RDAP 2020-01 2020-09-28RESOLUTION NO. RDAP 2020-01
A RESOLUTION OF THE DEVELOPMENT AUTHORITY OF PEARLAND
(DAP), ACCEPTING THE 2019 ANNUAL FINANCIAL REPORT FOR THE
FISCAL YEAR ENDING SEPTEMBER 30, 2019.
BE IT RESOLVED BY DAP BOARD OF DIRECTORS:
Section 1. That the Development Authority of Pearland, TX hereby accepts
the Fiscal Year 2019 Annual Financial Report as prepared by the accounting
firm of Whitley Penn, L.L.P.
PASSED, APPROVED, AND ADOPTED this 28th day of
September , A.D. 2020.
DAP CHAIRMAN
ATTEST:
DAP SECRETARY
Prepare
for the
Future ,
F -
o
Al
Fiscal Year Ending September 30, 2019
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CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
Fiscal Year Ended
September 30, 2019
Prepared by:
Finance
on
whitleypenn'
REPORT OF INDEPENDENT AUDITORS
To the Honorable Mayor and
Members of the City Council
City of Pearland, Texas
Houston Office
3737 Buffalo Speedway
Suite 1600
Houston, Texas 77098
713.621.1515 Main
whitleypenn.com
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, 2019, 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.
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, 2019, 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.
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 9 through 18, budgetary comparison information on
pages 82 through 83, and pension system supplementary information and other post -employment
benefit supplementary information on page 84 through 87 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 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
To the Honorable Mayor and
Members of the City Council
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March 23,
2020, 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.
Wk -AF y
Houston, Texas
March 23, 2020
Basic Financial Statements
CITY OF PEARLAND, TEXAS Page 1 of 2
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2019
Pearland
Economic
Capital
Development
General Fund
Debt Service
Projects
Corporation
Assets
Cash and cash equivalents
$ 1,352,391
$ 963,308
$ 6,877,395
$ 953,675
Investments
19,871,620
4,588,364
49,205,453
14,180,939
Receivables, net of allowance
for uncollectibles
7,050,158
7,666,936
3,521,219
5,344,209
Prepaid items
15,244
-
-
_
Total Assets
$ 28,289,413
$ 13,218,608
$ 59,604,067
$ 20,478,823
Liabilities
Accounts payable
$ 2,863,550
$ -
$ 3,811,046
$ 210,932
Accrued expenditures
1,964,678
132,080
2,818,803
72,479
Deposits
2,379,513
-
-
38,333
Due to other funds
2,750,000
-
_
_
Unearned revenue
581,131
771,003
1,622,513
-
Total Liabilities
10,538,872
903,083
8,252,362
321,744
Deferred Inflows of Resources
Unavailable revenue
548,691
6,888,916
-
3,421,643
Total Deferred Inflows
of Resources
548,691
6,888,916
-
3,421,643
Fund Balances
Non -spendable
Prepaid items
15,244
-
_
-
Restricted
Debt service
-
5,426,609
-
_
Capital improvements
-
-
51,351,705
-
Community development programs
-
_
_
_
Public safety
_
-
_
_
Economic development
-
-
-
16,735,436
Assigned
Encumbrances
1,520,940
-
_
_
Unassigned
15,665,666
-
_
_
Total Fund Balances
17,201,850
5,426,609
51,351,705
16,735,436
Total Liabilities, Deferred
Inflows of Resources,
and Fund Balances
$ 28,289,413
$ 13,218,608
$ 59,604,067
$ 20,478,823
CITY OF PEARLAND, TEXAS Page 2 of
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2019
Tax Increment
Development
Non -major
Total
Reinvestment
Authority of
Governmental
Governmental
Zone #2
Pearland
Funds
Funds
Assets
Cash and cash equivalents
$ 9,518,115
$ 8,324,596
$ 4,307,406
$
32,296,886
Investments
63,215
-
4,814,032
92,723,623
Receivables, net of allowance
for uncollectibles
70,737
-
2,035,162
25,688,421
Prepaid items
-
-
-
15,244
Total Assets
$ 9,652,067
$ 8,324,596
$ 11,156,600
$
150,724,174
Liabilities
Accounts payable
$ 53,052
$ -
$ 332,008
$
7,270,588
Accrued expenditures
-
-
30,057
5,018,097
Deposits
-
-
-
2,417,846
Due to other funds
-
-
-
2,750,000
Unearned revenue
-
-
-
2,974,647
Total Liabilities
53,052
-
362,065
20,431,178
Deferred Inflows of Resources
Unavailable revenue
-
-
1,486,878
12,346,128
Total Deferred Inflows
of Resources
-
-
1,486,878
12,346,128
Fund Balances
Non -spendable
Prepaid items
-
-
-
15,244
Restricted
Debt service
-
-
-
5,426,609
Capital improvements
-
-
1,600,152
52,951,857
Community development programs
-
-
7,230,884
7,230,884
Public safety
-
-
503,920
503,920
Economic development
9,599,015
8,324,596
-
34,659,047
Assigned
Encumbrances
-
-
-
1,520,940
Unassigned
-
-
(27,299)
15,638,367
Total Fund Balances
9,599,015
8,324,596
9,307,657
117,946,868
Total Liabilities, Deferred
Inflows of Resources,
and Fund Balances
$ 9,652,067
$ 8,324,596
$ 11,156,600
$
150,724,174
CITY OF PEARLAND, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES
GOVERNMENTAL FUNDS
September 30, 2099
Page 1 of 2
Expenditures
-
-
16,445,000
Pearland
Current:
-
10,240,000
5,515,000
Economic
General government
10,288,113
-
Capital
Development
Public safety
General Fund
Debt Service
Projects
Corporation
Revenues
12,154,279
-
441,518
-
Property taxes
$ 23,098,212
$ 35,397,759
$ -
$ -
Sales and use taxes
22,427,733
-
-
11,048,959
Franchise fees
7,244,497
-
_
_
Licenses and permits
4,198,551
-
9,053,153
(10,397,385)
Fines and forfeitures
2,528,927
_
-
11,118,461
Charges for services
17,149,571
-
-
488,271
Investment earnings
750,827
370,115
994,119
629,714
Intergovernmental
-
-
9,627,261
12,000
Other
1,167,832
792,945
600,000
441,664
Total Revenues
78,566,150
36,560,819
11,221,380
12,620,608
Expenditures
-
-
16,445,000
-
Current:
-
10,240,000
5,515,000
-
General government
10,288,113
-
Public safety
42,509,295
-
_
_
Public works
12,154,279
-
441,518
-
Community services
3,890,941
-
_
_
Parks and recreation
5,892,670
-
-
_
Economic development
-
-
-
11,257,984
Debt Service:
3,214,208
(1,370,505)
9,053,153
(10,397,385)
Principal
528,212
18,660,000
-
11,118,461
Interest and other charges
14,638
12,407,558
400,398
188,671
Capital outlay
753,529
-
31,656,489
472,321
Intergovernmental
-
7,325,484
-
-
Total Expenditures
76,031,677
38,393,042
32,498,405
23,037,437
Excess (deficiency) of revenues
over expenditures
2,534,473
(1,832,223)
(21,277,025
(10,416,829)
Other Financing Sources (Uses)
Revenue bonds issued
Certificates of obligation issued
-
-
16,445,000
-
Refunding bonds issued
-
10,240,000
5,515,000
-
Payments to refunded bond
escrow agent
-
(12,551,318)
-
_
Premium on debt issued
-
2,200,938
4,055,805
-
Transfers in
4,674,460
572,098
5,676,460
184,186
Transfers out
(3,994,725)
-
(1,362,087)
(164,742)
Total Other Financing Sources (Uses)
679,735
461,718
30,330,178
19,444
Net change in fund balances
3,214,208
(1,370,505)
9,053,153
(10,397,385)
Fund balances - beginning
13,987,642
6,797,114
42,298,552
27,132,821
Fund balances -ending $ 17,201,850 $ 5,426,609 $ 51,351,705 $ 16,735,436
CITY OF PEARLAND, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES
GOVERNMENTAL FUNDS
September 30, 2099
Revenues
Property taxes
Sales and use taxes
Franchise fees
Licenses and permits
Fines and forfeitures
Charges for services
Investment earnings
Intergovernmental
Other
Total Revenues
Expenditures
Current:
General government
Public safety
Public works
Community services
Parks and recreation
Economic development
Debt Service:
Principal
Interest and other charges
Capital outlay
Intergovernmental
Total Expenditures
Excess (deficiency) of revenues
over expenditures
Other Financing Sources (Uses)
Revenue bonds issued
Certificates of obligation issued
Refunding bonds issued
Payments to refunded bond
escrow agent
Premium on debt issued
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net change in fund balances
Fund balances - beginning
Page 2 of 2
Tax Increment Development Non -major Total
Reinvestment Authority of Governmental Governmental
Zone #2 Pearland Funds Funds
$ 31,755,832 $ - $ -
$ 90,251,803
- - 1,395,334
34,872,026
- - 235,300
7,479,797
- - -
4,198,551
- - 182,894
2,711,821
- - 88,664
17,726,506
188,520 17,674 234,755
3,185,724
- - 690,267
10,329,528
- - 944,243
3,946,684
31,944,352 17,674 3,771,457
174,702,440
- 10,725
874,571
11,173,409
- -
206,291
42,715,586
- -
-
12,595,797
- -
328,287
4,219,228
- -
172,457
6,065,127
14,209,992 12,820,008
-
38,287,984
- 7,700,000
-
38,006,673
- 2,634,236
-
15,645,501
- -
712,641
33,594,980
- -
-
7,325,484
14,209,992 23,164,969
2,294,247
209,629,769
17,734,360 (23,147,295) 1,477,210 (34,927,329)
5,835,000 - 5,835,000
- - 16,445,000
- - 15,755,000
(12,551,318)
-
-
-
6,256,743
-
17,146,455
370
28,254,029
(17,146,455)
-
(197,871)
(22,865,880)
(17,146,455)
22,981,455
(197,501)
37,128,574
587,905
(165,840)
1,279,709
2,201,245
9,011,110
8,490,436
8,027,948
115,745,623
Fund balances - ending $ 9,599,015 $ 8,324,596 $ 9,307,657 $ 117,946,868
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS (continued)
Note 4 - Capital Assets (continued)
The City had active construction projects as of September 30, 2019. 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:
Project Description
Drainage Improvement
Building Improvements
Street Improvement
Park Improvements
Total Governmental Activities
Water and Sewer Improvements
Total Primary Government
Note 5 - Long -Term Debt
A. Governmental Activity Debt
Contract
$ 20,628,454
49,723,789
135,296,577
Total In
Progress
$ 15,089,622
23,350,386
83, 735, 553
Remaining
Commitment
$ 5,538,832
26,373,403
51, 561, 024
35,187,889 23,491,916 11,695,973
240,836,709 145,667,477 95,169,232
209,183,295 98,529,761 110,653,534
$ 450,020,004 $ 244,197,238 $ 205,822,766
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 2018 were issued in November 2018 in the
amount of $5,835,000 for developer reimbursements of TIRZ infrastructure improvements. The bonds
bear an all cost true interest rate of 3.41 percent and are due in installments ranging from $395,000 to
$630,000 through September 1, 2029.
The Certificates of Obligation, Series 2019A were issued in August 2019 in the amount of $4,465,000
for construction and improvements to certain streets, roads, and intersections, certain improvements to
the recreation center and natatorium, and improvements to facilities for the Orange Street Service
Center. The certificates bear interest from 3.00 percent to 4.00 percent and are due in annual
installments ranging from $220,000 to $255,000 through March 1, 2039.
The Certificates of Obligation, Series 2019B were issued in August 2019 in the amount of $11,980,000
for certain improvements to parks, including Shadow Creek Ranch Park, improvements to Fire Station
#8, and improvements to the Shadow Creek Lihrary The cPrtifiratPc hoar intarnzt of q 00 nor/ -ono nnA
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS (continued)
Note 5 - Long -Term Debt (continued)
A. Governmental Activity Debt (continued)
The Permanent Improvement & Refunding Bonds, Series 2019 were issued in August 2019 in the
amount of $15,755,000 for construction and improvements to the City drainage system and City
facilities, and refunding certain outstanding obligations. The bonds bear interest from 4.00 percent to
5.00 percent and are due in annual installments ranging from $275,000 to $2,470,000 through March 1,
2039. The refunding proceeds were used to purchase U.S. Government securities and theses
securities were placed in an irrevocable escrow agent to provide for future debt service on $12,325,000
of refunded bonds Certificate of Obligations, Series 2007 of $3,285,000 and Certificate of Obligation,
Series 2010A of $9,040,000. As a result, the refunded bonds are considered to be defeased and the
related liability for the bonds has been removed from the City's liabilities. The reacquisition price
exceeded the net carrying amount of the old debt by $235,060, which is also known as refunding
charge. This amount is being netted against the new debt and amortized over the life of the new debt,
which was equal or shorter than the refunded debt. This resulted in an economic gain (difference
between present values of the old and new debt service payment) of $1,042,043.
During the fiscal year the City had a $10,845,000 early redemption (defeasance) of Sales Tax Revenue
Refunding Bonds, Series 2016. The City recorded the cash defeasance as debt service principal
expenditures in the fund financial statements. The amount of interest saving as a result of the early
redemption was $1,682,510.
The following is a summary of changes in the City's total governmental long-term liabilities for the year
ended September 30, 2019. 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.
Governmental Activities
Bonds payable:
General obligation bonds
Certificates of obligation
Sales tax revenue bonds
Tax increment revenue bonds
Unamortized premium/
(discount)
Total bonds payable
Other liabilities:
Obligations under capital leases
Compensated absences
Total Governmental Activities
Balance
$ 16,150,000
51,620,000
September 30,
1,750,000
250,000
2018
Additions
(Reductions)
$ 278,175,000
$ 15,755,000
$ (24,410,000)
41,750,000
16,445,000
(6,575,000)
12,845,000
-
(11,095,000)
85,180,000
5,835,000
(7,700,000)
Balance Amounts
September 30, Due Within
2019 One Year
$ 269,520,000
$ 16,150,000
51,620,000
3,330,000
1,750,000
250,000
83,315,000
7,350,000
23,844,210 6,256,743 (3,462,210) 26,638,743 -
441,794,210 44,291,743 (53,242,210) 432,843,743 27,080,000
1,281,527 36,181 (556,677) 761,031 367,691
7,249,494 4,741,274 (4,712,241) 7,278,527 1,358,243
$ 450,325,231 $ 49,069,198 $ (58,511,128) $ 440,883,301 $ 28,805,934
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
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,
2019, follows:
Series
General Obligation Bonds
Permanent Improvement & Refunding Bonds, Series 2009
Permanent Improvement Bonds, Series 2011
Permanent Improvement Refunding Bonds, Series 2012
Permanent Improvement Bonds, Series 2013
Permanent Improvement & Refunding Bonds, Series 2014
Permanent Improvement Refunding Bonds, Series 2015
Permanent Improvement Bonds, Series 2015
Permanent Improvement Refunding Bonds, Series 2015A
Permanent Improvement & Refunding Bonds, Series 2016A
Permanent Improvement Refunding Bonds, Series 2016B
Permanent Improvement & Refunding Bonds, Series 2017
Permanent Improvement Bonds, Series 2018
Permanent Improvement & Refunding Bonds, Series 2019
Annexed Municipal Utility District Bonds
BC MUD 4 Series 2011
Total General Obligation Bonds
Certificates of Obligation
Certificates of Obligation, Series 2009
Certificates of Obligation, Series 2009A
Certificates of Obligation, Series 2011
Certificates of Obligation, Series 2013
Certificates of Obligation, Series 2014
Certificates of Obligation, Series 2015
Certificates of Obligation, Series 2016
Certificates of Obligation, Series 2017
Certificates of Obligation, Series 2018
Certificates of Obligation, Series 2019A
Certificates of Obligation, Series 2019B
Total Certificates of Obligation
Original Interest Debt
Issue Matures Rate (%) Outstanding
16,735,000
2020
2.00-5.00
$ 615,000
5,400,000
2036
2.125-4.125
4,240,000
43,575,000
2029
3.00-5.00
32,410,000
9,315,000
2038
3.00-5.00
7,520,000
40,410,000
2034
2.00-5.00
34,795,000
47,165,000
2032
2.00-5.00
43,940,000
8,495,000
2035
2.00-4.00
6,795,000
10,210,000
2029
2.00-3.00
6,565,000
33,275,000
2036
2.00-5.00
30,810,000
29,840,000
2031
2.00-5.00
25,135,000
56,900,000
2037
2.00-5.00
53,745,000
7,440,000
2038
2.50-5.00
7,065,000
15,755,000
2039
4.00-5.00
15,755,000
2,640,000
2020
2.50-5.00
130,000
$ 269,520,000
8,520,000
2020
2.25-5.00
$ 325,000
12,145,000
2020
2.00-4.50
635,000
2,095,000
2021
2.09
420,000
2,745,000
2038
3.00-4.625
2,240,000
4,625,000
2034
2.00-4.00
3,470,000
4,860,000
2035
2.00-4.00
3,880,000
13,995,000
2036
2.00-4.00
11,895,000
6,205,000
2037
2.00-4.00
5,580,000
7,085,000
2038
2.00-5.00
6,730,000
4,465,000
2039
3.00-4.00
4,465,000
11,980,000
2030
5.00
11,980,000
$ 51,620,000
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, 2019, is as
follows:
Series
Pearland Economic Development Corporation
Sales Tax Revenue Refunding Bonds, Series 2016
Development Authority of Pearland
Tax Increment Revenue Bonds, Series 2013
Tax Increment Revenue Bonds, Series 2014
Tax Increment Revenue Bonds, Series 2015
Tax Increment Revenue Bonds, Series 2016
Tax Increment Revenue Bonds, Series 2017
Tax Increment Revenue Bonds, Series 2018
Total Component Unit Long -Term Debt
Prior Year Refunding
Interest Debt
Original Issue Matures Rate (%) Outstanding
$ 14,640,000
2030
2.36
$ 1,750,000
9,150,000
2029
3.77
6,765,000
8,060,000
2029
3.00
5,400,000
66,030,000
2029
3.00
48,340,000
12,320,000
2029
2.22
9,945,000
8,555,000
2029
3.13
7,425,000
5,835,000
2029
3.41
5,440,000
$ 85,065,000
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, 2019, the City did not have any previously refunded bonds
outstanding or outstanding refunding escrows.
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
2020
2021
2022
2023
Total
Less: Interest
Obligations under capital leases
Obligations
$ 379,616
212,807
125,336
64,434
782,193
(21,162)
$ 761,031
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS (continued)
Note 5 - Long -Term Debt (continued)
A. Governmental Activity Debt (continued)
Capital Lease Obligations (continued)
The annual requirements to amortize governmental activity general obligation bonds and certificates of
obligation outstanding at September 30, 2019, were as follows:
Fiscal Year
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
Governmental Activities
General Obligation
of Obligation
Principal
Interest
$ 16,150,000 $
11,070,228
17,465,000
10,397,667
18,235,000
9,646,768
18,885,000
8,829,193
19,500,000
7,941,180
20,290,000
7,032,692
20,905,000
6,116,162
21,690,000
5,150,068
22,475,000
4,191,428
23,255,000
3,247,130
15,455,000
2,450,971
15,925,000
1,850,960
15,185,000
1,257,007
6,310,000
828,688
6,400,000
589,722
4,400,000
381,788
3,355,000
220,121
2,220,000
105,763
1,140,000
35,531
280,000
5,600
$ 269,520,000 $
81,348,667
Certificates
of Obligation
Principal
Interest
$ 3,330,000
$ 1,823,899
2,370,000
1,791,676
2,160,000
1,730,232
2,155,000
1,669,319
2,160,000
1,603,957
2,175,000
1,531,881
2,170, 000
1,457,107
2,180,000
1,376,956
2,175,000
1,298,032
2,180,000
1,222,387
14,160,000
844,975
2,180,000
468,918
2,185,000
393,541
2,185,000
319,243
2,190,000
244,252
1,960,000
172,715
1,730,000
108,631
1,025,000
58,694
725,000
23,969
225,000
4,500
$ 51,620,000
$ 18,144,884
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS (continued)
Note 5 - Long -Term Debt (continued)
A. Governmental Activity Debt (continued)
Capital Lease Obligations (continued)
The annual requirements to amortize blended component unit revenue bonds outstanding at September
30, 2019, were as follows:
Governmental Activities
Sales Tax Revenue Bonds Tax Increment Revenue Bonds
Fiscal Year
Principal
Interest
2020
$ 250,000
$ 41,300
2021
250,000
35,400
2022
250,000
29,500
2023
250,000
23,600
2024
250,000
17,700
2025
250,000
11,800
2026
250,000
5,900
2027
-
-
2028
-
-
2029
-
-
$ 1,750,000
$ 165,200
B. Business -type Activity Debt
Principal
$ 7,350,000
7,550,000
7,760,000
7,975,000
8,195,000
8,420,000
8,650,000
8,890,000
9,135,000
9,390,000
$ 83,315,000
Interest
$ 2,303,495
2,102,129
1,895,150
1,679,674
1,460,178
1,234,157
1,001,497
762,008
515,391
261,508
$ 13,215,187
The Water and Sewer System Revenue Bonds, Series 2019A were issued in August 2019 in the amount
of $21,000,000. The bonds bear interest from 0.00 percent to 1.14 percent, due to the Texas Water
Development Board subsidy and are due in annual installments of $700,000 through September 1, 2049.
The Water and Sewer System Revenue & Refunding Bonds, Series 2019B were issued in August 2019 in
the amount of $34,590,000. The bonds bear interest from 4.00 percent to 5.00 percent and are due in
annual installments ranging from $580,000 to $5,065,000 through September 1, 2039. Proceeds of the
bonds will be used for waterworks and sanitary sewer system improvements and to refund certain
obligations of the City. The refunding proceeds were used to purchase U.S. Government securities and
theses securities were placed in an irrevocable escrow agent to provide for future debt service on
$27,250,000 of refunded bonds Water and Sewer System Revenue Bonds, Series 2007 of $11,390,000
and Water and Sewer System Revenue Bonds, Series 2010A of $15,860,000. As a result, the
refunded bonds are considered to be defeased and the related liability for the bonds has been removed
from the City's liabilities. The reacquisition price exceeded the net carrying amount of the old debt by
$613,010, which is also known as refunding charge. This amount is being netted against the new debt
and amortized over the life of the new debt, which was equal or shorter than the refunded debt. This
resulted in an economic gain (difference between present values of the old and new debt service
payment) of $2,174,196.
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, 2019.
Business -type Activities
Bonds payable:
Permanent Improvement Bonds
Water and sewer revenue bonds
Unamortized premium/
(discount)
Total bonds payable
Other liabilities:
Obligations under capital leases
Compensated absences
Total Business -type Activities
Balance
September 30,
2018 Additions
(Reductions)
Balance Amounts
September 30, Due Within
2019 One Year
$ 4,845,000 $ - $ (365,000) 4,480,000 370,000
214,705,000 55,590,000 (37,880,000) 232,415,000 11,770,000
10,896,823 7,069,135 (1,158,419) 16,807,539 -
230,446,823 62,659,135 (39,403,419) 253,702,539 12,140,000
172,828 - (86,662) 86,166 86,132
780,156 527,628 (467,233) 840,551 188,779
$ 231,399,807 $ 63,186,763 $ (39,957,314) $ 254,629,256 $ 12,414,911
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.
A summary of the terms of revenue bonds and permanent improvement bonds recorded in the Enterprise
Funds as of September 30, 2019, is as follows:
Series
Water and Wastewater Fund
Water & Sewer System Adjustable Rate Revenue Bonds,
Series 1999
Water & Sewer System Refunding Bonds, Series 2010B
Permanent Improvement and Refunding Bonds, Series 2012
Water & Sewer System Revenue Bonds, Series 2012
Water & Sewer System Revenue Bonds, Series 2014
Water & Sewer System Revenue Bonds, Series 2016A
Water & Sewer System Revenue Bonds, Series 2016B
Water & Sewer System Revenue Bonds, Series 2016C
Water & Sewer System Revenue Bonds, Series 2017A
Water & Sewer System Revenue Bonds, Series 2017B
Water & Sewer System Revenue & Refunding Bonds,
Series 2017C
Water & Sewer System Revenue Bonds, Series 2018A
Water & Sewer System Revenue Bonds, Series 2018B
Water & Sewer System Revenue Bonds, Series 2019A
Interest
Debt
Original Issue
Matures
Rate (%)
Outstanding
$ 8,000,000
2020
4.41-4.60
$ 610,000
8,970,000
2023
1.75-4.00
445,000
6,230,000
2025
3.00-5.00
4,480,000
8,670,000
2037
2.00-3.625
5,060,000
9,210,000
2039
2.00-4.00
8,205,000
8,880,000
2036
2.00-4.00
7,545,000
11,100,000
2025
2.00-4.00
7,405,000
50,100,000
2045
2.00-4.00
44,520,000
10,225,000
2027
0.00-1.29
8,210,000
12,025,000
2047
0.00-2.10
11,345,000
60,970,000
2037
2.00-5.00
57,025,000
8,650,000
2048
0.47-2.07
8,360,000
19,050,000
2038
2.00-5.00
18,095,000
21,000,000
2049
0.00-1.14
21,000,000
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, 2019, were as follows:
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
Business -Type
Activities
Revenue Bonds
Permanent Improvement Bonds
Fiscal Year
Principal
Interest
Principal
Interest
2020
$ 11,770,000
$ 6,586,457
$ 370,000
$ 157,000
2021
11,985,000
6,313,918
370,000
142,200
2022
12,075,000
6,011,190
385,000
127,100
2023
12,915,000
5,693,434
395,000
111,500
2024
12,110,000
5,328,627
1,480,000
74,000
2025
12,385,000
4,997,784
1,480,000
22,200
2026
12,880,000
4,637,707
-
-
2027
13,200,000
4,180,706
-
-
2028
12,470,000
3,708,034
-
-
2029
12,810,000
3,238,968
-
-
2030
13,140,000
2,780,073
-
-
2031
11,975,000
2,335,816
-
-
2032
9,520,000
1,918,967
-
-
2033
9,685,000
1,619,617
-
-
2034
9,855,000
1,323,683
-
-
2035
7,320,000
1,048,333
-
-
2036
6,730,000
853,134
-
-
2037
6,345,000
680,667
-
-
2038
5,260,000
518,819
-
-
2039
4,350,000
397,894
-
-
2040
3,130,000
312,878
-
-
2041
3,145,000
273,794
-
-
2042
3,150,000
233,896
-
-
2043
3,165,000
193,426
-
-
2044
3,175,000
152,277
-
-
2045
3,190, 000
110,604
-
-
2046
1,490,000
68,350
-
-
2047
1,500,000
44,924
-
-
2048
990,000
21,139
-
-
2049
700,000
7,980
-
-
$ 232,415,000
$ 65,593,096
$ 4,480,000
$ 634,000
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
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, 2019, is as follows:
General Fund
Debt Service Fund
Capital Projects Fund
Pearland Economic Development
Corporation
Tax Increment Reinvestment Zone #2
Development Authority of Pearland
Non -major Governmental Funds
Water and Sewer Fund
Internal Service Fund
Transfers In Transfers Out
$ 4,674,460 $ 3,994,725
572,098 -
5,676,460 1,362,087
184,186 164,742
- 17,146,455
17,146,455 -
370 197,871
834,754 12,199,151
5,976,248 -
$ 35,065,031 $ 35,065,031
A summary of interfund receivables and payables at September 30, 2018, follows:
Receivable Fund
Water and Sewer Fund
Note 7 - Fund Balance / Net Position
Encumbrances
Payable Fund
General Fund
Amount Purpose
$ 2,750,000 Short term loan
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:
Encumbrance
General Fund - assigned $ 1,520,940
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Fiscal Year Ending
September 30, 2019
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
City of Pearland
3519 Liberty Drive
Pearland, Texas 77581
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