R2021-061 2021-03-22RESOLUTION NO. R2021-61
A Resolution of the City Council of the City of Pearland, Texas, accepting
the City's comprehensive annual financial report for fiscal year 2020 and
the accompanying independent audit as presented by the accounting firm
of BKD, 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 2020, 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 2020.
Section 3. That acceptance of the comprehensive annual financial report reflects the
City's compliance with the Federal Single Audit requirements for government organizations
expending federal funds.
PASSED, APPROVED and ADOPTED this the 22nd day of March, A.D., 2021.
VIN COLE
AYOR
ATTE
CRYSTAL ROAN, TRMC, CMC
CITY SECRETARY
APPROVED AS TO FORM:
•
DARRIN M. COKER
CITY ATTORNEY
Prepare
for the
Future
FISCAL YEAR ENDING SEPT. 30, 2020
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Year Ended September 30, 2020
Prepared by:
Finance Department
CITY OF PEARLAND, TEXAS
Table of Contents
September 30, 2020
Introductory Section (Unaudited)
Letter of Transmittal i-xiv
Principal Officials xv
Staff Organizational Chart xvi
GFOA Certificate of Achievement xvii
Financial Section
Independent Auditor's Report 1
Management's Discussion and Analysis 7
Basic Financial Statements
Government -wide Financial Statements
Statement of Net Position 21
Statement of Activities 22
Fund Financial Statements
Balance Sheet — Governmental Funds 24
Reconciliation of the Balance Sheet — Governmental Funds
to the Government -wide Statement of Net Position 26
Statement of Revenues, Expenditures and Changes in Fund
Balances — Governmental Funds 28
Reconciliation of the Statement of Revenues, Expenditures
and Changes in Fund Balances — Governmental Funds to
the Government -wide Statement of Activities 30
Statement of Net Position — Proprietary Funds 31
Statement of Revenues, Expenses and Changes in Net Position —
Proprietary Funds 33
Statement of Cash Flows — Proprietary Funds 34
Notes to Financial Statements 37
Required Supplementary Information (Unaudited)
Schedule of Revenues, Expenditures and Changes in Fund Balance —
Budget and Actual — General Fund 85
Schedule of Revenues, Expenditures and Changes in Fund Balances —
Budget and Actual — Pearland Economic Development Corporation 86
Notes to Required Supplementary Budget Information 87
Schedule of Changes in Net Pension Liability and Related Ratios
Texas Municipal Retirement System 88
Schedule of Contributions — Texas Municipal Retirement System 89
Schedule of Changes in the Total OPEB Liability and Related Ratios —
Texas Municipal Retirement System Supplemental Death Benefits Fund 91
Schedule of Changes in the Total OPEB Liability and Related Ratios —
City of Pearland Retirement Health Care Plan 92
CITY OF PEARLAND, TEXAS
Table of Contents (Continued)
September 30, 2020
Other Supplementary Information
Combining and Individual Fund Statements and Schedules
Nonmajor Governmental Funds 97
Combining Balance Sheet — Nonmajor Governmental Funds 98
Combining Statement of Revenues, Expenditures and Changes
in Fund Balance — Nonmajor Governmental Funds 100
Combining Schedule of Revenues, Expenditures and Changes
in Fund Balance — Budget and Actual:
Major Governmental Fund — Debt Service Fund 102
Special Revenue Fund — Hotel/Motel Tax Fund 103
Special Revenue Fund — Court Security Fund 104
Special Revenue Fund — City -Wide Donation Fund 105
Special Revenue Fund — Court Technology Fund 106
Special Revenue Fund — Street Assessments Fund 107
Special Revenue Fund — Park Donation Fund 108
Special Revenue Fund — Police Seizure Fund 109
Special Revenue Fund — Parks and Recreation Development Fund 110
Special Revenue Fund — Sidewalk Fund 111
Special Revenue Fund — Grant Fund 112
Special Revenue Fund — Traffic Impact Improvement Fund 113
Special Revenue Fund — Juvenile Management Fund 114
Special Revenue Fund — Regional Detention Fund 115
Special Revenue Fund — Educational TV Fund 116
Special Revenue Fund — U of H Fund 117
Capital Projects Fund 118
Internal Service Funds 119
Combining Statement of Net Position — Internal Service Funds 120
Combining Statement of Revenues, Expenses and Changes
in Net Position — Internal Service Funds 121
Combining Statement of Cash Flows — Internal Service Funds 122
Statistical Section (Unaudited) 123
Financial Trends
Net Position by Component 124
Changes in Net Position 126
Fund Balances of Governmental Funds 130
Changes in Fund Balances of Governmental Funds 132
CITY OF PEARLAND, TEXAS
Table of Contents (Continued)
September 30, 2020
Revenue Capacity
Spending and Growth Analysis 134
Assessed Value and Estimated Actual Value of Taxable Property 136
Direct and Overlapping Property Tax Rates 138
Property Tax Levies and Collections 141
Principal Property Taxpayers 142
Principal Property Taxpayers — 2019 Total Taxes 143
Taxable Sales by Category 146
Debt Capacity
Outstanding Debt by Type 148
Ratio of Net General Bonded Debt to Assessed Value
and Net Bonded Debt Per Capita 150
Direct and Overlapping Governmental Activities Debt 151
Pledged Revenue Coverage 153
Demographic and Economic Information
Demographic and Economic Statistics 154
Principal Employers 155
Operating Information
Full-time Equivalent City Government Employees by Function/Program 156
Operating Indicators by Function/Program 158
Capital Asset Statistics by Function/Program 164
Introductory Section (Unaudited)
City of Pearland
3519 Liberty Drive
Pearland, Texas 77581
Tel: 281.652.1600
pearlandtx.gov
May 10, 2021
Honorable Mayor, Members
of City Council, and Citizens of the
City of Pearland, Texas USA
The Comprehensive Annual Financial Report of the City of Pearland, Texas (the "City") for the
fiscal year ended September 30, 2020, is hereby submitted as mandated by both local and state
statutes. The applicable 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. As standard practice, 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.
BKD, LLP, Certified Public Accountants, issued an unmodified (or "clean") opinion on the City of
Pearland's financial statements for the year ended September 30, 2020. 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 seven 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. The City Manager is appointed by
Council and is responsible for recommending a budget, implementation of City Council priorities,
keeping the City Council and community informed during the year, making recommendations, and
day-to-day management of all City operations. The incorporated City is primarily located across
the northern end of Brazoria County and shares a common border with Houston, Texas to the
north. The City extends into both Fort Bend and Harris counties.
The City of Pearland encompasses 48.82 square miles. The city is long, east to west.
Broadway/FM 518 stretches across the community from Almeda Road/FM 521 on the western
city limit to the eastern limit border with Friendswood. That stretch of Broadway/FM 518 is 13.94
miles across. The geography of the city challenges City delivery of services. Moreover, the
community is fast-growing additional population due to its multi -faceted attractiveness, increasing
from 18,000 residents in 1990 to 134,448 residents estimated according to the 2019 American
Community Survey 1-year estimates.
A full range of municipal services is provided by the City of Pearland including public safety (full-
time professional police and fire); 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. The Pearland community is
one of opportunity with economic development supported for investment and jobs. 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 TIRZ #2. All these component units are considered blended
component units and have been included as major funds in the Governmental Funds.
ECONOMIC CONDITIONS
Local Economy
Pearland is a premier location for residential and commercial growth. The City is located 20
minutes away from downtown Houston, the nation's second largest seaport, the world-renowned
Texas Medical Center, Port of Houston, Port Freeport, major chemical refineries in south Brazoria
County, and NASA -Johnson Space Center. The Pearland economy and context are inexorably
linked with the Houston metropolitan area. With available 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 2019, including HCA
Healthcare's Center for Clinical Advancement in Pearland.
The total of all new, non-residential construction permitted during the fiscal year was
approximately $151 million, an 32% decrease in value from 2019's $222 million. New single-family
housing permits totaled 451, down 31 % from the previous FY. While no multi -family permits were
issued in FY 2019, there was one multi -family housing project permitted in 2020 valued at $59
million. Total construction value for FY 2020 was $210 million, down 5.1% from FY 2019 During
FY 2020, the building permit revenues decreased by $81,929 or 1.9% as compared to FY 2019
revenue collections. Pearland is a regional shopping destination, and the economy has grown
since the Great Recession.
Pearland's unemployment rate was 6.6% in September 2020, down from a high of 10.8 % in April
2020 caused by the initial impact of the COVID-19 pandemic. Through the most recently available
data, the rate is holding steady at 6.5% as of November 2020. (https://ycharts.com
/indicators/pearland_tx_unemployment_rate) Those rates compare to the rates for the same time
periods in Brazoria County of 9.3%, 13.5%, and 9.4% respectively (https://ycharts.com/
indicators/brazoria_county_tx_unemployment_rate). There are now the seeds of recovery even
as the virus continues its community spread. Hurricane Harvey and "traditional' incidents are
relatively 'quick' with an immediate impact followed by recovery & rebuilding physical
infrastructure. With the ongoing pandemic, we are still in the thick of things, continuing to provide
public services in this 'new normal' that will continue for the foreseeable future, but major
uncertainties remain for safety and economy. Indicators contrary to each other abound -- sales
tax, home values, private investment, jobs.
As a multi -faceted local government, the City of Pearland's impact, as monitored and reported
continuously, has not shown dire impact from effects of this pandemic. The combination of early
action, conservative budgeting, and continuous monitoring have kept City finances in good
standing. Indeed, the elastic revenues of building permits and sales taxes were reported in the
City's Third Quarter financial report to be thus far only slightly off the prior year total. The sales
tax receipts represent not just our revenue, but also act as a proxy for the impact of the economy.
While the Pearland experience for retail sales tax activity has been relatively solid, the uncertainty
remains for FY21.
The City of Pearland through FY 2020 did not experience drastic revenue reductions. We acted
to increase cash reserves, providing flexibility in the form of additional fund balance. Throughout
FY 2020, we maintained a mantra of working to maximize flexibility and reserves to deal with
unknown change.
Regional and State of Texas Economy
Houston is the world's energy capital, capital of an oil and gas industry that is in constant flux. At
this writing, during the COVID-19 public health emergency and pandemic, that instability is in high
gear. A collapse in oil prices rocked the energy industry at the same time COVID shut down the
economy. Even prior to COVID-19, the Greater Houston Partnership (GHP) was reporting that
the closing spot price for a barrel of West Texas Intermediate (WTI), the U.S. benchmark for light,
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sweet crude, opened 2020 at $ 61.17 per barrel. As of April 2020, the price per barrel averaged
$16.55. A mild winter season and the spreading of coronavirus to several other countries
continued exerting downward pressures on global demand for oil and natural gas.
An Economist article (April 30, 2020) described the pandemic -era '90% economy' whereby
activity is not only smaller, but differently "weird" and less predictable. From GHP, it is reported
that "Metro Houston recovered 202,500 jobs since April, or 57.8% of all jobs lost in March and
April. Houston remains 147,700 jobs short of its pre -pandemic employment level." "Five sectors
have recouped all jobs shed in March and April and their employment now exceeds pre -pandemic
levels. Those sectors are transportation/warehousing; utilities; finance/insurance;
professional/scientific/technical services; and retail." GHP forecasts Houston to add 35,000 to
52,000 jobs in 2021, primarily in the second half of the year. The sectors with the most job growth
will be administrative support services, health care and social services, manufacturing and
professional services. The energy and retail sectors are not projected to grow.
GHP also stated that "As bad as the recession was, it would have been worse if not for the
Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which Congress passed in late
March. The act injected $2.2 trillion into the U.S. economy. Through the act's Paycheck Protection
Program (PPP), Houston businesses received more than $9.4 billion in financial assistance. The
Partnership estimates this supported more than 700,000 jobs in the region."
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 adopted (July 27, 2020) Five -Year CIP for fiscal year 2021 through 2025 totals $528.2
million. The large and varying CIP for public investments of drainage, parks, facilities, streets,
water, and wastewater positions City infrastructure for serving the high -growth that's here and
what will come.
The 2021-2025 CIP document completes the balance of the $162 million bond program approved
by the voters in May 2007 and adds the new voter -approved May 2019 bond issue of $80 million.
Funding from projects is supported by non -debt sources ($20.4 million), leveraged outside funds
($83.4 million), tax -supported debt ($117.6 million), and water/sewer supported enterprise fund
debt repaid by user fees ($306.9 million). The ratio of outstanding property tax -supported debt to
taxable assessed valuation has been decreasing and remains below 5% at about 3%.
For non -enterprise general obligations, the Debt Service Fund can meet current and future
obligations based on the City's Multi -Year Forecast and Five -Year CIP where needed. Issuance
of debt is factored into funding sources, based on the Five -Year CIP. The City's property tax rate
for the FY 2021 budget is $0.7200, of which $0.3548 cents is for actual debt service and $0.0602
cents is for rebates to in -city MUD districts but considered as debt service component. The Debt
Service component, inclusive of in -City MUD district rebates, for the FY 2021 was $0.4150.
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. Rate customers saw
no increase in FY 2019 and a slight increase of 1.6% beginning in FY 2020 to bring revenue
necessary to maintain the system. The City's utility system continues to be self-supporting and
financially sound. As with other aspects of the City's service delivery package, there are
substantial capital projects for expansion of plants, distribution and collection lines, and a variety
of modernizations to meet needs of the current and future community.
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Relevant Financial Policies/Guidelines
Financial policies guide the development and implementation of the budget, are a framework for
fiscal decision making, and 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
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 and a 1.4 bond coverage for Water and Sewer debt service
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
Personal safety is a key means of both attracting new residents and retaining existing ones in
Pearland; if citizens don't feel safe, they will not come nor will they stay. The Pearland Police
Department continues to focus on the strategic priority of Safe Community.
In order to operate more efficiently, the Department employs a data -driven approach to policing.
Examples of this are the implementation of the Special Investigation Unit investigation unit within
the Criminal Investigations Division to quickly address emerging criminal trends, continued efforts
to thwart crime and crashes in the identified Data Driven Approaches to Crime and Traffic Safety
(DDACTS) zones, and crime analysis updates which provide mapping and data specific to the
different police beats within the City of Pearland.
The Pearland Police Department encourages public involvement through the programs offered
by members of the Community Outreach unit. This includes the Department's flagship program,
the Citizens' Police Academy. The alumni association for that program provided a generous
donation which, along with funds from narcotic seizures and the City of Pearland, facilitated the
purchase of a mobile command post. This mobile unit will enable on -site command capacity for
the City of Pearland during emergency situations and large-scale public events.
With the support of IT staff, the Pearland Police Department continues to be a leader in innovative
policing technology. A prime example is the Unmanned Aircraft System (UAS), aka drone, unit
that provides support to police department personnel, other police agencies, and other COP
v
Departments. In addition to UAS training, the course catalog offered by the Police Department
has solidified Pearland as a regional hub for law enforcement training.
Fire Station 1, relocated on the northeast corner of McHard and Old Alvin Road, opened in
September 2019 to provide quicker response times. The new station totals approximately 9,500
sq. ft., while housing one fire engine and one ambulance.
Fire Station 8, located in the master -planned community of Shadow Creek Ranch, at the
northwest corner of Shadow Creek Parkway and Reflection Bay Drive, was completed early
summer 2020. This station is approximately 18,000 sq. ft. and currently houses 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. During FY 2021 an additional 26 full-time fire fighters will
be onboarded for staffing. The City of Pearland was successfully awarded a FEMA SAFER grant,
which supports funding for 12 new firefighters to be hired.
Fire Station 4 (located on Freedom Drive east of Cullen) will be relocated immediately adjacent
to the existing fire station, which was built in 2001 as a volunteer station. Modifications were
originally made in 2008 to accommodate some full-time staff. This new fire station, which is
currently going through design schematics, will have modern health and safety features, as well
as improved technology to assist with fire fighter safety, productivity, efficiency and effective
workflow. No additional staffing will be required to fully operate this station. New Fire Station 4
will be built in conjunction with a new Animal Shelter and is expected to complete construction in
late calendar 2021.
In May of 2019, Pearland voters approved a general obligation bond of $1.3 million for Phase I of
the Fire Training Field Improvement Plan to construct a two-story live fire training building. This
building will be located on the existing Fire Training Field behind the David L. Smith Fire
Administration Building on Veterans Drive and is expected to be completed by May 2021.
Our Emergency Management Program continues to grow, finalizing the city's Hazard Mitigation
Plan and implementing many lessons and strategies learned from Hurricane Harvey. Significant
Community Risk Reduction efforts have resulted in the removal of numerous
dilapidated/dangerous structures, public -private cooperation for subdivisions with residential
sprinklers, and semi-annual inspections of all establishments providing food service. In addition,
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division has aided more than
20,000 Pearland residents by
completing community public
safety education such as CPR
certifications, car seat
inspections, and smoke alarm
testing.
90th percentile city-wide
response times for fire
emergencies have been
reduced by over two minutes in
the last four years. The
achievement is due primarily
to the addition of Fire Stations
and staffing of operations that
will see a total of 131 full-time fire fighters by fall 2020.
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 FY 2020 attraction
and retention projects.
HCA Houston Healthcare
broke ground on its HCA
Healthcare Center for Clinical
Advancement in the Pearland
Town Center in February 2020.
The PEDC and city officials
began recruitment efforts for
this project with HCA and CBL
& Associates in 2018. The 48,400 square -foot, state-of-the-art training center will house high-
fidelity hospital simulation labs, connected classrooms and de -briefing rooms, where the health
system's nearly 7,000 nurses will receive ongoing clinical education and training. The center will
also serve as a hub for all HCA Houston Healthcare new hire orientations and the division's
Leadership and Organizational Development training. The center is scheduled to be open in early
2021.
Interim Healthcare, a privately held company that has been operating in the Houston market for
five years, selected Pearland for its new operational headquarters after an exhaustive search in
the Houston market. PEDC began recruitment efforts for this project in early 2020. The company,
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which provides home health care targeted to seniors, is leasing 4,600 square feet of office space
in the Trinity Professional Building on Country Place Parkway. The new offices, which opened
this summer, are home to Interim Healthcare's skilled nurses, therapists, aides and other health
care personnel who service the Houston area.
Endress+Hauser, a leader in the field of
measurement technology for industrial
process engineering, completed
constructed on its new Gulf Coast
Regional Campus in late 2020. The
Swiss -based company manufactures
instrumentation and devices that provide
solutions to more than 100,000
customers worldwide. PEDC assisted
with the project and began working with
the company on its relocation in early
2018. The 100,000-square-foot facility
will be located on a 17-acre site at the
southeast corner of Beltway 8 and Kirby
Drive. It will include an area for
calibration and repair, as well as feature
office and training space. The new facility will be home to approximately 110 employees when it
opens.
Lonza opened the world's largest dedicated gene and cell therapy manufacturing facility in
Pearland's Lower Kirby District in April 2018, and the 300,000-square-foot facility continues to
grow. The company had multiple expansions in 2019-20, including the construction of additional
parking and laboratory space. The new laboratory encompasses 10,000 square feet and will be
used to process new products and will also allow Lonza to employ more technicians. Additional
clean rooms were also constructed in 2020 and Lonza has also acquired a 19-acre parcel of land
south of the current facility for possible future growth. Lonza currently employs over 500 at its
Pearland facility.
In 2019, PEDC, along with local partners in government, education, healthcare and business
embarked on a collaborative community and economic development strategic planning process
that will make the community a more prosperous, successful, and vibrant place to live, work, and
do business. This plan builds upon the Pearland 20/20 strategy, which the community developed
through a similar process in 2013 and has helped catalyze numerous community improvements
in recent years. The resulting Pearland Prosperity Strategic Plan will guide the collective actions
of the PEDC and its partners in the coming years. At the center of the Pearland Prosperity
framework are two community goals that broadly identify the desired outcomes of Pearland's
holistic economic development effort. These goals are: (1) Economic growth and diversification
and (2) A community of choice in Greater Houston. These goals can be pursued through a number
of Strategic Initiatives grouped into seven high-level focus areas: (1) Business Development, (2)
Business Formation and Early Stage Growth, (3) Site Development, (4) Corridors, (5)
Infrastructure and Mobility, (6) Quality of Life and Quality of Place, and (7) Workforce and Talent.
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. Construction was completed on the extension of South Spectrum Boulevard in
viii
December 2019. The roadway was extended to Kirby Drive from its existing terminus just west of
288. The project is being implemented and funded by LKPMD and PMMD1 with partial funds from
America Modern Green and PEDC.
America Modern Green is developing the Ivy District at the southwest corner of South Spectrum
Boulevard and the SH 288 frontage road in the Lower Kirby District. The planned development is
proposed to include offices, a continuing care retirement center, retail, condominiums,
townhomes, and apartments. Infrastructure work was completed in 2019, including water and
sewer lines, as well as road and storm sewer construction. In January 2020, construction began
on the public park and amenities surrounding the East Conveyance Pond at the Ivy District,
including a trail along Clear Creek, which will serve active and passive recreation needs of those
who live, work, or visit within the District. In addition, the trail has been poured, the sidewalks are
complete and the terraced lawn and overlook deck are nearing completion, the playground
equipment and covers, along with the pavilion and trellis were erected. The pedestrian bridge is
expected to be installed in early 2021. Development of buildings should begin in late 2021. All
these improvements continue to transform the 1,200-acre Lower Kirby District into Pearland's
most diverse, mixed -use employment, residential and entertainment part of the city.
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 developed to
provide detail to the Strategic Plan
strategic initiatives provide the "big
picture" strategic actions that are
needed to encourage more
investment in the corridor.
Stemming from the State Highway
35 Redevelopment Strategy is the redevelopment of the Rice Drier area, which is identified as
Catalyst 2 Business Park North in the strategy. In recent years, PEDC has funded multiple phases
of public infrastructure improvement in the area to support almost 58 acres of development. Rice
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Drier and Halik streets are old and narrow asphalt roads that are in regular need of maintenance
due to truck traffic from commercial and industrial growth in the area. Improvements included
storm water conveyance, detention and outfall to Old Town ditch, which were completed in 2019,
and the reconstruction of Rice Drier west of Main, which will be completed in 2020. Also included
is the reconstruction of Halik west of Main, to be constructed in 2021. The improvements will
include a 38-foot wide concrete road with curb and gutter, storm sewers, new waterlines, shared
detention facility, and a six-foot sidewalk with brick pavers.
In 2020, PEDC completed the development of the Broadway Corridor Development Plan. A
strategic initiative in the Pearland Prosperity strategic plan was to continue to improve the
economic vibrancy of the City's primary corridors was to optimize the development potential of
Pearland's principal commercial corridors. The focus of the plan was to evaluate the impact of
Broadway's reconstruction and widening, an $88 million TxDOT project, scheduled to begin in
2024. Multiple recommendations were made to reduce right-of-way needs for the project, along
with a property impact analysis of TxDOT's widening on specific representative parcels. Also
included are recommendations on drainage, utilities, bike/pedestrian facilities, regulatory
framework, and approaches to improving the appearance of the corridor. The plan included an
analysis of alternate congestion relief options that might be possible by diverting traffic to other
roadways. The report specifically reviews constructing a north -south connection between
Veterans and Mykawa and turning Walnut Street into an eastbound one-way couplet with
Broadway being westbound only from McLean to Barry Rose Road, which will require both further
study and obtaining additional community input.
With construction of the managed toll lanes along the 288-corridor nearing completion in both
Harris and Brazoria Counties, PEDC, the City, and Pearland Municipal Management District No.
2 (PMMD2) continue to implement the 288 Corridor Master Improvements Plan. Additional
aesthetic improvements will be added after the entire toll lane construction is complete. These
include enhanced landscaping, lighting, artistic sculptures, detention ponds with large fountains,
irrigation, and gateway signage.
PEDC and the community celebrated the PEDC's 25th anniversary in 2020 and continues to
promote Pearland and is working with a number 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 positive destination for visitors.
Land Use Plan/Annexation
Land use planning allows a community to accommodate its projected growth in a manner that
preserves its history and culture, as well enhance the overall quality of life for the current and
future residents and businesses. Planning allows a city a greater measure of control of its future
rather than simply reacting to change.
The City of Pearland uses its Comprehensive Plan as its primary planning policy document to
guide and balance future development, including infill and redevelopment, and community
enhancement efforts of the city. Pearland has evolved from a rural community, to a busting growth
x
to come by focusing on the identifying forthcoming needs and setting concrete plans in place to
continue to manage this growth.
In 2019, the Texas State Legislature curtailed municipalities' abilities to proactively annex; long
used as a tool to assist in managing growth. However, with Pearland's water and wastewater
capacity, combined with its public safety and other services, Pearland has seen increased interest
in voluntary annexation petitions as property owners and developers seek to partner for both
party's success.
Capital Improvement Projects and Planning
With continued residential and commercial
development, the need to plan and build
new infrastructure and maintain existing
infrastructure is a priority and will be
implemented through an aggressive capital
improvement program. The City's adopted
(July 27, 2020) Five -Year CIP 2020-2024
totals $528.2 million. Projects include
drainage ($33.4 million), streets ($75.0
million), facilities ($89.5 million), parks
($23.3 million), water (66.3 million) and
wastewater ($240.6 million).
Major drainage projects include work in
West Lea, Willowcrest, Hickory Slough,
Mimosa Acres, and Piper Road.
Major street projects include, Mykawa Road Widening (BW 8 to FM 518), Smith Ranch Road
Expansion (Hughes Ranch to Broadway), Bailey Road Expansion (Veterans Drive to Main Street),
and various intersection improvements and neighborhood street reconstructions.
Facility projects include Sheri D. Coleman Animal Services Center, Fire Station #4, Fire Station
#7, Fire Station #11, Shadow Creek Public Library, and Orange Street Service Center Phase 2.
Parks projects include Clear Creek Trail and Independence Park Phase II.
Major projects for water improvements include the Surface Water Plant Phase 1 (10 MGD), Bailey
Water Plant Improvements, FM 518 Utility Relocations (SH288 to Cullen),Transite Pipe Waterline
Replacement Program, and Ground Storage Tank Rehabilitation.
Wastewater projects include Barry Rose Water Reclamation Facility Expansion, JHEC Water
Reclamation Facility Expansion, Longwood Water Reclamation Facility decommissioning,
Sanitary sewer rehabilitation, and Southdown Regional Lift Station & Force Main.
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 City is involved in
regional efforts for long-range transportation planning and funding. The Mayor a member of H-
GAC's Transportation Policy Council (TPC), with the Mayor Emeritus serving as an alternate. The
Deputy City Manager is the Chair of the Transportation Advisory Committee (TAC), a sub-
committee of the TPC and a member of the Transportation Improvement Program (TIP)
Subcommittee.
xi
The prior TIP calls provided major funding for ongoing and upcoming projects in and around
Pearland as depicted below.
Project
Project Sponsor Project Limits
City/County Federal State Total Project Projected
Funds Funds Estimate Letting Date
SH 288/FM 518 Overpass
FM 518/ SH 288 Intersection
CR 101
Hughes Ranch Road
Green Tee Terrace Trail
Shadow Creek Ranch Trail
McHard Road
Mykawa Road
Safe Routes to School
Smith Ranch Road
Clear Creek Trail
CR 59
CR 58
FM 521
Brazoria County Overpass Only
Brazoria County Intersection Only
Brazoria County FM 1128 to CR 90
City of Pearland Smith Ranch to Cullen
City of Pearland Hughes Rd to FM 518
City of Pearland Nature Park to Kirby Dr
City of Pearland Mykawa to Cullen
City of Pearland FM 518 to BW 8
City of Pearland Various
City of Pearland Hughes Ranch Rd to FM 518
City of Pearland Hughes Rd to U of H
Brazoria County Kirby to Kingsley
Brazoria County Savannah Pkwy to CR 48
Fort Bend County FM 2234to SH 6
$ 1,904,800
$ 2,800,200
$ 3,412,400
$ 8,313,156
$ 1,688,568
$ 767,760
$ 15,976,469
$ 13,330,623
$ 1,208,400
$ 5,820,409
$ 4,115,872
$ 1,954,000
$ 1,223,200
$ 15,045,400
7,619,200 $ 9,524,000
11,200,800 $ 14,001,000
13,649,600 $ 17,062,000
14,536,844 $ 22,850,000
3,275,150 $ 4,963,718
1,548,366 $ 2,316,126
32,580,531 $ 48,557,000
2,237,680
2,553,600
3,899,591
6,684,128
7,816,000
4,892,800
60,181, 600
$ 15,568,303
$ 3,762,000
$ 9,720,000
$ 10,800,000
$ 9,770,000
$ 6,116,000
$ 75,227,000
2016
2016
2017
2018
2018
2018
2020
2021
2021
2022
2022
2023
2023
2024
Total
$ 77,561,257 $ 172,675,890 $ 250,237,147
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 worked with the Texas Department of Transportation to provide traffic
relief on the corridor through managed toll lanes. The toll lanes from CR58 to US59 near
downtown Houston were opened in 2020. In conjunction with the toll lane project, TxDOT and
Brazoria County reconstructed the SH288 overpass at FM518 providing much needed additional
capacity at our busiest intersection.
xi/
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.
Again, as of this writing, the COVID-19 pandemic emergency leaves much uncertainty. The
relatively slow, but healthy, local economy prior to this date will aid in moderating the most severe
parts of the downturn. Local Pearland sales taxes before March 2020 were running about 1
growth over the prior year.
Property tax revenue is projected to maintain the strong levels that have developed. Property
taxes provide a timing buffer from the standpoint that the FY 2021 budget relies upon values
determined by the three county appraisal districts as of January 1, 2020. Likewise values as of
January 1, 2021 will provide the General Fund and Debt Service Fund revenues for FY 2022. All
those property values were well before the prevalence of COVID-19 and the likely economic
downturn associated. Looking ahead, property values as of January 1, 2022 will not come into
play until the City's FY 2023.
While about half -way into FY 2021, the City is already beginning to prepare for the 2022 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,
Texas, for its Comprehensive Annual Financial Report for the year ended September 30, 2019.
This was the 44' consecutive year that the City has received this prestigious award. To be
awarded a Certificate of Achievement, a governmental unit must publish an easily readable and
efficiently organized comprehensive annual financial report. The City's report satisfies 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.
In 2020, the Government Treasurers' Organization of Texas (GTOT) awarded the second
Certificate of Distinction to the City of Pearland for its Investment Policy. The certification is good
for a two-year period ending in 2022. 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 for 33 consecutive years with its Fiscal Year 2019 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 City participated in the Popular Annual Financial Report (PAFR) Fellowship Program, a
partnership between the Government Finance Officers Association (GFOA) and the Engaging
Local Government Leaders (ELGL). Key City accounting staff in the Finance Department worked
with Breanna Higgins, PAFR Fellow and Texas State University Master of Public Administration
Student, to compile, create and submit the City of Pearland's first PAFR to the GFOA for
consideration of the award. On November 20, 2020, the City was notified of award of the GFOA's
Popular Annual Financial Reporting award for our 2019 Popular Annual Financial Report (PAFR).
With this award, The City of Pearland Finance Department staff are now proudly GFOA 'Triple
Crown' recipients.
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,
Clay earson
City M pager
interirn Director of f•inanca
Trent Epperson
Deputy City Manager
/(-63crEp„eeA„,a_
Kristen Woolley
Deputy Director of Finance
xiv
CITY OF PEARLAND, TEXAS
Principal Officials
As of September 30, 2020
Elected Officials
Tom Reid
J. David Little
Luke Orlando
Tony Carbone
Gary Moore
Adrian Hernandez
Trent Perez
Woody Owens
Appointed Officials
Clay Pearson
Darrin Coker
Letitia Farnie
City Management Position
Jon Branson
Trent Epperson
Matt Buchanan
John McCarter
Crystal Roan
Clarence Wittwer
Michelle Graham
Daniel McGhinnis
Johnny Spires
Vacant
Vance Riley
John McDonald
Tracy Rohrbacher
Joshua Lee
Jennifer Huhn
Robert Upton
Position
Mayor
Mayor Pro Tem
Councilmember - Position 1
Councilmember - Position 2
Councilmember - Position 3
Councilmember - Position 4
Councilmember - Position 6
Councilmember - Position 7
Position
City Manager
City Attorney
Municipal Court Judge
Deputy City Manager
Assistant City Manager
PEDC President
Interim Director of Finance
City Secretary
Director of Public Works
Director of Human Resources
Chief Information Officer
Police Chief
Director of Parks and Recreation
Fire Chief
Director of Community Development
Executive Director, CVB
Director of Communications
Municipal Court Administrator
Director of Engineering and Capital Projects
Term
Expires
May
2020
2022
2022
2021
2020
2021
2022
2020
* The City's elections were postponed to November 2020 due to the COVID-19 pandemic.
xv
City of Peaeland. Texas
Organizational Chart
City Manager
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Parks & Recreation
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Engineering
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Managernent
Fire Marshal
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xvi
G�9
Government Finance Officers Association
ertific ate o f
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Pentland
Texas
For its Comprehensive Annual
Financial Reps
For the Fiscal Year Ended
September 30, 2-019
afeAdzig-.L P A!"-€
Executive Director..'CEO
xvii
Financial Section
BKD
CPAs & Advisors
The Mayor and City Council
City of Pearland, Texas
Pearland, Texas
2700 Post Oak Boulevard, Suite 1500 I Houston, TX 77056-5829
713.499.4600 I Fax 713.499.4699 I bkd.com
Independent Auditor's Report
Report on the Financial Statements
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 the City of Pearland, Texas
(the City), as of and for the year ended September 30, 2020, 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
PRAXITY
....., Empowering Business Globally
The Mayor and City Council
City of Pearland, Texas
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 of Pearland, Texas, as of September 30, 2020,
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
The 2019 financial statements of the governmental activities, business -type activities, the water and sewer
fund, the solid waste fund and the aggregate remaining fund information, before they were restated for the
matter discussed in Note 15, were audited by other auditors, and their report thereon, dated March 23,
2020, expressed an unmodified opinion. Our opinion is not modified with respect to these matters.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis, pension and other postemployment benefit information, and the schedule of
revenues, expenditures and changes in fund balance budget and actual — general fund and economic
development fund as listed in the table of contents 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 and statistical section as listed in the table of contents 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 schedules are the responsibility of management and
was derived from and relates 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,
2
The Mayor and City Council
City of Pearland, Texas
the combining and individual fund statements and 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 it.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we also have issued our report dated May 10, 2021,
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 solely 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 the effectiveness
of the City's 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 the City's internal
control over financial reporting and compliance.
Houston, Texas
May 10, 2021
3
THIS PAGE LEFT BLANK INTENTIONALLY
4
Management's Discussion and Analysis
5
6
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis
Year Ended September 30, 2020
As Management of the City of Pearland, Texas (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, 2020. This information is not intended to be a complete statement of
the City's financial condition. We recommend and encourage readers to consider the information
presented here in conjunction with the additional information presented in the accompanying
transmittal letter (Pages i-xiv of this report), and the statistical section (Pages 126-167 of this
report), as well as the annual budget found on the City's website at https://www.pearlandtx.gov/.
FINANCIAL HIGHLIGHTS
• The assets and deferred outflows of resources of the primary government of the City
exceeded its liabilities and deferred inflows of resources as of September 30, 2020, by
$837.3 million (net position). Of this amount, $703.4 million is invested in capital assets,
net of related capital debt and $61.7 million is restricted for capital improvements, debt
service, community development programs, public safety and economic development.
• At the close of the current fiscal year, the City's governmental funds reported combined
ending fund balances of $162.0 million, an increase of $41 million in comparison to the
prior year, before restatement for correction of errors resulting in a net increase in fund
balance of $3.1 million. Approximately $133 million of the $162 million is considered
restricted fund balance and primarily consists of $44.1 million for economic development
and $73.2 million for capital projects.
• As of September 30, 2020, the unassigned fund balance for the General Fund was $28.4
million or 36% of total General Fund expenditures. The total fund balance for the General
Fund is $29.1 million or 36% of General Fund expenditures.
• The City's long-term liabilities increased by $109.2 million primarily due to the issuance of
new debt and an increase in the net pension liability.
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 comprise four components: 1) government -wide
financial statements, 2) fund financial statements, 3) notes to the financial statements and 4)
required supplementary information which includes this management's discussion and analysis,
information related to the City's pension plan and retiree health plans and budgetary comparison
information. This report also contains other supplementary information as listed in the table of
contents 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.
7
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2020
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 21 through 23 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 Corporation 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 24 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.
8
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2020
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 31 of this report, provide separate information for the Water and Sewer and Solid Waste
Enterprise Funds since it fund of the City. The basic proprietary fund financial statements can be
found on pages 31 through 35 of this report.
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 37 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 86 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 $837.3 million at the close of the most recent fiscal year.
By far the largest portion of the City's net position (85%) 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.
As discussed in Note 15, the City has restated net position of the governmental activities and
business -type activities as of September 30, 2019, the comparative statement of net position as
shown below has not been restated to reflect the error corrections.
9
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2020
Comparative Statement of Net Position
September 30, 2020 and 2019
Amounts in (000's)
Assets
Current and other assets
Capital assets
Total assets
Deferred outflows of
resources
Net Position
Governmental Activities Business -type Activities Total
2020 2019 2020 2019 2020 2019
$ 192,268 $ 153,973 $ 231,423 $ 153,186 $ 423,691 $ 307,159
863,249 860,947 414,669 374,349 1,277,918 1,235,296
1,055,517 1,014,920 646,091 527,535 1,701,608 1,542,455
15,134 20,856 2,191 2,837 17,325 23,693
Liabilities
Current 17,203 19,155 18,633 11,598 35,836 30,753
Long-term liabilities
outstanding 480,762 472,634 360,155 259,005 840,917 731,639
Total liabilities 497,965 491,789 378,788 270,603 876,753 762,392
Deferred inflows of
resources 4,275 153 622 21 4,897 174
Net position:
Net investment in
capital assets 490,304 488,077 213,081 214,672 703,385 702,749
Restricted 44,928 56,491 16,776 15,270 61,704 71,761
Unrestricted 33,179 (734) 39,015 29,806 72,194 29,072
Total net position $ 568,411 $ 543,834 $ 268,873 $ 259,748 $ 837,284 $ 803,582
10
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2020
Comparative Statement of Activities
September 30, 2020 and 2019
Amounts in (000's)
Changes in Net Position
Governmental Activities Business -type Activities Total
2020 2019 2020 2019 2020 2019
Revenues
Program revenues:
Charges for services $ 24,861 $ 27,784 $ 62,465 $ 64,317 $ 87,326 $ 92,101
Operating grants and
contributions 20,774 9,005 225 1,497 20,999 10,502
Capital grants and
contributions 7,148 16,678 1,456 4,113 8,604 20,791
General revenues:
Property taxes 97,106 89,930 97,106 89,930
Sales and use taxes 34,928 34,872 34,928 34,872
Franchise taxes 7,270 7,480 7,270 7,480
Investment income 1,626 3,293 1,277 2,947 2,903 6,240
Other 4,865 560 13 2,361 4,878 2,921
Total revenues 198,578 189,602 65,436 75,235 264,014 264,837
Expenses
General government
Public safety
Public works
Community services
Parks and recreation
Economic development
Interest on long-term debt
Water and sewer
Solid waste
Total expenses
25,504 21,249 25,504 21,249
51,031 47,948 51,031 47,948
44,862 46,631 44,862 46,631
4,383 4,616 4,383 4,616
8,197 7,683 8,197 7,683
28,683 33,470 28,683 33,470
14,042 14,017 14,042 14,017
45,055 39,413 45,055 39,413
7,930 7,752 7,930 7,752
176,702 175,614 52,984 47,165 229,686 222,779
Increase in Net Position 21,876 13,988 12,451 28,070 34,327 42,058
Before Transfers 5,460 11,364 (5,460) (11,364)
Change in Net Position 27,336 25,352 6,991 16,706 34,327 42,058
Net Position,
Beginning, as
Previously Reported 543,834 518,482 259,748 243,042 803,582 761,524
Restatement: correction
of errors (2,759) 2,133 (626)
Net Position, Beginning,
as Restated 541,075 518,482 261,881 243,042 802,956 761,524
Net Position, Ending $ 568,411 $ 543,834 $ 268,873 $ 259,748 $ 837,284 $ 803,582
11
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2020
The increase in total net position from the prior year is $34.3 million, before a restatement for
correction of errors resulting in a decrease in net position of $0.6 thousand, is primarily
attributable to the increase in capital assets funded by debt issued in the current and prior fiscal
year.
Governmental activities — Governmental activities increased the City's net position by $27.3
million, before a restatement for corrections of errors resulting in a decrease in net position of
$2.8 million, thereby accounting for 80% 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 $97.1 million, $34.9
million, and $7.3 million, respectively. These revenues increased by $7.0 million from
prior year primarily as a result of an increase in taxable assessed values.
• Capital grants and contributions totaled $7.1 million as a result of infrastructure
contributed by developers.
• The revenues were offset by expenses for general government, public safety, public
works, economic development of $25.5 million, $51.0 million, $44.9 million, and $28.7
million, respectively.
Business -type activities — Business -type activities increased the City's net position by $7.0
million, before a restatement for corrections of errors resulting in an increase in net position of
$2.1 million, thereby accounting for 20% of the total increase in the net position of the City. Key
elements of this increase are as follows:
• Program revenues of $64.1 million decreased approximately $5.8 million from the prior
year primarily due to decreases in grants.
• Operating grants and contributions of $225 thousand decreased by $1.3 million from the
prior year due to decreases in grant funding from federal and state agencies.
• Capital grants and contributions of $1.5 million decreased $2.7 million from the prior year
primarily due to a decrease in contributions from developers for impact fees.
• The revenues listed above were offset by expenses of $45.1 million and $7.9 million,
respectively, for Water and Sewer and Solid Waste, respectively. Expenses increased
from the prior year by $5.8 million.
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.
12
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2020
The City's governmental funds reflect a combined fund balance of $162.0 million. A portion
of the combined fund balance, or $28.4 million, is unassigned and available for day-to-day
operations of the City; $73.2 million is restricted for capital projects; $44.1 million for economic
development and the remaining balance is restricted for debt service and other programs.
There was an increase in the combined governmental fund balance of $41.0 million from the
prior year, before restatement for corrections of errors resulting in an increase in fund balance
of $3.1 million. The increase in fund balance includes increases in the General Fund of $11.9
million, Debt Service Fund of $736 thousand, Capital Projects Fund of $18.7 million, before
restatement for corrections of errors resulting in an increase in fund balance of $3.1 million,
Pearland Economic Development Corporation of $5.7 million, and the Development Authority of
Pearland of $6.4 million. These increases in fund balance were partially offset by decreases in
fund balance in the Tax Increment Reinvestment Zone #2 of $2.7 million. The General Fund's
fund balance totaled $29.1 million at year-end.
Tax Increment Reinvestment Zone #2 had expenditures totaling $12.5 million, leaving an ending
restricted fund balance of $6.9 million.
The Pearland Economic Development Corporation and Development Authority of Pearland, the
City's blended component units, had expenditures totaling $27.2 million, leaving an ending fund
balance of $22.5 million, and $14.7 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 statement business -type activities. Total net position in the Internal
Service Fund was $9.3 million at year-end, a $3 million increase from the prior year, before
restatements for corrections of errors resulting in a decrease of $0.6 thousand.
GENERAL FUND BUDGETARY HIGHLIGHTS
During the year, there was a $3.6 million decrease in appropriations between the adopted and
amended budget. The decrease in appropriations is attributable to a reduction in planned
expenditures due to the COVID-19 pandemic.
Actual revenues of $88.6 million were $7.4 million over the amended budget mainly in
intergovernmental revenue due to an increase in grant funding due to COVID-19. Actual
expenditures of $80.0 million were under the amended budget, resulting in a year-end fund
balance of $29.1 million, in excess of budget by $9.9 million.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets - At the end of fiscal year 2020, the City's governmental activities and business -
type activities had invested $863.2 million and $414.7 million, respectively, in a variety of capital
assets and infrastructure, as reflected in the following schedule. This represents a net increase
of $2.3 million, or 0.3% over the end of last fiscal year for the governmental activities of $40.3
million or 10.8% over the end of last fiscal year for business -type activities.
13
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2020
Land
Construction in progress
Infrastructure
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Contractual water rights
Total capital assets
Capital Assets
Governmental Activities Business -type Activities Total
2020 2019 2020 2019 2020 2019
$ 31,212 $ 31,166 $ 3,796 $ 3,796 $ 35,009 $ 34,962
162,308 145,667 148,246 98,530 310,553 244,197
583,555 604,171 220,810 228,152 804,365 832,323
75,115 68,500 22,833 23,783 97,948 92,283
9,161 9,338 1,366 1,118 10,527 10,456
1,897 2,105 32 10 1,930 2,115
17,585 18,960 17,585 18,960
$ 863,249 $ 860,947 $ 414,669 $ 374,349 $ 1,277,918 $ 1,235,296
Construction in progress at year-end represents numerous ongoing projects, the largest of which
relate to street, parks, and water/sewer projects. 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 $802.7 million. Of this amount, $272.8 million is
composed of general obligation bonds, $66.4 million is composed of certificates, $416.9 million
represents revenue bonds secured solely by specified revenue sources.
General obligation bonds
Certificates of obligation
Revenue bonds
Unamortized issuance
premium (discount)
Capital leases payable
Total outstanding debt
Outstanding Debt
Governmental Activities Business -Type Activities
Total
2020 2019 2020 2019
2020 2019
$ 268,680 $ 269,520 $ 4,110 $ 4,480 $ 272,790 $ 274,000
66,405 51,620 - - 66,405 51,620
81,445 85,065 335,435 232,415 416,880 317,480
29,963 26,639 16,168 16,808 46,130 43,447
541 761 - 86 541 847
$ 447,034 $ 433,605 $ 355,713 $ 253,789 $ 802,746 $ 687,394
The City's general obligation bonds and certificates of obligation debt for governmental activities
increased to $335.1 million. The increase is due to new debt issued offset by scheduled principal
payments. The City's debt for business -type activities increased to $339.5 million, a net increase
of $102.7 million from the previous year, which was a result of new debt issued offset by
scheduled principal payments.
14
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2020
Current credit ratings on debt issues are as follows:
Moody's
Standard Investor
& Poor's Fitch Services
General obligation bonds AA AA Aa2
Certificates of obligation 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.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The City of Pearland continues with its forward momentum in FY 2021, less in terms of population
and more in terms of growing value. The City's sales tax revenue is expected to continue strongly,
providing $22.1 million in FY 2021. Sales tax revenue actually provides substantially to General
Fund operations as well as being the funding source for our Pearland Economic Development
Corporation for another $11.0 million in FY 2021. The City also saw an estimated $999.7 million
or 11.8% increase in added taxable value in FY 2021. 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. for its
2020 bond issuances. The City's Permanent Improvement Bonds Series 2020 for $15.31 million,
the City's Certificates of Obligation Series 2020A and 2020B for $8.540 million and $9.575 million,
respectively were assigned a rating of `AA' by Fitch and `Aa2' by Moody's. Separately, our
enterprise fund Water and Sewer System Revenue Bonds -Series 2020B for $7.19 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.
15
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2020
GO Debt to AV Ratio
—0—GO Debt to AV AGO Debt To AV Without TIRZ
o\°
0
6% Oo N o\° o\o 0 0 0• O coCO CO N 40 /� 0
0
Cp d �/ d < d r! M 0
0 co
M
5%
4%
3%
2%
1%
0%
o\°
M Mo j\° 0
co. O 0) 0Oj
M <V N
CO
N c\j
DP h\0`o cp A\ 0�00 O\�O \\ �\,��, b "\�D, ��N D ���<o co`
'\��2� 'b�A0 O� O
ti
00 00 00 00 00 0 O OI \ O\ \O� O� �
I, ti r, q,
Outstanding GO Debt (in Millions)
$400 M • I Co c°'
co O0) CO O M M M M 63
$350 O M co 6% 0) 03 69 • rxi
$300
M 69 69-
$250
$200 6%
CO
$150
$100
$50
$0
h\O�o O\O'\ A\4> O\0 OO O'� ^\,\�. O,D<�h0 O�'\\,�O O
00 00 0 00 00 00 O� O^ O� O� O� O� O\ O� O^ O�
16
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2020
The City's growth 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 decreased almost two cents from $0.4344 in 2020 to $0.4150 in
2021. Anticipated future increases to the Debt to AV ratio are precipitated by the voter -approved
2019 bond package, which included $79 million in general obligation projects. As of
September 30, 2020, the City had $339.2 million in General Obligation and Certificates of
Obligation outstanding principal 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 growing Houston area economy and the continued growth in value and population, the
City General Fund revenues and other sources are projected to increase from $86,213,352 in FY
2020 to $90,278,860 in FY 2021, an increase of $4,065,328, or 4.7%, mainly due to an increase
in Property Tax, Sales Tax, and Charges for Services. Property Tax revenues increased in 2021
by 6% over FY 2020 year-end amended revenue, resulting in steady property tax revenue as a
percent of total revenues, remaining flat at 31 % of the FY 2020 and FY 2021 budgets, and just
over a two cent decrease in the overall property tax rate from $0.7412 to $0.7200 per $100
valuation.
FY 2021 total expenditures are budgeted to be $89,589,896, 6.3% more than the FY 2020
Amended Budget. Salaries and benefits remain the major expenditure for FY 2021, at 71.9% of
the total. Police and Fire remained the main focus of the supplemental funding. The Police
Department will be adding two new Sworn Officers. The Fire Department will be continuing the
process of "continuous onboarding" by bringing on 12 new firefighters. A 2% increase in salary is
included for all personnel, to support recruitment and retention efforts.
The General Fund meets reserve requirements and the fund is structurally in balance for FY 2021
whereby operating revenues are budgeted to be greater than expenditures. The adopted FY 2021
fund balance over policy is $4,918,521, with the adopted ending fund balance of $19,850,170.
CONTACTING THE CITY'S FINANCIAL MANAGEMENT
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 Kristen Woolley, Deputy Director of Finance, at 3523 Liberty Drive,
Pearland, Texas 77581, or 652-1698. The report and general information can be found on the City's
website at www.pearlandtx.gov.
17
18
Basic Financial Statements
19
20
CITY OF PEARLAND, TEXAS
Statement of Net Position
September 30, 2020
Primary Government
Governmental Business -type
Activities Activities
Total
Assets
Cash and cash equivalents $ 64,565,185 $ 14,216,877 $ 78,782,062
Investments 96,483,410 19,333,650 115,817,060
Receivables (net of allowance for
uncollectibles, where applicable) 33,764,858 15,976,724 49,741,582
Internal balances (2,661,858) 2,661,858
Inventories 84,246 84,246
Prepaids 32,473 32,473
Restricted cash and cash equivalents 171,219,087 171,219,087
Restricted investments 8,014,700 8,014,700
Capital assets:
Nondepreciable 193,520,002 152,041,993 345,561,995
Depreciable, net 669,729,138 262,626,608 932,355,746
Total capital assets 863,249,140 414,668,601 1,277,917,741
Total Assets 1,055,517,454 646,091,497 1,701,608,951
Deferred Outflows of Resources
Deferred charge on refunding
OPEB
Pension
Total Deferred Outflows of Resources
Liabilities
Accounts payable and other
accrued liabilities
Accrued interest payable
Unearned revenues
Customer deposits
Noncurrent liabilities:
Due within one year
Due in more than one year
Total OPEB liability
Net pension liability
Total Liabilities
Deferred Inflows of Resources
OPEB
Pension
Total Deferred Inflows of Resources
7,804,901
1,519,348
5,810,134
15,134, 383
1,053,817
296,507
840,854
8,858,718
1,815,855
6,650,988
2,191,178 17,325,561
11,755,285 13,815,273 25,570,558
1,402,676 589,864 1,992,540
2,363,933 2,363,933
1,681,052 4,227,745 5,908,797
32,006,286 16,570,164 48,576,450
423,638,611 340,066,509 763,705,120
6,484,755 1,140,383 7,625,138
18,632,729 2,377,674 21,010,403
497,965,327 378,787,612 876,752,939
285,636
3,989,143
4,274,779
45,034
577,317
330,670
4,566,460
622,351 4,897,130
Net Position
Net investment in capital assets 490,304,418 213,081,451 703,385,869
Restricted for:
Debt service 9,063,796 9,063,796
Capital projects 7,712,303 7,712,303
Community development programs 7,286,538 7,286,538
Public safety 452,825 452,825
Economic development 37,188,502 37,188,502
Unrestricted 33,179,448 39,015,162 72,194,610
Total Net Position $ 568,411,731 $ 268,872,712 $ 837,284,443
See Notes to Financial Statements 21
CITY OF PEARLAND, TEXAS
Statement of Activities
Year Ended September 30, 2020
Functions/Programs:
Expenses
Program Revenues
Charges for
Services
Operating
Grants and
Contributions
Capital Grants
and
Contributions
Primary Government:
Governmental Activities:
General government
Public safety
Public works
Community services
Parks and recreation
Economic development
Interest on long-term debt
Total Governmental Activities
Business -type Activities:
Water and sewer
Solid waste
Total Business -type Activities
Total Primary Government
$ 25,503,753
51,030,944
44,861,968
4,383,387
8,196, 832
28,683,193
14,041,578
176,701,655
45,054,896
7,929,534
52,984,430
$ 12,424,106 $ 6,609,051
4,771,969
113,165 14,164,490
6,099,785 114
991,583
459,996
24,860,604 20,773,655
54,710,109
7,754,993
225,376
31
62,465,102 225,407
$
7,148,295
7,148,295
1,455,767
1,455,767
$ 229,686,085 $ 87,325,706 $ 20,999,062 $ 8,604,062
General Revenues:
Property taxes
Sales and use taxes
Franchise fees
Unrestricted investment earnings
Miscellaneous
Transfers
Total General Revenues And Transfers
Change In Net Position
Net Position, Beginning, As Previously Reported
Restatement: Error corrections
Net Position, Beginning, As Restated
Net Position, Ending
See Notes to Financial Statements 22
CITY OF PEARLAND, TEXAS
Statement of Activities (Continued)
Year Ended September 30, 2020
Net (Expense) Revenue and Changes in Net Position
Primary Government
Governmental
Activities
Business -type
Activities
Total
$ (6,470,596)
(46,258,975)
(23,436,018)
1,716,512
(7,205,249)
(28,223,197)
(14,041,578)
(123,919,101)
(123,919,101)
97,106,308
34,927,709
7,270,488
1,625, 879
4,865,169
5,460,009
151,255,562
27,336,461
543,834,323
(2,759,053)
541,075,270
$ 568,411,731
$
11,336,356
(174,510)
11,161,846
11,161,846
1,276,685
12,890
(5,460,009)
(4,170,434)
6,991,412
259,748,028
2,133, 272
261,881,300
$ 268,872,712
$ (6,470,596)
(46,258,975)
(23,436,018)
1,716,512
(7,205,249)
(28,223,197)
(14,041,578)
(123, 919,101)
11,336,356
(174,510)
11,161,846
(112,757,255)
97,106, 308
34,927,709
7,270,488
2,902,564
4,878,059
147, 085,128
34,327,873
803,582,351
(625,781)
802, 956, 570
$ 837,284,443
See Notes to Financial Statements 23
CITY OF PEARLAND, TEXAS
Balance Sheet — Governmental Funds
September 30, 2020
Assets
Cash and cash equivalents
Investments
Receivables (net of allowance for
uncollectibles, where applicable)
Prepaids
Total Assets
Pearland
Debt Capital Economic
General Service Projects Development
Fund Fund Fund Corporation
$ 7,212,409 $
17,118,841
10, 988, 337
28,271
1,166,338 $ 20,167,526 $ 3,908,732
5,144,009 52,055,947 16,835,439
6,736,982 8,817,531 4,883,712
$ 35,347,858 $ 13,047,329 $ 81,041,004 $ 25,627,883
Liabilities
Accounts payable $ 2,853,015 $ 19,967 $ 2,642,899 $ 182,458
Accrued expenditures 1,980,458 132,080 2,576,690 67,055
Customer deposits 642,719 - 1,000,000 38,333
Unearned revenue 317,608 423,812 1,622,513 -
Total Liabilities 5,793,800 575,859 7,842,102 287,846
Deferred Inflows of Resources
Unavailable revenue
Total Deferred Inflows of Resources
477,761 6,308,881 2,865,643
477,761 6,308,881 2,865,643
Fund Balances
Nonspendable 28,271 - - -
Restricted 6,162,589 73,198,902 22,474,394
Assigned 648,426 - - -
Unassigned 28,399,600 - - -
Total Fund Balances 29,076,297 6,162,589 73,198,902 22,474,394
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
$ 35,347,858 $ 13,047,329 $ 81,041,004 $ 25,627,883
See Notes to Financial Statements 24
CITY OF PEARLAND, TEXAS
Balance Sheet — Governmental Funds (Continued)
September 30, 2020
Tax Increment
Reinvestment
Zone #2
Development
Authority of
Pearland
Other
Governmental
Funds
Total
Governmental
Funds
$ 6,868,799
89,401
$ 14,715,308 $
3,718,825
5,329,174
2,240,826
$ 57,757,937
96,483,410
33,756,789
28,271
$ 6,958,200 $ 14,715,308 $ 11,288,825 $ 188,026,407
$
78,334 $ 1,200 $
78,334
1,200
6,879,866
14,714,108
6,879,866
14,714,108
248,984 $
31,886
6,026,857
4,788,169
1,681,052
2,363,933
280,870
14,860,011
1,486,878
11,139,163
1,486,878
11,139,163
9,548,376
(27,299)
28,271
132,978,235
648,426
28, 372, 301
9,521,077 162,027,233
$ 6,958,200 $ 14,715,308 $ 11,288,825 $ 188,026,407
See Notes to Financial Statements 25
CITY OF PEARLAND, TEXAS
Reconciliation of the Balance Sheet — Governmental Funds to the
Government -wide Statement of Net Position
Year Ended September 30, 2020
Total Fund Balances - Governmental Funds $ 162,027,233
Amounts reported for the 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. 859,702,867
Deferred outflows represent a consumption of net position that applies to future reporting
periods and therefore will not be recognized as an outflow of resources until then.
Deferred charge on refunding
Deferred outflows relating to OPEB activities
Deferred outflows relating to pension activities
Other long-term assets are not available to pay current period expenditures and,
therefore, are reported as unavailable revenue in the funds.
Long-term liabilities are not due and payable in the current period and, therefore, are not
reported in the funds.
Bonds and capital leases payable
Compensated absences
Accrued interest governmental activity debt
Total OPEB liability
Net pension liability
Deferred inflows represent an acquisition of net position that applies to future reporting
periods and therefore will not be recognized as an inflow of resources until then.
Deferred inflows relating to OPEB activities
Deferred inflows relating to pension activities
Internal service funds are used by management to charge the cost of certain activities to
individual funds. A portion of the assets and liabilities of the internal service funds are
included in the governmental activities in the statement of net position.
7,804,901
1,504,099
5,765,437
11,236,286
(447,033,524)
(8,611,373)
(1,402,676)
(6,464,674)
(18,491,521)
(283,275)
(3,958,455)
6,616,406
Net Position of Governmental Activities $ 568,411,731
See Notes to Financial Statements 26
27
CITY OF PEARLAND, TEXAS
Statement of Revenues, Expenditures and Changes
in Fund Balances — Governmental Funds
Year Ended September 30, 2020
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
General
Fund
Debt
Service
Fund
Capital
Projects
Fund
Pearland
Economic
Development
Corporation
$ 26,919,731
22,716,028
7,014,025
4,423,760
1,617,153
18,220,404
420,200
6,425,093
876,453
$ 37,924,975 $
- $ -
11,217,696
156,977 574,906
11, 518, 373
770,355 9,370
459,996
259,866
707,623
59,132
88,632,847 38,852,307
12,102,649 12,704,313
11,606,819
46,609,473
11,502,132
3,798,947
5,397,074
441,444
11,925
610,735
19,480,000
12, 934, 251
7,768,815
190,550
409,229
33,681,769
3,095,628
250,000
41,300
3,405,448
79,978,549
40,183,066 34,281,548
6,792,376
Excess (Deficiency) of Revenues
Over Expenditures 8,654,298 (1,330,759)
Other Financing Sources (Uses)
Proceeds from issuance of debt
Premium on debt issued
Transfers in
Transfers out
Total Other Financing Sources
(Uses)
Net Change in Fund Balances
Fund Balances, Beginning of Year,
as Previously Reported
Restatement: Error corrections
Fund Balances, Beginning of Year,
as Restated
Fund Balances, End of Year
(22,178,899) 5,911,937
221,261
4,949,456
(1,950,568)
33,425,000
6,897,046
2,066,739 2,000,663 -
(1,402,310) (172,979)
3,220,149
2,066,739 40,920,399 (172,979)
11,874,447
17,201,850
735,980 18,741,500 5,738,958
5,426,609 51,351,705 16,735,436
3,105,697
17,201,850 5,426,609 54,457,402 16,735,436
$ 29,076,297 $ 6,162,589 $ 73,198,902 $ 22,474,394
See Notes to Financial Statements 28
CITY OF PEARLAND, TEXAS
Statement of Revenues, Expenditures and Changes
in Fund Balances — Governmental Funds (Continued)
Year Ended September 30, 2020
Tax Increment Development Other Total
Reinvestment Authority of Governmental Governmental
Zone #2 Pearland Funds Funds
$ 32,261,602 $ - $ - $ 97,106,308
- - 993,985 34,927,709
- - 256,463 7,270,488
- - - 4,423,760
- - 105,842 1,722,995
- - 33,450 18,713,850
55,316 13,262 102,382 1,582,909
828,974 19,480,063
838,110 2,553,420
32,316,918 13,262 3,159,206 187,781,502
906,422 12,513,241
608,707 47,218,180
- 11,692,682
- 653,281 4,452,228
- - 85,790 5,482,864
12,491,525 10,256,277 - 25,843,430
7,625,000
2,542,015
660,594
27,796,444
15,938,720
38,358,546
7,768,815
12,491,525 20,423,292
2,914,794 197,065,150
19,825,393 (20,410,030) 244,412 (9,283,648)
- 4,255,000 37,901,261
6,897,046
- 22,544,542 - 31,561,400
(22,544,542) - (30,992) (26,101,391)
(22,544,542) 26,799,542
(30,992) 50,258,316
(2,719,149) 6,389,512 213,420 40,974,668
9,599,015 8,324,596 9,307,657 117,946,868
- - - 3,105,697
9,599,015
8,324,596 9,307,657 121,052,565
$ 6,879,866 $ 14,714,108 $ 9,521,077 $ 162,027,233
See Notes to Financial Statements 29
CITY OF PEARLAND, TEXAS
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances — Governmental Funds to the
Government -wide Statement of Activities
Year Ended September 30, 2020
Net Change In Fund Balances — Total Governmental Funds $ 40,974,668
Amounts reported for governmental activities in the statement of activities are different because:
Governmental funds report capital outlays as expenditures. However, in the statement of
activities, the cost of those assets is allocated over their estimated useful lives and reported as
depreciation expense. This is the amount by which capital outlays of $37,927,249 exceeded
depreciation expense of $41,912,466 in the current period.
Capital assets acquired through city development recognized as capital contributions in the
statement of activities
The repayment of the principal of long-term debt consumes the current financial resources of
governmental funds. The transaction, however, does not have any effect on net position. Also,
governmental funds report the effect of bond premiums, discounts and similar items when debt is
first issued, whereas the amounts are deferred and amortized in the statement of activities. The
effect of these differences in the treatment of long-term debt and related items was:
Debt issued
Repayment of long-term debt
Premiums on bonds payable
Deferred loss on refunding
Current year changes in other long-term liabilities do not require the use of current financial
resources; therefore, are not reported as expenditures in governmental funds. The effect of these
differences in the treatment of other long-term liabilities was:
Compensated absences
Current year changes in accrued interest payable do not require the use of current financial
resources; therefore, are not reported as an expenditure in the governmental funds.
Governmental funds do not present revenues that are not available to pay current olbigations. In
contrast, such revenues are reported in the statement of activities when earned.
The net change in the OPEB-related deferred outflows and inflows of resources and total OPEB
liability do not require the use of current financial resources; therefore, are not reported as
expenditures in the governmental funds.
The net change in the pension -related deferred outflows and inflows of resources and net
pension liability do not require the use of current financial resources; therefore, are not reported
as expenditures in the governmental funds.
An internal service fund is used by management to charge the cost of certain activities, such as
insurance and fleet management, to individual funds. A portion of the change in net position of
the internal service funds is included in governmental activities in the statement of activities.
(3,553,919)
7,148,295
(37,901,261)
27,796,444
(3,323,933)
(1,578,624)
(1,308,978)
(97,348)
(1,577,047)
(697,773)
(802,024)
2,257,961
Change In Net Position of Governmental Activities $ 27,336,461
See Notes to Financial Statements 30
CITY OF PEARLAND, TEXAS
Statement of Net Position - Proprietary Funds
Year Ended September 30, 2020
Business -type Activities - Enterprise Funds
Water and Solid Waste
Sewer Fund Fund
Total
Governmental
Activities
Internal
Service Fund
Assets
Current Assets:
Cash and cash equivalents $ 14,009,018 $ 207,859 $ 14,216,877 $ 6,807,248
Investments 19,333,650 - 19,333,650 -
Receivables (net of allowance for
uncollectibles, where applicable) 14,849,935 1,126,789 15,976,724 8,069
Inventories - - 84,246
Prepaids - 4,202
Restricted cash and cash equivalents 171,219,087 - 171,219,087 -
Restricted investments 8,014,700 - 8,014,700 -
Total Current Assets 227,426,390 1,334,648 228,761,038 6,903,765
Noncurrent Assets
Capital assets:
Land and improvements 3,796,382
Construction in progress 148,245,611
Contractual rights to water supply 34,511,428
Infrastructure 366, 628, 617
Buildings 32,042,833
Machinery and equipment 5,936,115
Less accumulated depreciation (176,492,385)
Total Non -current Assets 414,668,601
Total Assets 642,094,991
- 3,796,382 -
- 148,245,611 -
- 34,511,428 -
- 366,628,617 -
32,042,833 -
5,936,115 3,717,953
(176,492,385) (171,680)
414, 668, 601 3,546,273
1,334,648 643,429,639 10,450,038
Deferred Outflows of Resources
Deferred charge on refunding 1,053,817 - 1,053,817 -
OPEB 296,507 - 296,507 15,249
Pension 840,854 - 840,854 44,697
Total Deferred Outflows of Resources 2,191,178 2,191,178 59,946
Current Liabilities
Accounts payable and accrued expenses 13,174,436 640,837 13,815,273 538,154
Claims payable - - 499,228
Accrued interest payable 589,864 589,864 -
Customer deposits 4,227,745 - 4,227,745 -
Current portion of long-term liabilities:
Compensated absences 265,164 265,164
Bonds and permanent improvement
bonds payable 16,305,000 16,305,000
Total Current Liabilities 34,562,209 640,837 35,203,046 1,037,382
See Notes to Financial Statements 31
CITY OF PEARLAND, TEXAS
Statement of Net Position - Proprietary Funds (Continued)
Year Ended September 30, 2020
Noncurrent Liabilities
Compensated absences
Total OPEB liability
Net pension liability
Bonds and permanent improvement
bonds payable
Total Noncurrent Liabilities
Total Liabilities
Deferred Inflows of Resources
OPEB
Pension
Total Deferred Inflows of Resources
Net Position
Net investment in capital assets
Restricted for debt service
Restricted for capital projects
Unrestricted
Total Net Position
Adjustment to reflect the consolidation of
internal services fund activities related to
enterprise funds
Net Position of Business -type Activities
Governmental
Business -type Activities - Enterprise Funds Activities
Water and Solid Waste
Sewer Fund Fund
$ 658,780 $
1,140,383
2,377,674
339,407,729
343,584,566
378,146, 775
45,034
577,317
622,351
Total
Internal
Service Fund
- $ 658,780 $
- 1,140, 383
- 2,377,674
- 339,407,729
343, 584, 566
640,837 378,787,612
45,034
577,317
622,351
20,081
141,208
161,289
1,198,671
2,361
30,688
33,049
213,081,451 - 213,081,451 3,546,273
9,063,796 9,063,796 -
7,712,303 - 7,712,303 -
35,659,493 693,811 36,353,304 5,731,991
$ 265,517,043 $ 693,811 266,210,854 $ 9,278,264
2,661,858
$ 268,872,712
See Notes to Financial Statements 32
CITY OF PEARLAND, TEXAS
Statement of Revenues, Expenses and Changes
in Net Position — Proprietary Funds
Year Ended September 30, 2020
Operating Revenues
Charges for sales and services
Total Operating Revenues
Operating Expenses
Personnel services
Supplies and materials
Contractual services
Repairs and maintenance
Other expenses
Depreciation and amortization
Total Operating Expenses
Operating Income (Loss)
Business -type Activities - Enterprise Funds
Water and Solid Waste
Sewer Fund Fund
Total
Governmental
Activities
Internal
Service Fund
$ 54,710,109 $ 7,754,993 $ 62,465,102 $ 14,167,108
54,710,109 7,754,993 62,465,102 14,167,108
9,791,275
8,315,676
6,052,455
1,874,321
94,478
12,156, 284
7,929,534
38,284,489 7,929,534
16,425,620 (174,541)
9,791,275
8,315,676
13, 981, 989
1,874,321
94,478
12,156,284
520,660
43,947
9,592,404
1,022,078
31,454
171,680
46, 214, 023 11, 382, 223
16,251,079 2,784,885
Nonoperating Revenues (Expenses)
Intergovernmental 225,376 225,376 27,746
Earnings on investments 1,272,277 4,408 1,276,685 42,970
Gain on sale of capital assets 155,709
Miscellaneous revenue (expense) 12,890 31 12,921
Debt issuance costs (2,399,869) (2,399,869)
Interest expenses (5,123,887) (5,123,887)
Net Nonoperating Revenues (6,013,213) 4,439 (6,008,774) 226,425
Income Before Transfers and
Capital Contributions
Capital contributions
Transfers in
Transfers out
Change in Net Position
Net Position, Beginning, as
Previously Reported
Restatement: Error corrections
Net Position, Beginning, as
Restated
10,412,407
1,455, 767
250,000
(5,710,009)
6,408,165
258,125, 811
983,067
(170,102)
(170,102)
1,622,217
(758,304)
259,108,878 863,913
10,242,305
1,455,767
250,000
(5,710,009)
3,011,310
6,238,063 3,011,310
259,748,028 6,910,836
224,763 (643,882)
259, 972, 791 6,266,954
Net Position, Ending $ 265,517,043 $ 693,811 $ 266,210,854 $ 9,278,264
Reconciliation to government -wide statement of activities:
Change in Net Position of enterprise funds $ 6,238,063
Adjustment for the net effect of the current year activity
between the internal service funds and the enterprise
funds
753,349
Change in Net Position of Business -type Activities $ 6,991,412
See Notes to Financial Statements 33
CITY OF PEARLAND, TEXAS
Statement of Cash Flows — Proprietary Funds
Year Ended September 30, 2020
Business -type Activities - Enterprise Funds
Water and Solid Waste
Sewer Fund Fund
Total
Governmental
Activities
Internal
Service Fund
Cash Flows from Operating Activities
Receipts from customers and users $ 52,787,819 $ 7,846,627 $ 60,634,446 $
Receipts from interfund charges for services - - 14,261,260
Payments to employees for salaries and benefits (9,566,584) - (9,566,584) (543,133)
Payments to suppliers and service providers (9,284,616) (7,961,884) (17,246,500) (10,274,732)
Net Cash Provided By (Used In) Operating Activities 33,936,619 (115,257) 33,821,362 3,443,395
Cash Flows from Noncapital Financing Activities
Transfers from other funds
Transfers to other funds
Receipt of amount due from other fund
Cash received from nonoperating revenues
Net Cash Provided By (Used In) Noncapital
Financing Activities
250,000 - 250,000
(5,710,009) - (5,710,009)
2,750,000 - 2,750,000
238,266 31 238,297
(2,471,743)
31 (2,471,712)
27,746
27,746
Cash Flows from Capital and Related Financing
Activities
Acquisition and construction of capital assets (50,036,678) - (50,036,678) (2,637,853)
Proceeds from sale of assets - - 155,709
Proceeds from isuance of debt 116,104,085 - 116,104,085
Debt issuance costs (2,399,869) - (2,399,869)
Principal paid on capital debt (14,180,027) - (14,180,027)
Interest paid on capital debt (4,861,350) - (4,861,350)
Net Cash Provided By (Used In) Capital and
Related Financing Activities 44,626,161 44,626,161 (2,482,144)
Cash Flows from Investing Activities
Interest on investments 1,272,277 4,408 1,276,685 42,970
Investment maturities 30,277,410 - 30,277,410 Net Cash Provided By Investing Activities 31,549,687 4,408 31,554,095 42,970
Increase (Decrease) in Cash and Cash Equivalents 107,640,724 (110,818) 107,529,906 1,031,967
Cash and Cash Equivalents, Beginning of Year 77,587,381 318,677 77,906,058 5,775,281
Cash and Cash Equivalents, End of Year $ 185,228,105 $ 207,859 $ 185,435,964 $ 6,807,248
Reconciliation to the Statement of Net
Position - Proprietary Funds
Unrestricted cash and cash equivalents
Restricted cash and cash equivalents
$ 14,009,018 $ 207,859 $ 14,216,877 $ 6,807,248
171,219,087 - 171,219,087 -
$ 185,228,105 $ 207,859 $ 185,435,964 $ 6,807,248
See Notes to Financial Statements 34
CITY OF PEARLAND, TEXAS
Statement of Cash Flows — Proprietary Funds (Continued)
Year Ended September 30, 2020
Business -type Activities - Enterprise Funds
Water and Solid Waste
Sewer Fund Fund
Total
Governmental
Activities
Internal
Service Fund
Reconciliation of Operating Income to Net Cash
Provided By (Used In) Operating Activities
Operating income (loss) $ 16,425,620 $ (174,541) $ 16,251,079 $ 2,784,885
Items not requiring cash:
Depreciation and amortization 12,156,284 12,156,284 171,680
Changes in:
Receivables, net (1,922,290) 91,634 (1,830,656) 94,152
Prepaids - 37,196
Inventories - 144,737
Accounts payable and accrued liabilities 6,962,874 (32,350) 6,930,524 233,218
Deposits payable 89,440 89,440 -
Compensated absences 83,393 83,393 -
Total OPEB liability 321,989 321,989 (15,826)
Net pension liability (1,180,162) (1,180,162) 20,250
Deferred outflows - OPEB (216,083) (216,083) (15,249)
Deferred inflows - OPEB 34,785 34,785 2,361
Deferred outflows - Pension 613,935 613,935 (44,697)
Deferred inflows - Pension 566,834 566,834 30,688
Net Cash Provided By (Used In) Operating Activities $ 33,936,619 $ (115,257) $ 33,821,362 $ 3,443,395
Summary of Non -cash Transactions
Contributed capital assets
Capital asset acquisitions in accounts payable
$ 1,455,767 $
10,701,039
$ 1,455,767 $
10, 701, 039
See Notes to Financial Statements 35
36
CITY OF PEARLAND, TEXAS
Notes to Financial Statements
As of and For the Year Ended September 30, 2020
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) 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.
37
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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.
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: Each of these units are presented as governmental fund types.
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.
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.
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
38
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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 statement 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. Grant revenues are recognized when reimbursable expenditures are made, all other
eligibility requirements imposed by the provider have been met, and the City receives
reimbursement within one year of the current fiscal period. 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.
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
39
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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 Pearland Economic Development Corporation, a blended component unit, is a special
revenue fund 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 a special revenue fund 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. 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.
The Development Authority of Pearland fund, a blended component unit, is a special revenue
fund used to account for the financing of the development of the TIRZ #2.
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, health claims, and motor pool. The Internal
Service Funds is included in governmental activities for government -wide reporting purposes.
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.
40
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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 proprietaryfund'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.
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.
41
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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 two 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.
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.
42
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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 7% 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 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.
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.
43
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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 Prepaids
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.
Property, plant, and equipment are depreciated using the straight-line method over the following
useful lives:
Infrastructure 10-50
Water and sewer system 30-50
Buildings and improvements 10-45
Machinery and equipment 3-15
Furniture and fixtures 3-10
Intangible Assets - Contractual 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
1-15 years of service, 20 days per year for service of 16-19 years, and 25 days per year for service
44
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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 one
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.
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 includes a separate section for deferred
outflows of resources. 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 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.
45
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
• 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) changes
in actuarial assumptions; 2) differences between expected and actual actuarial
experiences. 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 postemployment 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.
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 three 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 from 1) differences between
projected and actual earnings on pension plan investments and 2) 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.
• Deferred inflows of resources for OPEB — Reported in the government -wide financial
statement of net position, these deferred inflows result from 1) differences between
expected and actual experience and 2) changes in actuarial assumptions. These OPEB
related deferred inflows will be amortized over the expected remaining service lives of all
employees (active and inactive employees) that are provided with OPEB through the
OPEB plans.
46
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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 Postemployment Benefits (OPEB) — Retiree Health Care
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.
T. Other Postemployment Benefits (OPEB) — TMRS Supplemental Death Benefits
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.
U. New Accounting Standards
The following standards have been issued, but have not been implemented as not yet effective.
GASB Statement No. 84, Fiduciary Activities. This statement establishes standards of accounting
and financial reporting for fiduciary activities.
GASB Statement No. 87, Leases. This statement establishes standards of accounting and
financial reporting for leases by lessees and lessors.
GASB Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction
Period. This statement establishes accounting requirements for interest cost incurred before the
end of a construction period.
47
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
GASB Statement No. 90, Majority Equity Interests. This statement is an amendment of GASB
Statements No. 14 and No. 6, will improve the consistency and comparability of reporting a
government's majority equity interest in a legally separate organization and to improve the
relevance of financial statement information for certain component units.
GASB Statement No. 91, Conduit Debt Obligations. This statement will provide a single method
of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with
commitments extended by issuers, arrangements associated with conduit debt obligations, and
related note disclosures.
GASB Statement No. 92, Omnibus 2020. This statement will enhance comparability in accounting
and financial reporting and to improve the consistency of authoritative literature by addressing
practice issues that have been identified during implementation and application of certain GASB
Statements.
GASB Statement No. 93, Replacement of Interbank Offered Rates. This statement will address
those and other accounting and financial reporting implications that result from the replacement
of an interbank offered rate (IBOR).
GASB Statement No. 94, Public -Private and Public -Public Partnerships and Availability Payment
Arrangements. The primary objective of this statement is to improve financial reporting by
addressing issues related to public -private and public -public partnership arrangements (PPPs).
GASB Statement No. 96, Subscription -Based Information Technology Arrangements. This
statement provides guidance on the accounting and financial reporting for subscription -based
information technology arrangements (SBITAs) for government end users (governments).
GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial
Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The objectives
of this statement are to mitigate costs associated with the reporting of certain defined contribution
pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee
benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary
component units in fiduciary fund financial statements; and enhance the relevance, consistency,
and comparability of the accounting and financial reporting for Internal Revenue Code (IRC)
Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension
plan and for benefits provided through those plans.
The City has not fully determined the effects that implementation of these statements will have on
the City's financial statements.
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
48
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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.
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 Cash and
Investments
Cash $ 250,001,149
Temporary Investments
Texas CLASS 92,111,109
TexSTAR 12,776,917
FAMC discount note 3,056,159
FHLMC discount note 1,008,468
FNMA discount note 1,004,049
Certificates of deposit 13,875,058
$ 373,832,909
49
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
At September 30, 2020, the City's cash deposits were covered by federal depository insurance
and by pledged collateral held by the City's agent in the City's name.
Agency securities are valued based on quoted market prices. Certificates of deposit are stated at
amortized cost. 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:
Interest income
Net unrealized gain on
temporary investments
$ 2,777,722
124,842
$ 2,902,564
The City's investments' fair value measurements are as follows at September 30, 2020:
Investments by fair value level:
U.S. agencies
Fair Value
Fair Value Measurements Using
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
$ 5,068,676 $ - $ 5,068,676
The City's investments in government pools include deposits in TexSTAR and Texas CLASS.
These pools operate similarly to money market funds and each share is equal in value to $1.00.
The value of the pool is equal to the value of the pool shares.
TexSTAR was created in April 2003 pursuant to the Interlocal Cooperation Act of the State of
Texas, chapter 791 of the Texas Government Code and the Public Funds Investment Act, chapter
2256 of the Texas Government Code. TexSTAR policies require that local government deposits
be used to purchase investments authorized by the Texas Public Funds Investment Act. The
State Comptroller of Public Accounts exercises responsibility over TexSTAR. TexSTAR is
administered by Hilltop Securities, Inc. and J.P. Morgan Investment Management. J.P. Morgan
Investment Management, Inc. provides investment advisory services.
The Texas Cooperative Liquid Assets Securities System Trust (Texas CLASS) was created as a
local government investment pool (LGIP) pursuant to Section 2256.016 of the Public Funds
Investment Act, Texas Government Code (PFIA). Per state code, entities may pool any of their
funds, or funds under their control, to preserve principal, maintain the liquidity of the funds, and
maximize yield. The Texas CLASS Trust Agreement is an agreement of indefinite term regarding
the investment, reinvestment, and withdrawal of local government funds. The parties to the Trust
Agreement are Texas local government entities that choose to participate in the Trust (the
Participants), Public Trust Advisors, LLC (Public Trust) as Program Administrator, and Wells
Fargo Bank Texas, N.A. as Custodian. The investment pools do not have any limitations or
restrictions on withdrawals, such as notice periods or maximum transaction amounts, and do not
impose any liquidity or redemption gates.
50
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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
Investments Maturity (days)
Temporary Investments
Texas CLASS $ 92,111,109 55
TexSTAR 12,776,917 45
FAMC discount note 3,056,159 354
FHLMC discount note 1,008,468 316
FNMA discount note 1,004,049 89
Certificates of deposit 13,875,058 288
$ 123,831,760
Portfolio weighted average maturity 90
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 90 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.
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% of the City's total investment portfolio will be invested in a
single security type.
Investments
Percentage of
Total Investment
Portfolio
Temporary Investments
Texas CLASS $ 92,111,109 74%
TexSTAR 12,776,917 10%
FAMC discount note 3,056,159 2%
FHLMC discount note 1,008,468 1%
FNMA discount note 1,004,049 1%
Certificates of deposit 13,875,058 11 %
$ 123,831,760 100%
51
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Credit Risk
Federal Agricultural Mortgage Corporation, Federal Home Loan Mortgage Corporation, and the
Federal National Mortgage Association discount notes were rated AA+ by Standard & Poor's 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. TexSTAR and Texas CLASS are both rated AAAm
by S&P Global Ratings.
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.
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 $ 9,580,364
Customer deposits 3,978,479
Capital improvements 165,674,944
Total $ 179,233,787
52
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Note 3 — Receivables
Receivables at September 30, 2020, consisted of the following:
Primary Government:
Governmental Funds:
Pearland
Economic Tax Increment Non -Major
Debt Capital Development Reinvestment Governmental
General Fund Service Fund Projects Fund Fund Zone #2 Funds
Total
Receivables
Property taxes,
including penalties
and interest $ 494,045 $ 782,560 $ - $ - $ - $ - $ 1,276,605
Lease receivable 5,974,626 - - 5,974,626
Sales and other taxes 5,233,217 1,959,041 235,117 7,427,375
Interest 4,486 27,360 12,906 - 44,752
Grants 4,086,381 6,167,658 - 498,870 10,752,909
Other 1,183,783 2,622,513 2,911,765 89,401 1,506,839 8,314,301
Gross receivable 11,001,912 6,757,186 8,817,531 4,883,712 89,401 2,240,826 33,790,568
Less allowance for
uncollectibles (13,575) (20,204) - - (33,779)
Net receivable $ 10,988,337 $ 6,736,982 $ 8,817,531 $ 4,883,712 $ 89,401 $ 2,240,826 $ 33,756,789
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 $ 477,761 $
Delinquent property taxes receivable - debt service fund 758,067
Lease revenues - principal 5,550,814
Street assessments 1,486,878
Other 2,865,643 1,622,513
Lease interest revenues - 423,812
Grants and revenus prior to meeting all eligibility requirements 317,608
$ 11,139,163 $ 2,363,933
53
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Proprietary Funds:
Governmental
Business -type Activities - Enterprise Funds Activities
Water and Solid Waste Internal
Sewer Fund Fund Total Service Fund
Receivables:
Customer accounts
Billed $ 3,874,899 $ 732,312 $ 3,278,852 $ 8,069
Unbilled 11,552,573 596,047 12,148,620
Interest 27,215 27,215
Allowance for
uncollectibles (604,752) (201,570) (806,322)
$ 14,849,935 $ 1,126,789 $ 14,648,365 $ 8,069
City utility customers are billed on the basis of monthly cycle billings. At fiscal year-end, the City
accrues estimated unbilled revenues for water and sewer services and solid waste services provided
before the period ended September 30, to be billed after year-end.
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.
54
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Note 4 — Capital Assets
A summary of changes in the primary government's capital assets for the year ended September 30,
2020, follows:
Beginning
Balance, as
Restated Increases Decreases Transfers Ending Balance
Capital assets, not being depreciated:
Land $ 31,165,735 $ - $ 46,663 $ - $ 31,212,398
Construction in progress 145,667,477 36,370,904 - (19,730,777) 162,307,604
Total capital assets, not being
depreciated 176,833,212 36,370,904 46,663 (19,730,777) 193,520,002
Capital assets, being depreciated:
Infrastructure 1,035,600,379 7,148,296 538,892 6,877,917 1,050,165,484
Buildings and improvements 110,466,005 149,773 (161,327) 12,852,860 123,307,311
Machinery and equipment 24,313,221 3,277,442 (130,077) - 27,460,586
Furniture and fixtures 8,254,672 454,043 45,662 8,754,377
Total capital assets, being
depreciated 1,178,634,277 11,029,554 293,150 19,730,777 1,209,687,758
Less accumulated depreciation:
Infrastructure (431,430,551) (35,179,663)
Buildings and improvements (45,319,707) (4,259,215)
Machinery and equipment (16,361,881) (1,937,667)
Furniture and fixtures (6,149,297) (707,600)
Total accumulated depreciation (499,261,436) (42,084,145)
Total capital assets being
depreciated, net
1,386,961
(466,610,214)
(48,191,961)
(18,299,548)
(6,856,897)
1,386,961 (539,958,620)
679,372,841 (31,054,591) 1,680,111
Governmental activities capital assets, net $ 856,206,053 $ 5,316,313 $ 1,726,774 $
19,730,777 669,729,138
- $ 863,249,140
55
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Beginning
Balance, as
Restated Increases Decreases Transfers Ending Balance
Capital assets, not being depreciated:
Land $ 3,796,382 $ - $ $ - $ 3,796,382
Construction in progress 99,067,878 49,394,409 (216,676) 148,245,611
Total capital assets, not being
depreciated 102,864,260 49,394,409 (216,676) 152,041,993
Capital assets, being depreciated:
Water and sewer system 364,431,770 1,455,766 524,405 216,676 366,628,617
Buildings and improvements 32,268,698 - (225,865) - 32,042,833
Machinery and equipment 5,678,502 399,406 (294,843) - 5,783,065
Furniture and fixtures 127,521 25,529 - 153,050
Contractual water rights 34,511,428 - - 34,511,428
Total capital assets, being
depreciated 437,017,919 1,880,701 3,697 216,676 439,118,993
Less accumulated depreciation:
Water and sewer system (136,280,342) (9,577,880) 39,587 - (145,818,635)
Buildings and improvements (8,486,168) (735,070) 11,063 - (9,210,175)
Machinery and equipment (4,230,445) (464,511) 278,326 - (4,416,630)
Furniture and fixtures (117,129) (3,754) - - (120,883)
Contractual water rights (15,550,993) (1,375,069) - (16,926,062)
Total accumulated depreciation (164,665,077) (12,156,284) 328,976 - (176,492,385)
Total capital assets being
depreciated, net
Business -type activities capital assets, net
272,352,842 (10,275,583)
332,673 216,676 262,626,608
$ 375,217,102 $ 39,118,826 $ 332,673 $ - $ 414,668,601
Depreciation was charged to programs as follows:
Governmental activities:
General government
Public safety
Public works
Community services
Parks and recreation
$ 2,160,220
1,927,366
34,576,207
176,494
3,243,858
42, 084,145
Business -type activities:
Water and sewer 12,156,284
Total depreciation expense, primary government $ 54,240,429
56
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
The City had active construction projects as of September 30, 2020. The projects included
various improvements to streets, drainage and facilities and water and sewer improvements. At
year-end, the City's contractual commitments on projects were as follows:
Total Remaining
Project Description Contract In Progress Commitment
Governmental activities:
Drainage Improvement
Building Improvements
Street Improvement
Park Improvements
Total governmental activities
Business -type activities:
Water and Sewer Improvements
Total business -type activities
Total Primary Government
Note 5 — Long -Term Debt
A. Governmental Activity Debt
$ 90,715,526 $ 11,108,304 $ 79,607,222
214,170,861 36,640,202 177,530,659
387,933,332 99,113,132 288,820,200
81,402,016 15,445,967 65,956,049
774,221,735 162,307,604 611,914,131
620,109,555
620,109, 555
148,245,611 471,863,944
148,245,611 471,863,944
$ 1,394,331,290 $ 310,553,215 $ 1,083,778,075
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 Permanent Improvement Bonds, Series 2020 were issued in August 2020 in the amount of
$15,310,000 for construction and improvements to City streets, construction and improvements
to City parks, construction and improvements to City facilities, and construction of a fire training
facility. The bonds bear interest from 3.00% to 5.00% and are due in annual installments ranging
from $765,000 to $770,000 through March 1, 2040.
The Certificates of Obligation, Series 2020A were issued in August 2020 in the amount of
$8,540,000 for construction and improvements to certain streets, roads and intersection within
the City, certain improvements to Fire Station #4 within the City, construction and improvements
to facilities for the Orange Street Service Center, certain improvements to the City Hall Annex
within the City, and certain improvements to the generator system for the Public Safety Building
within the City. The bonds bear interest from 3.00% to 5.00% and are due in annual installments
ranging from $425,000 to $430,000 through March 1, 2040.
57
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
The Certificates of Obligation, Series 2020B were issued in August 2020 in the amount of
$9,575,000 for construction and improvements to certain streets, roads and intersection within
the City, certain improvements to Fire Station #4 within the City, construction and improvements
to facilities for the Orange Street Service Center, certain improvements to the City Hall Annex
within the City, and certain improvements to the generator system for the Public Safety Building
within the City. The bonds bear interest from 3.00% to 5.00% and are due in annual installments
ranging from $425,000 to $430,000 through March 1, 2040.
The Tax Increment Contract Revenue Bonds, Series 2019 were issued in November 2019 in the
amount of $4,255,000 for developer reimbursements of TIRZ infrastructure improvements. The
bonds bear interest from 3.00% to 5.00% and are due in annual installments ranging from
$275,000 to $480,000 through September 1, 2029.
The following is a summary of changes in the City's total governmental long-term liabilities for the
year ended September 30, 2020. 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 oblitation
Sales tax revenue bonds
Tax increment revenue bonds
Unamortized discount/premium
Total bonds payable
Other liabilities:
Obligations under capital lease
Compensated absences
Total governmental activities
long-term liabilities
Beginning
Balance Increases Decreases
Ending
Balance
Amounts Due
in One Year
$ 269,520,000
51, 620, 000
1,750,000
83,315,000
26,638,743
$ 15,310,000
18,115,000
4,255,000
6,897,046
$ (16,150,000)
(3,330,000)
(250,000)
(7,625,000)
(3,573,113)
$ 268,680,000
66,405,000
1,500, 000
79,945,000
29,962,676
$ 18,230,000
2,800,000
250,000
7,960,000
432,843,743
761,031
7,278,527
44,577,046 (30,928,113)
221,261
8,587,055
(441,444)
(7,254,209)
446,492,676
540,848
8,611, 373
29,240,000
286,560
2,479,726
$ 440,883,301 $ 53,385,362 $ (38,623,766) $ 455,644,897 $ 32,006,286
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.
58
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
A summary of the terms of general obligation bonds and certificates of obligation, as of
September 30, 2020, follows:
General Obligation Bonds
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 2016E
Permanent Improvement & Refunding Bonds, Series 2017
Permanent Improvement Bonds, Series 2018
Permanent Improvement & Refunding Bonds, Series 2019
Permanent Improvement Bonds, Series 2020
Certificates Of Obligation
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
Certificates of Obligation, Series 2020A
Certificates of Obligation, Series 2020B
Original Issue
Interest
Matures Rate (%)
Debt
Outstanding
$ 5,400,000
43, 575,000
9,315,000
40,410,000
47,165,000
8,495,000
10,210,000
33,275,000
29,840,000
59,600,000
7,440,000
15,755,000
15,310,000
2036 2.125-4.125
2029 3.00-5.00
2038 3.00-4.625
2034 2.00-5.00
2032 2.00-5.00
2035 2.00-4.00
2029 2.00-3.00
2036 2.00-5.00
2031 2.00-5.00
2037 2.00-5.00
2038 2.00-5.00
2039 4.00-5.00
2040 3.00-5.00
$ 2,095,000 2021
2,745,000 2038
4,625,000 2034
4,860,000 2035
13,995,000 2036
6,205,000 2037
7,085,000 2038
4,465,000 2039
11,980,000 2030
8,540,000 2040
9,575,000 2030
2.09
3.00-4.625
2.00-4.00
2.00-4.00
2.00-4.00
2.00-4.00
2.00-5.00
3.00-4.00
5.00
3.00-5.00
5.00
$ 4,055,000
30,210,000
7,200,000
32,485,000
40,185,000
6,370,000
6,170,000
29,825,000
22,325,000
52,650,000
6,690,000
15,205,000
15,310,000
$ 268,680,000
$ 210,000
2,140, 000
3,240,000
3,640,000
11,195, 000
5,270,000
6,375,000
4,240,000
11, 980, 000
8,540,000
9,575,000
$ 66,405,000
59
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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,
2020, is as follows:
Pearland Economic Development Corporation
Sales Tax Revenue Refunding Bonds, Series 2016
Interest Debt
Original Issue Matures Rate (%) Outstanding
$ 14,640,000 2026 2.36 $ 1,500,000
Development Authority of Pearland
Tax Increment Revenue Bonds, Series 2013 $ 9,150,000 2029 3.77 6,320,000
Tax Increment Revenue Bonds, Series 2014 8,060,000 2029 2.72 4,925,000
Tax Increment Revenue Bonds, Series 2015 66,030,000 2029 3.00 43,945,000
Tax Increment Revenue Bonds, Series 2016 12,320,000 2029 2.22 9,045,000
Tax Increment Revenue Bonds, Series 2017 8,555,000 2029 2.30 6,755,000
Tax Increment Revenue Bonds, Series 2018 5,835,000 2029 3.41 4,975,000
Tax Increment Revenue Bonds, Series 2019 4,255,000 2029 1.91 3,980,000
$ 79,945,000
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, 2020, the City did not have any
previously refunded bonds outstanding or outstanding refunding escrows.
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
2021 $ 286,561
2022 199,090
2023 72,362
Total 558,013
Less: Interest (17,165)
Obligations under capital leases $ 540,848
60
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
The annual requirements to amortize governmental activity general obligation bonds and certificates
of obligation outstanding at September 30, 2020, were as follows:
Fiscal Year
Governmental Activities
General Obligation Certificates of Obligation
Principal Interest Principal Interest
2021 $ 18,230,000 $ 11,072,990 $ 2,800,000 $ 2,673,635
2022 19,000,000 10,262,993 2,590,000 2,552,532
2023 19,650,000 9,418,644 2,580,000 2,476,670
2024 20,265,000 8,500,031 2,585,000 2,394,307
2025 21,055,000 7,557,118 2,600,000 2,303,107
2026-2030 107,605,000 23,184,135 34,570,000 9,497,085
2031-2035 52,050,000 6,003,747 12,840,000 2,209,800
2036-2040 10,825,000 669,866 5,840,000 364,644
$268,680,000 $ 76,669,524 $ 66,405,000 $ 24,471,780
The annual requirements to amortize blended component unit revenue bonds outstanding at
September 30, 2020, were as follows:
Fiscal Year
Governmental Activities
Sales Tax Revenue Bonds Tax Increment Revenue Bonds
Principal Interest Principal Interest
2021 $ 250,000 $ 35,400 $ 7,960,000 $ 2,178,147
2022 250,000 29,500 8,175,000 1,963,337
2023 250,000 23,600 8,400,000 1,739,935
2024 250,000 17,700 8,625,000 1,512,321
2025 250,000 11,800 8,860,000 1,278,087
2026-2030 250,000 5,900 37,925,000 2,630,177
$ 1,500,000 $ 123,900 $ 79,945,000 $ 11,302,004
B. Business -type Activity Debt
The Water and Sewer System Revenue Bonds, Series 2020A were issued in August 2020 in the
amount of $107,600,000. The bonds bear interest from 0.00% to 0.63%, due to the Texas Water
Development Board subsidy and are due in annual installments ranging from $3,585,000 to
$3,590,000 through September 1, 2050.
The Water and Sewer System Revenue & Refunding Bonds, Series 2019B were issued in August
2020 in the amount of $7,190,000. The bonds bear interest from 2.00% to 5.00% and are due in
annual installments ranging from $355,000 to $360,000 through September 1, 2040. Proceeds of
the bonds will be used for waterworks and sanitary sewer system improvements.
61
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
The following is a summary of changes in the City's total business -type long-term liabilities for the
year ended September 30, 2020.
Business -type Activities
Bonds payable:
Permanent Improvement Bonds
Water and sewer revenue bonds
Unamortized discount/premium
Total bonds payable
Other liabilities:
Obligations under capital lease
Compensated absences
Total business -type activities
long-term liabilities
Beginning
Balance
Increases
Amounts Due
Decreases Ending Balance in One Year
$ 4,480,000 $
232,415, 000
16, 807, 539
114,790,000
1,314,085
$ (370,000)
(11,770,000)
(1,953,895)
$ 4,110,000
335,435,000
16,167, 729
$ 370,000
15,935,000
253, 702, 539 116,104,085
(14,093,895) 355,712,729 16,305,000
86,166 - (86,166)
840,551 921,170
(837,743) 923,978 265,164
$ 254,629,256 $ 117,025,255 $ (15,017,804) $ 356,636,707 $ 16,570,164
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, 2020, is as follows:
Water and Wastewater Fund
Permanent Improvement Refunding Bonds, Series 2012
Interest
Original Issue Matures Rate (%)
Debt
Outstanding
$ 6,230,000 2029 3.00-5.00
Water & Sewer System Revenue & Refunding Bonds,
Series 2012 8,670,000
Water & Sewer System Revenue Bonds, Series 2014 9,210,000
Water & Sewer System Revenue Bonds, Series 2016A 8,880,000
Water & Sewer System Revenue Bonds, Series 2016B 11,100,000
Water & Sewer System Revenue Bonds, Series 2016C 50,100,000
Water & Sewer System Revenue Bonds, Series 2017A 10,225,000
Water & Sewer System Revenue Bonds, Series 2017B 12,025,000
Water & Sewer System Revenue & Refunding Bonds,
Series 2017C 60,970,000
Water & Sewer System Revenue Bonds, Series 2018A 8,650,000
Water & Sewer System Revenue Bonds, Series 2018B 19,050,000
Water & Sewer System Revenue Bonds, Series 2019A 21,000,000
Water & Sewer System Revenue & Refunding Bonds,
Series 2019B 34,590,000
Water & Sewer System Revenue Bonds, Series 2020A 107,600,000
Water & Sewer System Revenue Bonds, Series 2020B 7,190,000
2037 2.00-3.625
2039 2.00-4.00
2036 2.00-4.00
2025 0.00-0.32
2045 0.00-1.12
2027 0.00-1.29
2047 0.00-2.10
2037 2.00-5.00
2048 0.47-2.07
2038 2.00-5.00
2049 0.00-1.14
2039 4.00-5.00
2050 0.00-0.63
2040 2.00-5.00
$ 4,110,000
4,260,000
7,965,000
7,100,000
6,170,000
42,660,000
7,200,000
11, 005, 000
54,940,000
8,070,000
17,140,000
20,300,000
33, 835, 000
107,600,000
7,190,000
$ 335,435,000
62
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
The annual requirements to amortize Enterprise Fund revenue bonds and permanent improvement
bonds outstanding at September 30, 2020, were as follows:
Fiscal Year
Business -Type Activities
Revenue Bonds Permanent Improvement bonds
Principal Interest Principal Interest
2021 $ 15,935,000 $ 6,866,821 $ 370,000 $ 142,200
2022 16,025,000 6,538,918 385,000 127,100
2023 16,860,000 6,210,361 395,000 111,500
2024 16,060,000 5,838,354 1,480,000 74,000
2025 16,330,000 5,500,311 1,480,000 22,200
2026-2030 84,220,000 20,917,723 - -
2031-2035 68,080,000 10,190,108 - -
2036-2040 45,555,000 4,151,403 - -
2041-2045 33,760,000 1,804,649 - -
2046-2050 22.610.000 474.165 - -
Note 6 — Interfund Transactions
$ 335,435,000 $ 68,492,813 $ 4,110,000 $ 477,000
A summary of interfund transfers, the purpose of which is to cover operational expenses/expenditures,
for the year ended September 30, 2020, is as follows:
Transfers in Transfers out
General Fund $ 4,949,456 $ 1,950,568
Debt Service Fund 2,066,739 -
Capital Projects Fund 2,000,663 1,402,310
Pearland Economic Development Corporation - 172,979
Tax Increment Reinvestment Zone #2 - 22,544,542
Development Authority of Pearland 22,544,542 -
Other Governmental Funds - 30,992
Water and Sewer Fund 250,000 5,710,009
$ 31,811,400 $ 31,811,400
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 $648,426
63
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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 and trustee. 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 888 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 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.
64
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
A summary of plan provisions for the City are as follows:
Plan Year Plan Year
2019 2018
Employee deposit rate 7.00% 7.00%
Matching ratio (city to employee) 2 to 1 2 to 1
Years required for vesting 5 5
Service requirement eligibility 60/5, 0/20 60/5, 0/20
(expressed as age/years of service)
Updated service credit
Annuity increase (to retirees)
100% Repeating, 100% Repeating,
Transfers Transfers
70% of CPI Repeating 70% of CPI Repeating
At the December 31, 2019 valuation and measurement date, the following employees were
covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 255
Inactive employees entitled to but not yet receiving benefits 315
Active employees 713
Total 1,283
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 2019, the City's contribution rate was 13.30% for the months in 2019
and 13.14% for the months in 2020. The City's contributions to TMRS for the year ended
September 30, 2020 were $6,818,604 and were equal to the required contributions.
Net Pension Liability
The City's Net Pension Liability (NPL) was measured as of December 31, 2019, 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, 2019 actuarial valuation was determined using
the following actuarial assumptions:
65
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Inflation 2.5% per year
Overall payroll growth 2.75% per year
Investment rate of return 6.75%, net of pension plan investment
expense, including inflation
Salary increases were based on a service -related table. Mortality rates for active members are
based on the PUB (10) mortality tables with the Public Safety table used for males and the
General Employee table used for females. Mortality rates for healthy retirees and beneficiaries
are based on the gender -distinct 2019 Municipal Retirees of Texas mortality tables. The rates for
actives, healthy retirees and beneficiaries are projected on a fully generational basis by Scale
UMP to account for future mortality improvements. For disabled annuitants, the same mortality
tables for healthy retirees is used with a 4-year set -forward for males and a 3-year set -forward for
females. In addition, a 3.5% and 3.0% minimum mortality rate is applied, for males and females
respectively, to reflect the impairment for younger members who become disabled. The rates are
projected on a fully generational basis by Scale UMP to account for future mortality improvements
subject to the floor.
These actuarial assumptions were developed primarily from the actuarial investigation of the
experience of TMRS over the 4-year period from December 31, 2014 to December 31, 2018.
They were adopted in 2019 and first used in the December 31, 2019 actuarial valuation. The
postretirement mortality assumption for Annuity Purchase Rates (APRs) is based on the Mortality
Experience Investigation Study covering 2009 through 2011 and dated December 31, 2013. Plan
assets are managed on a total return basis with an emphasis on both capital appreciation as well
as the production of income in order to satisfy the short-term and long-term funding needs of
TMRS.
The long-term expected rate of return on pension plan investments was determined using a
building-block method in which best estimate ranges of expected future real rates of return
(expected returns, net of pension plan investment expense and inflation) are developed for each
major asset class. These ranges are combined to produce the long-term expected rate of return
by weighting the expected future real rates of return by the target asset allocation percentage and
by adding expected inflation. In determining their best estimate of a recommended investment
return assumption under the various alternative asset allocation portfolios, the plan's actuary
focused on the area between (1) arithmetic mean (aggressive) without an adjustment for time
(conservative) and (2) the geometric mean (conservative) with an adjustment for time
(aggressive).
The target allocation and best estimates of arithmetic real rates of return for each major asset
class are summarized in the following table:
66
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Asset Class
Target
Allocation
Long-term Expected
Real Rate of Return
(Arithmetic)
Global equity
Core fixed income
Non -core fixed income
Real return
Real estate
Absolute return
Private equity
Total
Discount Rate
30.00%
10.00%
20.00%
10.00%
10.00%
10.00%
10.00%
100.00%
5.30%
1.25%
4.14%
3.85%
4.00%
3.48%
7.75%
The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash
flows used to determine the discount rate assumed that employee and employer contributions will
be made at the rates specified in 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
active and inactive employees. 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
TPL (a)
Balances at October 1, 2019 $ 158,296,499
Changes for the year:
Service cost 8,361,735
Interest 10,784,493
Difference between expected and
actual experience 249,817
Changes of assumptions 952,323
Contributions — employer
Contributions — employee
Net investment income
Benefit payments, including refunds
of employee contributions
Administrative expenses
Other changes
Net changes
Balances at September 30, 2020
Plan Fiduciary NPL
Net Position (b) (a) - (b)
$ 127,961,360 $ 30,335,139
6,543,589
3,439,022
19,805,631
(5,414,199) (5,414,199)
(111,780)
(3,358)
14,934,169 24,258,905
$ 173,230,668 $ 152,220,265
8,361,735
10,784,493
249,817
952,323
(6,543,589)
(3,439,022)
(19,805,631)
111,780
3,358
(9,324,736)
$ 21,010,403
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:
67
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
1% Decrease
(5.75%)
Current Single
Rate Assumption
(6.75%)
1% Increase
(7.75%)
Net Pension Liability (Asset) $ 51,107,984 $ 21,010,403 $ (3,120,452)
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 and Deferred Inflows of Resources Related to
Pensions
For the year ended September 30, 2020, the City recognized pension expense of $7,747,278.
At September 30, 2020, 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 expected and
actual economic experience $ 660,429 $
Changes in actuarial assumptions 776,293 33,630
Difference between projected and actual
pension plan investment earnings - 4,532,830
Contributions subsequent to the
measurement date 5,214,266 -
Total $ 6,650,988 $ 4,566,460
Deferred outflows of resources related to pensions resulting from contributions subsequent to the
measurement date of $5,214,266 will be recognized as a reduction of the net pension liability for
the measurement year ended December 31, 2020 (i.e. recognized in the City's financial
statements September 30, 2021). Other amounts reported as deferred outflows and inflows of
resources related to pensions will be recognized in pension expense as follows:
Year Ending September 30,
2021 $ (770,391)
2022 (926,405)
2023 482,824
2024 (2,006,871)
2025 91,105
Total $ (3,129,738)
68
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Note 10 — Other Postemployment Benefits
The City offers two other postemployment benefit (OPEB) plans; the Retiree Health Care Plan
and the TMRS-Supplemental Death Benefits Fund as discussed below. OPEB items for the two
plans are as follows.
Total OPEB Liability
Deferred outflows of
resources
Deferred inflows of
resources
OPEB expense
TMRS -
Supplemental
Death Benefits Retiree Health
Fund Care Plan
Total
$ 1,550,183 $ 6,074,955 $ 7,625,138
409,591
264,466
155,063
TMRS Supplemental Death Benefits Fund
Benefit Plan Description
1,406,264
66,204
734,119
1,815,855
330,670
889,182
The City also participates in the single -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
another postemployment 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, 2019 was as follows:
Inactive employees currently receiving benefits 188
Inactive employees entitled to but not yet receiving benefits 100
Active employees 713
1,001
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
69
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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 2.75% based on the 20-Year
Municipal GO AA Index rate published by bondbuyer.com is used as of the measurement date of
December 31, 2019.
Actuarial Assumptions
The City's total OPEB liability was measured at December 31, 2019 and was determined by an
actuarial valuation as of that date using the following actuarial assumptions:
Valuation Date:
Methods and Assumptions:
Inflation:
Salary Increases:
Discount rate:
Retirees' share of benefit related costs:
Administrative expenses:
Mortality rates — service retirees:
Mortality rates — disabled retirees:
Other Information
December 31, 2019
2.50%
3.50% to 11.50%, including inflation
2.75%. The discount rate was based on the Fidelity
Index's "20-Year Municipal GO AA Index" rate as of
December 31, 2019.
$0
All administrative expenses are paid through the
Pension Trust and accounted for under reporting
requirements under GASB Statement No. 68.
2019 Municipal Retirees of Texas Mortality Tables.
The rates are projected on a fully generational basis
with scale UMP.
2019 Municipal Retirees of Texas Mortality Tables
with a 4-year set -forward for males and a 3-year set -
forward for females. In addition, a 3.5% and 3.0%
minimum mortality rate will be applied to reflect the
impairment for younger members who become
disabled for males and females, respectively. The
rates are projected on a fully generational basis by
Scale UMP to account for future mortality
improvements subject to the floor.
The actuarial assumptions used in the December 31, 2019 valuation were based on the results of
an actuarial experience study for the period December 31, 2014 to December 31, 2018.
70
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Changes in the Total OPEB Liability
Balance as of October 1, 2019
Changes for the year:
Service cost
Interest on total OPEB liability
Differences between expected and actual experience
Change of assumptions
Benefit payments
Balance as of September 30, 2020
Sensitivity Analysis
Total OPEB
Liability
$ 1,376,976
73,693
52,362
(224,466)
276,531
(4,913)
$ 1,550,183
The following presents the total OPEB liability of the employer, calculated using the discount rate of
2.75%, 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 (1.75%) or 1-percentage-point higher (3.75%) 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.
1% Decrease in Current 1% Increase in
Discount Discount Discount
Rate (1.75%) Rate (2.75%) Rate (3.75%)
Total OPEB liability $ 1,923,361 $ 1,550,183 $ 1,265,055
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to OPEB Activity
For the year ended September 30, 2019, the City recognized OPEB expense of $155,063. As of
September 30, 2020, the City reported deferred outflows of resources related to OPEB from the
following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Difference between expected and actual experience $ 103,652 $ 192,445
Changes of assumptions 301,971 72,021
Benefit payments subsequent to the
measurement date 3,968
Total $ 409,591 $ 264,466
The $3,968 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, 2021. Amounts currently reported as deferred
71
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
outflows and deferred inflows of resources related to OPEB, excluding contributions subsequent to
the measurement date, will be recognized in OPEB expense as follows:
Year Ending September 30
2021 $ 29,008
2022 29,008
2023 29,008
2024 29,008
2025 16,461
Thereafter 8,664
$ 141,157
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 October 1, 2019, the actuarial valuation date, the
following employees were covered by the benefit terms:
Inactive employees currently receiving benefits
Inactive employees entitled to but not yet receiving benefits
Active employees
Total
Total OPEB Liability
6
687
693
The City's total OPEB liability of $6,074,955 was measured as of September 30, 2020, and was
determined by an actuarial valuation as of October 1, 2019.
Actuarial assumptions and methods
The total OPEB liability was determined using the following actuarial assumptions, applied to all
periods included in the measurement, unless otherwise specified:
Valuation Date: October 1, 2019
72
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Measurement Date:
Methods and Assumptions:
Discount Rate:
Inflation:
Salary Increases:
Healthcare cost trend rates:
Mortality rates were updated and are based
mortality improvement scale MP-2019.
Discount Rate
September 30, 2020
2.14% per annum, which includes inflation
2.25% per annum
3.00% average which includes inflation
11.87% initial medical trend rate for retirees
decreasing to an ultimate rate of 4.60% in the year
2041
upon the sex distinct PUB-210 headcount weighted
The discount rate of 2.14% 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:
Balance as of October 1, 2019
Changes for the year:
Service cost
Interest on total OPEB liability
Differences between expected and actual experience
Change of assumptions
Benefit payments
Balance as of September 30, 2020
Total OPEB
Liability
$ 4,415,018
364,519
167,755
(74,479)
1,240,492
(38,350)
$ 6,074,955
Assumption Changes. For the fiscal year ended September 30, 2020, the discount rate was
decreased from 3.58% to 2.14%, the mortality table has been updated to use the new PUB-2010
tables recently published by the Society of Actuaries, and update the per capita costs and how
these costs escalate in the future using recent experience.
73
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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 2.14%,
as well as what the plan's total OPEB liability would be if it were calculated using a discount rate
that is 1-percentage-point lower (1.14%) or 1-percentage-point higher (3.14%) than the current
rate:
1% Decrease in Current 1% Increase in
Discount Discount Discount
Rate (1.14%) Rate (2.14%) Rate (3.14%)
Total OPEB liability $ 6,488,377 $ 6,074,955 $ 5,244,272
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 1-percentage-point lower (10.87%) or 1-percentage-point higher (12.87%) than the current rate:
Current
Healthcare Cost
Trend Rates
1% Decrease Assumption 1% Increase
(10.87%) (11.87%) (12.87%)
Total OPEB liability $ 4,898,971 $ 6,074,955 $ 6,990,479
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to OPEB
For the year ended September 30, 2020, the City recognized OPEB expense of $734,119. At
September 30, 2020, the City reported deferred outflows of resources and deferred inflows of
resources related to OPEB from the following sources:
Difference between expected and actual experience
Changes of assumptions
Deferred Deferred
Outflows of Inflows of
Resources Resources
$ 206,761 $ 66,204
1,199, 503
$ 1,406,264 $ 66,204
Amounts currently reported as deferred outflows and inflows of resources related to OPEB,
excluding contributions subsequent to the measurement date, will be recognized in OPEB
expense as follows:
74
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Year Ending September 30
2021 $ 201,845
2022 201,845
2023 201,845
2024 201,846
2025 144,008
Thereafter 388,671
Total $ 1,340,060
Note 11 — Fund Balance Classifications
In accordance with the guidance in GASB No. 54, Fund Balance Reporting and Governmental
Fund Type Definitions, the City has classified ending fund balance based on the availability of
funds for expenditure on programs and services. As of September 30, 2020, the following
balances were reported in the governmental fund balances:
Nonspendable Restricted Assigned Unassigned
Prepaids $ 28,271 $ $ - $
General obligation
bonds 6,162,589
Capital projects 73,198,902
Economic development 37,188,502
TIRZ development 6,879,866
Tourism 5,569,343
Court security 38,362
Public safety 142,762
Court technology 6,356
Parks and recreation 536,959
Law enforcement
(seized funds) 278,591
Park development 1,144,452
Sidewalks 46,630
Federal, state and
local grants 153,874
Traffic improvements 617,931
Juvenile case
management 25,116
Public -access television
broadcasting 988,000
Subsequent year's
budget 648,426
Unassigned
28,372,301
$ 28,271 $ 132,978,235 $ 648,426 $ 28,372,301
75
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Note 12 - Commitments and Contingencies
Litigation and Other Contingencies
The City was involved in various lawsuits and arbitration proceedings at September 30, 2020. 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.
Current Incentives
Amounts Paid
Original Outstanding
Amount Prior Years Current Year Balance
Adient Medical $ 40,000 $ 10,000 $ 10,000 $ 20,000
Base Pair 2017 60,000 45,000 - 15,000
Endress+Hauser 525,000 - - 525,000
Graham Ventures - Code Ninja 638,000 - 638,000
H-Town HealthCare 70,000 - 17,500 52,500
Keystone 189,000 - - 189,000
KS Management -Grant 2,663,000 1,479,450 295,890 887,660
KS Management -Sales Tax 600,000 104,275 22,750 472,975
Lonza Phase 1 600,000 300,000 300,000 -
Lonza Phase 2 750,000 - 750,000
MHI 250,000 - 250,000 -
Multalloy (FloWorks Intl/Shale-Inland) 350,000 210,000 - 140,000
Ref -Chem 880,000 - - 880,000
Tool Flo 1,152,000 748,000 404,000
Wilmar 116,000 116,000
Lower Kirby Urban Center Master Plan
$ 8,883,000 $ 2,896,725 $ 896,140 $ 5,090,135
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 (LKMD) and Pearland Municipal Management District #1 (PMMD#1)
(collectively the "Districts") 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 developed and the Districts' taxable values support bond issuances. Each project is
taken on a case by case basis and is approved via a Letter of Financing Agreement (LFA).
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, 2020 of $3,465,781 relating to
these LFA's recorded in the Capital Projects Fund and the Pearland Economic Development
Fund.
76
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Lower Kirby Pearland
Pearland Municipal
Management Management
3/10/2014 Cost District District #1
Detention Pond $ 1,947,753 0.00% $ - 27.70% $ 539,528
Master Drainage Plan $ 127,410 0.00% - 30.80% 39,268
Regional Drainage Plan $ 183,031 0.00% - 23.90% 43,717
Subtotal - 622,513
8/24/2015
South Spectrum PER $ 214,137 57.40% - 40.20% 86,124
4/26/2016
TxDOT Ditch Acquisition $ 400,000 73.00% - 27.00% 128,508
2/28/2017
South Spectrum West $ 5,755,789 0.00% - 21.30% 1,228,378
5/8/2017
West Conveyance Pond $ 277,000 0.00% - 88.80% 246,044
7/10/2017
288 Waterline & LK Park Improvements $ 1,189,000 100.00% 1,000,000 0.00%
5/8/2019
LK Regional Detention Property Acquisition $ 32,097 0.00% - 100.00% 154,214
$ 1,000,000 $ 2,465,781
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 $381,076 in sales tax incentives.
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.
77
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
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 $654,997 in sales tax incentives.
Note 13 — 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, 2020, the City
believed the amounts paid on Workers' Compensation would not change significantly from the
amounts recorded.
The City uses the Property Liability Insurance Internal Service 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. The fund accounts for
the annual premiums and accounts for insurance recovery funds on eligible claims.
The City uses the Health Claims Fund, a medical self-insurance fund, to account for and finance
the City's employee health insurance medical claims. The fund accounts for employee, City,
retiree and COBRA contributions, claims and administrative fees.
Changes in the balance of claims liabilities as reported in the Health Claims Fund (an Internal
Service Fund) during the past two years are as follows:
Employee Health
Insurance
Liability - September 30, 2018 $
Claims incurred 6,515,067
Claims payments (6,528,050)
Changes to prior estimates 500,000
Liability - September 30, 2019 487,017
Claims incurred 6,883,700
Claims payments (6,871,489)
Liability - September 30, 2020 $ 499,228
78
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Note 14 — 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 the Debt Service Fund (a governmental fund),
the revenue 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
61 st day preceding the 20t" anniversary of the commencement date.
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, 2020,
the future minimum debt service lease payments to be received under the lease are as follows:
Fiscal year
ending
September 30, Payment
2021 $ 757,155
2022 737,205
2023 716,401
2024 695,169
2025 669,142
2026-2029 2,462,837
$ 6,037,909
Note 15 — Restatements
In the current fiscal year, it came to management's attention that the City's capital asset and
accumulated depreciation balances as recorded in the financial statements did not agree to
underlying records. 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 (government and business -type activities) and statement of revenues, expenses, and
changes in net position (water and sewer fund) to reflect the correction of the capital asset and
accumulated depreciation beginning balances.
In the current fiscal year, it came to management's attention that the City had overstated
receivables in the City's Solid Waste Fund due to an error in the year-end estimate of unbilled
accounts receivables. As a result, the beginning net position of the City's business -type activities,
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 (solid waste fund) to reflect
the correction of the accounts receivable beginning balances.
In the current fiscal year, it came to management's attention that the City had understated
receivables in the City's Capital Projects Fund due to errors in the year-end grants receivable
balances. As a result, the beginning fund balance of the Capital Projects Fund has been restated
on the statement of revenues, expenditures and changes in fund balances and the beginning net
79
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
position of the City's governmental activities has been restated on the statement of activities to
reflect the correction of the grants related accounts receivable beginning balances.
In the current fiscal year, it came to management's attention that the City had not allocated a
portion of the net pension liability and total other postemployment benefit liability and related
deferred outflows of resources and deferred inflows of resources to the City's internal service
funds in prior years. As a result, the beginning net position of the City's governmental activities,
business -type activities, water and sewer fund and internal service funds 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 and internal service fund) to reflect
the allocation of the liabilities and related deferred outflows of resources and deferred inflows of
resources.
In the current fiscal year, it came to management's attention that in prior years the City had not
accrued the estimated liability at year-end for incurred but not reported health care claims for the
City's self -insured employee health plan. As a result, the beginning net position of the City's
governmental activities, and internal service funds have been restated on the statement of
activities (governmental activities) and statement of revenues, expenses, and changes in net
position (internal service fund) to reflect the estimated claim liability beginning balance.
In the current fiscal year, it came to management's attention that the City historically had not
allocated internal service fund activities to business -type activities. As a result, the beginning net
position of the City's governmental activities, and business -type activities have been restated on
the statement of activities to reflect the allocation of the internal service funds activity between
governmental and business -type activities.
For the year ended September 30, 2019, these restatements result in a net increase in the change
in net position of governmental activities of approximately $735.3 thousand, a net decrease in the
change in net position of business -type activities of approximately $220.2 thousand, a net
increase in the change in fund balance of the capital projects fund of approximately $3.1 million,
a net increase in the change in net position of the water and sewer fund of approximately $538
thousand, and a net decrease in the change in net position of the solid waste fund of $758
thousand. The impact of the restatement due to allocation of internal service fund activities on the
change in net position for the year ended September 30, 2019 is not available.
80
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
September 30, 2019 net position,
as previously reported
Governmental
Funds
Governmental Capital Projects
Activities Fund
$ 543,834,323 $ 51,351,705
Restatement to correct beginning
balances for:
Capital assets, net of depreciation (3,353,886)
Capital assets, non depreciable
Receivables, net 3,105,697 3,105,697
Total other postemployement benefit
and net pension liability and related
deferred outflows and inflows of
resources (115,338)
Accrued claims liabilities (487,017)
Internal balances - Internal service
fund activities allocation (1,908,509)
September 30, 2019 net position,
as restated
September 30, 2019 net position,
as previously reported
Restatement to correct beginning
balances for:
Capital assets, net of depreciation
Capital assets, non depreciable
Receivables, net
Total other postemployement benefit
and net pension liability and related
deferred outflows and inflows of
resources
Accrued claims liabilities
Internal balances - Internal service
fund activities allocation
September 30, 2019 net position,
as restated
(2,759,053) 3,105,697
$ 541,075,270 $ 54,457,402
Business -Type Activities
Governmental
Activities
Proprietary Fund Proprietary Fund
Water and Sewer Solid Waste Total Business- Internal Service
Fund Fund type Activities Fund
$ 258,125,811 $ 1,622,217 $ 259,748,028 $ 6,910,836
329,612
538,117
115,338
(758,304)
983,067 (758,304)
329,612
538,117
(758,304)
115,338
1,908,509
(120,958)
(487,017)
2,133,272 (607,975)
$ 259,108,878 $ 863,913 $ 261,881,300 $ 6,302,861
81
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
As of and For the Year Ended September 30, 2020
Note 16 — Subsequent Events
Subsequent events have been evaluated through the date of the auditor's report, May 10, 2021,
which is the date the financial statements were available to be issued.
On December 3, 2020, the City of Pearland issued Permanent Improvement Refunding Bonds,
Series 2020, with a coupon rate of 1.272%. These bonds refunded the Series 2011 Permanent
Improvement Bonds in the amount of $3,865,000 and the Series 2012 Permanent Improvement
Refunding Bonds in the amount of $31,610,000. This refunding resulted in a net present value
savings of $3,375,928 and a total economic gain of $3,674,828.
82
Required Supplementary Information
(Unaudited)
83
84
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in
Fund Balances — Budget and Actual
General Fund
For the Year Ended September 30, 2020
Variance With
Final Budget
Original Final Favorable
Budget Budget Actual (Unfavorable)
Revenues
Property taxes $ 25,704,801 $ 26,801,576 $ 26,919,731 $ 118,155
Sales and use taxes 22,669,370 21,505,963 22,716,028 1,210,065
Franchise and other 7,242,757 7,139,532 7,014,025 (125,507)
License and permits 3,887,350 3,661,452 4,423,760 762,308
Fines and forfeitures 2,445,750 1,603,446 1,617,153 13,707
Charges for services 18,291,338 16,906,119 18,220,404 1,314,285
Investment earnings 622,000 453,898 420,200 (33,698)
Intergovernmental - 1,600,538 6,425,093 4,824,555
Other 1,121,854 1,590,410 876,453 (713,957)
Total Revenues 81,985,220 81,262,934 88,632,847 7,369,913
Expenditures
Current:
General government
Public safety
Public works
Community services
Parks and recreation
Debt Service:
Principal
Interest and other charges
Capital outlay
Total Expenditures
Excess (Deficiency) of Revenues
Over Expenditures
11, 007, 895 10, 581, 627
48,137,734 47,510,480
13, 695, 332 12, 572, 668
4,303,693 3,983,589
6,559,762 5,852,937
367,691 367,691
11,925 11,925
794,306 433,936
84,878,338 81,314,853
(2,893,118) (51,919)
11,606,819
46, 609,473
11, 502,132
3,798,947
5,397,074
441,444
11,925
610,735
(1,025,192)
901,007
1,070,536
184,642
455,863
(73,753)
(176,799)
79, 978, 549 1,336,304
8,654,298 8,706,217
Other Financing Sources (Uses)
Proceeds from issuance of debt - - 221,261 221,261
Transfers in 4,949,456 4,949,456 4,949,456
Transfers out (1,333,173) (2,938,961) (1,950,568) 988,393
Total Other Financing
Sources (Uses) 3,616,283 2,010,495 3,220,149 1,209,654
Net Change in Fund Balances
Fund Balances, Beginning of Year
Fund Balances, End of Year
$ 723,165 $ 1,958,576 11,874,447 $ 9,915,871
17,201,850
$ 29,076,297
85
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in
Fund Balances - Budget and Actual
Pearland Economic Development Corporation
For the Year Ended September 30, 2020
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
Revenues
Sales and use taxes $ 11,354,116 $ 10,667,741 $ 11,217,696 $ 549,955 $ 11,048,959
Charges for services 537,000 460,000 459,996 (4) 488,271
Investment earnings 250,000 290,000 259,866 (30,134) 629,714
Intergovernmental 571,000 698,000 707,623 9,623 12,000
Other 31,000 21,942 59,132 37,190 441,664
Total revenues 12,743,116 12,137,683 12,704,313 566,630 12,620,608
Expenditures
Current:
Economic development 5,126,507 3,430,646 3,095,628 335,018 11,257,984
Debt service:
Principal 250,000 250,000 250,000 11,118,461
Interest and other charges 41,300 41,300 41,300 188,671
Capital outlay 14,371,000 5,361,405 3,405,448 1,955,957 472,321
Total expenditures 19,788,807 9,083,351 6,792,376 2,290,975 23,037,437
Excess (Deficiency) of Revenues
Over Expenditures (7,045,691) 3,054,332 5,911,937 2,857,605 (10,416,829)
Other Financing Sources (Uses)
Transfers in - - 184,186
Transfers out (172,979) (172,979) (172,979) (164,742)
Total other financing sources (uses) (172,979) (172,979) (172,979) 19,444
Net Change in Fund Balance (7,218,670) 2,881,353 5,738,958 2,857,605 (10,397,385)
Fund Balance, Beginning of Year 16,735,436 16,735,436 16,735,436 27,132,821
Fund Balance, End of Year $ 9,516,766 $ 19,616,789 $ 22,474,394 $ 2,857,605 $ 16,735,436
86
CITY OF PEARLAND, TEXAS
Notes to Required Supplementary Budget Information
For the Year Ended September 30, 2020
Budgetary Compliance
The City has complied with all material budget requirements for the year ended September 30,
2020.
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. The City does not legally
adopt an annual appropriated budget for the Development Authority of Pearland or TIRZ #2.
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.
87
CITY OF PEARLAND, TEXAS
Schedule of Changes in Net Pension Liability and Related Ratios
Texas Municipal Retirement System
Last Six Measurement Years
Measurement Year
2014 2015 2016 2017 2018 2019
Total Pension Liability
Service cost $ 5,118,873 $ 6,035,636 $ 6,756,543 $ 7,548,267 $ 7,869,363 $ 8,361,735
Interest 7,010,813 7,680,048 8,166,924 9,064,733 9,914,570 10,784,493
Difference between expected
and actual experience 241,450 846,833 1,159,738 33,887 41,404 249,817
Change of assumptions (304,820) - - 952,323
Benefit payments, including refunds of
employee contributions (2,729,973) (3,808,062) (2,875,256) (3,481,143) (4,953,354) (5,414,199)
Net Change in Total Pension Liability 9,641,163 10,449,635 13,207,949 13,165,744 12,871,983 14,934,169
Total pension liability - beginning 98,960,025 108,601,188 119,050,823 132,258,772 145,424,516 158,296,499
Total pension liability - ending (a) $ 108,601,188 $ 119,050,823 $ 132,258,772 $ 145,424,516 $ 158,296,499 $ 173,230,668
Plan Fiduciary Net Position
Contributions - employer $ 4,339,785 $ 4,786,602 $ 5,253,253 $ 5,991,467 $ 6,225,163 $ 6,543,589
Contributions - employee 2,355,095 2,498,961 2,749,756 3,081,580 3,216,353 3,439,022
Net investment income 4,766,828 135,758 6,458,752 14,836,941 (3,818,135) 19,805,631
Benefit payments, including refunds of
employee contributions (2,729,973) (3,808,062) (2,875,256) (3,481,143) (4,953,354) (5,414,199)
Administrative expense (49,756) (82,673) (72,899) (76,869) (73,737) (111,780)
Other (4,091) (4,083) (3,927) (3,896) (3,853) (3,358)
Net Change in Plan Fiduciary Net Position 8,677,888 3,526,503 11,509,679 20,348,080 592,437 24,258,905
Plan Fiduciary Net Position, Beginning 83,306,773 91,984,661 95,511,164 107,020,843 127,368,923 127,961,360
Plan Fiduciary Net Position, Ending (b) $ 91,984,661 $ 95,511,164 $ 107,020,843 $ 127,368,923 $ 127,961,360 $ 152,220,265
Net Pension Liability, Ending (a) - (b) $ 16,616,527 $ 23,539,659 $ 25,237,929 $ 18,055,593 $ 30,335,139 $ 21,010,403
Plan Fiduciary Net Position as a Percentage
of Total Pension Liability 84.70% 80.23% 80.92% 87.58% 80.84% 87.87%
Covered Payroll $ 33,615,923 $ 35,545,557 $ 39,282,225 $ 44,013,221 $ 45,939,075 $ 49,128,879
Net Pension Liability as a Percentage
of Covered Payroll 49.43% 66.22% 64.25% 41.02% 66.03% 42.77%
Notes to the Required Supplementary Information
(a) Amounts presented are for each measurement year, which end the preceding December
31 of the City's fiscal year-end.
(b) Ten years of data should be presented in this schedule, but data was unavailable prior to
2014.
88
CITY OF PEARLAND, TEXAS
Schedule of Contributions
Texas Municipal Retirement System
Last Ten Fiscal Years
Fiscal Year
2016
2017 2018
2019 2020
Actuarially determined contribution $ 5,295,359
Contributions in relation to the actuarially
determined contribution 5,295,359
Contribution deficiency (excess) $
Covered payroll $ 39,566,838
Contributions as a percentage of covered
payroll
$ 5,924,405 $ 6,072,762 $ 6,461,150 $ 6,818,604
5,924,405 6,072,762 6,461,150 6,818,604
$ $ $ $
$ 43,703,166 $ 44,772,623 $ 48,297,918 $ 51,414,583
13.38% 13.56% 13.56% 13.38% 13.26%
Fiscal Year
2011 2012 2013
2014 2015
Actuarially determined contribution $ 3,302,952
Contributions in relation to the actuarially
determined contribution 3,302,952
Contribution deficiency (excess) $
Covered payroll $ 26,871,670
Contributions as a percentage of covered
payroll 12.29%
$ 3,518,289 $ 3,780,847
3,518,289 3,780,847
$ $
$ 27,756,555 $ 28,876,260
12.68% 13.09%
$ 4,311,811 $ 4,600,419
4,311,811 4,600,419
$ - $
$ 30,580,987 $ 34,650,598
14.10% 13.28%
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:
Amortization Method:
Remaining Amortization Period:
Asset Valuation Method:
Inflation:
Salary Increases:
Investment Rate of Return:
Retirement Age:
Mortality:
Entry Age Normal
Level Percentage of Payroll, Closed
26 years
10 Year smoothed market; 12% soft corridor
2.50%
3.50% to 11.50% including inflation
6.75%
Experience -based table of rates that are specific to the
City's plan of benefits. Last updated for the 2019 valuation
pursuant to an experience study of the period 2014-2018.
Postretirement: 2019 Municipal Retirees of Texas Mortality
Tables. The rates are projected on a fully generational basis
with scale UMP. Preretirement: PUB (10) mortality tables,
with the Public Safety table used for males and the General
Employee table used for females. The rates are projected
on a fully generational basis with scale UMP.
89
CITY OF PEARLAND, TEXAS
Schedule of Contributions (Continued)
Texas Municipal Retirement System
Last Ten Fiscal Years
Other Information:
Notes: There were no benefit changes during the year.
90
CITY OF PEARLAND, TEXAS
Schedule of Changes in the Total OPEB Liability and Related Ratios
Texas Municipal Retirement System Supplemental Death Benefits Fund
Last Three Measurement Years
Measurement Year
2017 2018 2019
Total OPEB Liability
Service cost $ 66,020 $ 82,690 $ 73,693
Interest 39,025 41,463 52,362
Difference between expected
and actual experience - 143,594 (224,466)
Change of assumptions 111,349 (99,775) 276,531
Benefit payments, including refunds of
employee contributions (4,401) (4,594) (4,913)
Net Change in Total OPEB Liability 211,993 163,378 173,207
Total OPEB Liability - Beginning 1,001,605 1,213,598 1,376,976
Total OPEB Liability - Ending $ 1,213,598 $ 1,376,976 $ 1,550,183
Covered -Employee Payroll $ 44,013,221 $ 45,939,075 $ 49,128,879
Total OPEB Liability as a Percentage
of Covered -Employee Payroll 2.76% 3.00% 3.16%
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.
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.
91
CITY OF PEARLAND, TEXAS
Schedule of Changes in the Total OPEB Liability and Related Ratios
City of Pearland Retirement Health Care Plan
Last Three Measurement Years
measurement Year
2018 2019 2020
Total OPEB Liability
Service cost $ 456,161 $ 295,552 $ 364,519
Interest 240,852 157,119 167,755
Changes of benefit terms (2,314,150)
Difference between expected
and actual experience 361,831 (74,479)
Change of assumptions 43,043 101,145 1,240,492
Benefit payments, including refunds of
employee contributions (127,339) (66,167) (38,350)
Net Change in Total OPEB Liability (1,339,602)
Total OPEB Liability - Beginning 5,266,971
Total OPEB Liability - Ending
Covered -Employee Payroll
Total OPEB Liability as a Percentage
of Covered -Employee Payroll 8.77%
487,649 1,659,937
3,927,369 4,415,018
$ 3,927,369 $ 4,415,018 $ 6,074,955
$ 44,772,623 $ 48,297,918 $ 51,067,300
9.14% 11.90%
Notes to the Required Supplementary Information
Amounts presented are for each measurement year, which is the same as the City's fiscal year-
end.
Ten years of data should be presented in this schedule, but data was unavailable prior to 2018.
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.
For the fiscal year ended September 30, 2020, the discount rate was decreased from 3.58% to
2.14%, the mortality table has been updated to use the new PUB-2010 tables recently published
by the Society of Actuaries, and update the per capita costs and how these costs escalate in the
future using recent experience. The cumulative effect of the assumption changes for 2020 was
an actuarial loss of $1.24 million. The increase was driven primarily by the change in discount
rate from 3.58% as of September 30, 2019 to 2.14% as of September 30, 2020, which increased
the liability by $0.9 million. The discount rate used under GASB 75 for unfunded plans must be
based upon the yield as of the measurement date of a set of 20-year tax-exempt general
obligation municipal bonds with an average rating of AA/Aa or higher.
92
Other Supplementary Information
93
94
Combining and Individual Fund Statements and Schedules
95
96
CITY OF PEARLAND, TEXAS
Nonmajor Governmental Funds
September 30, 2020
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 — 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.
97
CITY OF PEARLAND, TEXAS
Combining Balance Sheet - Nonmajor Governmental Funds
September 30, 2020
Assets
Cash and cash equivalents
Investments
Receivables (net of allowance for
uncollectibles, where applicable)
Total Assets
Hotel/Motel Court City -Wide Court Street Park Police
Tax Security Donation Technology Assessments Donation Seizure
$ 994,107 $ 39,067 $ 142,762 $ 8,372 $ - $ 537,893 $ 260,430
4,392,899
235,117
1,486,878 - 19,961
$ 5,622,123 $ 39,067 $ 142,762 $ 8,372 $ 1,486,878 $ 537,893 $ 280,391
Liabilities
Accounts payable $ 48,978 $ - $ - $ 2,016 $ - $ 934 $ 1,800
Accrued liabilities 3,802 705 - - - - -
Total Liabilities 52,780 705 - 2,016 - 934 1,800
Deferred Inflows of Resources
Unavailable revenue
Total Deferred Inflows of
Resources
Fund Balances
Restricted for:
Capital improvements -
Community development programs 5,569,343
Public safety -
Unassigned -
Total Fund Balances 5,569,343
1,486,878
1,486,878
38,362 - - - 536,959
38,362
142,762 6,356 278,591
142,762 6,356
536,959 278,591
Total Liabilities and Fund
Balances $ 5,622,123 $ 39,067 $ 142,762 $ 8,372 $ 1,486,878 $ 537,893 $ 280,391
98
CITY OF PEARLAND, TEXAS
Combining Balance Sheet - Nonmajor Governmental Funds (Continued)
September 30, 2020
Total
Park and Traffic Nonmajor
Recreation Impact Juvenile Regional Educational Governmental
Development Sidewalk Grant Improvement Management Detention TV U of H Funds
$ 997,276 $ 46,630 $ (264,898) $ 617,931 $ 26,321 $ - $ 312,934 $ - $ 3,718,825
250,456 - - - - - 685,819 - 5,329,174
498,870 - - - - 2,240,826
$ 1,247,732 $ 46,630 $ 233,972 $ 617,931 $ 26,321 $ - $ 998,753 $ $ 11,288,825
$ 103,280 $ - $ 52,719 $ - $ 1,205 $ - $ 10,753 $ 27,299 $ 248,984
- 27,379 - - - - 31,886
103,280 - 80,098 1,205 10,753 27,299 280,870
1,144,452
1,486,878
1,486,878
46,630 - 617,931 - - - 1,809,013
- 153,874 - - 988,000 7,286,538
25,116 - - 452,825
(27,299) (27,299)
1,144,452
46,630 153,874
617,931 25,116
988,000 (27,299) 9,521,077
$ 1,247,732 $ 46,630 $ 233,972 $ 617,931 $ 26,321 $ - $ 998,753 $ - $ 11,288,825
99
CITY OF PEARLAND, TEXAS
Combining Statement of Revenues, Expenditures and
Changes in Fund Balance - Nonmajor Governmental Funds
Year Ended September 30, 2020
Revenues
Sales and use taxes
Franchise fees
Fines and forfeitures
Charges for services
Investment earnings
Intergovernmental
Other
Total Revenues
Hotel/Motel Court City -Wide Court Street Park Police
Tax Security Donation Technology Assessments Donation Seizure
$ 993,985 $
$ - $ - $ - $ - $
31,919 - 31,154
64,954 324 1,088 114
3,325 114 -
25,199 - 53,016
1,087,463 32,357 54,104
31,268
33,450
4,326
1,631
53,828 218,947
91,604 220,578
Expenditures
Current:
General government 906,422 -
Public safety - - 23,827 - - - 31,665
Community services - 30,302 - 51,703 - - -
Parks and recreation - - - - - 84,695 -
Capital outlay 50,000 - 182,869
Total Expenditures 906,422 30,302 73,827 51,703 84,695 214,534
Excess (Deficiency) of Revenues
Over Expenditures
Other Financing Uses
Transfers out
Total Other Financing Uses
181,041 2,055 (19,723) (20,435) - 6,909 6,044
Net Change in Fund Balances 181,041 2,055 (19,723) (20,435) - 6,909 6,044
Fund Balances, Beginning of Year 5,388,302 36,307 162,485 26,791 530,050 272,547
Fund Balances, End of Year $ 5,569,343 $ 38,362 $ 142,762 $ 6,356 $ - $ 536,959 $ 278,591
100
CITY OF PEARLAND, TEXAS
Combining Statement of Revenues, Expenditures and
Changes in Fund Balance - Nonmajor Governmental Funds (Continued)
Year Ended September 30, 2020
Total
Park and Traffic Nonmajor
Recreation Impact Juvenile Regional Educational Governmental
Development Sidewalk Grant Improvement Management Detention TV U of H Funds
$ - $ - $ - $ - $ - $ - $ $ - $ 993,985
- - 256,463 256,463
42,769 - 105,842
- - 33,450
14,200 379 5,028 358 41 9,939 102,382
825,535 - - 828,974
456,169 - - 30,951 838,110
470,369 379 825,535 5,028 43,127 30,992 266,402 3,159,206
- - 906,422
553,215 - - 608,707
461,512 60,108 - 49,656 653,281
1,095 - - - - 85,790
265,820 24,112 - - 137,793 660,594
266,915 1,038,839 60,108 - 187,449 2,914,794
203,454 379 (213,304) 5,028 (16,981) 30,992 78,953 244,412
- (30,992)
- (30,992)
(30,992)
(30,992)
203,454 379 (213,304) 5,028 (16,981) - 78,953 213,420
940,998 46,251 367,178 612,903 42,097
909,047 (27,299) 9,307,657
$ 1,144,452 $ 46,630 $ 153,874 $ 617,931 $ 25,116 $ - $ 988,000 $ (27,299) $ 9,521,077
101
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance —
Budget and Actual
Major Governmental Fund — Debt Service Fund
Year Ended September 30, 2020
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
Revenues
Property taxes $ 36,301,300 $ 37,705,870 $ 37,924,975 $ 219,105 $ 35,397,759
Investment earnings 350,000 150,000 156,977 6,977 370,115
Other 771,581 771,581 770,355 (1,226) 792,945
Total revenues 37,422,881 38,627,451 38,852,307 224,856 36,560,819
Expenditures
Debt service:
Principal 19,475,000 19,480,000 19,480,000
Interest and other charges 13,099,336 12,959,124 12,934,251
Intergovernmental 7,435,253 7,615,133 7,768,815
Total expenditures 40,009,589 40,054,257 40,183,066
24,873
(153,682)
18,660,000
12,407,558
7,325,484
(128,809) 38,393,042
Excess (Deficiency) of Revenues
Over Expenditures (2,586,708) (1,426,806) (1,330,759) 96,047 (1,832,223)
Other Financing Sources (Uses)
Refunding bonds issued - - 10,240,000
Premium on debt issued - - 2,200,938
Payments to refunded bond escrow agent - - (12,551,318)
Transfers in 2,035,747 2,066,698 2,066,739 41 572,098
Total other financing sources 2,035,747 2,066,698 2,066,739 41 461,718
Net Change in Fund Balance (550,961) 639,892 735,980 96,088 (1,370,505)
Fund Balance, Beginning of Year 5,426,609 5,426,609 5,426,609 6,797,114
Fund Balance, End of Year $ 4,875,648 $ 6,066,501 $ 6,162,589 $ 96,088 $ 5,426,609
102
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance —
Budget and Actual
Special Revenue Fund — Hotel/Motel Tax Fund
Year Ended September 30, 2020
Revenues
Sales and use taxes
Investment earnings
Intergovernmental
Other
Total Revenues
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
$ - $ - $ 993,985 $ 993,985 $1,395,334
10,800 50,719 64,954 14,235 126,357
- - 3,325 3,325 -
- 24,458 25,199 741 71,021
10,800 75,177 1,087,463 1,012,286 1,592,712
Expenditures
Current:
General government 1,100,681 1,207,287 906,422 300,865 865,023
Total Expenditures 1,100,681 1,207,287 906,422 300,865 865,023
Excess (Deficiency) of Revenues
Over Expenditures (1,089,881) (1,132,110) 181,041 1,313,151 727,689
Other Financing Uses
Transfers out (665) (665) - 665 (665)
Total Other Financing Uses (665) (665) - 665 (665)
Net Change in Fund Balance (1,090,546) (1,132,775) 181,041 1,313,816 727,024
Fund Balance, Beginning 5,388,302 5,388,302 5,388,302 4,661,278
Fund Balance, Ending $4,297,756 $4,255,527 $5,569,343 $ 1,313,816 $5,388,302
103
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual
Special Revenue Fund - Court Security Fund
Year Ended September 30, 2020
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
Revenues
Fines and forfeitures $ 48,000 $ 25,300 $ 31,919 $ 6,619 $ 48,304
Investment earnings 700 350 324 (26) 593
Intergovernmental - - 114 114
Total Revenues 48,700 25,650 32,357 6,707 48,897
Expenditures
Current:
Community services 35,827 37,838 30,302 7,536 38,256
Total Expenditures 35,827 37,838 30,302 7,536 38,256
Net Change in Fund Balance 12,873 (12,188) 2,055 14,243 10,641
Fund Balance, Beginning 36,307 36,307 36,307 25,666
Fund Balance, Ending $ 49,180 $ 24,119 $ 38,362 $ 14,243 $ 36,307
104
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual
Special Revenue Fund - City -Wide Donation Fund
Year Ended September 30, 2020
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
Revenues
Investment earnings $ 1,000 $ 1,055 $ 1,088 $ 33 $ 3,619
Other 29,967 56,108 53,016 (3,092) 108,444
Total Revenues 30,967 57,163 54,104 (3,059) 112,063
Expenditures
Current:
Public safety 33,500 51,500 23,827 27,673 3,723
Capital outlay - 50,000 50,000 - 44,456
Total Expenditures 33,500 101,500 73,827 27,673 48,179
Net Change in Fund Balance (2,533) (44,337) (19,723) 24,614 63,884
Fund Balance, Beginning 162,485 162,485 162,485 98,601
Fund Balance, Ending $ 159,952 $ 118,148 $ 142,762 $ 24,614 $ 162,485
105
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance —
Budget and Actual
Special Revenue Fund — Court Technology Fund
Year Ended September 30, 2020
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
Revenues
Fines and forfeitures $ 55,000 $ 25,000 $ 31,154 $ 6,154 $ 55,081
Investment earnings 300 125 114 (11) 168
Total Revenues 55,300 25,125 31,268 6,143 55,249
Expenditures
Current:
Community services 61,591 58,223 51,703 6,520 33,373
Total Expenditures 61,591 58,223 51,703 6,520 33,373
Net Change in Fund Balance (6,291) (33,098) (20,435) 12,663 21,876
Fund Balance, Beginning 26,791 26,791 26,791 4,915
Fund Balance, Ending $ 20,500 $ (6,307) $ 6,356 $ 12,663 $ 26,791
106
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance —
Budget and Actual
Special Revenue Fund — Street Assessments Fund
Year Ended September 30, 2020
Revenues
Investment earnings
Other
Total Revenues
Expenditures
Parks and recreation
Net Change in Fund Balance
Fund Balance, Beginning
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
$
Fund Balance, Ending $ $ $ - $ - $
107
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual
Special Revenue Fund - Park Donation Fund
Year Ended September 30, 2020
Revenues
Charges for services
Investment earnings
Other
Total Revenues
Expenditures
Current:
Parks and recreation
Total Expenditures
Original Amended
Budget Budget Actual
Variance
Positive /
(Negative) 2019
$ $ 5,000 $ 33,450
9,800 4,700 4,326
126,000 70,157 53,828
135,800 79,857 91,604
373,250
373,250
330,439 84,695
330,439 84,695
Net Change in Fund Balance (237,450) (250,582) 6,909
Fund Balance, Beginning 530,050
530,050 530,050
$ 28,450 $ 44,850
(374) 14,409
(16,329) 96,648
11,747 155,907
245,744 142,584
245,744 142,584
257,491
13,323
516,727
Fund Balance, Ending $ 292,600 $ 279,468 $ 536,959 $ 257,491 $ 530,050
108
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual
Special Revenue Fund - Police Seizure Fund
Year Ended September 30, 2020
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
Revenues
Investment earnings $ 5,200 $ 1,700 $ 1,631 $ (69) $ 8,019
Other - 186,518 218,947 32,429 54,300
Total Revenues 5,200 188,218 220,578 32,360 62,319
Expenditures
Current:
Public safety 37,200 56,953 31,665 25,288 17,724
Capital outlay 182,868 182,869 (1) 146,657
Total Expenditures 37,200 239,821 214,534 25,287 164,381
Net Change in Fund Balance (32,000) (51,603) 6,044 57,647 (102,062)
Fund Balance, Beginning 272,547 272,547 272,547 374,609
Fund Balance, Ending $ 240,547 $ 220,944 $ 278,591 $ 57,647 $ 272,547
109
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual
Special Revenue Fund - Parks and Recreation Development Fund
Year Ended September 30, 2020
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
Revenues
Investment earnings $ 18,000 $ 9,000 $ 14,200 $ 5,200 $ 40,969
Other 120,000 128,000 456,169 328,169 581,017
Total Revenues 138,000 137,000 470,369 333,369 621,986
Expenditures
Current:
Parks and recreation 1,094 1,095 (1) 29,873
Capital outlay 250,000 532,546 265,820 266,726 494,732
Total Expenditures 250,000 533,640 266,915 266,725 524,605
Excess (Deficiency) of Revenues
Over Expenditures
(112,000) (396,640) 203,454 600,094 97,381
Other Financing Uses
Transfers out - - (162,000)
Total Other Financing Uses - - (162,000)
Net Change in Fund Balance (112,000) (396,640) 203,454 600,094 (64,619)
Fund Balance, Beginning 940,998 940,998 940,998 1,005,617
Fund Balance, Ending $ 828,998 $ 544,358 $ 1,144,452 $ 600,094 $ 940,998
110
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance —
Budget and Actual
Special Revenue Fund — Sidewalk Fund
Year Ended September 30, 2020
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
Revenues
Charges for services $ 5,000 $ 5,000 $ - $ (5,000) $ 43,814
Investment earnings 200 400 379 (21) 191
Total Revenues 5,200 5,400 379 (5,021) 44,005
Other Financing Uses
Transfers out - - - (4,220)
Total Other Financing Uses - - - (4,220)
Net Change in Fund Balance 5,200 5,400 379 (5,021) 39,785
Fund Balance, Beginning 46,251 46,251 46,251 - 6,466
Fund Balance, Ending $ 51,451 $ 51,651 $ 46,630 $ (5,021) $ 46,251
111
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance —
Budget and Actual
Special Revenue Fund — Grant Fund
Year Ended September 30, 2020
Revenues
Investment earnings
Intergovernmetnal
Other
Total Revenues
Expenditures
Current:
General government
Public safety
Community service
Capital outlay
Total Expenditures
Net Change in Fund Balance
Fund Balance, Beginning
Fund Balance, Ending
Original Amended
Budget Budget Actual
Variance
Positive /
(Negative)
2019
$ 75 $ 75 $ -
4,948,962 15,484,795 825,535
4,949,037 15,484,870
$ (75) $ 2,245
(14,659,260) 690,267
- 6,311
825,535 (14,659,335) 698,823
9,548
374,857 800,543 553,215 247,328 184,844
406,257 11,564,256 461,512 11,102,744 112,981
- 24,112 (24,112)
781,114 12,364,799 1,038,839 11,325,960 307,373
4,167,923 3,120,071 (213,304) (3,333,375) 391,450
367,178 367,178 367,178 - (24,272)
$4,535,101 $3,487,249 $ 153,874 $ (3,333,375) $ 367,178
112
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance —
Budget and Actual
Special Revenue Fund — Traffic Impact Improvement Fund
Year Ended September 30, 2020
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
Revenues
Investment earnings $ 11,000 $ 5,400 $ 5,028 $ (372) $ 15,855
Total Revenues 11,000 5,400 5,028 (372) 15,855
Other Financing Uses
Transfers out (1,141)
Total Other Financing Uses (1,141)
Net Change in Fund Balance 11,000 5,400 5,028 (372) 14,714
Fund Balance, Beginning 612,903 612,903 612,903 598,189
Fund Balance, Ending $ 623,903 $ 618,303 $ 617,931 $ (372) $ 612,903
113
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual
Special Revenue Fund - Juvenile Management Fund
Year Ended September 30, 2020
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
Revenues
Fines and forfeitures $ 72,500 $ 32,890 $ 42,769 $ 9,879 $ 79,509
Investment earnings 1,000 400 358 (42) 990
Total Revenues 73,500 33,290 43,127 9,837 80,499
Expenditures
Current:
Community services
Total Expenditures
Net Change in Fund Balance
Fund Balance, Beginning
Fund Balance, Ending
67,285 61,484 60,108
67,285 61,484 60,108
6,215 (28,194) (16,981)
42,097 42,097 42,097
1,376 66,009
1,376 66,009
11,213 14,490
27,607
$ 48,312 $ 13,903 $ 25,116 $ 11,213 $ 42,097
114
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance —
Budget and Actual
Special Revenue Fund — Regional Detention Fund
Year Ended September 30, 2020
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
Revenues
Investment earnings $ $ $ 41 $ 41 $ 179
Other 30,951 30,951 - 26,502
Total Revenues 30,951 30,992 41 26,681
Other Financing Uses
Transfers out (30,951) (30,992) (41) (29,845)
Total Other Financing Uses (30,951) (30,992) (41) (29,845)
Net Change in Fund Balance - (3,164)
Fund Balance, Beginning 3,164
Fund Balance, Ending $ $ $ $ - $
115
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual
Special Revenue Fund - Educational TV Fund
Year Ended September 30, 2020
Revenues
Franchise fees
Investment earnings
Total Revenues
Expenditures
Current:
Community serivces
Capital outlay
Total Expenditures
Net Change in Fund Balance
Fund Balance, Beginning
Fund Balance, Ending
Original Amended
Budget Budget Actual
Variance
Positive /
(Negative)
2019
$ 265,000 $ 230,000 $ 256,463
20,000 12,000 9,939
285,000 242,000 266,402
104,100 116,990 49,656
200,000 150,000 137,793
304,100 266,990 187,449
(19,100) (24,990) 78,953
909,047 909,047 909,047
$ 26,463 $ 235,300
(2,061) 21,161
24,402 256,461
67,334
12,207
79,541
77,668
26,796
104,464
103,943 151,997
757,050
$ 889,947 $ 884,057 $ 988,000 $ 103,943 $ 909,047
116
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance —
Budget and Actual
Special Revenue Fund — U of H Fund
Year Ended September 30, 2020
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
Other Financing Sources
Transfers in $ $ $ $ - $ 370
Total Other Financing Sources 370
Net Change in Fund Balance - 370
Fund Balance, Beginning (27,299) (27,299) (27,299) - (27,669)
Fund Balance, Ending $ (27,299) $ (27,299) $ (27,299) $ - $ (27,299)
117
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance —
Budget and Actual
Special Revenue Fund — Capital Projects Fund
Year Ended September 30, 2020
Variance
Original Amended Positive /
Budget Budget Actual (Negative) 2019
Revenues
Investment earnings $ 948,000 $ 948,000 $ 574,906 $ (373,094) $ 994,119
Intergovernmental 35,558,428 35,558,428 11,518,373 (24,040,055) 9,627,261
Other - 9,370 9,370 600,000
Total revenues 36,506,428 36,506,428 12,102,649 (24,403,779) 11,221,380
Expenditures
Current:
Public works 1,004,522 190,550 813,972 441,518
Debt service:
Interest and other charges - 409,229 (409,229) 400,398
Capital outlay 116,031,618 33,681,769 (33,681,769) 31,656,489
Total expenditures 116,031,618 1,004,522 34,281,548 (33,277,026) 32,498,405
Excess (Deficiency) of Revenues
Over Expenditures (79,525,190) 35,501,906 (22,178,899) (57,680,805) (21,277,025)
Other Financing Sources (Uses)
Bond proceeds 59,644,381 59,644,381 33,425,000 (26,219,381) 21,960,000
Premium on debt issued - 6,897,046 6,897,046 4,055,805
Transfers in 394,875 2,000,663 2,000,663 - 5,676,460
Transfers out (1,410,919) (1,402,310) (1,402,310) (1,362,087)
Total other financing sources (uses) 58,628,337 60,242,734 40,920,399 (19,322,335) 30,330,178
Net Change in Fund Balance (20,896,853) 95,744,640 18,741,500 (77,003,140) 9,053,153
Fund Balance, Beginning of Year 54,457,402 54,457,402 54,457,402 42,298,552
Fund Balance, End of Year $ 33,560,549 $ 150,202,042 $ 73,198,902 $ (77,003,140) $ 51,351,705
118
CITY OF PEARLAND, TEXAS
Internal Service Funds
September 30, 2020
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 -- 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.
Motor Pool Fund — To account for the operations and maintenance of the City's fleet. Its
customers are city departments, and its primary revenue source is payments from those
departments for vehicle and equipment maintenance and replacement.
119
CITY OF PEARLAND, TEXAS
Combining Statement of Net Position - Internal Service Funds
September 30, 2020
Property
Liability Employee Health Motor
Insurance Benefits Claims Pool
Fund Fund Fund Fund
Total
Assets
Current assets:
Cash and cash equivalents $ 612,560 $ (118,207) $ 3,765,781 $ 2,547,114 $ 6,807,248
Accounts receivable, net 957 369 6,743 - 8,069
Inventories - 84,246 84,246
Prepaids 4,202 - - 4,202
Total current assets 613,517 (113,636) 3,772,524 2,631,360 6,903,765
Noncurrent Assets
Capital assets:
Machinery and equipment - 3,717,953 3,717,953
Less accumulated depreciation - (171,680) (171,680)
Total non -current assets - 3,546,273 3,546,273
Total assets $ 613,517 $ (113,636) $ 3,772,524 $ 6,177,633 $ 10,450,038
Deferred Outflows of Resources
OPEB $ 1,449 $
Pensions 5,552
Total deferred outflows of resources 7,001
$
$ 13,800 $ 15,249
39,145 44,697
52,945 59,946
Liabilities
Current Liabilities
Accounts payable 3,600 (150,241) 136,728 548,067 538,154
Claims payable - - 499,228 - 499,228
3,600 (150,241) 635,956 548,067 1,037,382
Noncurrent Liabilities
Total OPEB liability
Net pension liability
Total noncurrent liabilities
Total liabilities
1,859
17,541
19,400
23,000 (150,241)
18,222 20,081
123,667 141,208
141,889 161,289
635,956 689,956 1,198,671
Deferred Inflows of Resources
OPEB 265 - 2,096 2,361
Pensions 3,812 - 26,876 30,688
Total deferred inflows of resources 4,077 - 28,972 33,049
Net Position
Net investment in capital assets
Unrestricted
Total net position
593,441
593,441
36,605
36,605
3,136,568
3,136,568
3,546,273 3,546,273
1,965,377 5,731,991
5,511,650 9,278,264
Total liabilities and net position $ 620,518 $ (113,636) $ 3,772,524 $ 6,230,578 $ 10,509,984
120
CITY OF PEARLAND, TEXAS
Combining Statement of Revenues, Expenses and
Changes In Net Position - Internal Service Funds
Year Ended September 30, 2020
Property
Liability Employee Health Motor
Insurance Benefits Claims Pool
Fund Fund Fund Fund
Total
Operating Revenues
Charges for services $ 1,658,538 $ - $ 8,311,896 $ 4,196,674 $ 14,167,108
Total operating revenues 1,658,538 - 8,311,896 4,196,674 14,167,108
Operating Expenses
Personnel services 56,641 - 464,019 520,660
Supplies and materials - 43,947 43,947
Contractual services 1,399,945 - 8,163,610 28,849 9,592,404
Repairs and maintenance 2,954 - - 1,019,124 1,022,078
Other expenses 37 - 31,417 - 31,454
Depreciation and amortization - - 171,680 171,680
Total operating expenses 1,459,577 - 8,195,027 1,727,619 11,382,223
Operating Income 198,961
116,869 2,469,055 2,784,885
Nonoperating Revenues
Intergovernmental revenue 27,746 - - 27,746
Investment earnings 4,173 5 22,429 16,363 42,970
Gain on disposal of property - - - 155,709 155,709
Total nonoperating revenues 31,919 5 22,429 172,072 226,425
Income Before Transfers 230,880 5 139,298 2,641,127 3,011,310
Transfers in
Transfers out
Change in Net Position 230,880 5 139,298 2,641,127 3,011,310
Net Position, Beginning, as
Previously Reported 380,806 36,600 3,484,287 3,009,143 6,910,836
Prior period adjustment (18,245) - (487,017) (138,620) (643,882)
Net Position, Beginning, as
Restated 362,561 36,600 2,997,270 2,870,523 6,266,954
Net Position, Ending $ 593,441 $ 36,605 $ 3,136,568 $ 5,511,650 $ 9,278,264
121
CITY OF PEARLAND, TEXAS
Combining Statement of Cash Flows - Internal Service Funds
Year Ended September 30, 2020
Total
Fleet Health Health Health Internal
Replacement Benefits Benefits Benefits Service
Fund Fund Fund Fund Funds
Cash Flows from Operating Activities
Receipts from interfund charges for fleet management $ 1,674,756 $ 7,092 $ 8,382,738 $ 4,196,674 $ 14,261,260
Payments to employees for salaries and benefits (58,410) - (484,723) (543,133)
Payments to suppliers and service providers (1,400,491) (154,443) (8,046,088) (673,710) (10,274,732)
Net Cash Provided By (Used In) Operating Activities 215,855 (147,351) 336,650 3,038,241 3,443,395
Cash Flows from Noncapital Financing Activity
Cash received from non operating revenues
Net Cash Used In Noncapital Financing Activity
27,746 - 27,746
27,746 - - 27,746
Cash Flows from Capital and Related Financing
Activities
Acquisition and construction of capital assets - (2,637,853) (2,637,853)
Proceeds from sale of assets - 155,709 155,709
Net Cash Used In Capital And Related
financing activities (2,482,144) (2,482,144)
Cash Flows from Investing Activities
Interest on investments 4,173 5 22,429 16,363 42,970
Net Cash Provided By (Used In) Investing Activities 4,173 5 22,429 16,363 42,970
Increase (Decrease) in Cash and Cash Equivalents 247,774 (147,346) 359,079 572,460 1,031,967
Cash and Cash Equivalents, Beginning of Year 364,786 29,139 3,406,702 1,974,654 5,775,281
Cash and Cash Equivalents, End of Year $ 612,560 $ (118,207) $ 3,765,781 $ 2,547,114 $ 6,807,248
Reconciliation of Operating Income to Net Cash
Provided By Operating Activities
Operating income $ 198,961 $ $ 116,869 $ 2,469,055 $ 2,784,885
Items not requiring cash:
Depreciation - 171,680 171,680
Changes in:
Accounts receivable, net 16,218 7,092 70,842 - 94,152
Inventories - 37,196 37,196
Prepaids (4,202) 148,939 - 144,737
Accounts payable and accrued liabilities 2,445 (150,241) - 381,014 233,218
Total OPEB liability (1,360) - (14,466) (15,826)
Net pension liability 2,515 - 17,735 20,250
Deferred outflows - OPEB (1,449) - (13,800) (15,249)
Deferred inflows - OPEB 265 - 2,096 2,361
Deferred outflows - Pension (5,552) (39,145) (44,697)
Deferred inflows - Pension 3,812 - 26,876 30,688
Net Cash Provided By (Used In) Operating Activities $ 215,855 $ (147,351) $ 336,650 $ 3,038,241 $ 3,443,395
122
CITY OF PEARLAND, TEXAS
Statistical Section (Unaudited)
September 30, 2020
This part of the City of Pearland'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 City's overall financial health.
Contents Page
Financial Trends 124
These schedules contain trend information to help the readers understand how the City's financial
performance and well-being have changed over time.
Revenue Capacity 134
These schedules contain information to help the reader assess the City's most significant local
revenue sources, sales and property tax.
Debt Capacity 148
These schedules present information to help the reader assess the affordability of the City's
current levels of outstanding debt and the City's ability to issue additional debt in the future.
Demographic and Economic Information 154
These schedules offer demographic and economic indicators to help the reader understand the
environment within which the City's financial activities take place.
Operating Information 156
These schedules contain service and infrastructure data to help the reader understand how the
information in the City's financial report relates to the services the city 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.
123
CITY OF PEARLAND, TEXAS
Net Position by Component
Last Ten Fiscal Years
Amounts in (000's)
(Accrual Basis of Accounting)
Governmental Activities
Net investment in capital assets
Restricted
Unrestricted
Total governmental activities
net position
Business -type activities
Net investment in capital assets
Restricted
Unrestricted
Total business -type activities
net position
Primary government
Investment in capital assets
Restricted
Unrestricted
Total primary government
net position
2011 20121 2013 1'2 2014 2015
$ 413,439 $ 353,160 $ 391,032 $ 397,346 $ 423,706
16,462 38,933 43,413 52,209 53,883
14,543 10,117 14,696 2,477 3,800
$ 444,444 $ 402,210 $ 449,141 $ 452,032 $ 481,389
$ 156,629 $ 156,888 $ 165,915 $ 174,955 $ 186,819
5,603 9,821 9,542 14,484 13,539
13,910 12,439 16,704 15,612 12,815
$ 176,142 $ 179,148 $ 192,161 $ 205,051 $ 213,173
$ 570,068
22,065
28,453
1 Restated due to implementation of
restated for comparison purposes.
2 Due to implementation of GASB 61
units versus discretely presented as
for comparison purposes.
$ 510,048 $ 556,947 $ 572,301 $ 610,525
48,754 52,955 66,693 67,422
22,556 31,400 18,089 16,615
$ 620,586 $ 581,358 $ 641,302 $ 657,083 $ 694,562
GASB 65 in fiscal year 2014. Fiscal years 2012 and 2013 have been
, the City's component units are now considered blended component
in years prior to fiscal year 2013. Fiscal year 2012 has been restated
124
CITY OF PEARLAND, TEXAS
Net Position by Component (Continued)
Last Ten Fiscal Years
Amounts in (000's)
(Accrual Basis of Accounting)
2016 2017 2018 2019 2020
Governmental Activities
Net investment in capital assets $ 439,923 $ 449,141 $ 454,670 $ 488,077 $ 490,304
Restricted 60,640 60,310 67,263 56,491 44,928
Unrestricted 3,185 (5,045) (2,500) (734) 33,179
Total governmental activities
net position $ 503,748 $ 504,406 $ 519,433 $ 543,834 $ 568,412
Business -type activities
Net investment in capital assets $ 187,937 $ 205,827 $ 210,674 $ 214,672 $ 213,081
Restricted 15,852 13,972 14,525 15,270 16,776
Unrestricted 13,351 6,972 20,663 29,806 39,015
Total business -type activities
net position $ 217,140 $ 226,771 $ 245,862 $ 259,748 $ 268,873
Primary government
Investment in capital assets $ 627,860 $ 654,968 $ 665,344 $ 702,749 $ 703,386
Restricted 76,492 74,282 81,788 71,761 61,704
Unrestricted 16,536 1,927 18,163 29,072 72,195
Total primary government
net position $ 720,888 $ 731,177 $ 765,295 $ 803,582 $ 837,284
125
CITY OF PEARLAND, TEXAS
Changes in Net Position
Last Ten Fiscal Years
Amounts in (000's)
(Accrual Basis of Accounting)
2011 2012 I 2013 1'2 2014 2015
Expenses
Governmental activities:
General Government $ 15,945 $ 13,334 $ 13,358 $ 12,241 $ 17,189
Public Safety 23,042 27,403 28,944 32,130 33,179
Public Works 31,130 28,510 31,690 38,579 45,894
Community Services 3,254 4,267 3,807 4,687 3,641
Parks and Recreation 8,062 9,264 9,524 6,896 3,731
Economic Development - 26,311 17,411 26,498 26,159
Interest on long-term debt 13,142 11,572 10,534 16,225 15,569
Total government activities expenses 94,575 120,661 115,268 137,256 145,362
Business -type activities:
Water and Sewer 29,192 29,392 31,289 32,444 34,266
Solid Waste 7,285 7,528 8,324 6,664 6,417
Total business -type activities 36,477 36,920 39,613 39,108 40,683
Total primary government expenses $ 131,052 $ 157,581 $ 154,881 $ 176,364 $ 186,045
Program Revenue
Governmental activities:
Charges for services:
General Government $ $ 7,624 $ 6,326 $ 6,637 $ 7,624
Public Safety 3,679 4,206 7,410 2,793 4,110
Public Works 18 43 3,096 322 338
Community Services 4,632 5,855 3,264 7,375 7,771
Parks and Recreation 2,027 2,080 2,209 2,290 2,412
Economic Development 413 414 430 1,209
Operating grants and contributions:
General Government 5,488 6,045 44 440 747
Public Safety 407 711 603 434 294
Public Works 675 53 1,388 7,612 4,589
Community Services 366 311 108 337 216
Parks and Recreation 462 542 182 474 1,586
Economic Development - - -
Capital grants and contributions:
General Government - 180
Public Safety - - -
Public Works 10,330 18,743 52,921 29,269 36,440
Parks and Recreation - 100 - -
Total governmental activities program revenues 28,084 46,726 78,145 58,413 67,336
Business -type activities:
Charges for services:
Water and Sewer 28,664 27,535 29,008 28,929 30,201
Solid Waste 7,258 7,654 8,175 7,008 6,637
Operating grants and contributions:
Water and Sewer 61 205 2,512
Capital grants and contributions:
Water and Sewer 4,215 8,118 16,273 17,677 13,177
Total business -type activities program revenues 40,198 43,512 53,456 53,614 52,527
Total primary government program revenues $ 68,282 $ 90,238 $ 131,601 $ 112,027 $ 119,863
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.
126
CITY OF PEARLAND, TEXAS
Changes in Net Position (Continued)
Last Ten Fiscal Years
Amounts in (000's)
(Accrual Basis of Accounting)
Expenses
Governmental activities:
General Government
Public Safety
Public Works
Community Services
Parks and Recreation
Economic Development
Interest on long-term debt
Total government activities expenses
Business -type activities:
Water and Sewer
Solid Waste
Total business -type activities
Total primary government expenses
Program Revenue
Governmental activities:
Charges for services:
General Government
Public Safety
Public Works
Community Services
Parks and Recreation
Economic Development
Operating grants and contributions:
General Government
Public Safety
Public Works
Community Services
Parks and Recreation
Economic Development
Capital grants and contributions:
General Government
Public Safety
Public Works
Parks and Recreation
Total governmental activities program revenues
Business -type activities:
Charges for services:
Water and Sewer
Solid Waste
Operating grants and contributions:
Water and Sewer
Capital grants and contributions:
Water and Sewer
Total business -type activities program revenues
Total primary government program revenues
2016
$ 18,015
38,933
46,449
3,711
4,820
31,330
15,946
2017
$ 20,121
44,343
49,221
5,107
8,823
31,293
14,422
159,204 173,331
37,941
6,833
44,774
$ 203,978
$ 8,547
4,276
320
8,520
2,218
13
2,595
11,123
24,636
41,475
7,059
48,534
$ 221,865
$ 9,518
3,949
1,395
8,026
2,001
3,886
12,459
575
10,107
2018
$ 20,360
43,275
53,271
4,509
7,194
29,521
14,441
2019
$ 21,249
47,948
46,631
4,616
7,683
33,470
14,017
172,571 175,614
41,683 39,413
7,441 7,752
49,124 47,165
$ 221,695 $ 222,779
$ 10,414 $ 10,826
3,777 4,413
253 1,379
6,566 6,888
2,766 2,328
3,503 1,951
11
5,884
232
19,241
8,765
239
16,678
62,248 51,916 52,647 53,467
43,677
6,945
30
51,544 55,593
6,549 7,842
4,094 2,027 4,613
55,696
8,621
1,497
2020
$ 25,504
51,031
44,862
4,383
8,197
28,683
14,042
176,702
45,055
7,930
52,984
$ 229,686
$ 12,424
4,772
113
6,100
992
460
6,609
14,164
7,148
52,782
54,710
7,755
225
4,113 1,456
54,746 60,120 68,048 69,927
64,146
$ 116,994 $ 112,036 $ 120,695 $ 123,394 $ 116,929
127
CITY OF PEARLAND, TEXAS
Changes in Net Position (Continued)
Last Ten Fiscal Years
Amounts in (000's)
(Accrual Basis of Accounting)
Net (Expense)/Revenue
Governmental activities
Business -type activities
Total primary government net expense
2011 2012 I 2013 1'2 2014 2015
$ (66,491) $ (73,935) $ (37,123) $ (78,843) $ (78,026)
3,721 6,592 13,843 14,506 11,844
$ (62,770) $ (67,343) $ (23,280) $ (64,337) $ (66,182)
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes:
Property taxes $ 32,963 $ 33,451 $ 52,230 $ 57,378 $ 62,974
Sales and use taxes 13,578 13,983 22,969 27,295 29,970
Franchise taxes 5,426 5,605 5,670 6,484 6,971
Unrestricted grants and contributions
Investment earnings 253 157 134 254 491
Miscellaneous 1,028 1,854 1,554 2,399 4,149
Special item - - -
Transfers 1,186 1,475 2,269 1,607 2,828
Total governmental activities 54,434 56,525 84,826 95,417 107,383
Business -type activities:
Investment earnings 100 116 68 95 325
Miscellaneous 779 9 444 682 219
Transfers (1,186) (1,475) (2,269) (1,607) (2,828)
Total business -type activities (307) (1,350) (1,757) (830) (2,284)
Total primary government $ 54,127 $ 55,175 $ 83,069 $ 94,587 $ 105,099
Change in Net Position:
Governmental activities
Business -type activities
Total primary government
$ (12,057) $ (17,410) $ 47,703 $ 16,574 $ 29,357
3,414 5,242 12,086 13,676 9,560
$ (8,643) $ (12,168) $ 59,789 $ 30,250 $ 38,917
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.
128
CITY OF PEARLAND, TEXAS
Changes in Net Position (Continued)
Last Ten Fiscal Years
Amounts in (000's)
(Accrual Basis of Accounting)
2016 2017 2018 2019 2020
Net (Expense)/Revenue
Governmental activities $ (96,956) $ (121,414) $ (119,924) $ (122,147) $ (123,919)
Business -type activities 9,972 11,586 18,924 22,762 11,162
Total primary government net expense $ (86,984) $ (109,828) $ (101,000) $ (99,385) $ (112,757)
General Revenues and Other Changes in Net Position
Governmental activities:
Taxes:
Property taxes $ 67,644 $ 76,686 $ 83,803 $ 89,930 $ 97,106
Sales and use taxes 31,293 31,976 35,437 34,872 34,928
Franchise taxes 7,228 7,263 7,358 7,480 7,270
Unrestricted grants and contributions
Investment earnings 729 622 1,651 3,293 1,626
Miscellaneous 5,957 3,108 4,691 562 4,865
Special item - - - -
Transfers 6,464 2,417 3,103 11,364 5,460
Total governmental activities 119,315 122,072 136,043 147,501 151,256
Business -type activities:
Investment earnings 294 396 1,361 2,947 1,277
Miscellaneous 166 66 7 2,361 13
Transfers (6,464) (2,417) (3,103) (11,364) (5,460)
Total business -type activities (6,004) (1,955) (1,735) (6,056) (4,170)
Total primary government $ 113,311 $ 120,117 $ 134,308 $ 141,445 $ 147,085
Change in Net Position:
Governmental activities
Business -type activities
Total primary government
$ 22,359 $ 658 $ 16,117 $ 25,354 $ 27,336
3,968 9,631 17,189 16,706 6,991
$ 26,327 $ 10,289 $ 33,306 $ 42,060 $ 34,328
129
CITY OF PEARLAND, TEXAS
Fund Balances of Governmental Funds
Last Ten Fiscal Years
Amounts in (000's)
(Modified Accrual Basis of Accounting)
2011 2012 20131 2014 2015
General fund
Non -spendable $ 130 $ 182 $ 158 $ 202 $ 293
Restricted 126 - - -
Assigned 160 167 1,554 1,394 1,406
Unassigned 14,108 17,222 16,911 17,859 19,655
Total General Fund $ 14,524 $ 17,571 $ 18,623 $ 19,455 $ 21,354
All other governmental funds
Non -spendable $ - $ $ 183 $ 209 $ 173
Restricted
Debt service 5,160 4,992 5,192 5,951 5,835
Capital improvements 23,461 13,776 14,536 17,519 22,484
Public safety 541 702 715 390 394
Economic Development - 20,777 23,814 24,117
Community development programs
Tourism 1,452 1,821 2,267 2,994 3,685
Parks and recreation 1,143 968 985 168 105
Capital projects - other 810 797 866 - -
Other 87 215 638 918 1,149
Unassigned - - - -
Total other Governmental Funds $ 32,654 $ 23,271 $ 46,159 $ 51,963 $ 57,940
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.
130
CITY OF PEARLAND, TEXAS
Fund Balances of Governmental Funds (Continued)
Last Ten Fiscal Years
Amounts in (000's)
(Modified Accrual Basis of Accounting)
2016 2017 2018 2019 2020
General fund
Non -spendable $ 151 $ 101 $ 136 $ 15 $ 28
Restricted - - -
Assigned 3,994 3,000 1,538 1,521 648
Unassigned 16,775 11,262 12,314 15,666 28,400
Total General Fund $ 20,919 $ 14,363 $ 13,988 $ 17,202 $ 29,076
All other governmental funds
Non -spendable $ - $ 4 $ $ - $ -
Restricted
Debt service 8,276 5,912 6,797 5,427 6,163
Capital improvements 47,361 59,200 43,912 52,952 73,316
Public safety 342 364 506 504 453
Economic Development 32,844 36,795 44,634 34,659 44,068
Community development programs
Tourism 4,194 4,604 4,661 5,388 5,569
Parks and recreation 131 262 517 530 537
Capital projects - other - -
Other 1,264 779 783 1,313 1,180
Unassigned - (28) (52) (28) (27)
Total other Governmental Funds $ 94,411 $ 107,892 $ 101,758 $ 100,745 $ 131,259
'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.
131
CITY OF PEARLAND, TEXAS
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
Amounts in (000's)
(Modified Accrual Basis of Accounting)
2011 2012 20131 2014 2015
Revenues
Property taxes $ 33,454 $ 34,362 $ 54,475 $ 57,378 $ 62,922
Sales and use taxes 13,983 15,632 24,942 27,295 29,970
Franchise fees 5,605 5,817 5,999 6,484 6,971
Licenses and permits 1,721 2,320 2,989 4,149 4,544
Fines and forfeitures 2,895 3,374 3,534 3,121 3,108
Charges for services 11,687 11,891 12,982 13,078 14,661
Investment earnings 156 92 154 254 433
Intergovernmental 2,199 3,089 4,595 2,541 3,197
Other 1,560 2,541 7,973 4,157 7,076
Total Revenues 73,260 79,118 117,643 118,457 132,882
Expenditures
General government 10,866 7,784 7,958 8,027 10,470
Public safety 23,926 25,372 26,204 29,171 32,229
Public works 6,505 5,533 7,812 8,121 10,298
Community services 3,376 4,246 3,523 3,960 3,408
Parks and recreation 7,539 7,499 7,244 7,816 5,823
Economic development 17,414 25,248 25,625
Debt service:
Principal 8,217 9,373 15,637 15,815 23,790
Interest and other charges 13,543 12,401 15,859 16,373 16,595
Capital outlay 25,703 9,201 22,101 15,536 24,471
Intergovernmental 3,954 3,992 4,058 4,307 4,792
Total Expenditures 103,629 85,401 127,810 134,374 157,501
Excess of revenues over (under) expenditures
(30,369) (6,283) (10,167) (15,917) (24,619)
Other Financing Sources (Uses)
Transfers in 3,525 5,909 15,515 16,507 17,043
Transfers out (2,050) (5,096) (14,583) (16,967) (15,233)
Debt issued 21,637 49,805 12,060 49,560 81,258
Payment to Escrow Agent (1,630) (54,478) (33,182) (54,303)
Capital leases 1,289 1,179 1,853 574
Other 56 3,809 331 4,784 3,157
Total other Financing Sources (uses) 22,826 (51) 14,502 22,555 32,496
Net change in fund balances $ (7,543) $ (6,334) $ 4,335 $ 6,638 $ 7,877
Debt service as a percentage of noncapital
expenditures
27.9% 28.3% 29.8% 27.0% 29.9%
'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.
132
CITY OF PEARLAND, TEXAS
Changes in Fund Balances of Governmental Funds (Continued)
Last Ten Fiscal Years
Amounts in (000's)
(Modified Accrual Basis of Accounting)
2016 2017 2018 2019 2020
Revenues
Property taxes $ 67,569 $ 76,562 $ 83,484 $ 90,252 $ 97,106
Sales and use taxes 31,293 31,976 35,437 34,872 34,928
Franchise fees 7,228 7,263 7,358 7,480 7,270
Licenses and permits 5,677 5,435 4,146 4,198 4,424
Fines and forfeitures 2,931 2,654 2,468 2,712 1,723
Charges for services 15,313 16,015 16,769 17,726 18,714
Investment earnings 728 619 1,600 3,186 1,583
Intergovernmental 15,959 16,010 8,579 10,329 19,480
Other 5,065 5,736 7,200 3,947 2,553
Total Revenues 151,765 162,270 167,041 174,702 187,782
Expenditures
General government 11,609 11,223 11,300 11,173 12,513
Public safety 36,818 40,858 41,273 42,716 47,218
Public works 13,292 17,365 16,968 12,596 11,693
Community services 4,294 4,837 4,313 4,219 4,452
Parks and recreation 6,458 6,419 5,959 6,065 5,483
Economic development 31,051 29,001 29,195 38,288 25,843
Debt service:
Principal 19,736 24,341 23,547 38,007 27,796
Interest and other charges 15,841 15,221 15,814 15,646 15,939
Capital outlay 31,982 43,860 43,474 39,541 38,359
Intergovernmental 4,847 6,937 7,168 7,325 7,769
Total Expenditures 175,928 200,062 199,011 215,576 197,065
Excess of revenues over (under) expenditures
(24,163) (37,792) (31,970) (40,874) (9,284)
Other Financing Sources (Uses)
Transfers in 26,062 28,466 24,456 34,200 31,561
Transfers out (20,844) (26,860) (22,266) (22,866) (26,101)
Debt issued 142,701 115,718 24,223 44,292 44,798
Payment to Escrow Agent (89,638) (72,608) - (12,551)
Capital leases 1,918 - - -
Other -
Total other Financing Sources (uses) 60,199 44,716 26,413 43,075 50,258
Net change in fund balances $ 36,036 $ 6,924 $ (5,557) $ 2,201 $ 40,975
Debt service as a percentage of noncapital
expenditures 24.8% 25.3% 24.9% 30.3% 27.6%
133
CITY OF PEARLAND, TEXAS
Spending and Growth Analysis
Last Ten Fiscal Years
Amounts in (000's)
(Modified Accrual Basis of Accounting)
Expenditures 2011
General Gov't
Public Safety
Public Works
Community Services
Parks & recreation
Economic Development
Debt Service - principal
Debt service - interest
Capital outlay
Intergovernmental
Total
Distribution of Spending
General Gov't
Public Safety
Public Works
Community Services
Parks & recreation
Economic Development
Debt Service - principal
Debt service - interest
Capital outlay
Intergovernmental
Total
Adjusted for CPI
POPULATION
PER CAPITA
CPI INDEX (NATIONAL)
PER CAPITA ADJ TO 2020
PER CAPITA ADJ TO 2011
$ 10,866
23,926
6,505
3,376
7,539
17,391
10,847
17,154
25,768
4,127
2012 2013 2014 2015 2016
$ 7,797
25,372
5,533
4,246
7,499
20,397
12,893
15,534
9,201
4,158
$ 7,958
26,204
7,812
3,523
7,244
17,414
15,637
15,859
22,101
4,058
$ 127,499 $ 112,630 $ 127,810
$ 8,027 $ 10,470 $ 11,609
29,171 32,229 36,818
8,121 10,298 13,292
3,960 3,408 4,294
7,816 5,823 6,458
25,248 25,625 31,051
15,815 23,790 19,736
16,373 16,595 15,841
15,536 24,471 31,982
4,307 4,792 4,847
$ 134,374 $ 157,501 $ 175,928
8.5% 6.9% 6.2% 6.0% 6.6% 6.6%
18.8% 22.5% 20.5% 21.7% 20.5% 20.9%
5.1% 4.9% 6.1% 6.0% 6.5% 7.6%
2.6% 3.8% 2.8% 2.9% 2.2% 2.4%
5.9% 6.7% 5.7% 5.8% 3.7% 3.7%
13.6% 18.1% 13.6% 18.8% 16.3% 17.6%
8.5% 11.4% 12.2% 11.8% 15.1% 11.2%
13.5% 13.8% 12.4% 12.2% 10.5% 9.0%
20.2% 8.2% 17.3% 11.6% 15.5% 18.2%
3.2% 3.7% 3.2% 3.2% 3.0% 2.8%
100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
97,200
$ 1,312 $
224.94
$ 1,518 $
$ 1,312 $
99,800 104,100 106,900 112,300 117,100
1,129 $ 1,228 $ 1,257 $ 1,403 $ 1,502
229.59 232.96 234.75 236.70 241.40
1,279 $ 1,372 $ 1,394 $ 1,542 $ 1,620
1,106 $ 1,186 $ 1,204 $ 1,333 $ 1,400
134
CITY OF PEARLAND, TEXAS
Spending and Growth Analysis (Continued)
Last Ten Fiscal Years
Amounts in (000's)
(Modified Accrual Basis of Accounting)
Expenditures
General Gov't
Public Safety
Public Works
Community Services
Parks & recreation
Economic Development
Debt Service - principal
Debt service - interest
Capital outlay
Intergovernmental
Total
Distribution of Spending
General Gov't
Public Safety
Public Works
Community Services
Parks & recreation
Economic Development
Debt Service - principal
Debt service - interest
Capital outlay
Intergovernmental
Total
Adjusted for CPI
POPULATION
PER CAPITA
CPI INDEX (NATIONAL)
PER CAPITA ADJ TO 2019
PER CAPITA ADJ TO 2010
Ten
Year
2017 2018 2019 2020 % CHG
$ 11,223 $ 11,300 $ 11,173 $ 12,513 15.2%
40,858 41,273 42,716 47,218 97.4%
17,365 16,968 12,596 11,693 79.7%
4,837 4,313 4,219 4,452 31.9%
6,419 5,959 6,065 5,483 -27.3%
29,001 29,195 38,288 25,843 48.6%
24,341 23,547 38,007 27,796 156.3%
15,221 15,814 15,646 15,939 -7.1
43,860 43,474 39,541 38,359 48.9%
6,937 7,168 7,325 7,769 88.2%
$ 200,062 $ 199,011 $ 215,576 $ 197,065 54.6%
5.6% 5.7% 5.2% 6.3%
20.4% 20.7% 19.8% 24.0%
8.7% 8.5% 5.8% 5.9%
2.4% 2.2% 2.0% 2.3%
3.2% 3.0% 2.8% 2.8%
14.5% 14.7% 17.8% 13.1
12.2% 11.8% 17.6% 14.1
7.6% 7.9% 7.3% 8.1
21.9% 21.8% 18.3% 19.5%
3.2% 3.6% 3.4% 3.9%
99.8% 92.3% 100.0% 100.0%
121,500
125,198
127,500 131,448
$ 1,647 $ 1,590 $ 1,691 $ 1,499
246.37 252.44 256.76
$ 1,740 $ 1,639 $ 1,691
$ 1,503 $ 1,416 $ 1,481
260.28
$ 1,499
$ 1,296
Average
Compounded
Growth Rate
1.58%
7.85%
6.73%
3.12%
- 3.48%
4.50%
11.02%
- 0.81%
4.52%
7.28%
4.96%
Average
Compounded
Growth Rate
3.41%
1.50%
1.63%
- 0.14%
-0.14%
135
CITY OF PEARLAND, TEXAS
Assessed Value and Estimated Actual Value
of Taxable Property
Last Ten Fiscal Years
Real Property
Fiscal Tax
Year Year Residential
Commercial
2011 2010 $ 4,916,409,359 $
2012 2011 4,929,336,548
2013 (1) 2012 5,042,965,503
2014 2013 5,530,854,515
2015 2014 6,000,588,340
2016 2015 6,687,172,478
2017 2016 7,800,700,555
2018 2017 8,160,296,748
2019 2018 8,388,984,355
2020 2019 8,795,872,742
1,833,483,370
1,897,683,176
1,954,587,058
1,966,675,342
2,035,398,664
2,200,841,575
2,552,439,217
3,201,012,344
3,467,102,770
3,632,391,578
Personal
Property
$ 527,132,210
488, 098, 315
612,564,952
614,461,500
670,832,220
677,182,023
776,125,452
801,094,174
880,377,068
1,018,446,748
Less Tax Exempt
Real Property
$ 590,247,297
592,996,676
617,274,555
627,308,465
673,524,095
677,182,023
835,697,201
916,937,992
882,979,174
903,424,894
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.
136
CITY OF PEARLAND, TEXAS
Assessed Value and Estimated Actual Value
of Taxable Property (Continued)
Last Ten Fiscal Years
Fiscal Tax
Year Year
2011 2010
2012 2011
2013(1) 2012
2014 2013
2015 2014
2016 2015
2017 2016
2018 2017
2019 2018
2020 2019
Less Other
Exemptions and
Abatements
$ 355,054,613
352,494,382
454,866,920
487,709,374
452, 738,140
423,238,764
571,315,443
681, 810,199
904,072,816
1,004,810,809
Assessed Value
$ 6,331,723,029
6,369,626,981
6,537,976,038
6,996,973,518
7,580,556,989
8,464,775,289
9,722,252,580
10,563,655,075
10,949,412,203
11,538,475,365
Total
Total Taxable Direct
Tax Rate
0.6651
0.6851
0.7051
0.7051
0.7121
0.7053
0.6812
0.6851
0.7092
0.7412
Estimated Actual
Taxable Value
$ 6,331,723,029
6,369,626,981
6,537,976,038
6,996,973,518
7,580,556,989
8,464,775,289
9,722,252,580
10,563,655,075
10,949,412,203
11,538,475,365
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.
Assessed
Value as a
Percent of
Actual Taxable
Value
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
137
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
Fiscal M & 0 I & S Total School School School Comm Brazoria Bend
Year Rate Rate Direct District District District College County County
2010 0.220 0.433 0.653 1.419 1.350 1.304 0.200 0.426 0.500
2011 0.215 0.450 0.665 1.419 1.350 1.304 0.200 0.463 0.500
2012 0.215 0.470 0.685 1.419 1.350 1.344 0.199 0.473 0.500
2013 0.215 0.490 0.705 1.419 1.350 1.329 0.200 0.486 0.500
2014 0.215 0.490 0.705 1.416 1.350 1.329 0.194 0.492 0.500
2015 0.222 0.490 0.712 1.416 1.350 1.417 0.204 0.499 0.495
2016 0.223 0.483 0.705 1.416 1.350 1.417 0.204 0.486 0.486
2017 0.241 0.440 0.681 1.416 1.350 1.450 0.192 0.457 0.474
2018 0.255 0.430 0.685 1.416 1.480 1.450 0.181 0.440 0.458
2019 0.279 0.430 0.709 1.416 1.416 1.450 0.188 0.368 0.445
2020 0.307 0.434 0.741 1.396 1.378 1.398 0.186 0.365 0.445
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.
138
CITY OF PEARLAND, TEXAS
Direct and Overlapping Property Tax Rates (Continued)
Last Ten Fiscal Years
(rate per $100 of assessed value)
Overlapping Rates (a)
Harris Harris Harris Brazoria/
Port of County County County Ft Bend
Fiscal Harris Houston Flood Hospital Dept of MUD MUD MUD MUD
Year County Authority Control District Education No. 1 No. 17 No. 18 No. 19
2010 0.392 0.016 0.029 0.192 0.060 0.850 0.600 0.560 0.630
2011 0.388 0.021 0.029 0.192 0.007 0.850 0.547 0.550 0.620
2012 0.391 0.019 0.028 0.192 0.007 0.850 0.547 0.545 0.600
2013 0.400 0.020 0.028 0.182 0.007 0.850 0.547 0.530 0.580
2014 0.415 0.017 0.028 0.170 0.006 0.850 0.544 0.510 0.550
2015 0.417 0.015 0.027 0.170 0.006 0.850 0.520 0.470 0.510
2016 0.419 0.013 0.027 0.170 0.005 0.848 0.460 0.390 0.450
2017 0.417 0.013 0.028 0.172 0.005 0.848 0.410 0.350 0.400
2018 0.418 0.013 0.028 0.171 0.005 0.848 0.380 0.310 0.380
2019 0.419 0.012 0.029 0.171 0.005 0.848 0.380 0.310 0.360
2020 0.407 0.011 0.028 0.166 0.005 0.848 0.360 0.290 0.350
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.
139
CITY OF PEARLAND, TEXAS
Direct and Overlapping Property Tax Rates (Continued)
Last Ten Fiscal Years
(rate per $100 of assessed value)
Overlapping Rates (a)
Fiscal MUD MUD MUD MUD MUD
Year No. 23 No. 26 No. 28 No. 34 No. 35
2010 0.800 0.710 0.820 0.850 1.020
2011 0.770 0.710 0.820 0.850 1.020
2012 0.630 0.690 0.820 0.850 1.020
2013 0.610 0.690 0.820 0.850 1.020
2014 0.600 0.690 0.820 0.850 1.020
2015 0.580 0.690 0.820 0.850 1.020
2016 0.540 0.690 0.820 0.820 1.020
2017 0.480 0.690 0.820 0.800 1.020
2018 0.470 0.690 0.820 0.800 1.000
2019 0.460 0.690 0.820 0.780 1.000
2020 0.460 0.690 0.820 0.750 1.000
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.
140
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
2011 $ 41,967,823 $ 41,594,389 99.11% $ 339,455 $ 41,933,844 99.9%
2012 43,441,562 43,110,373 99.24% 320,658 43,431,031 100.0%
2013 45,850,388 45,509,522 99.26% 302,589 45,812,111 99.9%
2014 49,096,238 48,802,720 99.40% 246,723 49,049,443 99.9%
2015 53,468,069 53,175,174 99.45% 186,651 53,361,825 99.8%
2016 58,834,077 58,545,664 99.51% 136,250 58,681,914 99.7%
2017 64,982,191 64,579,894 99.38% 220,965 64,800,859 99.7%
2018 70,630,574 70,216,601 99.41% 226,461 70,443,062 99.7%
2019 75,672,998 75,276,247 99.48% 222,017 75,498,264 99.8%
2020 83,055,340 82,617,167 99.47% 82,617,167 99.5%
Source: Brazoria County Tax Office
Note: Taxes levied based on adjusted tax roll.
141
CITY OF PEARLAND, TEXAS
Principal Property Taxpayers
Current Year and Nine Years Ago
Taxpayer
Pearland Town Center LP
HCA Healthcare Corp
Amreit SPF Shadow Creek LP
Mar Shadow Creek LP
FloWorks International LLC
DD Shadow Creek V LLC
MHI Compressor Manufacturer LLC
Goodgarden Owner GP
CenterPoint Energy, Inc.
W-F&B 11900 Shadow Creek VIII
Weatherford U.S., Inc.
Pearland Investments Inc.
Pearland Lifestyle Center, LP
Walmart Real Estate Bus TR
Shadow Kirby LTD Partnership
Inland American Waterford LTD
Total
2020 2011
Percentage Percentage
of Total City of Total City
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Value Rank Value Value Rank Value
$ 77,670,650 1 0.67% $ 67,661,190 1 1.07%
72,967,490 2 0.63% 20,030,180 9 0.32%
71,260,080 3 0.62% 50,744,245 2 0.80%
58,900,000 4 0.51%
48,578,680 5 0.42%
47,577,030 6 0.41%
46,562,236 7 0.40%
39,849,870 8 0.35%
37,635,130 9 0.33% 25,946,710 5 0.41%
36,246,640 10 0.31%
$ 537,247,806
Source: Brazoria County Appraisal District
* Tax Year 2019
Table does not include multiple taxpayers from the same address.
4.66%
45,210,463 3
35,554,380 4
24,153,065 6
23,412,910 7
23,114,059 8
17,125,100 10
$ 332,952,302
0.71%
0.56%
0.38%
0.37%
0.37%
0.27%
5.26%
142
CITY OF PEARLAND, TEXAS
Principal Property Taxpayers (Table 8A)
2019 Total Taxes
Taxpayer
Pearland Town HCA Amreit SPF
Healthcare Shadow
Center LP Corp Creek LP
Property Use
Retail mixed use Health Multi -Family
center Care/Hospital Housing
Taxable Value
$77,670,650 $72,967,490 $71,260,080
Taxing Unit
Tax Rate
Alvin ISD
1.397700
$ 1,085,603
$ 975,865
$ 996,002
Pearland ISD
1.395600
-
43,935
-
Houston ISD
1.136700
-
-
-
City of Pearland
0.741212
575,704
540,844
528,188
Harris County
0.407130
-
-
-
Brazoria County
0.365233
283,679
266,501
260,265
Brazoria County Special Road &
Bridge
0.050000
38,835
36,484
35,630
Alvin Community College
0.185862
144,360
17,610
132,445
Harris County Hospital District
0.165910
-
-
-
Brazoria Drainage District 4
0.146000
113,399
106,533
104,040
Brazoria County C&R District
0.150000
-
-
-
Houston Community College System
0.100263
-
-
-
Pearland Municipal Management
District #2
0.097500
75,729
-
69,479
Harris County Flood Control District
0.027920
-
-
-
Port of Houston Authority
0.010740
-
-
-
Harris County Dept. of Education
0.005000
-
-
-
Total Tax
$ 2,317,309
$ 1,987,772
$ 2,126,049
% Paid to City of Pearland
24.8%
27.2%
24.8%
Source: Brazoria County Tax Office & Harris County Tax Office
Table does not include multiple taxpayers from the same address.
143
CITY OF PEARLAND, TEXAS
Principal Property Taxpayers (Table 8A) (Continued)
2019 Total Taxes
Mar Shadow FlowWorks DD SCR V
Taxpayer
Creek LP International LLC
LLC
Property Use
Multi -Family Industrial / Multi -Family
Housing Manufacturing Housing
Taxable Value
$58,900,000 $48,578,680 $47,577,030
Taxing Unit
Tax Rate
Alvin ISD
1.397700
$ 823,245
$ -
$ 664,705
Pearland ISD
1.395600
-
631,143
-
Houston ISD
1.136700
-
-
-
City of Pearland
0.741212
436,574
340,186
352,498
Harris County
0.407130
-
-
-
Brazoria County
0.365233
215,122
177,425
173,694
Brazoria County Special Road &
Bridge
0.050000
29,450
24,289
23,779
Alvin Community College
0.185862
109,473
-
88,390
Harris County Hospital District
0.165910
-
-
-
Brazoria Drainage District 4
0.146000
85,994
67,008
69,433
Brazoria County C&R District
0.150000
-
-
-
Houston Community College System
0.100263
-
-
-
Pearland Municipal Management
District #2
0.097500
-
-
-
Harris County Flood Control District
0.027920
-
-
-
Port of Houston Authority
0.010740
-
-
-
Harris County Dept. of Education
0.005000
-
-
-
Total Tax
$ 1,699,858
$ 1,240,051
$ 1,372,499
Paid to City of Pearland
25.7%
27.4%
25.7%
Source: Brazoria County Tax Office & Harris County Tax Office
Table does not include multiple taxpayers from the same address.
144
CITY OF PEARLAND, TEXAS
Principal Property Taxpayers (Table 8A) (Continued)
2019 Total Taxes
MHI W-F&B 11900
Taxpayer
Compressor Goodgarden Centerpoint Shadow Creek
Manufacturer Owner GP Energy Inc VIII
LLC
Property Use
Industrial / Multi -Family Utility Multi -Family
Manufacturing Housing Housing
Taxable Value
$46,562,236 $ 39,849,870 $ 37,635,130 $36,246,640
Taxing Unit
Tax Rate
Alvin ISD
1.397700
$ -
$ 556,982
$ 48,249
$ 506,619
Pearland ISD
1.395600
-
-
46,861
-
Houston ISD
1.136700
529,273
-
-
City of Pearland
0.741212
345,125
295,372
278,956
268,664
Harris County
0.407130
189,569
-
-
-
Brazoria County
0.365233
-
145,545
24,872
132,385
Brazoria County Special Road &
Bridge
0.050000
-
19,925
3,405
18,123
Alvin Community College
0.185862
-
74,066
6,416
67,369
Harris County Hospital District
0.165910
77,251
-
-
-
Brazoria Drainage District 4
0.146000
-
58,181
9,907
52,920
Brazoria County C&R District
0.150000
-
-
36
-
Houston Community College System
0.100263
46,685
-
-
-
Pearland Municipal Management
District #2
0.097500
-
3,309
-
Harris County Flood Control District
0.027920
13,000
-
-
-
Port of Houston Authority
0.010740
5,001
-
-
-
Harris County Dept. of Education
0.005000
2,328
-
-
-
Total Tax
$ 1,208,232
$ 1,150,071
$ 422,011
$ 1,046,080
% Paid to City of Pearland
28.6%
25.7%
66.1%
25.7%
Source: Brazoria County Tax Office & Harris County Tax Office
Table does not include multiple taxpayers from the same address.
145
CITY OF PEARLAND, TEXAS
Taxable Sales by Category
Last Ten Calendar Years
(in thousands of dollars)
Calendar Year
2011 2012 2013 2014 2015
Retail Trade $ 697,419 $ 764,460 $ 828,225 $ 871,813 $ 961,565
Accommodations & Food Services 172,126 198,439 215,705 240,961 272,540
Real Estate/Rental/Leasing 48,059 61,690 55,811 61,392 48,024
Manufacturing 49,474 48,213 34,562 51,274 41,175
Wholesale Trade 33,163 33,566 34,356 42,915 41,491
Other Services (Except Public Admin) 29,557 30,669 34,119 38,539 40,373
Information 16,896 19,194 24,369 29,602 33,614
Construction 17,558 23,181 24,367 26,350 32,168
Arts, Entertainment & Recreation 11,511 12,710 13,569 14,692 15,555
Mining, Quarrying, Oil and Gas 3,316 3,726 12,865 14,520 7,285
Admin/Support/Waste Mgmt/Remediation 11,004 12,696 13,344 12,963 12,808
Professional/Scientific/Technical 7,072 9,037 11,210 10,531 11,307
Health Care/Social Assistance 252 351 1,065 3,205 5,007
Finance, Insurance 1,261 1,347 1,246 1,483 2,226
Agriculture, Forestry, Fishing 306 468 772 728 1,609
Transportation/Warehousing 418 425 318 406 285
Educational Services 314 429 372 350 393
Utilities 187 3 7 7 -
Total $ 1,099,893 $ 1,220,604 $ 1,306,282 $ 1,421,731 $ 1,527,425
City direct sales tax rate b
1.00% 1.00% 1.00% 1.00% 1.00%
Source: State Comptrollers Office.
a 2020 taxable sales thru 2nd quarter of 2020.
b The City direct sales tax rate includes the City only
and not the Pearland Economic Development Corp. (4B).
146
CITY OF PEARLAND, TEXAS
Taxable Sales by Category (Continued)
Last Ten Calendar Years
(in thousands of dollars)
Retail Trade
Accommodations & Food Services
Real Estate/Rental/Leasing
Manufacturing
Wholesale Trade
Other Services (Except Public Admin)
Information
Construction
Arts, Entertainment & Recreation
Mining, Quarrying, Oil and Gas
Admin/Support/Waste Mgmt/Remediation
Professional/Scientific/Technical
Health Care/Social Assistance
Finance, Insurance
Agriculture, Forestry, Fishing
Transportation/Warehousing
Educational Services
Utilities
Total
Calendar Year
2016
$ 999,033
298,860
32,786
40,192
48,114
40,181
33,449
24,655
16,020
8,141
12,725
12,177
2,307
2,182
2,112
372
406
2017 2018
$ 1,042,624 $ 1,056,690
316,070 341,462
44,540 44,467
39,860 39,133
49,702 56,347
41,711 43,812
35,824 39,187
21,363 27,310
16,344 17,127
11,682 11,125
14,489 16,918
6,689 8,371
3,751 3,355
2,108 1,906
3,471 2,496
560 678
439 512
2019
2020 a
$ 1,030,791 $ 481,690
375,329 169,012
32,215 11,016
58,202 21,912
42,928 19,816
34,340 10,081
33,948 15,372
3,794 2,557
30,721 12,983
43,987 22,410
763 258
5,103 2,032
$ 1,573,712 $ 1,651,227 $ 1,710,896 $ 1,692,121 $ 769,139
City direct sales tax rate b 1.00%
Source: State Comptroller's Office.
a 2020 taxable sales thru 2nd quarter of 2020.
b The City direct sales tax rate includes the City only
and not the Pearland Economic Development Corp. (4B).
1.00%
1.00%
1.00%
1.00%
147
CITY OF PEARLAND, TEXAS
Outstanding Debt by Type
Last Ten Fiscal Years
(dollars in thousands, except per capita)
Governmental Activities Business -Type Activities
General Unamortized Capital Permanent
Fiscal Obligation Certificates Revenue Premiums/ Lease Revenue Improvement
Year Bonds of Obligation Bonds (Discounts) Obligations Bonds Bonds
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
2019 269,520 51,620 85,065 26,639 761 232,415 4,480
2020 268,680 66,405 81,445 29,963 541 335,435 4,110
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.
148
CITY OF PEARLAND, TEXAS
Outstanding Debt by Type (Continued)
Last Ten Fiscal Years
(dollars in thousands, except per capita)
Business -Type Activities
Excluding
Unamortized Capital Total Percentage Total Component
Fiscal Premiums/ Lease Primary of Personal Per Units
Year (Discounts) Obligations Government Income Capita Per Capita
2011 $ 656 $ 421 $ 429,537 14.3% $ 4,380 $
2012 882 342 428,769 13.1% 4,223
2013* 730 253 506,547 14.1% 4,800 4,019
2014 592 169 514,091 13.2% 4,709 3,859
2015 659 82 528,999 12.6% 4,561 3,875
2016 850 375 611,897 13.2% 5,225 4,445
2017 9,395 257 658,742 15.3% 5,422 4,622
2018 10,897 173 673,696 13.1% 5,381 4,598
2019 16,808 86 687,394 13.4% 5,490 4,811
2020 16,168 802,746 13.3% 6,107 5,487
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.
149
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)
Less Debt Ratio of Net
Fiscal Tax General Bonded Service Net Bonded Bonded Debt to
Year Year Debt a Funds Debt Assessed Value
2011 2010 $ 311,158 $ 6,706 $ 304,452 4.8%
2012 2011 311,204 5,160 306,044 4.8%
2013 2012 321,068 4,992 316,076 4.8%
2014 2013 326,283 4,643 321,640 4.6%
2015 2014 339,518 4,536 334,982 4.4%
2016 2015 341,503 5,034 336,469 4.0%
2017 2016 353,837 8,276 345,561 3.6%
2018 2017 348,614 5,911 342,703 3.2%
2019 2018 433,605 6,797 426,808 4.0%
2020 2019 335,085 5,427 329,658 3.0%
Percentage
of Personal
Income b
10.2%
9.5%
8.9%
8.4%
8.2%
7.3%
8.0%
6.7%
8.3%
5.5%
Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
Per Capita b
$ 3,132
3,067
3,036
3,009
2,983
2,873
2,844
2,737
3,348
2,508
a Includes general obligation bonds, certificates of obligation, sales, increment, and permanent improvement bonds net of
related premiums/discounts.
b Population and personal income data can be found in demographic and economic statistics table.
150
CITY OF PEARLAND, TEXAS
Direct and Overlapping Governmental Activities Debt
September 30, 2020 and 2019
Taxing Jurisdiction
Alvin Community College District
Alvin ISD
Brazoria County
Brazoria County MUD No. 6
Brazoria County MUD No. 17
Brazoria County MUD No. 18
Brazoria County MUD No. 19
Brazoria County MUD No. 23
Brazoria County MUD No. 26
Brazoria County MUD No. 28
Brazoria County MUD No. 34
Brazoria County MUD No. 35
Brazoria-Fort Bend County MUD No. 1
Fort Bend County
Harris County (a)
Harris County Dept. of Education
Harris County Flood Control District
Harris County Hospital District
Harris-Brazoria Counties
Lower Kirby Pearland Man
Pasadena ISD
Pearland ISD
Port of Houston Authority
Total estimated Overlapping
The City
Total Direct and Estimated
Population
Per Capita Debt - Direct and Overlapping Debt
Debt as of
September 30,
2019
Overlapping
Percent
$ 28,625,000 29.55%
796,295,000 33.38%
143,758,313 22.08%
15,030,000 0.30%
20,535,000 100.00%
20,890,000 100.00%
25,045,000 100.00%
13,330,000 100.00%
14,900,000 100.00%
55,995,000 100.00%
37,910,000 100.00%
8,550,000 100.00%
70,630,000 100.00%
594,872,527 0.70%
1,885,182,125 0.24%
6,320,000 0.24%
83,075,000 0.24%
55,005,000 0.24%
33,470,000 100.00%
21,980,000 100.00%
726,235,000 1.68%
433,230,000 76.05%
572,569,397 0.20%
$ 433,604,774 100.00°A)
Amount
$ 8,458,688
265,803,271
31,741,836
45,090
20,535,000
20,890,000
25,045,000
13,330,000
14,900,000
55,995,000
37,910,000
8,550,000
70,630,000
4,164,108
4,524,437
15,168
199,380
132,012
33,470,000
21,980,000
12,200,748
329,471,415
1,145,139
981,136,291
433,604,774
$ 1,414,741,065
127,500
$ 11,096
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.
151
CITY OF PEARLAND, TEXAS
Direct and Overlapping Governmental Activities Debt (Continued)
September 30, 2020 and 2019
Taxing Jurisdiction
Alvin Community College District
Alvin ISD
Brazoria County
Brazoria County MUD No. 6
Brazoria County MUD No. 17
Brazoria County MUD No. 18
Brazoria County MUD No. 19
Brazoria County MUD No. 23
Brazoria County MUD No. 26
Brazoria County MUD No. 28
Brazoria County MUD No. 34
Brazoria County MUD No. 35
Brazoria-Fort Bend County MUD No. 1
Fort Bend County
Harris County (a)
Harris County Dept. of Education
Harris County Flood Control District
Harris County Hospital District
Harris-Brazoria Counties
Lower Kirby Pearland Man
Pasadena ISD
Pearland ISD
Port of Houston Authority
Total estimated Overlapping
Debt as of
September 30, Overlapping
2020 Percent Amount
$ 28,625,000 27.55% $ 7,886,188
906,860,000 31.83% 288,653,538
139,678,313 20.40% 28,494,376
12,620,000 0.31% 39,122
19,105,000 100.00% 19,105,000
19,515,000 100.00% 19,515,000
23,280,000 100.00% 23,280,000
12,630,000 100.00% 12,630,000
6,790,000 100.00% 6,790,000
54,290,000 100.00% 54,290,000
36,445,000 100.00% 36,445,000
8,170,000 100.00% 8,170,000
63,680,000 100.00% 63,680,000
630,766,310 0.78% 4,919,977
1,743,427,125 0.24% 4,184,225
6,320,000 0.24% 15,168
334,270,000 0.24% 802,248
86,050,000 0.24% 206,520
41,975,000 100.00% 41,975,000
24,565,000 100.00% 24,565,000
724,005,000 1.79% 12,959,690
433,230,000 79.21% 343,161,483
492,439,397 0.24% 1,181,855
1,002,949,389
The City $ 335,085,000 100.00% 335,085,000
Total Direct and Estimated $ 1,338,034,389
Population 131,448
Per Capita Debt - Direct and Overlapping Debt $ 10,179
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.
152
CITY OF PEARLAND, TEXAS
Pledged Revenue Coverage
Last Ten Fiscal Years
Amounts in (000's)
Water & Sewer Revenue Bonds
Net
Less: Revenue Debt Service
Fiscal Gross Operating Available for
Year Revenues Expenses Debt Service Principal Interest Total Coverage
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 11,634 3,765 4,584 8,349 1.39
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 32,713 10,630 5,129 15,759 2.08
2019 61,001 22,340 38,661 11,770 6,586 18,356 2.11
2020 56,221 26,128 30,093 15,935 6,867 22,802 1.32
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.
153
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)
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%
2019 127,500 5,313,435 41,674 35.3 14.2 37,400 2.7%
2020 131,448 6,015,060 45,760 36.1 14.2 28,568 6.7%*
(A) Pearland Economic Development Corporation, 2019 American Community Survey 5-year estimates (Nov 2020)
(B) Pearland Economic Development Corporation, 2018 American Community Survey 5-year estimates (Dec 2019)
(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, *Preliminary data as of September 2020
154
CITY OF PEARLAND, TEXAS
Principal Employers
Current Year and Nine Years Ago
2020 2011
Percentage Percentage
of Total City of Total City
Employer Employees * Rank Employment Employees Rank Employment
Pearland ISD 2,766 1 4.42% 2,212 1 4.85%
Kelsey Seybold 863 2 1.38%
City of Pearland 853 3 1.36% 619 3 1.36%
Alvin ISD 785 4 1.25%
Memorial Hermann 450 5 0.72%
Lonza 444 6 0.71%
Merit Medical 360 7 0.58%
HCA (Pearland Medical Center) 300 8 0.48%
Dover Energy 220 9 0.35%
Third Coast 209 10 0.33%
Kemlon 205 11 0.33% 370 4 0.81%
Tool -Flo 162 12 0.26%
Buc-ee's 150 13 0.24%
Packaging Service Company 120 14 0.19% 200 9 0.44%
Brask 100 15 0.16%
Wal-Mart 0.00% 1,185 2 2.60%
HEB 0.00% 350 5 0.77%
Home Depot 0.00% 230 6 0.50%
Bredero Shaw 0.00% 225 7 0.49%
Bass Pro Shop 0.00% 200 8 0.44%
Texas Honing 0.00% 178 10 0.39%
Total
Sources:
Pearland Economic Development Corp.
7,987 12.76%
Retail establishments data not available in 2019.
Labor force participation in 2019 is 61,312 and in 2010 is 42,732.
5,769 12.65%
*The above list does not include retail employers, such as Wal Mart, Super Target, Lowe's, Home Depot, HEB or Kroger.
155
CITY OF PEARLAND, TEXAS
Full-time Equivalent City Government
Employees by Function/Program
Last Ten Fiscal Years
2011 2012 2013 2014 2015
Function/Program
Governmental Activities:
General Government 57 56 44 45 52
Public Safety 275 286 295 313 339
Public Works 45 31 57 60 67
Community Services 45 56 51 53 40
Parks and Recreation 105 109 101 99 88
Business -type Activities:
Water & Sewer 87 90 99 101 105
Component Unit:
Economic Development 5 5 5 9 5
Total 619 633 652 680 696
Source: City Budget
156
CITY OF PEARLAND, TEXAS
Full-time Equivalent City Government
Employees by Function/Program (Continued)
Last Ten Fiscal Years
2016 2017 2018 2019 2020
Function/Program
Governmental Activities:
General Government 62 52 54 55 66
Public Safety 370 370 379 390 408
Public Works 54 65 73 85 80
Community Services 42 50 46 46 48
Parks and Recreation 89 84 89 90 94
Business -type Activities:
Water & Sewer 106 109 114 108 117
Component Unit:
Economic Development 5 5 6 6 6
Total 728 735 761 780 819
Source: City Budget
157
CITY OF PEARLAND, TEXAS
Operating Indicators by Function/Program
Last Ten Fiscal Years
2011 2012 2013 2014 2015
Function/Program
GENERAL GOVERNMENT
Finance
Number of purchase orders 2,679 2,415 2,671 2,640 2,377
Number of budget transfers 427 429 465 548 489
Number of invoices paid 21,000 20,768 23,512 21,486 22,212
Average number of employees paid per month 1,438 1,481 1,527 1,548 1,523
Human Resources
Number of hires 131 112 94 98 131
Number of applications received 3,299 4,936 7,642 8,507 9,132
Legal
Number of resolutions and ordinances prepared 205 220 254 243 271
Information Technology
Average monthly service requests 815 832 843 838 854
Number of PC's supported 439 448 454 575 649
PUBLIC SAFETY
Police
Fire
Part 1 Crimes 1,946 1,819 2,115 2,098 2,411
Traffic Crashes 1,323 1,465 1,529 1,590 1,761
Arrests 5,602 5,685 6,946 6,705 5,781
Citizen Calls for Service 27,414 27,379 29,242 29,744 31,474
Traffic Stops 40,817 49,531 52,945 43,783 33,472
Priority 1 Average Response Time 5:24 3:50 4:15 3:50 4:16
Total number of arson incidents 2 2 6 7 1
Fires investigated 25 18 16 25 20
Total annual inspections 1,380 1,537 1,958 1,644 1,640
Total calls for service 9,676 10,494 10,789 15,048 17,407
Patients treated 6,121 6,537 6,537 6,936 7,180
Sources: Various city departments.
Information not presented was not available at time of publication.
158
CITY OF PEARLAND, TEXAS
Operating Indicators by Function/Program (Continued)
Last Ten Fiscal Years
2016 2017 2018 2019 2020
Function/Program (continued)
GENERAL GOVERNMENT
Finance
Number of purchase orders 2,159 589 1,811 1,673 1,724
Number of budget transfers 362 750 552 509 472
Number of invoices paid 26,675 24,548 21,547 17,641 16,482
Average number of employees paid per month 1,536 1,704 1,641 1,665 1,713
Human Resources
Number of hires 194 170 163 183 161
Number of applications received 10,420 13,010 15,452 17,382 16,610
Legal
Number of resolutions and ordinances prepared 279 276 290 340 307
Information Technology
Average monthly service requests 871 894 325 400 347
Number of PC's supported 680 706 715 732 782
PUBLIC SAFETY
Police
Fire
Part 1 Crimes 2,202 2,193 1,962 2,175 1,934
Traffic Crashes 1,728 1,813 2,150 2,150 1,719
Arrests 5,044 4,865 4,844 4,604 2,613
Citizen Calls for Service 31,744 31,945 31,579 32,548 30,341
Traffic Stops 35,764 37,025 33,101 33,559 21,764
Priority 1 Average Response Time 4:11 3:40 4:03 3:53 3:59
Total number of arson incidents 7 4 2 2 4
Fires investigated 27 19 15 23 60
Total annual inspections 1,244 2,607 3,123 1,263 1,155
Total calls for service 9,904 9,965 10,666 10,720 10,587
Patients treated 6,117 4,610 6,273 7,181 7,618
Sources: Various city departments.
Information not presented was not available at time of publication.
159
CITY OF PEARLAND, TEXAS
Operating Indicators by Function/Program (Continued)
Last Ten Fiscal Years
2011 2012 2013 2014 2015
Function/Program (continued)
PUBLIC WORKS
Fleet Maintenance
Fleet maintenance jobs completed 3,410 3,581 3,817 3,860 3,887
Preventative maintenance performed 747 682 611 610 437
Other Public Works
Fuel issued (gallons) 361,464 377,754 350,186 353,890 332,745
Street sweeping (miles) 1,299 1,079 1,155 871 648
Street signs maintained/replaced 1,588 1,090 884 993 1,477
Total work orders completed 16,834 17,803 18,346 21,212 25,873
PARKS AND RECREATION
All Parks and recreation
ROW maintained - acres 255 251 251 251 550
Trees maintained 6,327 6,157 6,312 6,313 6,430
Acres of city property mowed 1,331 1,380 1,035 1,035 1,116
Total number of park work orders received 249 230 140 180 147
Parkland - acres 139 138 138 138 138
Total number of special events held 21 22 22 20 19
Total number of tournaments held 11 2 1 3 -
Number of recreation classes offered (I) 459 486 281 272 306
Average monthly attendance (all locations) (2) 16,116 18,378 18,980 21,366 14,371
Sources: Various city departments.
Information not presented was not available at time of publication.
(1)In FY 2020, recreation classes were cancelled due to COVID-19.
(2) In FY 2020, attendance was down due to COVID-19.
160
CITY OF PEARLAND, TEXAS
Operating Indicators by Function/Program (Continued)
Last Ten Fiscal Years
2016 2017 2018 2019 2020
Function/Program (continued)
PUBLIC WORKS
Fleet Maintenance
Fleet maintenance jobs completed 1,452 1,797 1,382 1,998 1,632
Preventative maintenance performed 750 742 663 856 645
Other Public Works
Fuel issued (gallons) 265,669 331,005 315,941 323,734 351,123
Street sweeping (miles) 1,160 1,112 1,815 497 564
Street signs maintained/replaced 1,370 1,179 1,471 1,511 4,638
Total work orders completed 31,163 25,688 24,529 20,791 17,696
PARKS AND RECREATION
All Parks and recreation
ROW maintained - acres 459 327 345 404 381
Trees maintained 7,922 8,355 8,523 8,873 9,223
Acres of city property mowed 632 664 443 523 523
Total number of park work orders received 190 114 147 55 19
Parkland - acres 337 388 392 547 547
Total number of special events held 16 19 17 23 13
Total number of tournaments held 26 5 12 18
Number of recreation classes offered (I) 384 265 868 908 289
Average monthly attendance (all locations) (2) 19,636 16,814 24,035 19,518 9,661
Sources: Various city departments.
Information not presented was not available at time of publication.
(1) In FY 2020, recreation classes were cancelled due to COVID-19.
(2) In FY 2020, attendance was down due to COVID-19.
161
CITY OF PEARLAND, TEXAS
Operating Indicators by Function/Program (Continued)
Last Ten Fiscal Years
2011 2012 2013 2014 2015
Function/Program (continued)
COMMUNITY SERVICES
Animal Control
Animal Services Calls for Service 4,742 4,618 5,167 5,822 5,230
Animal Shelter Live Release % 45% 42% 42% 48% 53%
Inspection Services
Total building inspections 19,244 22,416 26,274 28,434 36,497
Total code violation cases 2,860 1,952 2,244 2,140 4,596
Total permits issued 7,869 8,696 10,630 13,972 18,186
Number of plans reviewed 917 1,050 939 1,185 1,584
Municipal Court
Number of trials (3) 688 1,116 885 839 856
Number of charges (3) 26,369 30,187 27,439 23,182 19,223
Warrants cleared (3) 8,204 10,080 10,328 9,050 7,476
WATER & SEWER
Distribution and Collection
Fire hydrant maintenance and inspections (3) 395 887 1,399 837 612
Backed up sewer repairs 310 275 286 334 305
Water mains repaired 410 283 380 111 189
Water Production
Water produced - wells
(in millions of gallons) 3,869 2,916 2,859 2,470 1,933
Surface Water Purchased
(in millions of gallons) 968 1,321 1,816 2,133 2,276
Billing & Collections
Annual meter reads 364,424 370,755 403,220 414,499 428,265
Number of bills 350,871 359,716 387,997 388,338 400,662
Wastewater Treatment
Wastewater treated
(in millions of gallons) 1,943 2,364 2,530 2,493 3,067
Sources: Various city departments.
Information not presented was not available at time of publication.
(3) In FY2020, COVID-19 impacted Municipal Court operations.
(4) Prior to FY2020, fire hydrant maintenance and inspections was contracted out.
162
CITY OF PEARLAND, TEXAS
Operating Indicators by Function/Program (Continued)
Last Ten Fiscal Years
2016 2017 2018 2019 2020
Function/Program (continued)
COMMUNITY SERVICES
Animal Control
Animal Services Calls for Service 5,484 5,153 4,699 4,582 4,596
Animal Shelter Live Release % 54% 56% 56% 55% 80%
Inspection Services
Total building inspections 37,206 34,880 36,774 36,481 30,781
Total code violation cases 2,560 2,302 2,034 2,387 1,577
Total permits issued 14,612 13,075 8,894 7,270 5,545
Number of plans reviewed 1,349 1,278 1,971 2,419 2,196
Municipal Court
Number of trials (3) 443 656 567 664 390
Number of charges (3) 17,611 16,334 15,463 19,020 9,577
Warrants cleared (3) 7,525 8,463 5,801 6,095 3,757
WATER & SEWER
Distribution and Collection
Fire hydrant maintenance and inspections (3) 854 186 114 87 2,358
Backed up sewer repairs 497 545 308 196 233
Water mains repaired 120 102 126 125 114
Water Production
Water produced - wells
(in millions of gallons) 2,190 2,417 3,024 2,333 3,816
Surface Water Purchased
(in millions of gallons) 2,517 2,584 2,545 2,754 2,975
Billing & Collections
Annual meter reads 445,154 461,502 467,910 469,499 469,908
Number of bills 417,312 471,549 445,446 449,933 452,465
Wastewater Treatment
Wastewater treated
(in millions of gallons) 3,367 3,455 3,308 3,775 3,577
Sources: Various city departments.
Information not presented was not available at time of publication.
(3) In FY2020, COVID-19 impacted Municipal Court operations.
(4) Prior to FY2020, fire hydrant maintenance and inspections was contracted out.
163
CITY OF PEARLAND, TEXAS
Capital Asset Statistics by Function/Program
Last Ten Fiscal Years
Fiscal Year
2011 2012 2013 2014 2015
Function/Program
PUBLIC SAFETY
Police
Police stations 1 1 1 1 1
Police vehicles 142 155 157 161 143
Police K9s - - - 2
FARO Laser Scanning System (1) - - - -
Animal Services
Animal Services Building (shelter) 1 1 1 1 1
Animal Services Vehicles (2) - - - 10
Fire
Fire stations 5 6 6 6 6
Fire vehicles 22 23 26 26 26
Ambulances (3) - - 9 7
EMS
Ambulances (3) 8 8 9
PUBLIC WORKS
Other public works
Streets (miles) 806 806 839 844 842
Vehicle inventory 363 385 374 375 372
Traffic signals 62 74 81 81 73
PARKS AND RECREATION
Parks and recreation
Developed acreage 139 138 138 138 168
Pools 3 3 3 3 3
Outdoor basketball courts 10 6 6 6 6
Soccer fields 12 12 12 12 12
Activity buildings 4 3 3 3 3
Baseball/softball fields 4 4 4 4 4
WATER AND SEWER
Water Production
Water wells 11 11 10 10 10
Pumping stations 2 3 3 3 3
Ground storage tanks 15 15 15 15 15
Elevated towers 6 6 6 6 6
Wastewater
Treatment plants 5 5 5 5 5
Lift stations 80 80 75 76 73
Distribution and Collection
Water mains (miles)
Sanitary sewers (miles)
443 448 469 488 509
380 382 400 415 433
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) Purchased in FY16. System used to scan accident/crime scenes for full 3D image of scene.
(2)Beginning in FY15, Animal Services moved to Police Department.
(3) Beginning in FY14, EMS was rolled into the Fire Department.
164
CITY OF PEARLAND, TEXAS
Capital Asset Statistics by Function/Program (Continued)
Last Ten Fiscal Years
Fiscal Year
2016 2017 2018 2019 2020
Function/Program
PUBLIC SAFETY
Police
Police stations 1 1 1 1 1
Police vehicles 186 194 209 211 210
Police K9s 4 5 5 5 5
FARO Laser Scanning System (1) 1 1 1 1 1
Animal Services
Animal Services Building (shelter) 1 1 1 1 1
Animal Services Vehicles (2) 10 10 11 11 11
Fire
Fire stations 6 7 6 5 6
Fire vehicles 42 56 60 61 56
Ambulances (3) 9 9 10 10 9
EMS
Ambulances (3)
PUBLIC WORKS
Other public works
Streets (miles) 936 928 940 978 978
Vehicle inventory 451 385 338 434 502
Traffic signals 87 91 96 97 100
PARKS AND RECREATION
Parks and recreation
Developed acreage 334 388 392 443 458
Pools 3 3 3 2 2
Outdoor basketball courts 6 6 6 8 8
Soccer fields 18 12 14 12 12
Activity buildings 3 3 3 4 4
Baseball/softball fields 6 14 16 16 16
WATER AND SEWER
Water Production
Water wells 10 10 10 10 10
Pumping stations 3 3 3 3 3
Ground storage tanks 15 15 15 15 15
Elevated towers 6 6 6 6 6
Wastewater
Treatment plants 5 5 5 6 5
Lift stations 74 72 78 69 69
Distribution and Collection
Water mains (miles)
Sanitary sewers (miles)
537 546 551 553 553
440 448 456 459 459
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) Purchased in FY16. System used to scan accident/crime scenes for full 3D image of scene.
(2) Beginning in FY15, Animal Services moved to Police Department.
(3) Beginning in FY14, EMS was rolled into the Fire Department.
165
Prepare for the Future
nAAUOAA
FISCAL YEAR ENDING SEPT. 30, 2020
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
City of Pearland
3519 Liberty Drive
Pearland, TX 77581
Phone: 281.652.1600
pearlandtx.gov