25,832,190 1,143,159 (3,131,139) 23,844,210
Total bonds payable 443,692,190 24,223,159 (26,121,139) 441,794,210 26,895,000
Other liabilities:
Obligations under capital leases 1,838,204 (556,677) 1,281,527 520,496
Compensated absences 6,549,222 3,743,838 (3,043,566) 7,249,494 1,344,649
Total Governmental Activities $ 452,079,616 $ 27,966,997 $ (29,721,382) $ 450,325,231 $28,760,145
Long-term liabilities applicable to the City's governmental activities are not due and payable in the
current period, and accordingly, are not reported as fund liabilities in the governmental funds. Interest on
long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when
due.
The full amount estimated to be required for debt service on general obligation debt is provided by (1) the
debt service portion of the tax levy; (2) interest earned in the Debt Service Fund; and (3) transfers from
the Water and Sewer Enterprise Fund. Transfers from the Enterprise Funds are approved at the discretion
of City Council and are not intended to service a specific bond series.
52
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5 - Long-Term Debt (continued)
A. Governmental Activity Debt(continued)
A summary of the terms of general obligation bonds and certificates of obligation, as of September 30,
2017, follows:
Original Interest Debt
Series Issue Matures Rate(%) Outstanding
General Obligation Bonds
Permanent Improvement, Series 2008 22,835,000 2019 4.50-5.50 $ 405,000
Permanent Improvement and Refunding Bonds, Series 2009 16,735,000 2020 2.00-5.00 1,205,000
Permanent Improvement, Series 2010A 12,415,000 2035 3.00-4.00 9,455,000
Permanent Improvement, Series 2011 5,400,000 2036 2.125-4.125 4,415,000
Permanent Improvement and Refunding Bonds, Series 2012 43,575,000 2029 3.00-5.00 35,620,000
Permanent Improvement Bonds, Series 2013 9,315,000 2038 3.00-5.00 7,840,000
Permanent Improvement and Refunding Bonds, Series 2014 40,410,000 2034 2.00-5.00 36,035,000
Permanent Improvement Refunding Bonds, Series 2015 47,165,000 2032 2.00-5.00 46,070,000
Permanent Improvement Bonds, Series 2015 8,495,000 2035 2.00-4.00 7,220,000
Permanent Improvement Refunding Bonds, Series 2015-A 10,210,000 2029 2.00-3.00 8,555,000
Permanent Improvement Refunding Bonds, Series 2016-A 33,275,000 2036 2.00-5.00 31,630,000
Permanent Improvement Refunding Bonds, Series 2016-B 29,840,000 2031 2.00-5.00 27,185,000
Permanent Improvement and Refunding Bonds, Series 2017 56,900,000 2037 2.00-5.00 54,840,000
Annexed Municipal Utility District Bonds
BC MUD 4 Series 2011 2,640,000 2020 2.50-5.00 260,000
Permanent Improvement Bonds, Series 2018 7,440,000 2038 2.50-5.00 7,440,000
Total General Obligation Bonds $278,175,000
Certificates of Obligation
Certificates of Obligation, Series 2007 23,250,000 2030 3.25-5.25 $ 3,285,000
Certificates of Obligation, Series 2008 9,000,000 2019 3.75-5.00 185,000
Certificates of Obligation, Series 2009 8,520,000 2020 2.25-5.00 645,000
Certificates of Obligation, Series 2009A 12,145,000 2020 2.00-4.50 1,275,000
Certificates of Obligation, Series 2011 2,095,000 2021 2.09 630,000
Certificates of Obligation, Series 2013 2,745,000 2038 3.00-4.625 2,330,000
Certificates of Obligation, Series 2014 4,625,000 2034 2.00-4.00 3,700,000
Certificates of Obligation, Series 2015 4,860,000 2035 2.00-4.00 4,125,000
Certificates of Obligation,Series 2016 13,995,000 2036 2.00-4.00 12,595,000
Certificates of Obligation, Series 2017 6,205,000 2037 2.00-4.00 5,895,000
Certificates of Obligation, Series 2018 7,085,000 2038 2.00-5.00 7,085,000
Total Certificates of Obligation $ 41,750,000
53
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5 - Long-Term Debt(continued)
A. Governmental Activity Debt(continued)
A summary of the terms of the revenue bonds recorded as long-term liabilities in the Pearland Economic
Development Corporation and Development Authority of Pearland as of September 30, 2018, is as
follows:
Original Interest Debt
Series Issue Matures Rate(%) Outstanding
Pearland Economic Development Corporation
Sales Tax Revenue Refunding Bonds,Series 2016 $ 14,640,000 2030 2.36 $ 12,845,000
Development Authority of Pearland
Tax Increment Revenue Bonds,Series 2013 9,150,000 2029 3.77 7,185,000
Tax Increment Revenue Bonds, Series 2014 8,060,000 2029 3.00 5,950,000
Tax Increment Revenue Bonds,Series 2015 66,030,000 2029 3.00 52,930,000
Tax Increment Revenue Bonds,Series 2016 12,320,000 2029 2.22 10,980,000
Tax Increment Revenue Bonds,Series 2017 8,555,000 2029 3.13 8,135,000
Total Component Unit Long-Term Debt $ 98,025,000
Prior Year Refunding
In prior years, the City defeased certain general obligation and other bonds by placing the proceeds of the
new bonds in an irrevocable trust to provide for all future debt service payments on the refunded bonds.
Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's
financial statements. At September 30, 2018, approximately $23.8 million of previously refunded bonds
outstanding were considered defeased.
General Obligation
CO Series 2009 $ 5,985,000
PIB Series 2009 12,065,000
CO Series 2009A 5,750,000
Total: $23.800.000
54
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5 - Long-Term Debt(continued)
A. Governmental Activity Debt(continued)
Capital Lease Obligations
The City has entered into certain capital lease agreements in order to purchase public safety and
management information systems, equipment and other construction-related equipment. The capital lease
obligations are paid out of the General, Debt Service and Water and Sewer Funds. The historical purchase
price of the capital assets under lease is approximately $7.4 million and entirely classified as machinery
and equipment.
Following is a summary of future lease payments due on this equipment:
Fiscal Year Obligations
2019 $ 542,850
2020 379,616
2021 212,807
2022 125,336
2023 64,434
Total 1,325,043
Less: Interest (43,516)
Obligations under capital leases $ 1,281,527
55
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5 - Long-Term Debt(continued)
A. Governmental Activity Debt(continued)
The annual requirements to amortize governmental activity general obligation bonds and certificates of
obligation outstanding at September 30, 2018, were as follows:
Governmental Activities
General Obligation Certificates of Obligation
Fiscal Year Principal Interest Principal Interest
2019 $ 15,370,000 $ 11,230,392 $ 3,290,000 $ 1,298,816
2020 16,025,000 10,671,939 3,105,000 1,222,871
2021 17,335,000 10,018,570 2,145,000 1,148,863
2022 18,110,000 9,282,426 1,935,000 1,094,169
2023 18,755,000 8,479,276 1,930,000 1,040,006
2024 19,370,000 7,605,470 1,940,000 981,319
2025 20,165,000 6,709,495 1,950,000 915,919
2026 20,780,000 5,805,289 1,950,000 847,819
2027 21,565,000 4,852,395 1,955,000 774,344
2028 22,350,000 3,906,459 1,950,000 703,294
2029 21,370,000 3,018,418 3,705,000 608,194
2030 13,750,000 2,317,983 3,495,000 485,800
2031 15,745,000 1,770,530 1,955,000 393,219
2032 15,005,000 1,190,434 1,960,000 326,841
2033 6,125,000 771,925 1,960,000 261,544
2034 6,230,000 538,297 1,970,000 195,453
2035 4,235,000 335,225 1,740,000 132,716
2036 3,080,000 181,422 1,505,000 77,531
2037 1,945,000 78,063 805,000 36,494
2038 865,000 18,831 505,000 10,569
$ 278,175,000 $ 88,782,839 $ 41,750,000 $ 12,555,781
56
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5 - Long-Term Debt (continued)
A. Governmental Activity Debt(continued)
The annual requirements to amortize blended component unit revenue bonds outstanding at September
30, 2018, were as follows:
Governmental Activities
Tax Increment Revenue
Sales Tax Revenue Bonds Bonds
Fiscal Year Principal Interest Principal Interest
2019 $ 930,000 $ 303,142 $ 7,305,000 $ 2,313,858
2020 955,000 281,194 6,885,000 2,117,991
2021 975,000 258,656 7,070,000 1,932,481
2022 1,000,000 235,646 7,260,000 1,741,870
2023 1,025,000 212,046 7,460,000 1,543,444
2024 1,055,000 187,856 7,660,000 1,341,510
2025 1,080,000 162,958 7,870,000 1,133,732
2026 1,105,000 137,470 8,080,000 919,828
2027 1,130,000 111,392 8,300,000 699,776
2028 1,165,000 84,724 8,530,000 473,278
2029 1,195,000 57,230 8,760,000 240,025
2030 1,230,000 29,028
$ 12,845,000 $ 2,061,342 $ 85,180,000 $ 14,457,793
B. Business-type Activity Debt
The Water and Sewer System Revenue Bonds, Series 2018A were issued in May 2018 in the amount of
$8,650,000. The bonds bear interest from 0.47 percent to 2.07 percent and are due in annual installments
ranging from $285,000 to $290,000 through September 1, 2048.
The Water and Sewer System Revenue Bonds, Series 2018E were issued in September 2018 in the
amount of $19,050,000. The bonds bear interest from 2.00 percent to 5.00 percent and are due in
annual installments ranging from $950,000 to $955,000 through September 1, 2038. Proceeds of the
bonds will be used for waterworks and sanitary sewer system improvements.
57
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5 - Long-Term Debt (continued)
B. Business-type Activity Debt(continued)
The following is a summary of changes in the City's total business-type long-term liabilities for the year
ended September 30, 2018.
Balance Balance Amounts
September 30, September 30, Due Within
2017 Additions (Reductions) 2018 One Year
Business-type Activities
Bonds payable:
Permanent Improvement Bonds $ 7,360,000 $ $ (2,515,000) $ 4,845,000 $ 365,000
Water and sewer revenue bonds 196,200,000 27,700,000 (9,195,000) 214,705,000 10,630,000
Unamortized premium/
(discount) 9,394,807 2,063,159 (561,143) 10,896,823
Total bonds payable 212,954,807 29,763,159 (12,271,143) 230,446,823 10,995,000
Other liabilities:
Obligations under capital leases 257,044 (84,216) 172,828 85,662
Compensated absences 699,184 426,983 (346,011) 780,156 175,454
Total Business-type Activities $ 213,911,035 $ 30,190,142 $ (12,701,370) $ 231,399,807 $11,256,116
The business-type activity long-term debt will be repaid, plus accrued interest, from operating revenues of
the Water and Sewer Fund. The City is required by the applicable revenue bond indentures to pledge the
net revenues of the Water and Sewer Fund for the retirement of its outstanding revenue bonds, including
interest thereon. Revenue bonds and refunding bonds are payable solely from and, equally secured by, a
first lien on and pledge of the net revenue of the City's Water and Sewer Fund.
58
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5 - Long-Term Debt (continued)
B. Business-type Activity Debt(continued)
A summary of the terms of revenue bonds and permanent improvement bonds recorded in the Enterprise
Funds as of September 30, 2018, is as follows:
Original Interest Debt
Series Issue Matures Rate(%) Outstanding
Water and Wastewater Fund
Water and Sewer System Adjustable Rate Revenue Bonds,
Series 1999 $ 8,000,000 2020 4.41-4.60 $ 1,195,000
Water and Sewer System Revenue and Refunding Bonds,
Series 2007 40,135,000 2031 3.50-5.50 11,390,000
Water and Sewer System Revenue Bonds,Series 2010A 14,040,000 2035 1.75-4.50 10,825,000
Water and Sewer System Refunding Bonds, Series 2010E 8,970,000 2023 1.75-4.00 6,360,000
Permanent Improvement and Refunding Bonds,Series 2012 6,230,000 2025 3.00-5.00 4,845,000
Water and Sewer System Revenue Bonds,Series 2012 8,670,000 2037 2.00-3.625 5,840,000
Water and Sewer System Revenue Bonds,Series 2014 9,210,000 2039 2.00-4.00 8,435,000
Water and Sewer System Revenue Bonds,Series 2016A 8,880,000 2036 2.00-4.00 7,990,000
Water and Sewer System Revenue Bonds,Series 2016B 11,100,000 2025 2.00-4.00 8,635,000
Water and Sewer System Revenue Bonds,Series 2016C 50,100,000 2045 2.00-4.00 46,380,000
Water and Sewer System Revenue Bonds,Series 2017A 10,225,000 2027 0.00-1.29 9,220,000
Water and Sewer System Revenue Bonds, Series 2017E 12,025,000 2047 0.00-2.10 11,685,000
Water and Sewer System Revenue Bonds, Series 2017C 60,970,000 2037 2.00-5.00 59,050,000
Water and Sewer System Revenue Bonds,Series 2018A 8,650,000 2048 0.47-2.07 8,650,000
Water and Sewer System Revenue Bonds,Series 2018E 19,050,000 2038 2.00-5.00 19,050,000
Total Utility System Fund $219,550,000
59
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5 - Long-Term Debt (continued)
B. Business-type Activity Debt(continued)
The annual requirements to amortize Enterprise Fund revenue bonds and permanent improvement bonds
outstanding at September 30, 2018, were as follows:
Business-Type Activities
Revenue Bonds Permanent Improvement Bonds
Fiscal Year Principal Interest Principal Interest
2019 $ 10,630,000 $ 3,628,355 $ 365,000 $ 171,700
2020 10,790,000 3,176,582 370,000 157,000
2021 11,010,000 2,728,131 370,000 142,200
2022 11,090,000 2,344,111 385,000 127,100
2023 11,920,000 1,979,646 395,000 111,500
2024 11,105,000 1,647,437 1,480,000 74,000
2025 11,390,000 1,376,342 1,480,000 22,200
2026 11,895,000 1,097,183
2027 12,225,000 838,358
2028 11,500,000 659,264
2029 11,855,000 515,807
2030 12,140,000 383,249
2031 10,930,000 291,894
2032 8,420,000 236,928
2033 8,590,000 204,774
2034 8,770,000 172,086
2035 6,250,000 139,036
2036 5,450,000 105,447
2037 5,065,000 71,404
2038 3,980,000 36,850
2039 3,065,000 21,194
2040 2,430,000 5,249
2041 2,445,000
2042 2,450,000
2043 2,465,000
2044 2,475,000
2045 2,490,000
2046 790,000
2047 800,000
2048 290,000
$ 214,705,000 $ 21,659,327 $ 4,845,000 $ 805,700
C. Legal Compliance
Long-term debt assumed by the City upon dissolution of annexed municipal utility district in fiscal years
2006, 2007, and 2013 has been recorded as part of the City's long-term debt. A portion of the assumed
debt is related to assets recorded in the Water and Sewer Fund. Even though the debt is related to assets
recorded in the Water and Sewer Fund, the debt is considered general obligation debt based on Texas
law.
60
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CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 6 - Interfund Transactions
A summary of interfund transfers, the purpose of which is to cover operational expenses/expenditures, for
the year ended September 30, 2018, is as follows:
Transfers In Transfers Out
General Fund $ 3,816,116 $ 1,009,451
Debt Service Fund 697,023
Capital Projects Fund 6,432,944 1,006,954
Pearland Economic Development
Corporation 4,918,673
Tax Increment Reinvestment Zone#2 13,758,032
Development Authority of Pearland 13,758,032
Non-major Governmental Funds 1,573,312
Water and Sewer Fund 487,109 3,589,802
Internal Service Fund 665,000
$ 25,856,224 $ 25,856,224
A summary of interfund receivables and payables at September 30, 2018, follows:
Receivable Fund Payable Fund Amount Purpose
General Fund Grant Fund $ 126,992 Short term loan
General Fund Solid Waste Fund 1,267,452 Short term loan
$ 1,394,444
Note 7 - Fund Balance/ Net Position
Encumbrances
Encumbrance accounting is employed as an extension of formal budgetary integration for the General
Fund, special revenue funds, and capital projects funds. Certain amounts which were classified as
restricted, committed, or assigned for specific purposes have been encumbered in the governmental
funds.
Significant encumbrances, primarily for capital improvements and street maintenance, included in
governmental fund balances are as follows:
General Fund - assigned $ 1,538,066
61
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CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 8 - Deferred Compensation Plan
The City maintains, for its employees, a tax-deferred compensation plan meeting the requirements of
Internal Revenue Code Section 457. The plan was established in the 1995 fiscal year by City Ordinance,
and ICMA Retirement Corporation is the plan administrator. The deferred compensation is not available to
employees until termination, retirement, death, or unforeseen emergency. The plan's trust arrangements
are established to protect deferred compensation amounts of employees under the plan from any other use
other than intended under the plan (eventual payment to employees deferring the compensation) in
accordance with federal tax laws. Amounts of compensation deferred by employees under plan provisions
are disbursed bi-weekly by the City to a third-party administrator. The third-party administrator handles all
funds in the plan and makes investment decisions and disburses funds to employees in accordance with
plan provisions.
Note 9 - Employee Retirement System
Texas Municipal Retirement System
Plan Description and Provisions
The City participates as one of 883 plans in the nontraditional, joint contributory, hybrid defined benefit
pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency
created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8,
Texas Government Code (the TMRS Act) as an agent multiple-employer retirement system for
municipal employees in the State of Texas. The TMRS Act places the general administration and
management of the System with a six-member Board of Trustees. Although the Governor, with the
advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of
Texas. TMRS's defined benefit pension plan is a tax-qualified plan under Section 401 (a) of the Internal
Revenue Code. TMRS issues a publicly available comprehensive annual financial report (CAFR) that
can be obtained at www.tmrs.com.
All eligible employees of the city are required to participate in TMRS.
Benefits Provided
TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the
governing body of the City, within the options available in the state statutes governing TMRS.
At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest, and
the city-financed monetary credits with interest were used to purchase an annuity. Members may
choose to receive their retirement benefit in one of seven actuarially equivalent payments options.
Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an
amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member's deposits
and interest.
At the date the plan began, the City granted monetary credits for service rendered before the plan
began of a theoretical amount equal to two times what would have been contributed by the employee,
with interest, prior to establishment of the plan. Monetary credits for service since the plan began are
200% of the employee's accumulated contributions.
62
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 9 - Employee Retirement System (continued)
Benefits Provided (continued)
A summary of plan provisions for the City are as follows:
Employee deposit rate: 7%
Matching ratio (city to employee): 2 to 1
Years required for vesting: 5
Service retirement eligibility: 20 years at any age, 5 years at age 60 and above
Updated service credit: 100% repeating
Annuity increase to retirees: 70% of CPI repeating
Supplemental death benefit—employees
and retirees: Yes
At the December 31, 2017 valuation and measurement date, the following employees were covered by
the benefit terms:
Retirees or beneficiaries currently receiving benefits: 200
Inactive employees entitled to but not yet receiving benefits: 289
Active employees: 666
Total: 1 155
Contributions
The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross earnings,
and the city matching percentages are either 100%, 150%, or 200%, both as adopted by the governing
body of the city. Under the state law governing TMRS, the contribution rate for each city is determined
annually by the consulting actuary, using the Entry Age Normal (EAN) actuarial cost method. The
actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by
employees during the year, with an additional amount to finance any unfunded accrued liability.
Employees for the City were required to contribute 7% of their annual gross earnings during the fiscal
year. For fiscal year 2018, the City's contribution rate was 13.61% for the months in 2017 and 13.55%
for the months in 2018.
Net Pension Liability
The City's Net Pension Liability (NPL) was measured as of December 31, 2017, and the Total Pension
Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of
that date.
Actuarial Assumptions
The Total Pension Liability in the December 31, 2017 actuarial valuation was determined using the
following actuarial assumptions:
Inflation: 2.5% per year
Overall payroll growth: 3.0% per year
Investment Rate of Return: 6.75%, net of pension plan investment expense, including inflation
63
City of Pearland FY 2018 CAFR
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NOTES TO FINANCIAL STATEMENTS(continued)
Note 9 - Employee Retirement System (continued)
Actuarial Assumptions (continued)
Salary increases were based on a service-related table. Mortality rates for active members, retirees,
and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality Table, with
male rates multiplied by 109% and female rates multiplied by 103%. The rates are projected on a fully
generational basis by scale BB to account for future mortality improvements. For disabled annuitants,
the gender-distinct RP2000 Disabled Retiree Mortality Table is used, with slight adjustments.
These actuarial assumptions were developed primarily from the actuarial investigation of the
experience of TMRS over the four year period from December 31, 2010 to December 31, 2014. They
were adopted in 2015 and first used in the December 31, 2015 actuarial valuation. The post-retirement
mortality assumption for healthy annuitants and Annuity Purchase Rate (APRs) are based on the
Mortality Experience Investigation Study covering 2009 through 2011 and dated December 31, 2013. In
conjunction with these changes first used in the December 31, 2013 valuation, the System adopted the
Entry Age Normal actuarial cost method and a one-time change to the amortization policy. Assumptions
are reviewed annually. No additional changes were made for the 2017 valuation.
The long-term expected rate of return on pension plan investments is 6.75%. The pension plan's policy
in regard to the allocation of invested assets is established and may be amended by the TMRS Board
of Trustees. Plan assets are managed on a total return basis with an emphasis on both capital
appreciation as well as the production of income, in order to satisfy the short-term and long-term
funding needs of TMRS.
The long-term expected rate of return on pension plan investments was determined using a building-
block method in which best estimate ranges of expected future real rates of return (expected returns,
net of pension plan investment expense and inflation) are developed for each major asset class. These
ranges are combined to produce the long-term expected rate of return by weighting the expected future
real rates of return by the target asset allocation percentage and by adding expected inflation.
The target allocation and best estimates of arithmetic real rates of return for each major asset class are
summarized in the following table:
Long-Term
Expected Real
Rate of Return
Asset Class Target Allocation (Arithmetic)
U.S. equities 17.5% 4.55%
International equities 17.5% 6.10%
Core fixed income 10.0% 1.00%
Non-core fixed income 20.0% 3.65%
Real estate 10.0% 4.03%
Real return 10.0% 5.00%
Absolute return 10.0% 4.00%
Private equity 5.0% 8.00%
Total 100.0%
64
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 9 - Employee Retirement System (continued)
Discount Rate
The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows
used to determine the discount rate assumed that employee contributions will remain at the current 7%
and employer contributions will be made at the rates specified in statute. Based on that assumption, the
pension plan's Fiduciary Net Position was projected to be available to make all projected future benefit
payments of current plan members. Therefore, the long-term expected rate of return on pension plan
investments was applied to all periods of projected benefit payments to determine the Total Pension
Liability.
Changes in the Net Pension Liability
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability
(a) (b) (a) - (b)
Balance at 12/31/2016 $132,258,772 $107,020,843 $25,237,929
Changes for the year:
Service cost 7,548,267 7,548,267
Interest 9,064,733 9,064,733
Difference between
expected and actual
experience 33,887 33,887
Changes in assumptions
Contributions -employer 5,991,467 (5,991,467)
Contributions -employee 3,081,580 (3,081,580)
Net investment income 14,836,941 (14,836,941)
Benefit payments,
including refunds, of
employee contributions (3,481,143) (3,481,143)
Administrative expense (76,869) 76,869
Other charges (3,896) 3,896
Net changes 13,165,744 20,348,080 (7,182,336)
Balance at 12/31/2017 $145,424,516 $127,368,923 $18,055,593
The following presents the net pension liability of the City, calculated using the discount rate of 6.75%,
as well as what the City's net pension liability would be if it were calculated using a discount rate that is
1-percentage-point lower(5.75%) or 1-percentage-point higher (7.75%) than the current rate:
Current
Single Rate
1% Decrease Assumption 1% Increase
to 5.75% 6.75% to 7.75%
City's net pension liability $43,010,750 $18,055,593 $(1,962,178)
65
City of Pearland FY 2018 CAFR
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NOTES TO FINANCIAL STATEMENTS(continued)
Note 9 - Employee Retirement System (continued)
Pension Plan Fiduciary Net Position
Detailed information about the pension plan's Fiduciary Net Position is available in a separately-issued
TMRS financial report. That report may be obtained on the Internet at www.tmrs.com.
Pension Expense and Deferred Outflows of Resources Related to Pensions
For the year ended September 30, 2018, the City recognized pension expense of$6,690,268.
At September 30, 2018, the City reported deferred outflows and inflows of resources related to
pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between actuarial
assumptions and actual
experience $ 1,239,596 $
Changes in actuarial assumptions used 142,107
Differences between projected
and actual investment earnings 3,363,280
Contributions subsequent to
the measurement date 4,693,623
Total $ 5,933,219 $ 3,505,387
Deferred outflows of resources related to pensions resulting from contributions subsequent to the
measurement date of $4,693,623 will be recognized as a reduction of the net pension liability for the
measurement year ending December 31, 2018 (i.e. recognized in the city's financial statements
September 30, 2019). Other amounts reported as deferred outflows and inflows of resources related to
pensions will be recognized in pension expense as follows:
Net Deferred
Fiscal Outflows (Inflows)
Year of Resources
2019 $ 301,991
2020 83,291
2021 (1,249,425)
2022 (1,405,439)
2023 _ 3,791
Total $ (2,265,791)
66
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 10 - Other Post-Employment Benefits
TMRS Supplemental Death Benefits Fund
Benefit Plan Description
The City also participates in the cost sharing multiple-employer defined benefit group-term life insurance
plan operated by the Texas Municipal Retirement System (TMRS) known as the Supplemental Death
Benefits Fund (SDBF). The City elected, by ordinance, to provide group-term life insurance coverage to
both current and retired employees. The City may terminate coverage under and discontinue participation
in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January
1.
The death benefit for active employees provides a lump-sum payment approximately equal to the
employee's annual salary (calculated based on the employee's actual earnings, for the 12-month period
preceding the month of death); retired employees are insured for $7,500; this coverage is an other post-
employment benefit (OPEB). As the SDBF covers both active and retiree participants, with no segregation
of assets, the SDBF is considered to be an unfunded OPEB plan (i.e. no assets are accumulated).
Membership in the plan as of the measurement date of December 31, 2017 was as follows:
Inactive employees currently receiving benefits 144
Inactive employees entitled to but not yet receiving benefits 93
Active employees 666
Total
Contributions
Contributions are made monthly based on the covered payroll of employee members of the participating
member city. The contractually required contribution rate is determined annually for each city (currently
0.12% of covered payroll). The rate is based on the mortality and service experience of all employees
covered by the SDBF and the demographics specific to the workforce of the city. There is a one-year delay
between the actuarial valuation that serves as the basis for the employer contribution rate and the calendar
year when the rate goes into effect. The funding policy of this plan is to assure that adequate resources
are available to meet all death benefit payments for the upcoming year; the intent is not to prefund retiree
term life insurance during employees' entire careers. As such, contributions are utilized to fund active
member deaths on a pay-as-you-go basis; any excess contributions and investment income over
payments then become net position available for benefits.
Discount Rate
The TMRS SDBF program is treated as unfunded OPEB plan because the SDBF trust covers both active
employees and retirees and the assets are not segregated for these groups. Under GASB Statement No.
75, the discount rate for an unfunded OPEB plan should be based on 20-year tax-exempt AA or higher
Municipal Bonds. Therefore, a discount rate of 3.31% based on the 20 Year Bond GO Index published by
bondbuyer.com is used as of the measurement date of December 31, 2017. At transition, GASB
Statement No.75 also requires that the total OPEB liability as of the prior fiscal year end be estimated
based on the 20 Year Bond GO Index as of the prior fiscal year end. The actuary has estimated the total
OPEB liability, as of December 31, 2016, using a discount rate of 3.78%.
67
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 10 - Other Post-Employment Benefits (continued)
TMRS Supplemental Death Benefits Fund(continued)
Plan Assets
There are no plan assets accumulated in a trust that meets the criteria in paragraph 4 of GASB
Statement No. 75.
Actuarial Assumptions
The City's total OPEB liability was measured at December 31, 2017 and was determined by an actuarial
valuation as of that date using the following actuarial assumptions:
Valuation Date: December 31, 2017
Methods and Assumptions:
Inflation: 2.50%
Salary Increases: 3.50%to 10.50%, including inflation
Discount rate: 3.31%. The discount rate was based on the Fidelity Index's "20-
Year Municipal GO AA Index" rate as of December 31, 2017.
Retirees' share of benefit related costs: $0
Administrative expenses: All administrative expenses are paid through the Pension Trust
and accounted for under reporting requirements under GASB
Statement No. 68.
Mortality rates—service retirees: RP2000 Combined Mortality Table with Blue Collar
Adjustment with male rates multiplied by 109% and female rates
multiplied by 103% and projected on a fully generational basis
with scale BB.
Mortality rates—disabled retirees: RP2000 Combined Mortality Table with Blue Collar Adjustment
with male rates multiplied by 109% and female rates multiplied
by 103%with a 3 year set-forward for both males and females.
The rates are projected on a fully generational basis with scale
BB to account for future mortality improvements subject to the
3% floor.
Other Information
The actuarial assumptions used in the December 31, 2017 valuation were based on the results of an
actuarial experience study for the period December 31, 2010 to December 31, 2014.
Changes in the Total OPEB Liability
Service cost $ 66,020
Interest 39,025
Changes of assumptions 111,349
Benefit payments (4,401)
Net change in total OPEB liability 211,993
Total OPEB liability- beginning 1,001,605
Total OPEB liability- ending $ 1,213,598
68
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 10 - Other Post-Employment Benefits (continued)
TMRS Supplemental Death Benefits Fund(continued)
Sensitivity Analysis
The following presents the total OPEB liability of the employer, calculated using the discount rate of 3.31%,
as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is 1
percentage point lower (2.31%) or 1 percentage point higher (4.31%) than the current rate. Note that the
healthcare cost trend rate does not affect the total OPEB liability, so sensitivity to the healthcare cost trend
rate is not shown.
Current
Discount Rate
1% Decrease to Assumption 1% Increase to
2.31% 3.31% 4.31%
$ 1,505,048 $ 1,213,598 $ 992,842
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to
OPEB Activity
For the year ended September 30, 2018, the City recognized OPEB expense of $120,532. As of
September 30, 2018, the City reported deferred outflows of resources related to OPEB from the following
sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Changes assumptions $ 95,862 $
Contributions subsequent to
the measurement date 3,464
Total $ 99,326 $
The $3,464 reported as deferred outflows of resources related to OPEB resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the total OPEB liability in the
year ending September 30, 2019. Amounts currently reported as deferred outflows of resources related to
OPEB, excluding contributions subsequent to the measurement date, will be recognized in OPEB expense
as follows:
Net deferred
outflows
Fiscal (inflows) of
Year resources
2019 $ 15,487
2020 15,487
2021 15,487
2022 15,487
2023 15,487
Thereafter 18,427
Total $ 95,862
69
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 10 -Other Post-Employment Benefits (continued)
Retiree Health Care Plan (RHCP)
Plan Description
The City's defined benefit OPEB plan, City of Pearland Retiree Health Care Plan (RHCP), provides
OPEB through an implicit healthcare premium for retirees for all permanent full-time employees of the
City. RHCP is a single-employer defined benefit OPEB plan administered by the City. At this time, no
assets are accumulated in a trust to fund the future requirements of the RHCP.
Benefits provided
Retirees who are entitled to receive retirement benefits under the City's retirement plan may purchase
continued health benefits coverage for the retiree and the retiree's dependents, but shall pay 100% of the
premium for coverage. The retiree, however, is able to receive a lower rate by participating in the City's
plan as opposed to individually purchasing health insurance. The City's coverage is secondary to Medicare
when the person becomes eligible for these benefits.
Employees covered by benefit terms. At September 30, 2018, the following employees were covered
by the benefit terms:
Inactive employees or beneficiaries currently receiving benefit payments: 8
Inactive employees entitled to but not yet receiving benefit payments: 0
Active employees: 643
Total 651
Total OPEB Liability
The City's total OPEB liability of $3,927,369 was measured as of September 30, 2018, and was
determined by an actuarial valuation as of October 1, 2017.
Actuarial assumptions and methods
The total OPEB liability in the October 1, 2017 actuarial valuation was determined using the following
actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:
Valuation Date: October 1, 2017
Methods and Assumptions:
Discount Rate: 3.75% per annum, which includes inflation
Inflation: 2.50% per annum
Salary Increases: 2.75% average which includes inflation
Healthcare cost trend rates: 5.70% initial medical trend rate for pre-65 retirees decreasing to an
ultimate rate of 3.81% in the year 2073
Mortality rates were updated and are based upon the RP-2014h sex distinct mortality improvement
table with generational mortality improvement scale MP-2018
70
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 10 -Other Post-Employment Benefits (continued)
Retiree Health Care Plan (RHCP) (continued)
Discount Rate
The discount rate of 3.75% is based upon the yield of 20-year tax-exempt general obligation municipal
bonds with an average rating of AA/Aa or higher. The other financial assumptions for long-term
inflation, payroll growth, and salary scale were taken from the TMRS actuary study. The per capita
claims costs and how these costs are expected to escalate in the future were set by HUB International
who develops the funding rates.
Plan Assets
There are no plan assets accumulated in a trust that meets the criteria in paragraph 4 of GASB
Statement No. 75.
Changes in the Total OPEB Liability
The retiree medical plan sponsored by the City is offered to all former employees who satisfy the
retirement eligibility provisions of the plan, however only a grandfathered group of employees and
retirees are eligible for a subsidy which is based upon accrued service with the City as of October 1,
2006 and or the number of years of City service at retirement. The following table shows the changes in
total OPEB liability:
Service cost $ 456,161
Interest 240,852
Changes of benefit terms (2,314,150)
Difference between expected and actual
experience 361,831
Changes of assumptions 43,043
Benefit payments (127,339)
Net change in total OPEB liability (1,339,602)
Total OPEB liability at 9/30/2017 5,266,971
Total OPEB liability at 9/30/2018 $ 3,927,369
Assumption Changes. Since the prior valuation, the mortality improvement scale was updated from MP-
2016 to the MP-2018 table. Also, the per capita claims costs and trend were updated to reflect recent
experience.
Sensitivity of the total OPEB liability to changes in the discount rate
The following presents the plan's total OPEB liability, calculated using a discount rate of 3.75%, as well
as what the plan's total OPEB liability would be if it were calculated using a discount rate that is one
percent lower or one percent higher:
Current
Discount Rate
1% Decrease to Assumption 1% Increase to
2.75% 3.75% 4.75%
$ 4,444,870 $ 3,927,369 $ 3,471,405
71
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 10 -Other Post-Employment Benefits (continued)
Retiree Health Care Plan (RHCP) (continued)
Sensitivity of the total OPEB liability to changes in the healthcare cost trend rates
The following presents the plan's total OPEB liability, calculated using the assumed trend rates as well
as what the plan's total OPEB liability would be if it were calculated using a trend rate that is one
percent lower or one percent higher:
Current
Healthcare Cost
Trend Rate
1% Decrease to Assumption 1% Increase to
7.00% 8.00% 9.00%
$ 3,350,310 $ 3,927,369 $ 4,628,804
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related
to OPEB
For the year ended September 30, 2018, the City recognized a negative OPEB expense of$1,559,298.
At September 30, 2018, the City reported deferred outflows of resources and deferred inflows of
resources related to OPEB from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between
expected and actual
experience $ 310,141 $
Changes assumptions 36,894
Total $ 347,035 $
Amounts currently reported as deferred outflows of resources related to OPEB, excluding contributions
subsequent to the measurement date, will be recognized in OPEB expense as follows:
Net deferred
outflows
Fiscal (inflows) of
Year resources
2019 $ 57,839
2020 57,839
2021 57,839
2022 57,839
2023 57,839
Thereafter 57,840
Total $ 347,035
72
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 11 - Commitments and Contingencies
Litigation and Other Contingencies
The City was involved in various lawsuits and arbitration proceedings at September 30, 2018. The City and
its legal counsel believe that any amounts which the City might ultimately be required to pay will not
exceed underlying insurance coverage.
Reimbursements due to Developers/Business Assistance
Pursuant to the Local Government Code, the Economic Development Corporation offers incentives to
attract and retain businesses to Pearland. The following are the current incentives.
Amounts Paid
Original Outstanding
Current Incentives Amount Other Prior Years Current Year Balance
KS Management $2,663,000 $ - $ 884,670 $ 298,890 $ 1,479,440
KS Management-Sales Tax 600,000 - 48,157 18,039 533,804
Keystone 189,000 - - - 189,000
Shale-Inland(FloWorks Intl) 490,000 (140,000) - 210,000 140,000
M&S Logistics 60,000 - 30,000 8,000 22,000
Brask Neela 70,000 - 70,000 - -
Lonza Phase 1 600,000 - - - 600,000
Tool Flo 1,152,000 - 152,000 - 1,000,000
Lonza Phase 2 450,000 300,000 - - 750,000
Base-Pair 2017 60,000 - 15,000 15,000 30,000
Zap 60,000 - 60,000 - -
Adient 40,000 - - 10,000 30,000
Diamond Bolt 27,500 - - 27,500 -
Endress+Hauser 525,000 - - - 525,000
$6,986,500 $160,000 $1,259,827 $ 587,429 $ 5,299,244
Lower Kirby Urban Center Master Plan
On June 10, 2013 Pearland adopted a 20/20 Strategic Plan to create a vision for the community's future
growth. One of the strategies was to implement plans to develop the Lower Kirby Urban Center as
Pearland's most intensive mixed-use employment, residential, and entertainment district. The Lower Kirby
Master Plan identified $48 million in priority construction projects that include drainage, water, sewer,
streets, traffic, sidewalks, and streetscape necessary to facilitate development of the area. On March 10,
2014, the City entered into a Master Financing Agreement with Lower Kirby Pearland Management District
and Pearland Municipal Management District which outlines the process for the City to advance funds to the
District(s) in order to facilitate the development. The City will be reimbursed from the District(s) from bond
sales as the area is development and value on the ground. Each project is taken on a case by case basis
and is approved via a Letter of Financing Agreement(LFA).
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CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 11 -Commitments and Contingencies (continued)
The following LFA's have been approved by and between the City and the LKMD and the PMMD#1.
The City had receivable balances at September 30, 2018 of$4,213,576 relating to these LFA's.
Lower Kirby Pearland
Pearland Municipal
Management Management
3/10/2014 Cost District District#1
Detention Pond $1,947,753 0.0% $ - 27.7% $ 539,528
Master Drainage Plan 127,410 0.0% - 30.8% 39,268
Regional Drainage Plan 183,031 0.0% - 23.9% 43,717
Subtotal - 622,513
8/24/2015
South Spectrum PER $ 214,137 57.4% 122,992 40.2% 86,124
9/12/2015
North Spectrum Traffic Signal $ 318,525 100.0% 318,525 0.0% -
4/26/2016
TxDOT Ditch Acquisition $ 400,000 73.0% 292,000 27.0% 108,000
2128/2017
South Spectrum West $5,755,789 0.0% - 21.3% 1,228,378
5/8/2017
West Conveyance Pond $ 277,000 0.0% - 88.8% 246,044
7/10/2017
288 Waterline& LK Park Improve $1,189,000 100.0% 1,189,000 0.0% -
Total $ 1,922,517 $ 2,291,059
City funding for these LFA's is via Reimbursement Agreements with the Pearland Economic
Development Corporation, whereby the City gets reimbursed for the cost of these projects by the
Corporation; so that the City is not actually out any dollars.
Chapter 380 Economic Development Agreements
The City had two sales tax incentive agreements in effect during the current fiscal year with Kelsey-Seybold
and Costco Wholesale Corporation. The City's legal obligations and limitations relating to the sales tax
incentive agreements are outlined by the Texas Local Government Code, Title 12, Subtitle A, Chapter 380,
Miscellaneous Provisions Relating to Municipal Planning and Development.
Kelsey-Seybold (Kelsey) is a large multi-specialty clinic system located in the Greater Houston area
and is Houston's largest and most renowned private multi-specialty physician group. The Kelsey
System is a major provider of healthcare for NASA and a center for healthcare research. The City of
Pearland and Pearland Economic Development Corporation made certain agreements with Kelsey to
relocate its administrative headquarters to Shadow Creek Ranch in Pearland. The headquarters is
located in a four story, 170,000-square-foot building at the intersection of Shadow Creek Parkway and
Kirby Drive. The headquarters had a cost of$36 million, including the costs for equipment, construction,
and fees. Construction began in May 2012 and Kelsey began operations at the site in October 2013.
The City of Pearland and the Pearland Economic Development Corporation (PEDC) each have a 10-
year sales tax incentive agreement with Kelsey that allows Kelsey to receive an incentive of 60% of the
sales tax remitted by Kelsey and its vendors. The agreements with the City and the PEDC requires
Kelsey to maintain a minimum of 600 jobs to be in place as an eligibility factor. To date the City and the
PEDC have paid $700,426 in sales tax incentives.
74
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 11 - Commitments and Contingencies (continued)
Chapter 380 Economic Development Agreements (continued)
Costco Wholesale Corporation is a membership warehouse club that provides a wide selection of
merchandise. As of 2014, it is the second largest retailer in the United States and the third largest in the
world, and the largest membership warehouse club chain in the United States. The City of Pearland
agreed to provide Costco incentives to build a 150,000 square-foot retail warehouse with an attached
tire center and free-standing fuel facility. Total investment was estimated at $33.7M and the project
created approximately 75 full-time and 75 part-time jobs.
The agreement with Costco and the City of Pearland is to refund Costco a portion of the 1.0% of sales
tax collected by the City at the business location for a period not to exceed 10 years and an amount not
to exceed $750,000. Costco opened in November 2015, with the first payment made in fiscal year
2016. To date, the City has paid $303,147 in sales tax incentives.
Note 12 - Risk Management
The City is exposed to various risks of loss related to torts: theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters. The City's risk management
program mainly encompasses obtaining property and liability insurance through Texas Municipal
League's Intergovernmental Risk-Pool (TML-IRP), and through commercial insurance carriers. The
participation of the City in TML-IRP is limited to payment of premiums. The City has not had any
significant reduction in insurance coverage, and the amounts of insurance settlements have not
exceeded insurance coverage for any of the last three years.
The City also provides Workers' Compensation insurance on its employees through TML-Workers'
Compensation Fund. Workers' Compensation premiums are subject to change when audited by TML
Workers' Compensation Fund. At fiscal year-end September 30, 2018, the City believed the amounts
paid on Workers' Compensation would not change significantly from the amounts recorded.
Note 13 - Capital Lease
The City has a 20-year agreement to lease a facility to the University of Houston Clear Lake (UHCL),
which commenced in July 2010. Rent or lease payments are broken into two parts, debt service and
operating. For accounting purposes the City has classified the lease as a direct financing lease.
Because this lease is recorded in a governmental fund, the receivable is deferred and the distinction
between a sales and direct financing lease is not relevant at the fund level.
UHCL has an option to purchase the facility upon the commencement date of July 2010 until the 61st
day preceding the 20th anniversary of the commencement date.
75
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CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 13 - Capital Lease (continued)
The lease payments related to debt service to be received coincide with debt service payments the City
is required to make on a bond that matures on March 1, 2029. At September 30, 2018, the future
minimum debt service lease payments to be received under the lease are as follows:
Fiscal year ending
September 30, Payment
2018 $ 815,232
2019 794,889
2020 771,557
2021 757,131
2022 737,182
2023-2027 3,360,426
2028-2029 1,181,543
Total $ 8,417,960
Note 14 - Prior Period Adjustments
In the current fiscal year, the City implemented GASB Statement No. 75, Accounting and Financial
Reporting for Postemployment Benefits Other Than Pension. As a result, the beginning net position of
the City's governmental activities, business-type activities, and water and sewer fund have been
restated on the statement of activities (governmental and business-type activities) and statement of
revenues, expenses and changes in net position (water and sewer fund) to reflect the total OPEB
liability and deferred outflow of resources related to OPEB contributions made after the prior
measurement date.
In the current fiscal year, it came to management's attention that the prior year utility billing accrual was
understated. As a result, the beginning net position of the City's business-type activities, water and
sewer fund, and solid waste fund have been restated on the statement of activities (business-type
activities) and statement of revenues, expenses and changes in net position (water and sewer fund and
solid waste fund) to reflect the increase to the receivable balance.
Statement of
Revenues, Expenses and
Statement of Activities Changes in Net Position
Governmental Business-type Water and Solid Waste
Activities Activities Sewer Fund Fund
Net position at September 30, 2017,
as previously reported $ 504,405,720 $ 226,770,942 $227,135,350 $ (364,408)
Net OPEB obligation (GASB 45) 3,326,485 598,544 598,544
Total OPEB liability(GASB 75) (5,370,422) (898,154) (898,154)
OPEB conrtibutions made after
the measurement date 2,990 397 397
Utility billing accrual 1,436,143 1,219,667 216,476
Total prior period adjustment (2,040,947) 1,136,930 920,454 216,476
Net position at October 1, 2017,
as restated $ 502,364,773 $ 227,907,872 $228,055,804 $ (147,932)
76
City of Pearland FY 2018 CAFR
Required Supplementary Information
77
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES-BUDGET AND ACTUAL
GENERAL FUND
For the year ended September 30, 2018
Variance with
Final Budget-
Budgeted Amounts Positive
Adopted Amended Actual (Negative)
Revenues
Property taxes $ 20,705,007 $ 20,453,523 $20,383,959 $ (69,564)
Sales and use taxes 21,368,690 21,957,016 22,662,007 704,991
Franchise fees 7,120,000 7,154,583 7,097,567 (57,016)
Licenses and permits 5,590,150 3,783,035 4,145,497 362,462
Fees and forfeitures 2,550,450 2,313,750 2,322,399 8,649
Charges for services 16,753,256 16,203,603 16,051,689 (151,914)
Investment earnings 220,000 250,000 193,334 (56,666)
Intergovernmental 1,607,719 (1,607,719)
Other 938,475 1,306,308 1,304,805 (1,503)
Total Revenues 75,246,028 75,029,537 74,161,257 (868,280)
Expenditures
Current:
General government 10,571,620 9,962,960 10,298,777 (335,817)
Public safety 41,058,365 42,366,919 40,950,030 1,416,889
Public works 12,800,337 14,261,679 13,326,696 934,983
Community services 4,254,661 4,240,687 4,024,727 215,960
Parks and recreation 6,077,860 5,982,694 5,816,980 165,714
Debt Service:
Principal 564,303 556,677 556,677
Interest and other charges 34,922 34,922 34,922
Capital outlay 2,316,639 2,772,515 2,334,476 438,039
Total Expenditures 77,678,707 80,179,053 77,343,285 2,835,768
Excess (deficiency)of revenues
over expenditures (2,432,679) (5,149,516) (3,182,028) 1,967,488
Other Financing Sources(Uses)
Transfers in 3,824,407 3,816,116 3,816,116
Transfers out (1,036,811) (1,141,000) (1,009,451) 131,549
Total Other Financing Sources(Uses) 2,787,596 2,675,116 2,806,665 131,549
Net change in fund balances 354,917 (2,474,400) (375,363) 2,099,037
Fund balances, beginning 14,363,005 14,363,005 14,363,005
Fund balances,ending $ 14,717,922 $ 11,888,605 $13,987,642 $ 2,099,037
78
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY BUDGET INFORMATION
Budgetary Compliance
The City has complied with all material budget requirements for the year ended September 30, 2018.
Annual appropriated budgets are adopted for the General, Special Revenue and Debt Service Funds,
using the same basis of accounting as for financial reporting. All annual appropriations lapse at fiscal
year-end. Project length budgets are adopted for the Capital Project Funds. The City, for management
control, approves a financial plan for the Enterprise Fund. City Council approves the annual budget for
the Pearland Economic Development Corporation, which is included in the City's financial reporting entity.
Expenditures may not legally exceed budgeted appropriations at the fund level (i.e. General Fund, Debt
Service Fund, etc.). Expenditure requests, which would require an increase in total budgeted
appropriations, must be approved by City Council through a formal budget amendment. At any time in
the fiscal year, the Council may make emergency appropriations to meet a pressing need for public
expenditure in order to protect the public health, safety, or welfare. The Council has the power to transfer
any unencumbered funds allocated by the budget from one activity, function, or department, to another
activity, function, or department, to re-estimate revenues and expenditures, and to amend the budget.
Because City Council adopts the budget at the fund level, management has the authority to transfer
available funds allocated by the budget from one function/department or activity to another function or
activity within the same department. In cooperation with the directors and department heads of the City,
the Budget Officer, the Director of Finance and the City Manager prepare an annual budget for the
General Fund, Special Revenue Funds and Debt Service Fund for the ensuing fiscal year, in a form
and style as deemed desirable by the City Manager. The City Manager shall submit to the Council, for
its review, consideration, and revision, both a letter describing the proposed new budget, as well as a
balanced budget for the forthcoming fiscal year, between 60 (sixty) and 90 (ninety) days prior to the
beginning of the fiscal year. The budget, as adopted, must set forth the appropriations for services,
functions, and activities of the various City departments and agencies, and shall meet all fund
requirements provided by law and required by bond covenants. Capital projects are budgeted on a
project-length basis.
Amounts reported in the accompanying financial statements represent the budgeted amount with all
supplemental appropriations.
79
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM
Last Four Measurement Years
2017 2016 2015 2014
Service cost $ 7,548,267 $ 6,756,543 $ 6,035,636 $ 5,118,873
Interest 9,064,733 8,166,924 7,679,417 7,010,813
Changes of benefit terms
Difference between expected and actual experience 33,887 1,159,738 846,833 241,450
Change in assumptions (304,820)
Benefit payments,including refunds of
employee contributions (3,481,143) (2,875,256) (3,808,062) (2,729,973)
Net change in total pension liability 13,165,744 13,207,949 10,449,004 9,641,163
Total pension liability-beginning 132,258,772 119,050,823 108,601,188 98,960,025
Total pension liability-ending(a) $145,424,516 $ 132,258,772 $119,050,192 $108,601,188
Plan fiduciary net position:
Contributions-employer $ 5,991,467 $ 5,253,253 $ 4,786,602 $ 4,339,785
Contributions-employee 3,081,580 2,749,756 2,498,961 2,355,095
Net investment income 14,836,941 6,458,752 135,758 4,766,828
Benefit payments, including refunds of
employee contributions (3,481,143) (2,875,256) (3,808,062) (2,729,973)
Administrative expense (76,869) (72,899) (82,673) (49,756)
Other (3,896) (3,927) (4,082) (4,091)
Net change in plan fiduciary net position 20,348,080 11,509,679 3,526,504 8,677,888
Plan fiduciary net position-beginning 107,020,843 95,511,165 91,984,661 83,306,773
Plan fiduciary net position-ending(b) 127,368,923 107,020,844 95,511,165 91,984,661
Net pension liability-ending(a)-(b) $ 18,055,593 $ 25,237,928 $ 23,539,027 $ 16,616,527
Plan fiduciary net position as a
percentage of total pension liability 87.58% 80.92% 80.23% 84.70%
Covered employee payroll $ 44,013,221 $ 39,282,225 $ 35,545,557 $ 33,615,923
Net pension liability as a percentage
of covered payroll 41.02% 64.25% 66.22% 49.43%
Notes to the Required Supplementary Information
Amounts presented are for each measurement year,which end the preceding December 31 of the City's fiscal year end.
Net pension liability is calculated using a new methodology and will be presented prospectively in accordance with GASB 68.
Ten years of data should be presented in this schedule but data was unavailable prior to 2014.
80
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
SCHEDULE OF CONTRIBUTIONS
TEXAS MUNICIPAL RETIREMENT SYSTEM
Last Ten Fiscal Years
2018 2017 2016 2015 2014
Actuarially determined contribution $ 6,072,762 $ 5,924,405 $ 5,295,359 $ 4,600,419 $ 4,311,811
Contribution in relation of the actuarially
determined contribution $ 6,072,762 $ 5,924,405 $ 5,295,359 $ 4,600,419 $ 4,311,811
Contribution deficiency(excess) - - - - -
Covered payroll $ 44,772,623 $ 43,703,166 $ 39,566,838 $ 34,650,598 $ 30,580,987
Contributions as a percentage of
covered
payroll 13.6% 13.6% 13.4% 13.3% 14.1%
2013 2012 2011 2010 2009
Actuarially determined contribution $ 3,780,847 $ 3,518,289 $ 3,302,952 $ 2,995,119 $ 2,550,976
Contribution in relation of the actuarially
determined contribution $ 3,780,847 $ 3,518,289 $ 3,302,952 $ 2,995,119 $ 2,550,976
Contribution deficiency(excess) - - - - -
Covered payroll $ 28,876,260 $ 27,756,555 $ 26,871,670 $ 25,519,548 $ 25,135,418
Contributions as a percentage of
covered
payroll 13.1% 12.7% 12.3% 11.7% 10.1%
NOTES TO REQUIRED PENSION SYSTEM SUPPLEMENTARY INFORMATION
Valuation Date:
Notes: Actuarial determined contribution rates are calculated as of
December 31 and become effective in January 13 months later.
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost Method: Entry Age Normal
Amortization Method: Level Percentage of Payroll, Closed
Remaining Amortization Period: 28 years
Asset Valuation Method: 10 Year smoothed market; 15% soft corridor
Inflation: 2.5%
Salary Increases: 3.50% to 10.50% including inflation
Investment Rate of Return: 6.75%
Retirement Age: Experience-based table of rates that are specific to the City's plan
of benefits. Last updated for the 2015 valuation pursuant to an
experience study of the period 2010—2014.
Mortality: RP2000 Combined Mortality Table with Blue Collar Adjustment
with male rates multiplied by 109% and female rates multiplied by
103% and projected on a fully generational basis with scale BB.
Other Information:
Notes: There were no benefit changes during the year.
81
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SCHEDULE OF CHANGES IN THE TOTAL OPEB LIABILITY AND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM SUPPLEMENTAL DEATH BENEFITS FUND
Last Measurement Year
2017
Service cost $ 66,020
Interest 39,025
Changes of assumptions 111,349
Benefit payments (4,401)
Net change in total OPEB liability 211,993
Total OPEB liability- beginning 1,001,605
Total OPEB liability- ending $ 1,213,598
Covered payroll $ 44,013,221
Total OPEB liability as a percentage of covered payroll 2.76%
Notes to the Required Supplementary Information
Amounts presented are for each measurement year, which end the preceding
December 31 of the City's fiscal year end.
Total OPEB liability is calculated using a new methodology and will be presented
prospectively in accordance with GASB 75.
Ten years of data should be presented in this schedule but data was unavailable
prior to 2017.
There are no plan assets accumulated in a trust that meets the criteria in
paragraph 4 of GASB Statement No. 75.
82
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SCHEDULE OF CHANGES IN THE TOTAL OPEB LIABILITY AND RELATED RATIOS
CITY OF PEARLAND RETIREE HEALTH CARE PLAN
Last Measurement Year
2018
Service cost $ 456,161
Interest 240,852
Changes of benefit terms (2,314,150)
Difference between expected and actual experience 361,831
Changes of assumptions 43,043
Benefit payments (127,339)
Net change in total OPEB liability (1,339,602)
Total OPEB liability- beginning 5,266,971
Total OPEB liability- ending $ 3,927,369
Covered payroll $ 44,772,623
Total OPEB liability as a percentage of covered payroll 8.77%
Notes to the Required Supplementary Information
Amounts presented are for each measurement year, which is the same as the
City's fiscal year end.
Total OPEB liability is calculated using a new methodology and will be presented
prospectively in accordance with GASB 75.
Ten years of data should be presented in this schedule but data was unavailable
prior to 2017.
There are no plan assets accumulated in a trust that meets the criteria in
paragraph 4 of GASB Statement No. 75.
Assumption Changes
Since the prior valuation, the mortality improvement scale was updated from MP-2016 to
the MP-2018 table. Also, the per capita claims costs and trend were updated to reflect
recent experience.
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84
City of Pearland FY 2018 CAFR
Other Supplementary Information
85
City of Pearland FY 2018 CAFR
Combining and Individual Fund
Statements and Schedules
87
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NON-MAJOR GOVERNMENTAL FUNDS
To account for the proceeds of specific revenue sources that, are legally restricted to expenditures for
specific purposes.
Hotel/Motel Tax Fund- A fund created to account for hotel/motel occupancy tax revenue.
Court Security Fund-A fund created to account for the receipt and expenditure of revenues from court
fines for court security.
City-Wide Donation Fund - A fund created to account for miscellaneous donations for all city
departments except parks.
Court Technology Fund-This fund is used to account for the receipt and expenditure of revenues from
court fines for court technology.
Street Assessments Fund - A fund created to account for the revenue and expenditure of street
assessments as approved by City Council for a designated street(s).
Park Donation Fund - A fund used to account for park donations for park special events and
development of parks. This fund also includes funds from tree trust donations.
Police Seizure Fund - A fund created to account for state and federal seizure funds which are used
solely for law enforcement purposes.
Park and Recreation Development Fund-A fund created to account for the receipt and expenditure of
payment in lieu of parkland for the development of parks.
Sidewalk Fund-A fund created to account for resources designated for sidewalks.
Grant Fund- A fund created to account for revenues and expenditures associated with federal, state,
and local grants.
Traffic Impact Improvement Fund - A fund created to account for resources and expenditures from
traffic impact analysis.
Juvenile Management Fund- A fund created to account for receipt and expenditure of revenues from
court fines for juvenile case manager.
Regional Detention Fund-A fund created to account for regional detention development.
Educational TV Fund- A fund created to account for the revenues and expenditures associated with
the purchase of equipment for public-access television broadcasting under rules set forth by the Federal
Communications Commission (FCC).
University of Houston (U of H) Fund- A fund created to account for lease revenues and the operating
expenditures related to the University of Houston Clear Lake-Pearland Campus built by the City and
leased to the University of Houston Clear Lake and the Pearland Economic Development Corporation.
89
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
September 30, 2018
Hotel/Motel Court City-Wide
Tax Security Donation
Assets
Cash and cash equivalents $ 383,152 $ 27,034 $ 95,250
Investments 4,046,813
Receivables (net of allowance
for uncollectibles) 332,301 3,351
Total Assets $ 4,762,266 $ 27,034 $ 98,601
Liabilities
Accounts payable $ 85,192 $ 1,368 $
Accrued expenditures 15,796
Due to other funds
Total Liabilities 100,988 1,368
Deferred Inflows of Resources
Unavailable revenue
Total Deferred Inflows
of Resources
Fund Balance
Non-spendable
Restricted for:
Community development
programs 4,661,278 25,666
Public safety 98,601
Capital improvements
Unassigned
Total Fund Balances 4,661,278 25,666 98,601
Total Liabilities, Deferred
Inflows of Resources,
and Fund Balances $ 4,762,266 $ 27,034 $ 98,601
90
City of Pearland FY 2018 CAFR
Page 1 of 2
Park and
Court Street Park Police Recreation
Technology Assessments Donation Seizure Development
$ 5,059 $ $ 517,741 $ 375,959 $ 871,640
237,257
1,486,878
$ 5,059 $ 1,486,878 $ 517,741 $ 375,959 $ 1,108,897
$ 144 $ $ 1,014 $ 1,350 $ 103,280
144 1,014 1,350 103,280
1,486,878
1,486,878
516,727
4,915 374,609
1,005,617
4,915 516,727 374,609 1,005,617
$ 5,059 $ 1,486,878 $ 517,741 $ 375,959 $ 1,108,897
91
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
September 30, 2018
Traffic Impact
Sidewalk Grant Improvement
Assets
Cash and cash equivalents $ 6,466 $ $ 351,569
Investments 246,599
Receivables (net of allowance
for uncollectibles) 155,844 21
Total Assets $ 6,466 $ 155,844 $ 598,189
Liabilities
Accounts payable $ $ 53,124 $
Accrued expenditures
Due to other funds 126,992
Total Liabilities 180,116
Deferred Inflows of Resources
Unavailable revenue
Total Deferred Inflows
of Resources
Fund Balance
Non-spendable
Restricted for:
Community development
programs
Public safety
Capital improvements 6,466 598,189
Unassigned (24,272)
Total Fund Balances 6,466 (24,272) 598,189
Total Liabilities, Deferred
Inflows of Resources,
and Fund Balances $ 6,466 $ 155,844 $ 598,189
92
City of Pearland FY 2018 CAFR
Page 2 of 2
Total
Non-major
Juvenile Regional Educational Governmental
Management Detention TV U of H Funds
$ 28,991 $ 3,164 $ 217,484 $ $ 2,883,509
512,028 5,042,697
27,538 2,005,933
$ 28,991 $ 3,164 $ 757,050 $ $ 9,932,139
$ 1,384 $ $ $ $ 246,856
27,669 43,465
126,992
1,384 27,669 417,313
1,486,878
1,486,878
757,050 5,960,721
27,607 505,732
3,164 1,613,436
(27,669) (51,941)
27,607 3,164 757,050 (27,669) 8,027,948
$ 28,991 $ 3,164 $ 757,050 $ $ 9,932,139
93
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
NON-MAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30, 2018
Hotel/Motel Court City-Wide
Tax Security Donation
Revenues
Sales and use taxes $ 1,597,258 $ $
Franchise fees
Fines and forfeitures 41,035
Charges for services
Investment earnings 70,762 416 1,336
Intergovernmental
Other 36,611 31,681
Total Revenues 1,704,631 41,451 33,017
Expenditures
Current:
General government 1,029,011
Public safety 9,128
Public works
Community services 50,258
Parks and recreation
Capital outlay
Total Expenditures 1,029,011 50,258 9,128
Excess (deficiency) of revenues
over expenditures 675,620 (8,807) 23,889
Other Financing Sources (Uses)
Transfers out (617,890)
Total Other Financing
Sources (Uses) (617,890)
Net change in fund balances 57,730 (8,807) 23,889
Fund balances - beginning 4,603,548 34,473 74,712
Fund balances -ending $ 4,661,278 $ 25,666 $ 98,601
94
City of Pearland FY 2018 CAFR
Page 1 of 2
Park and
Court Street Park Police Recreation
Technology Assessments Donation Seizure Development
$ $ $ $ $
44,138
290,615
9 7,809 4,941 10,867
99,376 115,876 964,060
44,147 397,800 120,817 974,927
17,800
40,203
143,452
134,494
40,203 143,452 17,800 134,494
3,944 254,348 103,017 840,433
(555,000)
(555,000)
3,944 254,348 103,017 285,433
971 262,379 271,592 720,184
$ 4,915 $ $ 516,727 $ 374,609 $ 1,005,617
95
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES
NON-MAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30, 2018
Traffic Impact
Sidewalk Grant Improvement
Revenues
Sales and use taxes $ $ $
Franchise fees
Fines and forfeitures
Charges for services 86
Investment earnings 97 2,393 8,460
Intergovernmental 539,284
Other
Total Revenues 183 541,677 8,460
Expenditures
Current:
General government 19,385
Public safety 304,018
Public works 93,548
Community services 79,830
Parks and recreation
Capital outlay 106,497
Total Expenditures 509,730 93,548
Excess (deficiency) of revenues
over expenditures 183 31,947 (85,088)
Other Financing Sources (Uses)
Transfers out (200,000)
Total Other Financing
Sources (Uses) (200,000)
Net change in fund balances 183 (168,053) (85,088)
Fund balances - beginning 6,283 143,781 683,277
Fund balances -ending $ 6,466 $ (24,272) $ 598,189
96
City of Pearland FY 2018 CAFR
Page 2 of 2
Total
Non-major
Juvenile Regional Educational Governmental
Management Detention TV U of H Funds
$ $ $ $ $ 1,597,258
260,430 260,430
60,315 145,488
290,701
409 607 12,193 120,299
539,284
148,290 1,395,894
60,724 148,897 272,623 4,349,354
1,048,396
330,946
93,548
53,628 64,760 288,679
143,452
240,991
53,628 64,760 2,146,012
7,096 148,897 207,863 2,203,342
(148,891) (51,531) (1,573,312)
(148,891) (51,531) (1,573,312)
7,096 6 156,332 630,030
20,511 3,158 600,718 (27,669) 7,397,918
$ 27,607 $ 3,164 $ 757,050 $ (27,669) $ 8,027,948
97
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
MAJOR GOVERNMENTAL FUND-DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES,AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Property taxes $34,297,205 $34,190,351 $(106,854) $32,476,674
Investment earnings 170,000 217,443 47,443 77,637
Miscellaneous 815,275 813,537 (1,738) 837,046
Total Revenues 35,282,480 35,221,331 (61,149) 33,391,357
Expenditures
Debt Service:
Principal 15,245,000 15,245,000 17,318,542
Interest and other charges 12,652,041 12,619,329 32,712 11,872,754
Intergovernmental 7,157,603 7,168,372 (10,769) 6,936,997
Total Expenditures 35,054,644 35,032,701 21,943 36,128,293
Excess (deficiency) of revenues
over expenditures 227,836 188,630 (39,206) (2,736,936)
Other Financing Sources(Uses)
Refunding bonds issued 64,850,000
Premium on debt issued 7,557,342
Payments to refunded bond
escrow agent (72,608,326)
Transfers in 693,204 697,023 3,819 572,961
Total Other Financing Sources(Uses) 693,204 697,023 3,819 371,977
Net change in fund balance 921,040 885,653 (35,387) (2,364,959)
Fund Balance -Beginning 5,911,461 5,911,461 8,276,420
Fund Balance -Ending $ 6,832,501 $ 6,797,114 $ (35,387) $ 5,911,461
98
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND-HOTEL/MOTEL TAX
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Sales and use taxes $1,590,000 $1,597,258 $ 7,258 $1,421,958
Investment earnings 62,700 70,762 8,062 12,053
Other 19,436 36,611 17,175 25,284
Total Revenues 1,672,136 1,704,631 32,495 1,459,295
Expenditures
Current:
General government 1,070,010 1,029,011 40,999 1,049,230
Total Expenditures 1,070,010 1,029,011 40,999 1,049,230
Excess (deficiency) of revenues
over expenditures 602,126 675,620 73,494 410,065
Other Financing Sources (Uses)
Transfers out (617,890) (617,890) (772)
Net change in fund balance (15,764) 57,730 73,494 409,293
Fund Balance - Beginning 4,603,548 4,603,548 4,194,255
Fund Balance - Ending $4,587,784 $4,661,278 $ 73,494 $4,603,548
99
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND-COURT SECURITY
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Fines and forfeitures $ 41,700 $41,035 $ (665) $44,095
Investment earnings 200 416 216 30
Total Revenues 41,900 41,451 (449) 44,125
Expenditures
Current:
Community services 62,041 50,258 11,783 38,893
Total Expenditures 62,041 50,258 11,783 38,893
Net change in fund balance (20,141) (8,807) 11,334 5,232
Fund Balance - Beginning 34,473 34,473 29,241
Fund Balance - Ending $ 14,332 $25,666 $ 11,334 $34,473
100
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND- CITY-WIDE DONATION
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Investment earnings $ 1,000 $ 1,336 $ 336 $ 75
Other income 11,661 31,681 20,020 29,354
Total Revenues 12,661 33,017 20,356 29,429
Expenditures
Current:
Public safety 16,638 9,128 7,510 23,096
Capital outlay 44,052 44,052
Total Expenditures 60,690 9,128 51,562 23,096
Excess (deficiency) of revenues
over expenditures (48,029) 23,889 71,918 6,333
Net change in fund balance (48,029) 23,889 71,918 6,333
Fund Balance - Beginning 74,712 74,712 68,379
Fund Balance - Ending $ 26,683 $98,601 $ 71,918 $74,712
101
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
SPECIAL REVENUE FUND- COURT TECHNOLOGY
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Fines and forfeitures $ 48,000 $ 44,138 $ (3,862) $47,861
Investment earnings 2 9 7 6
Total Revenues 48,002 44,147 (3,855) 47,867
Expenditures
Current:
Community services 49,557 40,203 9,354 66,805
Total Expenditures 49,557 40,203 9,354 66,805
Net change in fund balance (1,555) 3,944 5,499 (18,938)
Fund Balance - Beginning 971 971 19,909
Fund Balance - Ending $ (584) $ 4,915 $ 5,499 $ 971
102
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND-STREET ASSESSMENTS
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018 *
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Investment earnings $ $ $ $57,308
Other
Total Revenues 57,308
Expenditures
Current:
General government 57,308
Total Expenditures 57,308
Net change in fund balance
Fund Balances - Beginning
Fund Balances - Ending $ $ $ $
* No transactions in 2018.
103
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND-PARK DONATION
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Charges for services $275,615 $290,615 $ 15,000 $137,300
Investment earnings 7,100 7,809 709 210
Other 106,000 99,376 (6,624) 101,304
Total Revenues 388,715 397,800 9,085 238,814
Expenditures
Current:
Parks and recreation 173,100 143,452 29,648 107,235
Capital outlay 6,400 6,400
Total Expenditures 179,500 143,452 36,048 107,235
Net change in fund balance 209,215 254,348 45,133 131,579
Fund Balance - Beginning 262,379 262,379 130,800
Fund Balance - Ending $471,594 $516,727 $ 45,133 $262,379
104
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND-POLICE SEIZURE
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Investment earnings $ 4,000 $ 4,941 $ 941 $ 285
Other 70,363 115,876 45,513 82,423
Total Revenues 74,363 120,817 46,454 82,708
Expenditures
Current:
Public safety 37,200 17,800 19,400 35,622
Capital outlay 10,673
Total Expenditures 37,200 17,800 19,400 46,295
Net change in fund balance 37,163 103,017 65,854 36,413
Fund Balance - Beginning 271,592 271,592 235,179
Fund Balance - Ending $ 308,755 $ 374,609 $ 65,854 $ 271,592
105
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND-PARK AND RECREATION DEVELOPMENT
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Investment earnings $ 15,500 $ 10,867 $ (4,633) $ (3,079)
Other 848,059 964,060 116,001 38,492
Total Revenues 863,559 974,927 111,368 35,413
Expenditures
Capital outlay 134,495 134,494 1
Total Expenditures 134,495 134,494 1
Excess (deficiency) of
revenues over expenditures 729,064 840,433 111,369 35,413
Other Financing Sources (Uses)
Transfers out (555,000) (555,000) (510,000)
Total Other Financing
Sources (Uses) (555,000) (555,000) (510,000)
Net change in fund balance 174,064 285,433 111,369 (474,587)
Fund Balance - Beginning 720,184 720,184 1,194,771
Fund Balance - Ending $894,248 $1,005,617 $ 111,369 $ 720,184
106
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND-SIDEWALK
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Charges for services $ 55 $ 86 $ 31 $ 286
Investment earnings 50 97 47 10
Total Revenues 105 183 78 296
Expenditures
Current:
Public works 11,520
Total Expenditures 11,520
Net change in fund balance 105 183 78 (11,224)
Fund Balance - Beginning 6,283 6,283 17,507
Fund Balance - Ending $ 6,388 $6,466 $ 78 $ 6,283
107
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND-GRANT
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Investment earnings $ 1,000 $ 2,393 $ 1,393 $ 72
Intergovernmental 1,426,751 539,284 (887,467) 912,864
Total Revenues 1,427,751 541,677 (886,074) 912,936
Expenditures
Current:
General government 52,170 19,385 32,785 18,393
Public safety 466,896 304,018 162,878 138,397
Community service 287,451 79,830 207,621 536,622
Parks and recreation 21,645
Capital outlay _ 421,234 106,497 314,737 111,820
Total Expenditures 1,227,751 509,730 718,021 826,877
Excess (deficiency) of
revenues over expenditures 200,000 31,947 (168,053) 86,059
Other Financing Sources (Uses)
Transfers out (200,000) (200,000)
Total other financing
sources (uses) (200,000) (200,000)
Net change in fund balance (168,053) (168,053) 86,059
Fund Balance - Beginning 143,781 143,781 57,722
Fund Balance - Ending $ 143,781 $(24,272) $(168,053) $143,781
108
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND- TRAFFIC IMPACT IMPROVEMENT
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Investment earnings $ 8,200 $ 8,460 $ 260 $ 1,054
Other 37,351
Total Revenues 8,200 8,460 260 38,405
Expenditures
Current:
Public works 93,548 93,548 (93,548)
Total Expenditures 93,548 93,548 (93,548)
Excess (deficiency) of revenues
over expenditures (85,348) (85,088) 260 131,953
Other Financing Sources/(Uses)
Transfers out (44,800)
Net change in fund balance (85,348) (85,088) 260 87,153
Fund Balance - Beginning 683,277 683,277 596,124
Fund Balance - Ending $597,929 $598,189 $ 260 $683,277
109
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND-JUVENILE MANAGEMENT
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Fines and Forfeitures $ 59,000 $60,315 $ 1,315 $50,537
Investment earnings 200 409 209 26
Total Revenues 59,200 60,724 1,524 50,563
Expenditures
Current:
Community services 58,610 53,628 4,982 51,781
Total Expenditures 58,610 53,628 4,982 51,781
Net change in fund balance 590 7,096 6,506 (1,218)
Fund Balance - Beginning 20,511 20,511 21,729
Fund Balance - Ending $ 21,101 $27,607 $ 6,506 $20,511
110
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND-REGIONAL DETENTION
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Investment earnings $ 580 $ 607 $ 27 $
Other 141,552 148,290 6,738 22,113
Total Revenues 142,132 148,897 6,765 22,113
Other Financing Sources (Uses)
Transfers out (145,290) (148,891) (3,601) (18,955)
Total Other Financing Sources (Usa (145,290) (148,891) (3,601) (18,955)
Net change in fund balance (3,158) 6 3,164 3,158
Fund Balance - Beginning 3,158 3,158
Fund Balance - Ending $ $ 3,164 $ 3,164 $ 3,158
111
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND-EDUCATIONAL TV
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Investment earnings $ 9,000 $ 12,193 $ 3,193 $ 3,234
Franchise taxes 270,000 260,430 (9,570) 287,603
Total Revenues 279,000 272,623 (6,377) 290,837
Expenditures
Current:
Community services 159,000 64,760 94,240 58,004
Capital outlay 53,459
Total Expenditures 159,000 64,760 94,240 111,463
Revenues over(under) expenditures 120,000 207,863 87,863 179,374
Other Financing Sources (Uses)
Transfers out (51,531) (51,531) (466,258)
Total Other Financing Sources (51,531) (51,531) (466,258)
Net change in fund balance 68,469 156,332 87,863 (286,884)
Fund Balances - Beginning 600,718 600,718 887,602
Fund Balances - Ending $669,187 $757,050 $ 87,863 $600,718
112
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND- U OF H
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Investment earnings $ $ $ $ 133
Intergovernmental 298
Other 882
Total Revenues 1,313
Expenditures
Current:
Public works 314,783
Total Expenditures 314,783
Net change in fund balance (313,470)
Fund Balances - Beginning (27,669) (27,669) 285,801
Fund Balances - Ending $(27,669) $(27,669) $ $(27,669)
113
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
MAJOR GOVERNMENTAL FUND-CAPITAL PROJECTS FUND
SCHEDULE OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30, 2018
with comparative actual totals for the year ended September 30, 2017
2018
Variance
Amended Positive /
Budget Actual (Negative) 2017
Revenues
Investment earnings $ 635,000 $ 620,468 $ (14,532) $ 207,112
Intergovernmental 46,589,446 7,779,656 (38,809,790) 15,084,953
Other income 106 106 1,083,040
Total Revenues 47,224,446 8,400,230 (38,824,216) 16,375,105
Expenditures
Current:
Public works 4,302,565 3,577,346 725,219 4,983,526
Debt Service
Interest and other charges 212,265 (212,265) 375,452
Capital outlay 43,531,430 41,193,320 2,338,110 38,183,894
Total Expenditures 47,833,995 44,982,931 2,851,064 43,542,872
Excess (deficiency) of revenues
over expenditures (609,549) (36,582,701) (35,973,152) (27,167,767)
Other Financing Sources(Uses)
Issuance of debt 15,446,888 14,525,000 (921,888) 28,095,000
Premium on debt issued 1,143,159 1,143,159 2,896,020
Transfers in 14,240,619 6,432,944 (7,807,675) 10,192,660
Transfers out (975,006) (1,006,954) (31,948) (1,780,957)
Total Other Financing Sources (Us, 28,712,501 21,094,149 (7,618,352) 39,402,723
Net change in fund balance 28,102,952 (15,488,552) (43,591,504) 12,234,956
Fund Balance - Beginning 57,787,104 57,787,104 45,552,148
Fund Balance -Ending $85,890,056 $42,298,552 $(43,591,504) $57,787,104
114
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NON-MAJOR GOVERNMENTAL FUNDS
Internal Service Funds are used to account for the financing of goods or services provided by one
department or agency to other departments or agencies of the government and to other government
units, on a cost reimbursement basis.
Property Liability Insurance Fund - To account for the activities of the City's property and casualty
insurance. Coverage includes general liability, law enforcement, public official and employees' liability,
auto liability, physical damage and multi-peril, mobile equipment, real and personal property, and
windstorm coverage.
Employee Benefits Fund - To account for other forms of insurance such as dental, vision, life, and
disability provided by the City to employees except for health insurance.
Health Claims Fund- To account for the activities of the City's employee health insurance. The fund
accounts for retiree and COBRA contributions, claims and coverage.
115
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
COMBINING STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDS
September 30, 2018
Property
Liability Employee
Insurance Benefits Health
Fund Fund Claims Fund Total
Assets
Current assets:
Cash and cash equivalents $ 405,910 $ 147,756 $ 3,037,502 $ 3,591,168
Accounts Receivables, net 46,499 226 3,459 50,184
Total Assets 452,409 147,982 3,040,961 3,641,352
Liabilities
Current liabilities:
Accounts payable and accrued
expenses 1,074 112,928 7,591 121,593
Total Liabilities 1,074 112,928 7,591 121,593
Net Position
Unrestricted 451,335 35,054 3,033,370 3,519,759
Total Net Position $ 451,335 $ 35,054 $ 3,033,370 $ 3,519,759
116
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION
INTERNAL SERVICE FUNDS
For the Year Ended September 30, 2018
Property
Liability Employee
Insurance Benefits Health
Fund Fund Claims Fund Total
Revenues
Charges for services $ 548,611 $ $ 7,346,647 $ 7,895,258
Total operating revenues 548,611 7,346,647 7,895,258
Operating Expenses
Personnel services 42,763 42,763
Contractual services 1,323,911 6,807,950 8,131,861
Other expenses 264 18,491 18,755
Total Operating Expenses 1,366,938 6,826,441 8,193,379
Operating income(loss) (818,327) 520,206 (298,121)
Non-Operating Revenues(Expenses)
Earnings on investments 7,689 2,316 41,123 51,128
Total Non-Operating Revenues(Expenses) 7,689 2,316 41,123 51,128
Income(loss) before contributions and
transfers (810,638) 2,316 561,329 (246,993)
Transfers in 665,000 665,000
Transfers out
Change in net position (145,638) 2,316 561,329 418,007
Total net position -beginning 596,973 32,738 2,472,041 3,101,752
Total net position -ending $ 451,335 $ 35,054 $ 3,033,370 $ 3,519,759
117
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
For the Year Ended September 30, 2018
Property
Liability Employee
Insurance Benefits Health
Fund Fund Claims Fund Total
Cash Flows from Operating Activities
Receipts from interfund charges for insurance activities $ 516,408 $ (227) $ 7,344,579 $ 7,860,760
Disbursed for personnel services (42,763) (42,763)
Disbursed for goods and services (1,376,436) 24,378 (7,204,315) (8,556,373)
Net cash provided(used)by operating activities (902,791) 24,151 140,264 (738,376)
Cash Flows from Noncapital Financing Activities
Transfers in 665,000 665,000
Net cash provided by(used by)noncapital
financing activities 665,000 665,000
Cash Flows from Investing Activities
Interest received 7,689 2,316 41,122 51,127
Net cash provided by(used by)investing activities 7,689 2,316 41,122 51,127
Net increase(decrease)in cash and equivalents (230,102) 26,467 181,386 (22,249)
Cash and equivalents,beginning 636,012 121,289 2,856,116 3,613,417
Cash and equivalents,end $ 405,910 $ 147,756 $ 3,037,502 $ 3,591,168
Reconciliation of operating income to net cash
provided by operating activities
Operating income(loss) $ (818,327) $ $ 520,206 $ (298,121)
Adjustments to reconcile operating income to net cash
(Increase)decrease in accounts receivable (32,203) (227) (2,068) (34,498)
Increase(decrease)in accounts payable (52,261) 24,378 (377,874) (405,757)
Net cash provided by(used by)operating activities $ (902,791) $ 24,151 $ 140,264 $ (738,376)
118
City of Pearland FY 2018 CAFR
Long-Term Debt Amortization Schedules
119
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT
BY MATURITY DATE
September 30,2018
Certificates of Obligation,Series 2007 Certificates of Obligation,Series 2008
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ $ 106,763 $ 106,763 $ 185,000 $ 3,700 $ 188,700
2020 106,763 106,763
2021 106,763 106,763
2022 106,763 106,763
2023 106,763 106,763
2024 106,763 106,763
2025 106,763 106,763
2026 106,763 106,763
2027 106,763 106,763
2028 106,763 106,763
2029 1,745,000 78,406 1,823,406
2030 1,540,000 25,025 1,565,025
2031
2032
2033
2034
2035
2036
2037
2038
$ 3,285,000 $ 1,171,061 $ 4,456,061 $ 185,000 $ 3,700 $ 188,700
Permanent Improvement Bonds,Series 2008 Certificates of Obligation,Series 2009
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 405,000 $ 10,125 $ 415,125 $ 320,000 $ 25,800 $ 345,800
2020 325,000 13,000 338,000
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
$ 405,000 $ 10,125 $ 415,125 $ 645,000 $ 38,800 $ 683,800
120
City of Pearland FY 2018 CAFR
Page 1 of 4
Certificates of Obligation,Series 2009A Permanent Improvement and Refunding Bonds,
Series 2009(Gov't Portion)
Fiscal Year _ Principal Interest Total Principal Interest Total
2019 $ 640,000 $ 31,518 $ 671,518 $ 590,000 $ 30,018 $ 620,018
2020 635,000 10,319 645,319 615,000 9,994 624,994
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
$ 1,275,000 $ 41,837 $ 1,316,837 $ 1,205,000 $ 40,012 $ 1,245,012
Permanent Improvement Bonds,Series 2010A Permanent Improvement Bonds,Series 2011
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 415,000 $ 354,628 $ 769,628 $ 175,000 $ 164,031 $ 339,031
2020 425,000 342,028 767,028 185,000 156,831 341,831
2021 440,000 329,053 769,053 190,000 149,331 339,331
2022 455,000 315,059 770,059 200,000 141,531 341,531
2023 465,000 300,109 765,109 205,000 134,456 339,456
2024 485,000 284,065 769,065 210,000 128,231 338,231
2025 500,000 265,578 765,578 220,000 121,506 341,506
2026 520,000 246,153 766,153 225,000 114,275 339,275
2027 540,000 226,603 766,603 235,000 106,506 341,506
2028 560,000 205,558 765,558 245,000 98,106 343,106
2029 585,000 182,938 767,938 250,000 88,819 338,819
2030 610,000 159,038 769,038 260,000 78,619 338,619
2031 635,000 133,344 768,344 275,000 67,919 342,919
2032 660,000 105,825 765,825 285,000 56,719 341,719
2033 690,000 77,138 767,138 295,000 45,119 340,119
2034 720,000 47,175 767,175 305,000 33,119 338,119
2035 750,000 15,938 765,938 320,000 20,419 340,419
2036 335,000 6,909 341,909
2037
2038
$ 9,455,000 $ 3,590,230 $ 13,045,230 $ 4,415,000 $ 1,712,446 $ 6,127,446
121
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT
BY MATURITY DATE
September 30,2018
Certificates of Obligation,Series 2011 Permanent Improvement and Refunding Bonds,
Series 2012(Gov't Portion)
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 210,000 $ 10,973 $ 220,973 $ 3,210,000 $ 1,164,300 $ 4,374,300
2020 210,000 6,584 216,584 2,200,000 1,056,100 3,256,100
2021 210,000 2,195 212,195 2,340,000 965,300 3,305,300
2022 2,680,000 864,900 3,544,900
2023 2,840,000 754,500 3,594,500
2024 2,720,000 643,300 3,363,300
2025 4,520,000 521,100 5,041,100
2026 4,540,000 385,200 4,925,200
2027 3,035,000 271,575 3,306,575
2028 5,355,000 145,725 5,500,725
2029 2,180,000 32,700 2,212,700
2030
2031
2032
2033
2034
2035
2036
2037
2038
$ 630,000 $ 19,752 $ 649,752 $ 35,620,000 $ 6,804,700 $ 42,424,700
BC MUD#4 Permanent Improvement Bonds,Series 2013
Unlimited Tax Bonds,Series 2011
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 130,000 $ 6,825 $ 136,825 $ 320,000 $ 326,868 $ 646.868
2020 130,000 2,275 132,275 320,000 314,068 634.068
2021 330,000 301,068 631,068
2022 330,000 287,868 617,868
2023 340,000 274,468 614,468
2024 350,000 260,668 610,668
2025 360,000 246,468 606,468
2026 370,000 231,868 601,868
2027 370,000 217,068 587,068
2028 380,000 202,068 582,068
2029 390,000 186,424 576,424
2030 400,000 169,880 569,880
2031 410,000 152,411 562,411
2032 420,000 134,203 554,203
2033 430,000 115,288 545,288
2034 440,000 95,713 535,713
2035 450,000 75,688 525,688
2036 460,000 55,213 515,213
2037 480,000 33,763 513,763
2038 490,000 11,331 501,331
$ 260,000 $ 9,100 $ 269,100 $ 7,840,000 $ 3,692,394 $ 11,532,394
122
City of Pearland FY 2018 CAFR
Page 2 of 4
Certificates of Obligation,Series 2013 Permanent Improvement and Refunding Bonds,
Series 2014
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 90,000 $ 102,338 $ 192,338 $ 1,240,000 $ 1,573,031 $ 2,813,031
2020 100,000 98,988 198,988 2,310,000 1,508,281 3,818,281
2021 100,000 94,488 194,488 2,415,000 1,401,706 3,816,706
2022 100,000 89,488 189,488 2,510,000 1,284,831 3,794,831
2023 100,000 84,488 184,488 3,165,000 1,149,206 4,314,206
2024 100,000 79,488 179,488 2,710,000 1,002,331 3,712,331
2025 110,000 74,238 184,238 2,830,000 863,831 3,693,831
2026 110,000 69,288 179,288 3,055,000 716,706 3,771,706
2027 110,000 64,888 174,888 4,120,000 537,331 4,657,331
2028 110,000 60,488 170,488 3,145,000 385,191 3,530,191
2029 120,000 55,738 175,738 5,860,000 218,850 6,078,850
2030 120,000 50,563 170,563 535,000 90,950 625,950
2031 120,000 45,313 165,313 535,000 69,550 604,550
2032 120,000 40,063 160,063 535,000 48,150 583,150
2033 130,000 34,513 164,513 535,000 28,088 563,088
2034 130,000 28,663 158,663 535,000 9,363 544,363
2035 130,000 22,813 152,813
2036 140,000 16,650 156,650
2037 140,000 10,175 150,175
2038 150,000 3,469 153,469
$ 2,330,000 $ 1,126,140 $ 3,456,140 $ 36,035,000 $ 10,887,396 $ 46,922,396
Certificates of Obligation,Series 2014 Permanent Improvement and Refunding Bonds,
Series 2015
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 230,000 $ 109,919 $ 339,919 $ 2,130,000 $ 2,035,319 $ 4,165,319
2020 230,000 105,319 335,319 3,755,000 1,926,819 5,681,819
2021 230,000 100,719 330,719 3,890,000 1,768,019 5,658,019
2022 230,000 96,119 326,119 4,020,000 1,619,069 5,639,069
2023 230,000 90,369 320,369 4,010,000 1,462,119 5,472,119
2024 230,000 82,319 312,319 4,975,000 1,247,494 6,222,494
2025 235,000 73,019 308,019 4,540,000 1,009,619 5,549,619
2026 230,000 63,719 293,719 4,745,000 777,494 5,522,494
2027 235,000 55,594 290,594 4,155,000 554,994 4,709,994
2028 235,000 48,544 283,544 4,100,000 348,619 4,448,619
2029 230,000 41,425 271,425 3,450,000 159,869 3,609,869
2030 230,000 34,238 264,238 905,000 59,478 964,478
2031 230,000 26,906 256,906 720,000 33,638 753,638
2032 230,000 19,431 249,431 675,000 10,969 685,969
2033 230,000 11,813 241,813
2034 235,000 3,966 238,966
2035
2036
2037
2038
$ 3,700,000 $ 963,419 $ 4,663,419 $ 46,070,000 $ 13,013,519 $ 59,083,519
123
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT
BY MATURITY DATE
September 30,2018
Permanent Improvement Bonds,Series 2015 Certificates of Obligation,Series 2015
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 425,000 $ 211,075 $ 636,075 $ 245,000 $ 121,650 $ 366,650
2020 425,000 202,575 627,575 240,000 116,800 356,800
2021 425,000 194,075 619,075 240,000 112,000 352,000
2022 425,000 185,575 610,575 240,000 106,600 346,600
2023 425,000 176,013 601,013 245,000 100,538 345,538
2024 425,000 165,388 590,388 245,000 93,800 338.800
2025 425,000 151,575 576,575 240,000 85,325 325.325
2026 425,000 134,575 559,575 245,000 75,625 320,625
2027 425,000 117,575 542,575 245,000 65,825 310,825
2028 425,000 100,575 525,575 245,000 57,250 302,250
2029 425,000 85,700 510,700 245,000 49,900 294,900
2030 420,000 73,025 493,025 240,000 42,625 282.625
2031 425,000 60,350 485,350 240,000 35,275 275,275
2032 425,000 47,600 472,600 245,000 27,697 272,697
2033 425,000 34,425 459,425 240,000 19,969 259,969
2034 425,000 20,719 445,719 240,000 12,169 252,169
2035 425,000 6,906 431,906 245,000 4,134 249,134
2036
2037
2038
$ 7,220,000 $ 1,967,726 $ 9,187,726 $ 4,125,000 $ 1,127,182 $ 5,252,182
Permanent Improvement and Refunding Bonds, Permanent Improvement and Refunding Bonds,
Series 2015A Series 2016A
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 1,990,000 $ 224,125 $ 2,214,125 820,000.0 1,248,750.0 $ 2,068,750
2020 395,000 188,350 583,350 985,000 1,230,700 2,215,700
2021 410,000 176,275 586,275 1,120,000 1,209,650 2,329,650
2022 430,000 163,675 593,675 1,125,000 1,170,325 2,295,325
2023 535,000 150,538 685,538 1,135,000 1,113,825 2,248,825
2024 520,000 136,050 656,050 1,150,000 1,056,700 2,206,700
2025 540,000 120,150 660,150 1,160,000 998,950 2,158,950
2026 555,000 103,725 658,725 1,200,000 939,950 2,139,950
2027 580,000 86,700 666,700 1,215,000 879,575 2,094,575
2028 855,000 65,175 920,175 1,230,000 824,600 2,054,600
2029 1,745,000 26,175 1,771,175 1,960,000 770,600 2,730,600
2030 6,725,000 606,700 7,331,700
2031 4,100,000 390,200 4,490,200
2032 4,425,000 219,700 4,644,700
2033 820,000 114,800 934,800
2034 820,000 82,000 902,000
2035 820,000 49,200 869,200
2036 820,000 16,400 836,400
2037
2038
$ 8,555,000 $ 1,440,938 $ 9,995,938 $ 31,630,000 $ 12,922,625 $ 44,552,625
124
City of Pearland FY 2018 CAFR
Page 3 of 4
Certificates of Obligation,Series 2016 Permanent Improvement Refunding Bonds,
Series 2016E
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 700,000 $ 314,850 $ 1,014,850 $ 2,050,000 $ 1,240,550 $ 3,290,550
2020 700,000 300,850 1,000,850 2,810,000 1,143,350 3,953,350
2021 700,000 286,850 986,850 2,910,000 1,028,950 3,938,950
2022 700,000 272,850 972,850 3,025,000 895,125 3,920,125
2023 700,000 258,850 958,850 2,675,000 752,625 3,427,625
2024 700,000 244,850 944,850 2,810,000 615,500 3,425,500
2025 700,000 230,850 930,850 2,005,000 495,125 2,500,125
2026 700,000 216,850 916,850 2,015,000 394,625 2,409,625
2027 700,000 195,850 895,850 2,105,000 291,625 2,396,625
2028 700,000 174,850 874,850 1,105,000 211,375 1,316,375
2029 700,000 157,350 857,350 1,140,000 155,250 1,295,250
2030 700,000 136,350 836,350 1,265,000 95,125 1,360,125
2031 695,000 115,425 810,425 1,270,000 31,750 1,301,750
2032 700,000 94,500 794,500
2033 700,000 73,500 773,500
2034 700,000 52,500 752,500
2035 700,000 31,500 731,500
2036 700,000 10,500 710,500
2037
2038
$ 12,595,000 $ 3,169,125 $ 15,764,125 $ 27,185,000 $ 7,350,975 $ 34,535,975
Permanent Improvement Refunding Bonds, Certificates of Obligation,Series 2017
Series 2017
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 1,095,000 $ 2,349,894 $ 3,444,894 $ 315,000 $ 194,250 $ 509,250
2020 1,095,000 2,300,619 3,395,619 310,000 188,000 498,000
2021 2,495,000 2,216,344 4,711,344 310,000 180,250 490,250
2022 2,540,000 2,090,469 4,630,469 310,000 170,950 480,950
2023 2,590,000 1,962,219 4,552,219 300,000 161,800 461,800
2024 2,645,000 1,831,344 4,476,344 310,000 151,100 461,100
2025 2,695,000 1,697,844 4,392,844 310,000 138,700 448,700
2026 2,760,000 1,561,469 4,321,469 310,000 126,300 436,300
2027 4,410,000 1,382,219 5,792,219 310,000 113,900 423,900
2028 4,580,000 1,157,469 5,737,469 310,000 101,500 411,500
2029 3,010,000 967,719 3,977,719 310,000 89,100 399,100
2030 2,260,000 858,569 3,118,569 310,000 76,700 386,700
2031 7,000,000 719,669 7,719,669 315,000 64,200 379,200
2032 7,205,000 470,569 7,675,569 310,000 53,250 363,250
2033 2,560,000 275,269 2,835,269 310,000 43,950 353,950
2034 2,615,000 183,209 2,798,209 310,000 34,456 344,456
2035 1,095,000 114,975 1,209,975 310,000 24,769 334,769
2036 1,095,000 65,700 1,160,700 310,000 15,081 325,081
2037 1,095,000 21,900 1,116,900 315,000 5,119 320,119
2038
$ 54,840,000 $ 22,227,469 $ 77,067,469 $ 5,895,000 $ 1,933,375 $ 7,828,375
125
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT
BY MATURITY DATE
September 30,2018
Permanent Improvement Bonds,Series 2018 Certificates of Obligation,Series 2018
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 375,000 $ 290,854 $ 665,854 $ 355,000 $ 277,057 $ 632,057
2020 375,000 289,950 664,950 355,000 276,250 631,250
2021 370,000 278,800 648,800 355,000 265,600 620,600
2022 370,000 264,000 634,000 355,000 251,400 606,400
2023 370,000 249,200 619,200 355,000 237,200 592,200
2024 370,000 234,400 604,400 355,000 223,000 578,000
2025 370,000 217,750 587,750 355,000 207,025 562,025
2026 370,000 199,250 569,250 355,000 189,275 544,275
2027 375,000 180,625 555,625 355,000 171,525 526,525
2028 370,000 162,000 532,000 350,000 153,900 503,900
2029 375,000 143,375 518,375 355,000 136,275 491,275
2030 370,000 126,600 496,600 355,000 120,300 475,300
2031 375,000 111,700 486,700 355,000 106,100 461,100
2032 375,000 96,700 471,700 355,000 91,900 446,900
2033 370,000 81,800 451,800 350,000 77,800 427,800
2034 370,000 67,000 437,000 355,000 63,700 418,700
2035 375,000 52,100 427,100 355,000 49,500 404,500
2036 370,000 37,200 407,200 355,000 35,300 390,300
2037 370,000 22,400 392,400 350,000 21,200 371,200
2038 375,000 7,500 382,500 355,000 7,100 362,100
$ 7,440,000 $ 3,113,204 $ 10,553,204 $ 7,085,000 $ 2,961,407 $ 10,046,407
Pearland Economic Development Corporation Development Authority of Pearland
Sales Tax Revenue Refunding Bonds,Series Tax Increment Contract Revenue Bonds,Series
2016 2013
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 930,000 $ 303,142 $ 1,233,142 $ 420,000 $ 270,875 $ 690,875
2020 955,000 281,194 1,236,194 445,000 255,041 700,041
2021 975,000 258,656 1,233,656 465,000 238,264 703,264
2022 1,000,000 235,646 1,235,646 735,000 220,734 955,734
2023 1,025,000 212,046 1,237,046 560,000 193,024 753,024
2024 1,055,000 187,856 1,242,856 615,000 171,912 786,912
2025 1,080,000 162,958 1,242,958 670,000 148,727 818,727
2026 1,105,000 137,470 1,242,470 725,000 123,468 848,468
2027 1,130,000 111,392 1,241,392 785,000 96,135 881,135
2028 1,165,000 84,724 1,249,724 850,000 66,541 916,541
2029 1,195,000 57,230 1,252,230 915,000 34,496 949,496
2030 1,230,000 29,028 1,259,028
2031
2032
2033
2034
2035
2036
2037
2038
$ 12,845,000 $ 2,061,342 $ 14,906,342 $ 7,185,000 $ 1,819,217 $ 9,004,217
126
City of Pearland FY 2018 CAFR
Page 4 of 4
Development Authority of Pearland Development Authority of Pearland
Tax Increment Contract Revenue Bonds,Series Tax Increment Contract Revenue&Refunding
2014 Bonds,Series 2015
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 550,000 $ 161,840 $ 711,840 $ 4,590,000 $ 1,450,282 $ 6,040,282
2020 475,000 146,880 621,880 4,395,000 1,324,516 5,719,516
2021 490,000 133,960 623,960 4,510,000 1,204,093 5,714,093
2022 505,000 120,632 625,632 4,380,000 1,080,519 5,460,519
2023 520,000 106,896 626,896 4,705,000 960,507 5,665,507
2024 530,000 92,752 622,752 4,800,000 831,590 5,631,590
2025 545,000 78,336 623,336 4,900,000 700,070 5,600,070
2026 560,000 63,512 623,512 5,005,000 565,810 5,570,810
2027 575,000 48,280 623,280 5,110,000 428,673 5,538,673
2028 590,000 32,640 622,640 5,215,000 288,659 5,503,659
2029 610,000 16,592 626,592 5,320,000 145,768 5,465,768
2030
2031
2032
2033
2034
2035
2036
2037
2038
$ 5,950,000 $ 1,002,320 $ 6,952,320 $ 52,930,000 $ 8,980,487 $ 61,910,487
Development Authority of Pearland Development Authority of Pearland
Tax Increment Contract Revenue Bonds,Series Tax Increment Contract Revenue Bonds,Series
2016 2017
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 1,035,000 $ 243,756 $ 1,278,756 $ 710,000 $ 187,105 $ 897,105
2020 900,000 220,779 1,120,779 670,000 170,775 840,775
2021 920,000 200,799 1,120,799 685,000 155,365 840,365
2022 940,000 180,375 1,120,375 700,000 139,610 839,610
2023 955,000 159,507 1,114,507 720,000 123,510 843,510
2024 985,000 138,306 1,123,306 730,000 106,950 836,950
2025 1,005,000 116,439 1,121,439 750,000 90,160 840,160
2026 1,025,000 94,128 1,119,128 765,000 72,910 837,910
2027 1,050,000 71,373 1,121,373 780,000 55,315 835,315
2028 1,070,000 48,063 1,118,063 805,000 37,375 842,375
2029 1,095,000 24,309 1,119,309 820,000 18,860 838,860
2030
2031
2032
2033
2034
2035
2036
2037
2038
$ 10,980,000 $ 1,497,834 $ 12,477,834 $ 8,135,000 $ 1,157,935 $ 9,292,935
127
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
COMBINING SCHEDULE OF ENTERPRISE FUND LONG-TERM DEBT
BY MATURITY DATE
September 30,2018
Water 8.Sewer Revenue Bonds, Water 8 Sewer Revenue Bonds,
Series 1999 Series 2007
Fiscal Year Principal _ Interest Total Principal Interest Total
2019 $ 585,000 S 54,970 $ 639,970 S $ 398,650 $ 398,650
2020 610,000 28,060 638,060 398,650 398,650
2021 398,650 398,650
2022 398,650 398,650
2023 398,650 398,650
2024 398,650 398,650
2025 398,650 398,650
2026 398,650 398,650
2027 398,650 398,650
2028 398,650 398,650
2029 3,615,000 398,650 4,013,650
2030 3,795,000 272,125 4,067,125
2031 3,980,000 139,300 4,119,300
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
$ 1,195,000 S 83,030 $ 1,278,030 $ 11,390,000 $ 4,796,575 $ 16,186,575
Water 8.Sewer Revenue Bonds, Water&Sewer Revenue Bonds,
Series 2010A Series 2010B
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 455,000 $ 453,731 $ 908,731 $ 425,000 $ 248,988 $ 673,988
2020 475,000 438,944 913,944 445,000 235,175 680,175
2021 495,000 422,319 917,319 1,750,000 219,600 1,969,600
2022 515,000 402,519 917,519 1,830,000 149,600 1,979,600
2023 535,000 381,919 916,919 1,910,000 76,400 1,986,400
2024 555,000 360,519 915,519
2025 580,000 338,319 918,319
2026 600,000 315,119 915,119
2027 625,000 291,119 916,119
2028 650,000 265,338 915,338
2029 680,000 237,713 917,713
2030 710,000 208,813 918,813
2031 740,000 177,750 917,750
2032 755,000 144,450 899,450
2033 785,000 110,475 895,475
2034 825,000 75,150 900,150
2035 845,000 38,025 883,025
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
$ 10,825,000 $ 4,662,222 $ 15,487,222 $ 6,360,000 $ 929,763 $ 7,289,763
128
City of Pearland FY 2018 CAFR
Page 1012
Permanent Improvement and Refunding Bonds, Water 8 Sewer Revenue Bonds,
Series 2012(water/sewer portion) Series 2012
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 365,000 $ 171,700 $ 536,700 $ 780,000 $ 180,755 960,755
2020 370,000 157,000 527,000 800,000 165,155 965,155
2021 370,000 142,200 512,200 230,000 141,155 371,155
2022 385,000 127,100 512,100 230,000 134,255 364,255
2023 395,000 111,500 506,500 240,000 127,355 367,355
2024 1,480,000 74,000 1,554,000 230,000 120,155 350,155
2025 1,480,000 22,200 1,502,200 225,000 113,255 338,255
2026 175,000 106,505 281,505
2027 180,000 101,080 281,080
2028 185,000 95,500 280,500
2029 190,000 89,488 279,488
2030 195,000 83,313 278,313
2031 200,000 76,975 276,975
2032 300,000 70,225 370,225
2033 315,000 60,100 375,100
2034 325,000 49,075 374,075
2035 335,000 37,700 372,700
2036 345,000 25,556 370,556
2037 360,000 13,050 373,050
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
$ 4,845,000 $ 805.700 $ 5,650,700 $ 5,840,000 $ 1,790,652 $ 7,630,652
Water&Sewer Revenue Bonds, Water and Sewer Revenue Bonds,
Series 2014 Series 2016A
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 230,000 $ 299,619 $ 529,619 $ 445,000 $ 223,013 668,013
2020 240,000 290,419 530,419 445,000 209,663 654,663
2021 255,000 280,819 535,819 445,000 196,313 641,313
2022 270,000 270,619 540,619 445,000 187,413 632,413
2023 280,000 259,819 539,819 440,000 178,513 618,513
2024 295,000 248,619 543,619 445,000 169,713 614,713
2025 310,000 236,819 546,819 445,000 160,813 605,813
2026 330,000 224,419 554,419 440,000 151,913 591,913
2027 345,000 211,219 556,219 445,000 134,313 579,313
2028 365,000 200,869 565,869 445,000 116,513 561,513
2029 385,000 189,919 574,919 445,000 106,500 551,500
2030 405,000 177,888 582,888 445,000 93,150 538,150
2031 425,000 164,725 589,725 440,000 79,800 519,800
2032 445,000 150,913 595,913 445,000 66,600 511,600
2033 470,000 135,894 605,894 445,000 53,250 498,250
2034 495,000 120,031 615,031 445,000 39,900 484,900
2035 520,000 102,706 622,706 440,000 26,550 466,550
2036 550,000 84,506 634,506 445,000 13,350 458,350
2037 575,000 65,256 640,256
2038 605,000 45,131 650,131
2039 640,000 23,200 663,200
2040
2041
2042
2043
2044
2045
2046
2047
2048
$ 8,435,000 $ 3,783,409 $ 12,218,409 $ 7,990,000 $ 2,207,280 $ 10,197,280
129
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
COMBINING SCHEDULE OF ENTERPRISE FUND LONG-TERM DEBT
BY MATURITY DATE
September 30,2018
Water&Sewer Revenue Bonds, Water&Sewer Revenue Bonds,
Series 2016B Series 2016C
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 1,230,000 $ 7,524 $ 1,237,524 $ 1,860,000 $ 315,066 $ 2,175,066
2020 1,235,000 7,524 1,242,524 1,860,000 315,066 2,175,066
2021 1,235,000 7,524 1,242,524 1,855,000 315,066 2,170,066
2022 1,235,000 7,524 1,242,524 1,700,000 315,066 2,015,066
2023 1,235,000 7,524 1,242,524 1,700,003 315,066 2,015,066
2024 1,230,000 6,412 1,236,412 1,700,000 313,536 2,013,536
2025 1,235,000 3,952 1,238,952 1,700,000 310,136 2,010,136
2026 1,700,000 304,696 2,004,696
2027 1,700,000 297,386 1,997,386
2028 1,700,030 288,206 1,988,206 2029 1,700,000 278,176 1,978,176
2030 1,700,000 267,296 1,967,296
2031 1,700,000 255,396 1,955,396
2032 1,700,000 242,476 1,942,476
2033 1,700,000 228,536 1,928,536
2034 1,700,030 213,746 1,913,746
2035 1,700,000 198,106 1,898,106
2036 1,700,000 181,786 1,881,786
2037 1,700,000 164,786 1,864,786
2038 1,700,000 147,446 1,847,446
2039 1,700,000 129,766 1,829,766
2040 1,700,000 111,746 1,811,746
2041 1,700,000 93,556 1,793,556
2042 1,700,000 75,196 1,775,196
2043 1,700,000 56,666 1,756,666
2044 1,700,000 37,966 1,737,966
2045 1,705,000 19,096 1,724,096
2046
2047
2048
$ 8,635,000 $ 47,984 $ 8,682,984 $ 46,380,000 $ 5,791,032 $ 52,171,032
Water&Sewer Revenue Bonds, Water&Sewer Revenue Bonds,
Series 2017A Series 2017B
Fiscal Year Principal hterest Total Principal Interest Total
2019 $ 1,010,000 $ 59,079 $ 1,069,079 $ 340,000 $ 184,925 $ 524,925
2020 1,010,000 59,079 1,069,079 340,000 184,925 524,925
2021 1,010,000 58,473 1,068,473 340,000 184,721 524,721
2022 1,015,000 55,948 1,070,948 340,000 183,871 523,871
2023 1,020,000 51,380 1,071,380 345,000 182,341 527,341
2024 1,025,000 44,954 1,069,954 345,000 180,168 525,168
2025 1,030,000 36,447 1,066,447 350,000 177,304 527,304
2026 1,045,000 25,941 1,070,941 350,000 173,734 523,734
2027 1,055,000 13,610 1,068,610 355,000 169,604 524,604
2028 360,000 165,025 525,025
2029 365,000 160,021 525,021
2030 370,000 154,582 524,582
2031 375,000 148,699 523,699
2032 385,000 142,362 527,362
2033 390,000 135,586 525,586
2034 395,000 128,488 523,488
2035 405,000 121,062 526,062
2036 410,000 113,245 523,245
2037 420,000 105,168 525,168
2038 430,000 96,768 526,768
2039 435,000 88,125 523,125
2040 445,003 79,338 524,338
2041 455,000 70,305 525,305
2042 465,000 61,023 526,023
2043 475,030 51,490 526,490
2044 485,000 41,705 526,705
2045 495,000 31,666 526,666
2046 505,000 21,370 526,370
2047 515,000 10,815 525,815
2048
$ 9,220,000 $ 404,911 $ 9,624,911 $ 11,685,000 $ 3,548,436 $ 15,233,436
130
City of Pearland FY 2018 CAFR
Page 2 of 2
Water and Sewer Revenue Refunding Bonds, Water and Sewer Revenue Refunding Bonds,
Series 2017C Series 2018A
Fiscal Year Principal Interest Total Principal Interest Total
2019 $ 2,025,000 $ 2,668,531 $ 4,693,531 $ 290,000 $ 118,604 $ 408,604
2020 2,085,000 2,567,281 4,652,281 290,000 117,705 407,705
2021 2,150,000 2,463,031 4,613,031 290,000 116,458 406,458
2022 2,270,000 2,355,531 4,625,531 290,000 114,805 404,805
2023 2,980,000 2,242,031 5,222,031 285,000 112,746 397,746
2024 4,045,000 2,093,031 6,138,031 285,000 110,380 395,380
2025 4,275,000 1,890,781 6,165,781 290,000 107,758 397,758
2026 6,020,000 1,677,031 7,697,031 285,000 104,829 389,829
2027 6,275,000 1,376,031 7,651,031 290,000 101,694 391,694
2028 6,555,000 1,062,281 7,617,281 290,000 98,301 388,301
2029 3,230,000 734,531 3,964,531 290,000 94,734 384,734
2030 3,275,000 605,331 3,880,331 290,000 90,964 380,964
2031 1,825,000 507,081 2,332,081 290,000 87,020 377,020
2032 3,150,000 452,331 3,602,331 285,000 82,931 367,931
2033 3,245,000 326,331 3,571,331 290,000 78,770 368,770
2034 3,345,000 196,531 3,541,531 290,000 74,362 364,362
2035 765,000 92,000 857,000 285,000 69,809 354,809
2036 765,000 61,400 826,400 285,000 65,221 350,221
2037 770,000 30,800 800,800 290,000 60,547 350,547
2038 290,000 55,704 345,704
2039 290,000 50,803 340,803
2040 285,000 45,844 330,844
2041 290,000 40,913 330,913
2042 285,000 35,867 320,867
2043 290,000 30,880 320,880
2044 290,000 25,776 315,776
2045 290,000 20,643 310,643
2046 285,000 15,481 300,481
2047 285,000 10,379 295,379
2048 290,000 5,249 295,249
$ 59,050,000 $ 23,401,896 $ 82,451,896 $ 8,650,000 $ 2,145,177 $ 10,795,177
Water&Sewer Revenue Bonds,
Series 2018B
Fiscal Year Principal Interest Total
2019 $ 955,000 $ 805,583 $ 1,760,583
2020 955,000 799,950 1,754,950
2021 955,000 780,850 1,735,850
2022 950,000 742,650 1,692,650
2023 950,000 704,650 1,654,650
2024 950,000 666,650 1,616,650
2025 950,000 628,650 1,578,650
2026 950,000 581,150 1,531,150
2027 955,000 533,650 1,488,650
2028 950,000 485,900 1,435,900
2029 955,000 438,400 1,393,400
2030 955,000 390,650 1,345,650
2031 955,000 342,900 1,297,900
2032 955,000 295,150 1,250,150
2033 950,000 247,400 1,197,400
2034 950,000 199,900 1,149,900
2035 955,000 152,400 1,107,400
2036 950,000 114,200 1,064,200
2037 950,000 76,200 1,026,200
2038 955,000 38,200 993,200
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
$ 19,050,000 $ 9,025,083 $ 28,075.083
131
City of Pearland FY 2018 CAFR
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132
City of Pearland FY 2018 CAFR
Statistical Section
(Unaudited)
133
City of Pearland FY 2018 CAFR
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134
City of Pearland FY 2018 CAFR
Unaudited Statistical Section
This part of the City's comprehensive annual financial report presents detailed information as a context
for understanding what the information in the financial statements, note disclosures, and required
supplementary information says about the government's overall financial health.
Contents Page
Financial Trends 136
These schedules contain trend information to help the reader understand how the
government's financial performance and well-being have changed over time.
Revenue Capacity 148
These schedules contain information to help the reader assess the government's
most significant local revenue sources, the property tax and sales tax.
Debt Capacity 158
These schedules present information to help the reader assess the affordability of
the government's current levels of outstanding debt and the government's ability to
issue additional debt in the future.
Demographic and Economic Information 165
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the government's financial activities take
place.
Operating Information 168
These schedules contain service and infrastructure data to help the reader
understand how the information in the government's financial report relates to the
services the government provides and the activities it performs.
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive
annual financial reports for the relevant year.
135
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
NET POSITION BY COMPONENT
Last Ten Fiscal Years
Amounts in (000's)
(Accrual Basis of Accounting)
2009 2010 2011 2012I
Governmental Activities
Net investment in capital assets $429,054 $422,643 $413,439 $353,160
Restricted 10,615 18,020 16,462 38,933
Unrestricted 13,330 13,692 14,543 10,117
Total governmental activities
net position $452,999 $454,355 $444,444 $402,210
Business-type activities
Net investment in capital assets $146,150 $144,244 $156,629 $156,888
Restricted 11,965 17,587 5,603 9,821
Unrestricted 9,256 11,942 13,910 12,439
Total business-type activities
net position $167,371 $173,773 $176,142 $179,148
Primary government
Investment in capital assets $575,204 $566,887 $570,068 $510,048
Restricted 22,580 35,607 22,065 48,754
Unrestricted 22,586 25,634 28,453 22,556
Total primary government
net position $620,370 $628,128 $620,586 $581,358
1 Restated due to implementation of GASB 65 in fiscal year 2014. Fiscal years 2012
and 2013 have been restated for comparison purposes.
2 Due to implementation of GASB 61, the City's component units are now considered
blended component units versus discretely presented as in years prior to fiscal year
2013. Fiscal year 2012 has been restated for comparison purposes.
136
City of Pearland FY 2018 CAFR
20131'2 2014 2015 2016 2017 2018
$391,032 $397,346 $423,706 $439,923 $449,141 $454,670
43,413 52,209 53,883 60,640 60,310 67,263
14,696 2,477 3,800 3,185 (5,045) (2,500)
$449,141 $452,032 $481,389 $503,748 $504,406 $519,433
$165,915 $174,955 $186,819 $187,937 $205,827 $210,674
9,542 14,484 13,539 15,852 13,972 14,525
16,704 15,612 12,815 13,351 6,972 20,663
$192,161 $205,051 $213,173 $217,140 $226,771 $245,862
$556,947 $572,301 $610,525 $627,860 $654,968 $665,344
52,955 66,693 67,422 76,492 74,282 81,788
31,400 18,089 16,615 16,536 1,927 18,163
$641,302 $657,083 $694,562 $720,888 $731,177 $765,295
137
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
CHANGES IN NET POSITION
Last Ten Fiscal Years
Amounts in(000's)
(Accrual Bass of Accounting)
2009 2010 2011 20121
Expenses
Governmental activities:
General Government $ 12,355 $ 13,439 $ 15,945 $ 13,334
Public Safety 22,438 24,268 23,042 27,403
Public Works 26,893 35,679 31,130 28,510
Community Services 3,290 3,323 3,254 4,267
Parks and Recreation 7,240 7,699 8,062 9,264
Economic Development 26,311
Interest on long-term debt 11,647 13,738 13,142 11,572
Total government activities expenses 83,863 98,146 94,575 120,661
Business-type activities:
Water and Sewer 25,439 27,157 29,192 29,392
Solid Waste 7,106 7,089 7,285 7,528
Total business-type activities 32,545 34,246 36,477 36,920
Total primary government expenses $116,408 $132,392 $131,052 $157,581
Program Revenue
Governmental activities:
Charges for services:
General Government $ 6,637 $ 6,637 $ $ 7,624
Public Safety 3,524 3,296 3,679 4,206
Public Works 35 10 18 43
Community Services 4,755 4,312 4,632 5,855
Parks and Recreation 672 906 2,027 2,080
Economic Development 413
Operating grants and contributions:
General Government 4,913 5,215 5,488 6,045
Public Safety 420 641 407 711
Public Works 375 207 675 53
Community Services 202 159 366 311
Parks and Recreation 450 424 462 542
Economic Development
Capital grants and contributions:
General Government
Public Safety 279 98
Public Works 26,092 29,800 10,330 18,743
Parks and Recreation 4,653 100
Total governmental activities program revenue 53,007 51,705 28,084 46,726
Business-type activities:
Charges for services:
Water and Sewer 26,617 24,961 28,664 27,535
Solid Waste 6,766 7,313 7,258 7,654
Operating grants and contributions:
Water and Sewer 2,464 70 61 205
Capital grants and contributions:
Water and Sewer 6,125 8,611 4,215 8,118
Total business-type activities program revenue 41,972 40,955 40,198 43,512
Total primary government program revenues $ 94,979 $ 92,660 $ 68,282 $ 90,238
1 Restated due to implementation of GASB 65 in fiscal year 2014. Fiscal years 2012 and 2013 have
been restated for comparison purposes.
2 Due to implementation of GASB 61,the City's component units are now considered blended
component units versus discretely presented as in years prior to fiscal year 2013. Fiscal year 2012
has been restated for comparison purposes. 138
City of Pearland FY 2018 CAFR
Page 1 of 2
20131'2 2014 2015 2016 2017 2018
$ 13,358 $ 12,241 $ 17,189 $ 18,016 $ 20,121 $ 20,360
28,944 32,130 33,179 38,933 44,343 43,275
31,690 38,579 45,894 46,449 49,221 53,271
3,807 4,687 3,641 3,711 5,107 4,509
9,524 6,896 3,731 4,820 8,823 7,194
17,411 26,498 26,159 31,330 31,293 29,521
10,534 16,225 15,569 15,946 14,422 14,441
115,268 137,256 145,362 159,205 173,331 172,573
31,289 32,444 34,266 37,941 41,475 41,683
8,324 6,664 6,417 6,833 7,059 7,441
39,613 39,108 40,683 44,774 48,534 49,124
$154,881 $176,364 $186,045 $203,979 $ 221,865 $ 221,697
$ 6,326 $ 6,637 $ 7,624 $ 8,547 $ 9,518 $ 10,414
7,410 2,793 4,110 4,276 3,949 3,777
3,096 322 338 320 1,395 253
3,264 7,375 7,771 8,520 8,026 6,566
2,209 2,290 2,412 2,218 2,001 2,766
414 430 1,209 13 3,886 3,503
44 440 747 2,595
603 434 294 11
1,388 7,612 4,589 11,123 12,459 5,884
108 337 216 575 232
182 474 1,586
180
52,921 29,269 36,440 24,636 10,107 19,241
78,145 58,413 67,336 62,248 51,916 52,647
29,008 28,929 30,201 43,677 51,544 55,593
8,175 7,008 6,637 6,945 6,549 7,842
2,512 30
16,273 17,677 13,177 4,094 2,027 4,613
53,456 53,614 52,527 54,746 60,120 68,048
$131,601 $112,027 $119,863 $116,994 $ 112,036 $ 120,695
139
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
CHANGES IN NET POSITION
Last Ten Fiscal Years
Amounts in (000's)
(Accrual Basis of Accounting)
2008 2009 2010 2011
Net(Expense)/Revenue
Governmental activities $ (30,856) $ (46,441) $ (66,491) $ (73,935)
Business-type activities 9,427 6,709 3,721 6,592
Total primary government net expense $ (21,429) $ (39,732) $ (62,770) $ (67,343)
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes:
Property taxes $ 29,492 $ 31,140 $ 32,963 $ 33,451
Sales and use taxes 12,581 14,218 13,578 13,983
Franchise taxes 4,427 5,075 5,426 5,605
Investment earnings 4,572 1,376 253 157
Miscellaneous 2,911 6,294 1,028 1,854
Special item
Transfers 1,330 621 1,186 1,475
Total governmental activities $ 55,313 $ 58,724 $ 54,434 $ 56,525
Business-type activities:
Investment earnings $ 1,669 $ 363 $ 100 $ 116
Miscellaneous 12 23 779 9
Transfers (1,330) (621) (1,186) (1,475)
Total business-type activities 351 (235) (307) (1,350)
Total primary government $ 55,664 $ 58,489 $ 54,127 $ 55,175
Change in Net Position :
Governmental activities $ 24,457 $ 12,283 $ (12,057) $ (17,410)
Business-type activities 9,778 6,474 3,414 5,242
Total primary government $ 34,235 $ 18,757 $ (8,643) $ (12,168)
1 Restated due to implementation of GASB 65 in fiscal year 2014. Fiscal years 2012 and 2013 have
been restated for comparison purposes.
2 Due to implementation of GASB 61, the City's component units are now considered blended
component units versus discretely presented as in years prior to fiscal year 2013. Fiscal year 2012
has been restated for comparison purposes.
140
City of Pearland FY 2018 CAFR
Page 2 of 2
20121 2013 1'2 2014 2015 2017 2017
$ (37,123) $ (78,843) $ (78,026) $ (96,957) $(121,414) $(119,926)
13,843 14,506 11,844 9,972 11,586 18,924
$ (23,280) $ (64,337) $ (66,182) $ (86,985) $(109,828) $(101,002)
$ 52,230 $ 54,433 $ 57,378 $ 62,974 $ 76,686 $ 83,803
22,969 24,942 27,295 29,970 31,976 35,437
5,670 5,999 6,484 6,971 7,263 7,358
134 155 254 491 622 1,651
1,554 1,701 2,398 4,149 3,108 4,691
(3,039)
2,269 1,607 2,031 2,828 2,417 3,103
$ 84,826 $ 88,837 $ 92,801 $107,383 $ 122,072 $ 136,043
$ 68 $ 95 $ 139 $ 325 $ 396 $ 1,361
444 682 274 219 66 7
(2,269) (1,607) (2,030) (2,828) (2,417) (3,103)
(1,757) (830) (1,617) (2,284) (1,955) (1,735)
$ 83,069 $ 88,007 $ 91,184 $105,099 $ 120,117 $ 134,308
$ 47,703 $ 9,994 $ 14,775 $ 10,426 $ 658 $ 16,117
12,086 13,676 10,227 7,688 9,631 17,189
$ 59,789 $ 23,670 $ 25,002 $ 18,114 $ 10,289 $ 33,306
141
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
Amounts in (000's)
(Modified Accrual Basis of Accounting)
2009 2010 2011 2012
General fund
Non-spendable $ 119 $ 146 $ 130 $ 182
Restricted 126
Assigned 699 117 160 167
Unassigned 11,401 12,599 14,108 17,222
Total General Fund $ 12,219 $ 12,862 $ 14,524 $ 17,571
All other governmental funds
Non-spendable $ $ $ $
Restricted
Debt service 7,246 6,705 5,160 4,992
Capital improvements 62,467 30,893 23,461 13,776
Public safety 699 612 541 702
Economic Development
Community development programs
Tourism 1,344 1,394 1,452 1,821
Parks and recreation 1,094 1,214 1,143 968
Capital projects - other 1,146 962 810 797
Other 85 79 87 215
Unassigned
Total other Governmental Funds $ 74,081 $ 41,859 $ 32,654 $ 23,271
Due to implementation of GASB 61, the City's component units are now considered blended
component units versus discretely presented as in years prior to fiscal year 2013.
142
City of Pearland FY 2018 CAFR
20131 2014 2015 2016 2017 2018
$ 158 $ 202 $ 293 $ 151 $ 101 $ 136
1,554 1,394 1,406 3,994 3,000 1,538
16,911 17,859 19,655 16,775 11,262 12,407
$ 18,623 $ 19,455 $ 21,354 $ 20,919 $ 14,363 $ 14,081
$ 183 $ 209 $ 173 $ $ 4 $
5,192 5,951 5,835 8,276 5,912 6,797
14,536 17,519 22,484 47,361 59,200 44,760
715 390 394 342 364 506
20,777 23,814 24,117 32,844 36,795 44,634
2,267 2,994 3,685 4,194 4,604 4,672
985 168 105 131 262 517
866
638 918 1,149 1,264 779 782
(28) (52)
$ 46,159 $ 51,963 $ 57,940 $ 94,411 $ 107,892 $ 102,616
143
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
Amounts in (000's)
(Modified Accrual Basis of Accounting)
2009 2010 2011 2012
Revenues
Property taxes $ 31,349 $ 32,856 $ 33,454 $ 34,362
Sales and use taxes 14,218 13,578 13,983 15,632
Franchise fees 5,075 5,426 5,605 5,817
Licenses and permits 2,079 1,807 1,721 2,320
Fines and forfeitures 2,325 2,475 2,895 3,374
Charges for services 8,885 9,328 11,687 11,891
Investment earnings 1,375 591 156 92
Intergovernmental 7,589 3,689 2,199 3,089
Other 8,980 982 1,560 2,541
Total Revenues 81,875 70,732 73,260 79,118
Expenditures
General government 8,412 8,527 10,866 7,784
Public safety 22,310 23,784 23,926 25,372
Public works 12,051 7,108 6,505 5,533
Community services 3,386 3,839 3,376 4,246
Parks and recreation 5,789 6,305 7,539 7,499
Economic development
Debt service:
Principal 5,482 6,200 8,217 9,373
Interest and other charges 12,080 13,635 13,543 12,401
Capital outlay 68,615 61,317 25,703 9,201
Intergovernmental 3,250 3,794 3,954 3,992
Total Expenditures 141,375 134,509 103,629 85,401
Excess of revenues over(under) expenditures (59,500) (63,777) (30,369) (6,283)
Other Financing Sources (Uses)
Transfers in 3,246 3,498 3,525 5,909
Transfers out (2,625) (2,312) (2,050) (5,096)
Debt issued 8,520 28,962 21,637 49,805
Payment to Escrow Agent (1,630) (54,478)
Capital leases 649 2,050 1,289
Other (54) 56 3,809
Total other Financing Sources (uses) 9,736 32,198 22,826 (51)
Net change in fund balances $ (49,764) $ (31,579) $ (7,543) $ (6,334)
Debt service as a percentage of noncapital
expenditures 24.1% 27.1% 27.9% 28.3%
1 Due to implementation of GASB 61, the City's component units are now considered blended component
units versus discretely presented as in years prior to fiscal year 2013.
144
City of Pearland FY 2018 CAFR
20131 2014 2015 2016 2017 2018
$ 54,475 $ 57,378 $ 62,922 $ 67,569 $ 76,562 $ 83,484
24,942 27,295 29,970 31,293 31,976 35,437
5,999 6,484 6,971 7,228 7,263 7,358
2,989 4,149 4,544 5,677 5,435 4,146
3,534 3,121 3,108 2,931 2,654 2,468
12,982 13,078 14,661 15,313 16,015 16,769
154 254 433 728 619 1,600
4,595 2,541 3,197 15,959 16,010 8,579
7,973 4,157 7,076 5,065 5,736 7,200
117,643 118,457 132,882 151,765 162,270 167,041
7,958 8,027 10,470 11,609 11,223 11,300
26,204 29,171 32,229 36,818 40,858 41,273
7,812 8,121 10,298 13,292 17,365 16,968
3,523 3,960 3,408 4,294 4,837 4,313
7,244 7,816 5,823 6,458 6,419 5,959
17,414 25,248 25,625 31,051 29,001 29,195
15,637 15,815 23,790 19,736 24,341 23,547
15,859 16,373 16,595 15,841 15,221 15,814
22,101 15,536 24,471 31,982 43,860 43,474
4,058 4,307 4,792 4,847 6,937 7,168
127,810 134,374 157,501 175,928 200,062 199,011
(10,167) (15,917) (24,619) (24,163) (37,792) (31,970)
15,515 16,507 17,043 26,062 28,466 24,456
(14,583) (16,967) (15,233) (20,844) (26,860) (22,266)
12,060 49,560 81,258 142,701 115,718 24,223
(33,182) (54,303) (89,638) (72,608)
1,179 1,853 574 1,918
331 4,784 3,157
14,502 22,555 32,496 60,199 44,716 26,413
$ 4,335 $ 6,638 $ 7,877 $ 36,036 $ 6,924 $ (5,557)
29.8% 27.0% 29.9% 24.8% 25.3% 24.9%
145
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
SPENDING AND GROWTH ANALYSIS
Last Ten Fiscal Years
Amounts in(000's)
(Modified Accrual Basis of Accounting)
Amounts in(000's)
Expenditures 2009 2010 2011 2012
General Gov't $ 8,423 $ 19,561 $ 10,877 $ 7,797
Public Safety 22,310 23,784 23,926 25,372
Public Works 12,051 7,108 6,505 5,533
Community Services 3,386 3,839 3,376 4,246
Parks &recreation 5,789 6,305 7,539 7,499
Economic Development 18,730 15,426 17,391 20,397
Debt Service- principal 7,517 8,525 10,847 12,893
Debt service-interest 15,704 17,096 17,154 15,534
Capital outlay 75,490 64,563 25,768 9,201
Intergovernmental 7,630 4,234 4,127 4,158
Total $ 177,030 $ 170,441 $ 127,510 $ 112,630
Distribution of Spending
General Gov't 4.8% 11.5% 8.5% 6.9%
Public Safety 12.6% 14.0% 18.8% 22.5%
Public Works 6.8% 4.2% 5.1% 4.9%
Community Services 1.9% 2.3% 2.6% 3.8%
Parks &recreation 3.3% 3.7% 5.9% 6.7%
Economic Development 10.6% 9.1% 13.6% 18.1%
Debt Service-principal 4.2% 5.0% 8.5% 11.4%
Debt service-interest 8.9% 10.0% 13.5% 13.8%
Capital outlay 42.6% 37.9% 20.2% 8.2%
Intergovernmental 4.3% 2.5% 3.2% 3.7%
Total 100.0% 100.0% 100.0% 100.0%
Per Capita Expenditures Adjusted for CPI
POPULATION 92,600 94,100 97,200 99,800
PER CAPITA $ 1,912 $ 1,811 $ 1,312 $ 1,129
CPI INDEX(NATIONAL) 214.54 218.06 224.94 229.59
PER CAPITA ADJ TO 2018 $ 2,250 $ 2,097 $ 1,472 $ 1,241
PER CAPITAADJ TO 2009 $ 1,912 $ 1,782 $ 1,251 $ 1,055
146
City of Pearland FY 2018 CAFR
Ten Average
Year Compounded
2013 2014 2015 2016 2017 2018 %CHG Growth Rate
$ 7,958 $ 8,027 $ 10,470 $ 11,609 $ 11,223 $ 11,300 34.2% 3.32%
26,204 29,171 32,229 36,818 40,858 41,273 85.0% 7.07%
7,812 8,121 10,298 13,292 17,365 16,968 40.8% 3.88%
3,523 3,960 3,408 4,294 4,837 4,313 27.4% 2.73%
7,244 7,816 5,823 6,458 6,419 5,959 2.9% 0.32%
17,414 25,248 25,625 31,051 29,001 29,195 55.9% 5.06%
15,637 15,815 23,790 19,736 24,341 23,547 213.2% 13.53%
15,859 16,373 16,595 15,841 15,221 15,814 0.7% 0.08%
22,101 15,536 24,471 31,982 43,860 43,474 -42.4% -5.95%
4,058 4,307 4,792 4,847 6,937 7,168 -6.1% -0.69%
$ 127,810 $ 134,374 $ 157,501 $ 175,928 $200,062 $ 199,011 12.4% 1.31%
6.2% 6.0% 6.6% 6.6% 5.6% 5.7%
20.5% 21.7% 20.5% 20.9% 20.4% 20.7%
6.1% 6.0% 6.5% 7.6% 8.7% 8.5%
2.8% 2.9% 2.2% 2.4% 2.4% 2.2%
5.7% 5.8% 3.7% 3.7% 3.2% 3.0%
13.6% 18.8% 16.3% 17.6% 14.5% 14.7%
12.2% 11.8% 15.1% 11.2% 12.2% 11.8%
12.4% 12.2% 10.5% 9.0% 7.6% 7.9%
17.3% 11.6% 15.5% 18.2% 21.9% 21.8%
3.2% 3.2% 3.0% 2.8% 3.5% 3.6%
100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Average
Compounded
Growth Rate
104,100 106,900 112,300 117,100 121,500 125,198 3.41%
$ 1,228 $ 1,257 $ 1,403 $ 1,502 $ 1,647 $ 1,590 -2.03%
232.96 234.75 236.70 241.40 246.37 252.44 1.82%
$ 1,330 $ 1,352 $ 1,496 $ 1,571 $ 1,687 $ 1,590 -3.78%
$ 1,131 $ 1,149 $ 1,271 $ 1,335 $ 1,434 $ 1,351 -3.78%
147
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE
OF TAXABLE PROPERTY
Last Ten Fiscal Years
Real Property
Less Tax
Fiscal Tax Personal Exempt Real
Year Year Residential Commercial Property Property
2009 2008 $4,535,133,971 $ 1,795,132,850 $ 521,854,047 $ 461,051,494
2010 2009 4,673,324,896 1,762,831,286 632,160,830 484,145,515
2011 2010 4,916,409,359 1,833,483,370 527,132,210 590,247,297
2012 2011 4,929,336,548 1,897,683,176 488,098,315 592,996,676
2013 (1) 2012 5,042,965,503 1,954,587,058 612,564,952 617,274,555
2014 2013 5,530,854,515 1,966,675,342 614,461,500 627,308,465
2015 2014 6,000,588,340 2,035,398,664 670,832,220 673,524,095
2016 2015 6,687,172,478 2,200,841,575 677,182,023 677,182,023
2017 2016 7,800,700,555 2,552,439,217 776,125,452 835,697,201
2018 2017 8,160,296,748 3,201,012,344 801,094,174 916,937,992
Notes:
(1) Assessed valuation for fiscal year 2013 does not include Brazoria County Mud#4
valuation of$241,712,166 that was annexed into the City on December 31, 2012.
Assessed values presented here are for the City and Tax Increment Reinvestment Zone
Assessed value based on adjusted tax roll at year end.
148
City of Pearland FY 2018 CAFR
Assessed
Less Other Value as a
Exemptions Total Percent of
and Total Taxable Direct Estimated Actual Actual Taxable
Abatements Assessed Value Tax Rate Taxable Value Value
$ 486,242,814 $ 5,904,826,560 0.6526 $ 5,904,826,560 100%
315,123,559 6,269,047,937 0.6526 6,269,047,937 100%
355,054,613 6,331,723,029 0.6651 6,331,723,029 100%
352,494,382 6,369,626,981 0.6851 6,369,626,981 100%
454,866,920 6,537,976,038 0.7051 6,537,976,038 100%
487,709,374 6,996,973,518 0.7051 6,996,973,518 100%
452,738,140 7,580,556,989 0.7121 7,580,556,989 100%
423,238,764 8,464,775,289 0.7053 8,464,775,289 100%
571,315,443 9,722,252,580 0.6812 9,722,252,580 100%
681,810,199 10,563,655,075 0.6851 10,563,655,075 100%
149
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
DIRECT AND OVERLAPPING PROPERTY TAX RATES
Last Ten Fiscal Years
(rate per$100 of assessed value)
City Direct Rates Overlapping Rates a
Pearland Pasadena Alvin
Independent Independent Independent Alvin Fort Port of
Fiscal M&0 I&S Total School School School Comm Brazoria Bend Harris Houston
Year Rate Rate Direct District District District College County County County Authority
2009 0.220 0.433 0.653 1.419 1.350 1.328 0.200 0.390 0.500 0.391 0.018
2010 0.220 0.433 0.653 1.419 1.350 1.304 0.200 0.426 0.500 0.392 0.016
2011 0.215 0.450 0.665 1.419 1.350 1.304 0.200 0.463 0.500 0.388 0.021
2012 0.215 0.470 0.685 1.419 1.350 1.344 0.199 0.473 0.500 0.391 0.019
2013 0.215 0.490 0.705 1.419 1.350 1.329 0.200 0.486 0.500 0.400 0.020
2014 0.215 0.490 0.705 1.416 1.350 1.329 0.194 0.492 0.500 0.415 0.017
2015 0.222 0.490 0.712 1.416 1.350 1.417 0.204 0.499 0.495 0.417 0.015
2016 0.223 0.483 0.705 1.416 1.350 1.417 0.204 0.486 0.486 0.419 0.013
2017 0.241 0.440 0.681 1.416 1.350 1.450 0.192 0.457 0.474 0.417 0.013
2018 0.255 0.430 0.685 1.416 1.480 1.450 0.181 0.440 0.458 0.418 0.013
Source:Brazoria County,Harris County,and Fort Bend County Appraisal Districts.
a Overlapping rates are those of local and county governments that apply to property owners within the City of
Pearland.Not all overlapping rates apply to all Pearland property owners;for example,although the county property
tax rates apply to all.
150
City of Pearland FY 2018 CAFR
Harris Harris Harris Brazoria/
County County County Ft Bend
Flood Hospital Dept of MUD MUD MUD MUD MUD MUD MUD MUD MUD
Control District Education No.1 No.17 No.18 No.19 No.23 No.26 No.28 No.34 No.35
0.031 0.192 0.006 0.850 0.630 0.570 0.660 0.820 0.710 0.820 0.850 0.890
0.029 0.192 0.060 0.850 0.600 0.560 0.630 0.800 0.710 0.820 0.850 1.020
0.029 0.192 0.007 0.850 0.547 0.550 0.620 0.770 0.710 0.820 0.850 1.020
0.028 0.192 0.007 0.850 0.547 0.545 0.600 0.630 0.690 0.820 0.850 1.020
0.028 0.182 0.007 0.850 0.547 0.530 0.580 0.610 0.690 0.820 0.850 1.020
0.028 0.170 0.006 0.850 0.544 0.510 0.550 0.600 0.690 0.820 0.850 1.020
0.027 0.170 0.006 0.850 0.520 0.470 0.510 0.580 0.690 0.820 0.850 1.020
0.027 0.170 0.005 0.848 0.460 0.390 0.450 0.540 0.690 0.820 0.820 1.020
0.028 0.172 0.005 0.848 0.410 0.350 0.400 0.480 0.690 0.820 0.800 1.020
0.028 0.171 0.005 0.848 0.380 0.310 0.380 0.470 0.690 0.820 0.800 1.000
151
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Fiscal Collected within the
Year Taxes Levied Fiscal Year of the Levy Collections Total Collections to Date
Ended for the Percentage in Subsequent Percentage
Sept 30, Fiscal Year Amount of Levy Years Amount of Levy
2009 $ 38,368,354 $ 37,820,603 98.57% $ 527,538 $ 38,348,141 99.9%
2010 41,081,407 40,590,543 98.81% 442,411 41,032,954 99.9%
2011 41,968,046 41,594,389 99.11% 331,641 41,926,030 99.9%
2012 43,441,792 43,110,373 99.24% 309,734 43,420,106 100.0%
2013 45,850,625 45,509,522 99.26% 291,383 45,800,905 99.9%
2014 49,096,473 48,802,720 99.40% 221,946 49,024,666 99.9%
2015 53,463,919 53,175,174 99.46% 149,582 53,324,756 99.7%
2016 58,829,331 58,545,664 99.52% 104,436 58,650,100 99.7%
2017 64,977,413 64,579,894 99.39% 139,613 64,719,507 99.6%
2018 70,633,922 70,216,601 99.41% 70,216,601 99.4%
Source: Brazoria County Tax Office
Note: Taxes levied based on adjusted tax roll.
152
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
PRINCIPAL PROPERTY TAX PAYERS
Current Year and Nine Years Ago
2018 2009
Percentage Percentage
of Total City of Total City
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Taxpayer Value Rank Value Value Rank Value
Pearland Town Center LP $ 88,220,349 1 0.84% $ 19,085,030 8
HCA Healthcare Corp 76,694,850 2 0.73% 18,283,700 10 0.31%
Amreit SPF Shadow Creek LP 67,412,570 3 0.64% 70,313,800 1
Mar Shadow Creek LP 57,481,391 4 0.54%
MHI Compressor Manufacturing LL( 42,033,612 5 0.40%
Weatherford U.S., Inc. 39,314,580 6 0.37% 52,609,383 2 0.89%
DD Shadow Creek V LLC 37,000,000 7 0.35%
Goodgarden 36,750,000 8 0.35%
Brazoria SCR Associates LLC 36,452,500 9 0.35%
UVN-TIC LLC Et.al. 35,450,000 10 0.34%
Pearland Investments LTD 35,486,130 3 0.60%
CenterPoint Energy, Inc. 24,467,250 4 0.41
Walmart Real Estate 24,177,330 5 0.41%
Waterford SCR LP 24,135,860 6
Carrington SCR LP 22,156,750 7
USA Tranquility Lake 18,300,410 9 0.31%
Total $516,809,852 4.91% $309,015,643 2.93%
Source: Brazoria County Appraisal District
*Tax Year 2017
153
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
PRINCIPAL PROPERTY TAX PAYERS
2017 TOTAL TAXES
Pearland Town HCA Amreit SPF Mar Shadow
Taxpayer Healthcare Shadow Creek
Center LP Corp LP Creek LP
Property Use Retail mixed use Health Retail Multi-Family
center Care/Hospital Housing
Taxable Value $88,220,349 $76,694,850 $67,412,570 $57,481,391
Taxing Unit Tax Rate
Alvin ISD 1.450000 1,279,195 1,065,882 977,482 833,480
Pearland ISD 1.415600 - 45,097 - -
Houston ISD 1.206700 - - - -
City of Pearland 0.685059 604,361 525,405 461,816 393,781
Harris County 0.418010 - - - -
Brazoria County 0.380234 335,444 291,620 256,326 218,564
Alvin Community College 0.180750 159,458 15,775 121,848 103,898
Harris County Hospital District 0.171100 - - - -
Brazoria Drainage Dist 4 0.146000 128,802 111,974 98,422 83,923
Houston Community College 0.100263 - - - -
System
Pearland Municipal Manag 0.100000 88,220 - 67,413 -
Brazoria County Special Road& 0.060000 52,932 46,017 40,448 34,489
Bridge
Harris County Flood Control Dist 0.028310 - - - -
Port of Houston Authority 0.012560 - - - -
Harris County Dept. of 0.005195 - - - -
Education
Total Tax $ 2,648,413 $ 2,101,771 $ 2,023,754 $ 1,668,135
% Paid to City of Pearland 22.8% 25.0% 22.8% 23.6%
Source: Brazoria County Tax Office&Harris County Tax Office
154
City of Pearland FY 2018 CAFR
MHI
Compressor Weatherford Goodgarden Brazoria-SCR UVN-TIC LLC
Manufacturer US LP DD SCR V LLC Owner GP Associates LLC Etal
LLC & Shadow Cre
Industrial/ Oil&Gas Multi-Family Multi-Family Multi-Famil Multi-Family
Manufacturing Service Housing Housing Housing Housing
$42,033,612 $39,314,580 $37,000,000 $36,750,000 $36,452,500 $35,450,000
- - 536,500 532,875 528,561 514,025
- 556,537 - - - -
507,220 - - - - -
287,955 269,328 253,472 251,759 249,721 242,853
175,705 - - - - -
- 149,487 140,687 139,736 138,605 134,793
- - 66,878 66,426 65,888 64,076
71,920 - - - - -
- 57,399 54,020 53,655 53,221 51,757
42,144 - - - - -
- 23,589 22,200 22,050 21,872 21,270
11,900 - - - - -
5,279 - - - - -
2,184 - - - - -
$ 1,104,306 $ 1,056,341 $ 1,073,756 $ 1,066,501 $ 1,057,867 $ 1,028,774
26.1% 25.5% 23.6% 23.6% 23.6% 23.6%
155
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
TAXABLE SALES BY CATEGORY
Last Ten Calendar Years
(in thousands of dollars)
Calendar Year
2009 2010 2011 2012
Retail Trade $ 699,338 $ 673,714 $ 697,419 $ 764,460
Accommodations & Food Services 146,598 155,345 172,126 198,439
Real Estate/Rental/Leasing 38,924 46,811 48,059 61,690
Manufacturing 31,243 39,582 49,474 48,213
Wholesale Trade 25,954 30,730 33,163 33,566
Other Services (Except Public Admin) 23,670 25,114 29,557 30,669
Information 14,413 15,672 16,896 19,194
Construction 14,372 15,537 17,558 23,181
Arts, Entertainment& Recreation 9,909 11,315 11,511 12,710
Mining, Quarrying, Oil and Gas 3,355 3,246 3,316 3,726
Admin/Support/Waste Mgmt/Remediatioi 11,670 10,650 11,004 12,696
Professional/Scientific/Technical 5,923 6,277 7,072 9,037
Health Care/Social Assistance 52 184 252 351
Finance, Insurance 1,811 1,404 1,261 1,347
Agriculture, Forestry, Fishing 566 180 306 468
Transportation/Warehousing 161 282 418 425
Educational Services 144 207 314 429
Utilities 6 3 187 3
Total $1,028,109 $1,036,253 $1,099,893 $1,220,604
City direct sales tax rate b 1.00% 1.00% 1.00% 1.00%
Source: State Comptroller's Office.
a 2018 taxable sales thru 2nd quarter of 2018.
b The City direct sales tax rate includes the City only
and not the Pearland Economic Development Corp. (4B).
156
City of Pearland FY 2018 CAFR
Calendar Year
2013 2014 2015 2016 2017 2018 a
$ 829,666 $ 871,813 $ 961,563 $ 997,137 $1,041,979 $513,983
216,155 240,961 272,540 298,860 316,070 170,262
56,079 61,392 48,024 34,670 44,540 22,097
34,598 51,274 41,175 40,390 40,525 21,283
34,358 42,915 41,491 48,104 49,702 28,133
34,175 38,539 40,373 40,162 41,705 21,839
24,387 29,602 33,614 33,449 35,824 18,970
24,370 26,350 32,170 24,460 21,362 13,071
13,570 14,692 15,555 16,020 16,344 8,721
12,893 14,520 7,285 8,141 11,682 5,388
13,778 12,963 12,808 12,725 14,489 7,926
11,317 10,531 11,307 12,167 6,689 4,120
1,057 3,205 5,007 2,307 3,751 1,460
1,246 1,483 2,226 2,182 2,108 932
772 728 1,609 2,112 3,471 2,105
318 406 284 350 560 358
374 350 393 406 439 172
7 7
$1,309,120 $1,421,731 $1,527,424 $1,573,642 $1,651,240 $840,820
1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
157
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
(dollars in thousands, except per capita)
Governmental Activities Business-Type Activities
General Certificates Unamortized Capital Permanent
Fiscal Obligation of Obligation Revenue Premiums/ Lease Revenue Improvemen
Year Bonds Bonds Bonds (Discounts) Obligations Bonds Bonds
2009 180,765 82,505 2,400 1,479 104,435 12,160
2010 193,785 92,380 3,277 3,237 116,440 10,540
2011 207,105 91,150 3,173 4,032 113,270 9,730
2012 224,170 65,425 3,629 6,479 3,407 109,305 15,130
2013* 236,199 64,690 75,125 6,159 3,681 105,690 14,020
2014 246,791 56,505 80,186 10,122 4,344 102,517 12,865
2015 261,998 50,030 77,012 16,185 3,629 108,099 11,305
2016 262,865 50,070 91,370 18,793 4,229 173,570 9,775
2017 283,140 37,505 97,215 25,832 1,838 196,200 7,360
2018 278,175 41,750 98,025 23,844 1,282 214,705 4,845
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
Due to implementation of GASB 61 in fiscal year 2013, the City's component units are now considered
blended component units versus discretely as in years prior to fiscal year 2013. As such, the outstanding
debt for the components units have been added; however, the City, or primary government is not legally
responsible for the payment of its debt.
158
City of Pearland FY 2018 CAFR
Business-Type Activities
Excluding
Unamortized Capital Total Percentage Total Component
Premiums/ Lease Primary of Personal Per Units
(Discounts) Obligations Government Income Capita Per Capita
186 235 384,165 13.0% 4,121
783 345 420,787 13.5% 4,429
656 421 429,537 14.3% 4,380
882 342 428,769 13.1% 4,223
730 253 506,547 14.1% 4,800 4,019
592 169 514,091 13.2% 4,709 3,859
659 82 528,999 12.6% 4,561 3,875
850 375 611,897 13.2% 5,225 4,445
9,395 257 658,742 15.3% 5,422 4,622
10,897 173 673,696 13.1% 5,381 4,598
159
City of Pearland FY 2018 CAFR
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160
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
RATIO OF NET GENERAL BONDED DEBT TO ASSESSED
VALUE AND NET BONDED DEBT PER CAPITA
Last Ten Fiscal Years
(dollars in thousands, except per capita)
General Less Debt Ratio of Net Percentage
Fiscal Tax Obligation Service Net Bonded Bonded Debt to of Personal
Year Year Bonds Funds Debt Assessed Value Income a Per Capita a
2009 2008 $ 277,830 $ 7,247 $ 270,583 4.6% 9.2% $ 2,922
2010 2009 299,982 6,706 293,276 4.7% 9.5% 3,117
2011 2010 311,158 5,160 305,998 4.8% 10.3% 3,148
2012 2011 311,204 4,992 306,212 4.8% 9.5% 3,068
2013 2012 321,068 4,643 316,425 4.8% 8.9% 3,040
2014 2013 326,283 4,536 321,747 4.6% 8.4% 3,010
2015 2014 339,518 5,034 334,484 4.4% 8.2% 2,978
2016 2015 341,503 8,276 333,227 3.9% 7.2% 2,846
2017 2016 353,837 5,911 347,926 3.6% 8.1% 2,864
2018 2017 348,614 6,797 341,817 3.2% 6.7% 2,730
Note:Details regarding the city's outstanding debt can be found in the notes to the financial statements.
a Population and personal income data can be found in demographic and economic statistics table.
161
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
September 30, 2017 and 2018
Debt as of
September 30, Overlapping
Taxing Jurisdiction 2017 Percent Amount
Alvin Community College District $ 11,125,000 32.44% $ 3,608,950
Alvin ISD 684,700,000 35.53% 243,273,910
Brazoria County 75,150,000 25.43% 19,110,645
Brazoria County MUD No. 6 15,385,000 0.35% 53,848
Brazoria County MUD No. 17 23,130,000 100.00% 23,130,000
Brazoria County MUD No. 18 23,595,000 100.00% 23,595,000
Brazoria County MUD No. 19 29,300,000 100.00% 29,300,000
Brazoria County MUD No. 23 14,740,000 100.00% 14,740,000
Brazoria County MUD No. 26 29,090,000 100.00% 29,090,000
Brazoria County MUD No. 28 61,055,000 100.00% 61,055,000
Brazoria County MUD No. 34 35,725,000 100.00% 35,725,000
Brazoria County MUD No. 35 9,025,000 100.00% 9,025,000
Brazoria-Fort Bend County MUD No. 83,215,000 98.99% 82,374,529
Fort Bend County 565,727,978 0.58% 3,281,222
Hams County (a) 2,167,734,361 0.16% 3,468,375
Hams County Dept. of Education 6,780,000 0.16% 10,848
Hams County Flood Control District 83,075,000 0.16% 132,920
Hams County Hospital District 61,595,000 0.16% 98,552
Harris-Brazoria Counties 8,500,000 100.00% 8,500,000
Lower Kirby Pearland Man 13,280,000 100.00% 13,280,000
Pasadena ISD 689,705,000 1.08% 7,448,814
Pearland ISD 380,077,774 78.67% 299,007,185
Port of Houston Authority 638,829,397 0.16% 1,022,127
Total estimated Overlapping 910,331,924
The City $ 328,005,000 100.00% 328,005,000
Total Direct and Estimated $ 1,238,336,924
Population 121,500
Per Capita Debt-Direct and Overlapping Debt $ 10,192
Source: Individual jurisdictions and/or Texas Municipal Reports.
(a) Harris County Toll Road Certificates are considered self-supporting and are not included
in the amount shown for Harris County.
162
City of Pearland FY 2018 CAFR
Debt as of
September 30, Overlapping
2018 Percent Amount
$32,520,000 31.56% $ 10,263,312
668,510,000 34.79% 232,574,629
76,230,000 22.97% 17,510,031
17,615,000 0.36% 63,414
21,835,000 100.00% 21,835,000
22,230,000 100.00% 22,230,000
26,715,000 100.00% 26,715,000
14,265,000 100.00% 14,265,000
24,490,000 100.00% 24,490,000
57,645,000 100.00% 57,645,000
39,175,000 100.00% 39,175,000
8,920,000 100.00% 8,920,000
80,865,000 100.00% 80,865,000
593,424,527 0.79% 4,688,054
2,050,758,022 0.22% 4,511,668
6,555,000 0.22% 14,421
83,075,000 0.22% 182,765
59,490,000 0.22% 130,878
21,635,000 100.00% 21,635,000
15,630,000 100.00% 15,630,000
771,080,000 1.52% 11,720,416
367,580,000 76.05% 279,544,590
593,754,397 0.18% 1,068,758
895,677,935
$ 324,770,000 100.00% 324,770,000
$ 1,220,447,935
125,198
$ 9,748
163
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
PLEDGED REVENUE COVERAGE
Amounts in (000'4
Last Ten Fiscal Years
Water&Sewer Revenue Bonds
Net
Less: Revenue Debt Service
Fiscal Gross Operating Available for
Year Revenues Expenses Debt Service Principal Interest Total Coverage
2009 $ 26,980 $ 12,877 $ 14,103 $ 1,595 $ 4,648 $ 6,243 2.26
2010 25,061 13,585 11,476 2,575 4,848 7,423 1.55
2011 28,664 15,529 13,135 3,170 5,155 8,325 1.58
2012 27,969 15,946 12,023 3,305 5,016 8,321 1.44
2013 29,607 17,423 12,184 3,615 4,724 8,339 1.46
2014 29,341 17,707 12,184 3,765 4,584 8,349 1.46
2015 30,744 18,767 11,977 3,920 4,622 8,542 1.40
2016 44,163 21,167 22,995 7,630 4,918 12,548 1.83
2017 52,005 24,178 27,828 9,195 4,297 13,492 2.06
2018 56,960 24,247 32,714 10,630 5,129 15,759 2.08
Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
Operating expenses do not include interest, depreciation, or amortization expenses. Debt service excludes
Permanent Improvement Bonds paid with system revenues, as those bonds do not require bond coverage.
164
City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Education
Personal Per Capita Level in
Fiscal Population Income Personal Median Years of School Unemployment
Year (A) (in$000's) Income (B) Age (B) Schooling Enrollment(C) Rate (D)
2009 92,600 2,941,717 31,768 34.5 14.2 20,056 6.5%
2010 94,100 3,076,788 32,697 33.4 14.2 21,269 6.9%
2011 97,200 2,974,785 30,605 33.3 14.2 20,931 6.9%
2012 99,800 3,213,184 32,196 34.8 14.2 21,721 5.6%
2013 104,100 3,555,431 34,154 34.4 14.2 23,771 5.0%
2014 106,900 3,822,958 35,762 34.6 14.2 23,075 4.3%
2015 112,300 4,063,014 36,180 34.6 14.2 23,241 3.3%
2016 117,100 4,637,394 39,602 33.9 14.2 24,096 3.8%
2017 121,500 4,305,839 35,439 36.1 14.2 24,400 4.0%
2018 125,198 5,134,370 41,010 34.7 14.2 30,739 3.5%
(A) Estimated
(B) Pearland Economic Development Corporation
(C)Texas Education Agency- Beginning in FY 2018, school enrollment was
obtained by surveying each school located in the City limits and ETJ.
(D) Bureau of Labor Statistics
* Information not presented is not available.
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City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
PRINCIPAL EMPLOYERS
Current Year and Nine Years Ago
2018 2009
Percentage Percentage
of Total City of Total City
Employer Employees* Rank Employment Employees Rank Employment
Pearland ISD 2,660 1 4.34% 2,400 1 5.62%
Kelsey Seybold 801 2 1.31%
City of Pearland 787 3 1.29% 471 3 1.10%
Alvin ISD 753 4 1.23%
Memorial Hermann 450 5 0.73%
Merit Medical 310 6 0.51
Pearland Medical Center 300 7 0.49%
Kemlon 300 8 0.49% 325 4 0.76%
Lonza 272 9 0.44%
Dover Energy 212 10 0.35%
Third Coast Terminals 185 11 0.30%
Ethos Energy(TurboCare) 180 12 0.29% 181 10 0.42%
Aggreko 154 13 0.25%
ShawCor Pipe Protection 150 14 0.24% 275 6 0.64%
Packaging Service Company 120 15 0.20%
Davis Lynch (Forum Energy) 120 16 0.20% 250 7 0.59%
Weatherford 112 17 0.18% 325 8 0.76%
Mitsubishi Heavy Industries Com 109 18 0.18%
Wal-Mart 800 2 1.87%
Bass Pro Shop 300 5 0.70%
Home Depot 225 9 0.53%
Total 7,975 13.02% 5,552 12.99%
Sources:
Pearland Economic Development Corp.
Retail establishments data not available in 2017.
Labor force participation in 2017 is 61,242 and in 2008 is 42,732.
*The above list does not include retail employers, such as Wal Mart, Super Target, Lowe's, Home Depot,
HEB or Kroger.
167
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
FULL-TIME EQUIVALENT CITY GOVERNMENT
EMPLOYEES BY FUNCTION/PROGRAM
Last Ten Fiscal Years
2009 2010 2011 2012
Function/Program
Governmental Activities:
General Government 55 57 57 56
Public Safety 253 264 276 286
Public Works 47 47 45 31
Community Services 52 47 45 56
Parks and Recreation 72 99 105 109
Business Type Activities:
Water& Sewer 82 82 87 90
Component Unit:
Economic Development 5 6 5 5
Total 564 601 619 633
Source: City Budget
168
City of Pearland FY 2018 CAFR
2013 2014 2015 2016 2017 2018
44 45 52 62 52 54
295 313 339 370 370 379
57 60 67 54 65 73
51 53 40 42 50 46
101 99 88 89 84 89
99 101 105 106 109 114
5 9 5 5 5 6
652 680 696 728 735 761
169
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
2009 2010 2011
Function/Program
GENERAL GOVERNMENT
Finance
Number of purchase orders 3,264 2,913 2,679
Number of budget transfers 406 470 427
Number of invoices paid 23,259 21,632 21,000
Average number of employees paid per month 1,230 1,220 1,438
Human Resources
Number of hires 90 91 131
Number of applications received 3,137 3,880 3,299
Legal
Number of resolutions and ordinances prepared 266 229 205
Information Technology
Average monthly service requests 649 734 815
Number of PC's supported 394 429 439
PUBLIC SAFETY
Police
Number of police calls resulting in dispatch 37,440 35,676 39,815
Total police arrests made 5,188 5,986 6,218
Dispatched calls per patrol officer 576 513 606
Commercial vehicles equipment violations 711 672 852
Cases Assigned to the Criminal Investigations Division (1) 629 2,003 3,304
Fire
Total number of arson incidents 8 5 2
Fires investigated 33 22 25
Total annual inspections 2,374 1,752 1,380
Total calls for service 8,843 8,888 9,676
Patients treated 5,804 5,619 6,121
Sources:Various city departments.
Information not presented was not available at time of publication.
(1)UCR method of reporting was terminated after 2009. Effective 2010, Incident Based Reporting
(IBR) is used.
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City of Pearland FY 2018 CAFR
Page 1 of 3
2012 2013 2014 2015 2016 2017 2018
2,415 2,671 2,640 2,377 2,159 589 1,811
429 465 548 489 362 750 552
20,768 23,512 21,486 22,212 26,675 24,548 21,547
1,481 1,527 1,548 1,523 1,536 1,704 1,641
112 94 98 131 194 170 163
4,936 7,642 8,507 9,132 10,420 13,010 15,452
220 254 243 271 279 276 290
832 843 838 854 871 894 325
448 454 575 649 680 706 715
42,318 47,200 45,500 49,750 55,648 54,931 54,631
6,525 7,642 7,081 6,115 5,522 5,450 5,608
625 659 550 679 780 785 748
900 810 598 614 391 381 248
1,836 2,094 1,900 2,417 2,980 2,460 2,415
2 6 7 1 7 4 2
18 16 25 20 27 19 15
1,537 1,958 1,644 1,640 1,244 2,607 3,123
10,494 10,789 15,048 17,407 9,904 9,965 10,666
6,537 6,537 6,936 7,180 6,117 4,610 6,273
171
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
Last Nine Fiscal Years
2009 2010 2011
Function/Program(continued)
PUBLIC WORKS
Fleet Maintenance
Fleet maintenance jobs completed 3,063 2,394 3,410
Preventative maintenance performed 1,998 1,741 747
Other Public Works
Fuel issued (gallons) 313,596 354,422 361,464
Street sweeping (miles) 2,561 2,239 1,299
Street signs maintained/replaced 2,864 2,049 1,588
Total work orders completed 20,213 18,632 16,834
PARKS AND RECREATION
All Parks and recreation
ROW maintained- acres 228 245 255
Trees maintained 5,004 5,800 6,327
Acres of city property mowed 851 1,301 1,331
Total number of park work orders received 275 252 249
Parkland- acres (2) 138 139 139
Total number of special events held 25 24 21
Total number of tournaments held 6 9 11
Number of recreation classes offered(3) 855 307 459
Average monthly attendance (all locations)(4) 3,623 11,823 16,116
Sources:Various city departments.
Information not presented was not available at time of publication.
(2)Prior to 2009, Parkland acres included medians and Wastewater Treatment Plants. After 2009,
(3)Prior to 2010, individual music classes were included in the total recreation classes held.
Program was cancelled.
(4)In FY 2010, a new facility, Recreation Center/Natatorium, opened.
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City of Pearland FY 2018 CAFR
Page 2 of 3
2012 2013 2014 2015 2016 2017 2018
3,581 3,817 3,860 3,887 1,452 1,797 1,382
682 611 610 437 750 742 663
377,754 350,186 353,890 332,745 265,669 331,005 315,941
1,079 1,155 871 648 1,160 1,112 1,815
1,090 884 993 1,477 1,370 1,179 1,471
17,803 18,346 21,212 25,873 31,163 25,688 24,529
251 251 251 550 459 327 345
6,157 6,312 6,313 6,430 7,922 8,355 8,523
1,380 1,035 1,035 1,116 632 664 443
230 140 180 147 190 114 147
138 138 138 138 337 388 392
22 22 20 19 16 19 17
2 1 3 - 26 - 5
486 281 272 306 384 265 868
18,378 18,980 21,366 14,371 19,636 16,814 24,035
173
City of Pearland FY 2018 CAFR
CITY OF PEARLAND, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
Last Nine Fiscal Years
2009 2010 2011
Function/Program(continued)
COMMUNITY SERVICES
Animal Control
Number of animals at shelter 2,868 2,532 2,685
Total number of calls for service 3,529 4,206 4,346
Inspection Services
Total building inspections 24,834 21,753 19,244
Total code violation cases 4,274 3,433 2,860
Total permits issued 9,249 7,874 7,869
Number of plans reviewed 925 969 917
Municipal Court
Number of trials 1,391 402 688
Number of charges 24,400 24,657 26,369
Warrants cleared 7,374 8,692 8,204
WATER & SEWER
Distribution and Collection
Fire hydrant maintenance and inspections (5) 451 402 395
Backed up sewer repairs 270 325 310
Water mains repaired 168 82 410
Water Production
Water produced-wells
(in millions of gallons) 2,574 3,065 3,869
Surface Water Purchased
(in millions of gallons) 1,146 634 968
Billing & Collections
Annual meter reads 340,281 344,618 364,424
Number of bills 325,201 336,668 350,871
Wastewater Treatment
Wastewater treated
(in millions of gallons) 2,106 2,361 1,943
Sources:Various city departments.
Information not presented was not available at time of publication.
(5)In Water& Sewer, Distribution and Collection fire hydrant maintenance and inspections is
contracted out.
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City of Pearland FY 2018 CAFR
Page 3 of 3
2012 2013 2014 2015 2016 2017 2018
2,220 2,375 2,176 2,126 2,100 2,178 1,987
4,326 5,236 6,114 5,509 5,312 6,022 4,426
22,416 26,274 28,434 36,497 37,206 34,880 36,774
1,952 2,244 2,140 4,596 2,560 2,302 2,034
8,696 10,630 13,972 18,186 14,612 13,075 8,894
1,050 939 1,185 1,584 1,349 1,278 1,971
1,116 885 839 856 443 656 567
30,187 27,439 23,182 19,223 17,611 16,334 15,463
10,080 10,328 9,050 7,476 7,525 8,463 5,801
887 1,399 837 612 854 186 114
275 286 334 305 497 545 308
283 380 111 189 120 102 126
2,916 2,859 2,470 1,933 2,190 2,417 3,024
1,321 1,816 2,133 2,276 2,517 2,584 2,545
370,755 403,220 414,499 428,265 445,154 461,502 467,910
359,716 387,997 388,338 400,662 417,312 471,549 445,446
2,364 2,530 2,493 3,067 3,367 3,455 3,308
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City of Pearland FY 2018 CAFR
CITY OF PEARLAND,TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
Fiscal Year
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Function/Program
PUBLIC SAFETY
Police
Police stations 1 1 1 1 1 1 1 1 1 1
Police vehicles 130 138 142 155 157 161 143 186 194 209
Fire
Fire stations 4 4 5 6 6 6 6 6 7 6
Fire vehicles 17 17 22 23 26 26 26 42 56 60
Ambulances(1) - - - - - 9 7 9 9 10
EMS
Ambulances(1) 8 8 8 8 9 - - - - -
PUBLIC WORKS
Other public works
Streets(miles)(2) 807 807 806 806 839 844 842 936 928 940
Vehicle inventory(3) 333 355 363 385 374 375 372 451 385 338
Traffic signals 71 80 62 74 81 81 73 87 91 98
PARKS AND RECREATION
Parks and recreation
Developed acreage(4) 138 139 139 138 138 138 168 334 388 392
Pools 1 3 3 3 3 3 3 3 3 3
Outdoor basketball court: 10 10 10 6 6 6 6 6 6 6
Soccer fields 12 12 12 12 12 12 12 18 12 14
Activity buildings 3 4 4 3 3 3 3 3 3 3
Baseball/softball fields 4 4 4 4 4 4 4 6 14 16
WATER AND SEWER
Water Production
Water wells 11 11 11 11 10 10 10 10 10 10
Pumping stations 2 2 2 3 3 3 3 3 3 3
Ground storage tanks 15 15 15 15 15 15 15 15 15 15
Elevated towers 5 6 6 6 6 6 6 6 6 6
Wastewater
Treatment plants 5 5 5 5 5 5 5 5 5 5
Lift stations 78 78 80 80 75 76 73 74 72 78
Distribution and Collection
Water mains(miles) 420 433 443 448 469 488 509 537 546 551
Sanitary sewers(miles) 370 378 380 382 400 415 433 440 448 456
Sources:Various city departments.
Note:No capital asset indicators are available for the general government and community services functions.
Information not presented was not available at time of publication.
(1)Beginning in FY 2014,the EMS department was rolled into the Fire Department.
(2)Inside city limits. Prior to FY07, street miles were measured visually. Beginning FY07,a GIS system was used to measure street miles.
Although new streets were added in FY 2011,an audit of the database resulted in the elimination of some street miles previously reported.
(3)Decrease in inventory reflects surplus of vehicles auctioned off. Increases reflect new purchases,which may offset with those sold.
Vehicle inventory includes public safety revenues.
(4)Prior to 2009, Parkland acres included medians and Wastewater Treatment Plants.
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City of Pearland FY 2018 CAFR
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178
City of Pearland FY 2018 CAFR
201 7 - 201 8
CITY OF PEARLAND
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
rf.,
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TEX AS
fsr j89
City of Pearland
3519 Liberty Drive
Pearland,Texas 77581
Phone:281.652.1600
pearlandtx.gov
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