R2023-254 2023-10-09DocuSign Envelope ID: 8C3F1B40-79F0-4FFF-B918-2DC67EA8ECD2
RESOLUTION NO. R2023-254
A Resolution of the City Council of the City of Pearland, Texas, accepting the
City's Annual Comprehensive Financial Report, Financial Statement
Restatement for fiscal year 2022 as presented by the accounting firm of
Forvis.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That certain Annual Comprehensive Financial Report, Financial Statement
Restatement for fiscal year 2022, 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 Annual Comprehensive Financial
Report Financial Statement Restatement for fiscal year 2022.
PASSED, APPROVED and ADOPTED this the 9t1 day of October, A.D., 2023.
ATTEST:
DocuSigned by:
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FRANCES AGUILAR, TRMC, MMC
CITY SECRETARY
APPROVED AS TO FORM:
DocuSigned by:
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DARRIN M.ODD1FCOKER
CITY ATTORNEY
DocuSigned by:
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J. KEVIN COLE
MAYOR
CITY OF PEARLAND
ANNUAL COMPREHENSIVE
FINANCIAL REPORT
"SHAPING THE FUTURE"
4. 7- .1%
FISCAL YEAR ENDING IN SEPT. 30, 2022
CITY OF PEARLAND, TEXAS
ANNUAL COMPREHENSIVE FINANCIAL REPORT
Year Ended September 30, 2022
Prepared by:
Finance Department
CITY OF PEARLAND, TEXAS
Table of Contents
September 30, 2022
Introductory Section (Unaudited)
Letter of Transmittal i-xix
Principal Officials xx
Staff Organizational Chart xxi
GFOA Certificate of Achievement xxii
Financial Section
Independent Auditor's Report 1
Management's Discussion and Analysis 4
Basic Financial Statements
Government -wide Financial Statements
Statement of Net Position 13
Statement of Activities 14
Fund Financial Statements
Balance Sheet — Governmental Funds 16
Reconciliation of the Balance Sheet — Governmental Funds
to the Government -wide Statement of Net Position 18
Statement of Revenues, Expenditures and Changes in Fund
Balances — Governmental Funds 19
Reconciliation of the Statement of Revenues, Expenditures
and Changes in Fund Balances — Governmental Funds to
the Government -wide Statement of Activities 21
Statement of Net Position — Proprietary Funds 22
Statement of Revenues, Expenses and Changes in Net Position —
Proprietary Funds 24
Statement of Cash Flows — Proprietary Funds 25
Statement of Fiduciary Net Position — Fiduciary Fund 27
Statement of Changes in Fiduciary Net Position —
Fiduciary Fund 28
Notes to Financial Statements 29
Required Supplementary Information (Unaudited)
Schedule of Revenues, Expenditures and Changes in Fund Balance —
Budget and Actual — General Fund 74
Schedule of Revenues, Expenditures and Changes in Fund Balances —
Budget and Actual — Pearland Economic Development Corporation 75
Notes to Required Supplementary Budget Information 76
Schedule of Changes in Net Pension Liability and Related Ratios
Texas Municipal Retirement System 77
Schedule of Contributions — Texas Municipal Retirement System 78
Schedule of Changes in the Total OPEB Liability and Related Ratios —
Texas Municipal Retirement System Supplemental Death Benefits Fund 79
Schedule of Changes in the Total OPEB Liability and Related Ratios —
City of Pearland Retirement Health Care Plan 80
CITY OF PEARLAND, TEXAS
Table of Contents (Continued)
September 30, 2022
Other Supplementary Information
Combining and Individual Fund Statements and Schedules
Nonmajor Governmental Funds 81
Combining Balance Sheet — Nonmajor Governmental Funds 82
Combining Statement of Revenues, Expenditures and Changes
in Fund Balance — Nonmajor Governmental Funds 84
Combining Schedule of Revenues, Expenditures and Changes
in Fund Balance — Budget and Actual:
Major Governmental Fund — Debt Service Fund 86
Special Revenue Fund — Hotel/Motel Tax Fund 87
Special Revenue Fund — Court Security Fund 88
Special Revenue Fund — City-wide Donation Fund 89
Special Revenue Fund — Court Technology Fund 90
Special Revenue Fund — Street Assessments Fund 91
Special Revenue Fund — Park Donation Fund 92
Special Revenue Fund — Police Seizure Fund 93
Special Revenue Fund — Parks and Recreation Development Fund 94
Special Revenue Fund — Sidewalk Fund 95
Special Revenue Fund — Grant Fund 96
Special Revenue Fund — Traffic Impact Improvement Fund 97
Special Revenue Fund — Juvenile Management Fund 98
Special Revenue Fund — Regional Detention Fund 99
Special Revenue Fund — Educational TV Fund 100
Special Revenue Fund — U of H Fund 101
Capital Projects Fund 102
Internal Service Funds 103
Combining Statement of Net Position — Internal Service Funds 104
Combining Statement of Revenues, Expenses and Changes
in Net Position — Internal Service Funds 105
Combining Statement of Cash Flows — Internal Service Funds 106
Statistical Section (Unaudited) 107
Financial Trends
Net Position by Component 108
Changes in Net Position 110
Fund Balances of Governmental Funds 114
Changes in Fund Balances of Governmental Funds 116
CITY OF PEARLAND, TEXAS
Table of Contents (Continued)
September 30, 2022
Revenue Capacity
Spending and Growth Analysis 118
Assessed Value and Estimated Actual Value of Taxable Property 120
Direct and Overlapping Property Tax Rates 122
Property Tax Levies and Collections 125
Principal Property Taxpayers 126
Principal Property Taxpayers — 2020 Total Taxes 127
Taxable Sales by Category 130
Debt Capacity
Outstanding Debt by Type 132
Ratio of Net General Bonded Debt to Assessed Value
and Net Bonded Debt Per Capita 134
Direct and Overlapping Governmental Activities Debt 135
Pledged Revenue Coverage 137
Demographic and Economic Information
Demographic and Economic Statistics 138
Principal Employers 139
Operating Information
Full-time Equivalent City Government Employees by Function/Program 140
Operating Indicators by Function/Program 142
Capital Asset Statistics by Function/Program 148
Introductory Section (Unaudited)
City of Pearland
3519 Liberty Drive
Pearland, Texas 77581
Tel: 281.652.1600
pearlandtx.gov
May 16, 2023
Honorable Mayor, Members
of City Council, and Citizens of the
City of Pearland, Texas USA
The Annual Comprehensive Financial Report (ACFR) of the City of Pearland, Texas (the City) for
the FY ending September 30, 2022, 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.
FORVIS, LLP, Certified Public Accountants, issued an unmodified (or clean) opinion on the City
of Pearland's financial statements for the year ending September 30, 2022. 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. The MD&A complements this letter of transmittal and should be read in conjunction
with the transmittal letter.
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 Pearland's multi -faceted
attractiveness increased from 18,000 residents in 1990 to 125,828 residents as reported in the in
the official 2020 U.S. Census, an increase of 600 percent over thirty years.
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 near the end of each FY 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 two component units
The Pearland Economic Development Corporation (PEDC) and the Development Authority of
Pearland (DAP). 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 Development Authority of Pearland was created in 2004 to provide financing for the
development of Tax Increment Reinvestment Zone #2. 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. Both 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 continued implementation efforts for the Pearland Prosperity
community strategic plan and worked on several major projects in 2022, including the recruitment
of Syzygy Plasmonics' headquarters and manufacturing facility, Lonza's expansion to add new
laboratories and parking, and three distribution projects totaling one million in square footage in
Lower Kirby.
The total of all new, non-residential construction permitted during the FY was approximately $405
million, an increase of 3.5 percent in value from FY 2021's $391 million. New single-family housing
permits totaled 497, down 33 percent from the previous FY. One multi -family permit was issued
in FY 2022 for the Ivy Lofts, a 335-unit project. State law prevents the city from requesting single-
family residential valuation during the permitting process. Building permit revenues increased by
$677,000 or approximately 20.9 percent as compared to FY 2021 revenue collections. Pearland
is a regional shopping destination, and the economy has mostly recovered from the initial negative
impacts of the COVID-19 pandemic.
Pearland's unemployment rate was 3.4 percent in September 2022, down from 4.1 percent in
September 2021, where the impact of the COVID-19 pandemic were still being felt. Through the
most recently available data, the rate is continuing its downward path to 3.1 percent as of
December 2022. (https://ycharts.com/indicators/pearland_tx_unemployment_rate) Those rates
compare to the rates for the same time periods in Brazoria County of 4.6 percent, 6.1 percent,
and 4.4 percent respectively (https://ycharts.com/indicators/brazoria_county_tx_unemployment_
rate). As we near the end of 2022, a great deal of uncertainty remains when it comes to the
direction of the economy. After all, we're still reeling from the effects of a global pandemic with
negative impacts to public health, the ripple effects of a temporary shutdown of the economy,
supply chain disruptions, changes in consumer behavior that are likely to persist for years, and
worker shortages causing upward wage pressures. The end result is the highest inflation in four
decades, prompting several interest rate hikes this year with the potential for more as we enter
2023.
As a multi -faceted local government, the City of Pearland's economy, as monitored and reported
continuously, has shown significant resilience over the past year from the effects of this pandemic.
The combination of early action, conservative budgeting, and continuous monitoring have kept
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City finances in good standing. The City of Pearland through FY 2022 did not experience drastic
revenue reductions. As with 2020 and 2021, throughout FY 2022, the City maintained a mantra
of working to maximize flexibility and reserves to deal with unknown change.
GRANTS
The City receives ongoing assistance from the federal government and the State of Texas in the
form of grants and grant -funded loans each year. In compliance with applicable federal
regulations (2 CFR 200 Subpart F — 200.501), entities that spend over $750,000 in federal funding
within a FY must complete a "Single Audit" of all federal grant -funded expenditures. Where State
grant funding is concerned, Chapter 783 of the Texas Government Code imposes a similar
regulation, requiring entities that spend more than $750,000 in State grant funds to perform a
Single Audit of State grant -funded expenditures.
In FY 2022, the City's federal grant funded expenditures exceeded $750,000 and a Federal Single
Audit is required. State -funded programs did not result in expenditures over the statutory
threshold (also, $750,000), so no State Single Audit is required.
Federal Grants and Assistance
The programs that make up the City's estimated federal expenditures applicable to Single Audit
requirements in FY 22 include funds awarded from the following federal agencies, with more detail
available in the applicable Single Audit Schedule of Expenditures of Federal Awards (SEFA)**:
SOURCE*
PROGRAM TYPE
EXPENSES*
U.S. Department of Housing & Urban Development
Entitlement
$461,455
U.S. Department of Justice
Public Safety
$167,502
U.S. Department of Transportation
Transportation
$11,956,136
U.S. Department of the Treasury
COVID-19 Relief
$4,590,899
U.S. Environmental Protection Agency
Water Quality
$57,904,381
U.S. Department of Homeland Security
Fire Protection
$641,177
Executive Office of the President
Drug Task Force
$15,531
Total Estimated Federal Expenditures
$75,737,081
*State pass -through entities may be involved in the disbursement of funds to the City.
**Unaudited Schedule of Expenditures of Federal Awards (SEFA) — 12/21/2022.
State Grant Funding
For FY 2022, the only State -issued grant funding assistance came from the Texas Parks & Wildlife
Department (TPWD) for an Inclusive Playground facility at the City's Shadow Creek Ranch Sports
Complex. The expenditure for FY 22 totals $585,548, which is below the $750,000 statutory
spending threshold required to trigger a State Single Audit, so no Schedule of
Expenditures of State Awards (SESA) is required for FY 22.
Regional and State of Texas Economy
Houston is the world's energy capital; the capital of an oil and gas industry that is in constant flux.
At this writing, a plunge in new home construction, the ongoing war in Ukraine, inflation, rising
interest rates, and a looming recession create uncertainty. However, demand for global crude has
been climbing as economies reopen, which bodes well for our region. The U.S. Energy
Information Administration forecasts West Texas Intermediate to average $86.38 per barrel in
2023.
iv
According to Greater Houston Partnership's (GHP) The Economy at a Glance January 2023, "The
region lost 359,400 jobs during March and April of '20 as businesses shut down and consumers
stayed home. From when the economy began to reopen in May of '20 through November of '22,
the region created 504,200 jobs, recouping 140.3 percent of its losses. Fifteen of the 19 major
sectors tracked by TWC have fully recouped their pandemic losses. Only hotels, manufacturing,
other services, and energy have yet to recover". GHP also stated that it "expects the next
recession to be short and shallow, with minimal impact on the local economy. Momentum from
'22 and the region's remarkable resilience will set the tone over the next 12 months. By the time
'24 arrives, job growth will again be robust, and Houston will be seven -for -seven in recessions
and recoveries."
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 ahead.
The City's adopted (July 25, 2022) Five-year CIP for FYs 2023 through 2027 totals $794.4 million.
The large and varying CIP for public investments of drainage, parks, facilities, streets, water, and
wastewater positions City infrastructure for serving the population and businesses that are here
and yet to come.
The 2023-2027 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 ($12 million), leveraged outside funds
($21.6 million), tax -supported debt ($277.2 million), and water/sewer supported enterprise fund
debt repaid by user fees ($483.4 million). The ratio of outstanding property tax -supported debt to
taxable assessed valuation increased slightly from the previous year but remains below 5 percent
at about 3.3 percent.
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 2023 budget is $0.623765 of which $0.282357 cents is for actual debt service and
$0.056408 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 2023 budget
was $0.388765.
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 2021 and a 5 percent increase in FY 2022. To bring revenue necessary to
maintain the system. The City's utility system continues to be self-supporting and financially
sound. City Council approved a 13.1 percent increase in the FY 2023 Budget to keep up with
expenses and debt issuance. 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. Continued
expansions and improvements will require appropriate rate increases to provide adequate upkeep
of the system.
v
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 three months of operations
• Meet a 1.15 Bond Coverage Requirement and the annual Debt Service Reserve set by
Bond Ordinances. Maintain a cash equivalent operating reserve at 15 percent of the
current year's budget appropriation for total operating expenses in the Water/Sewer
operating fund. The aggregate between the reserve balances of the Water/Sewer
operating fund and Water/Sewer debt service fund shall be no less than 25 percent.
• 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.
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To operate more efficiently and effectively, the Department employs a data -driven approach to
policing. Examples of this are the implementation of the Special 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 City has two professional crime analysts,
experts in data analysis and communication who work closely with Criminal Investigations and
Patrol operations.
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. Another primary focus of the Police Department is training. In 2021,
the department launched its own Police Academy and graduated the first class of cadets in early
2022. Additionally, the Training Division provided over 38,000 training hours last year, including
internal personnel and attendees from over 160 outside agencies.
With the support of information technology (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 City of Pearland Departments. This section works with other units such as
K9 and SWAT to further capabilities in several key areas like search and rescue, tracking and
safety at public events.
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The Animal Services section of the Police
Department met and maintained an important
milestone in FY 2021 by reaching no -kill
status. Through the continued focus on
adoption and rescue programs the Animal
Services section is proud to report the no -kill
status was maintained for FY 2022 as well.
Additionally, this unit moved into the new
Shari D. Coleman Animal Shelter and
Adoption Center in November 2022 and is
motivated to continue their efforts with more
space and resources readily available.
Fire Station 4 opened in May 2022 and is located immediately adjacent to the Shari D. Coleman
Animal Shelter and Adoption Center (located on Freedom Drive east of Cullen). Modifications to
the original location were made in 2008 to accommodate full-time staff, but the building was not
sufficient for present-day operations. The newly built station has modern health and safety
features, as well as improved technology to assist with fire fighter safety, productivity, efficiency,
and effective workflow.
In FY 2022, the department was approved for one ladder truck, two fire engines and four
ambulances to replacing an aging fleet and move towards a comprehensive apparatus
replacement program.
Our Emergency Management Program
continues to grow, finalizing the city's
Hazard Mitigation Plan and implementing
many lessons and strategies learned
from Hurricane Harvey and Winter Storm
Uri. Significant Community Risk
Reduction efforts have resulted in the
removal of numerous dilapidated and
dangerous structures, public -private
cooperation for subdivisions with
residential sprinklers, and semi-annual
inspections of all establishments
providing food service. In addition, the
viii
Community Outreach 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.
The 90th percentile City-wide response times for fire emergencies have continued to improve over
the last four years. The achievement is due primarily to the addition of Fire Stations and staffing
of operations with 135 full-time firefighters and 18 part-time firefighters, who also provide
Emergency Medical Services as certified EMT and Paramedic professionals. 135 is an increase
of four full-time (FTE) positions added to Operations in FY 2023.
During FY 2022, the City was awarded the highest rating from the Insurance Services Office, Inc.
(ISO), a Public Protection Class (PPC) 1 for the incorporated city limits of Pearland. ISO ratings
are for a series of factors, recognizing the integrated nature of fire safety prevention and response,
when required. The ISO upgrade reflects their assessment of significant number of improvements
made, and currently in progress, in Communications, Fire Department and Public Works since
2015. The improved rating will promote lower insurance premiums for homeowners and
businesses and contribute to economic development by promoting Pearland as a safe community
for business and residential development.
In addition, future Firehouse #7 located on Bailey Rd. is planned to be included in the 2023 bond
election referendum. Upon approval, this will require ordering a new piece of fire apparatus to be
housed at Firehouse #7 due to current apparatus build times of 38-46 months. Firehouse #7 will
also be staffed by 15-18 additional firefighter positions (FTE). This will increase total Fire
Operations staffing to 150-153.
Parks and Recreation
The Parks and Recreation department is an essential part of the Pearland community. The
department protects, maintains, and operates 26 parks and facilities, exceeding 546 acres of
City -owned land and over 16 miles of existing city trails.
The Parks and Recreation department strives to remain safe, relevant, and accessible by all.
Through a dedicated staff, the department offers a variety of sports, recreation, educational
enrichment, adaptive programming, arts programs, culturally inclusive opportunities, nature
exploration and aquatic activities.
In 2022, Pearland Parks and Recreation provided
countless hours of programs and services and hit
some noteworthy milestones. Record number of swim
lessons and water safety courses were conducted,
with over 95 percent of classes at capacity all year
round. The department launched Camp PELICAN, a
second summer day camp program which was met
with overwhelming support from the community.
Pearland's first ever Miracle League, an inclusive
baseball league for individuals of all abilities,
completed its first two seasons doubling the
anticipated registration numbers with many success
stories of outstanding volunteerism, sportsmanship
and lives impacted.
ix
Pearland Parks and Recreation values the importance of engagement and connection with other
parks & recreation professionals and community organizations as networkers and leaders in the
industry. The department's Natural Resources division was recently recognized by Texas
Recreation and Park Association and presented with the Park Development Innovations Award
for their Prairie Restoration work and commitment to area conservation and nature education.
Success of the organization is attributed to having the ability to strike a balance between steadfast
tradition and change through innovation and delivering services that address the unique needs of
a diverse and engaged community.
In April 2022, the City of Pearland opened the doors to the new West Pearland Library. The
state-of-the-art facility designed to accommodate the growth on the west end of Pearland provides
a permanent home for its patrons, addresses increasing circulation requirements, offers an
opportunity for a larger collection and is sized to accommodate demands of the growing
population. This approximate 40,000 square foot building contains 30,000 square feet that has
two stories of books, the new Brazoria County Tax Office annex, two community rooms and a
teaching theater. The project has been a great partnership with the Brazoria County Library
System, Brazoria County Tax Office, Friends of the West Pearland Library, Tax Reinvestment
Zone #2 and our City Parks Department.
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.
x
PEDC staff works with the City and partners to generally promote the City and to utilize various
tools to encourage and sustain quality private investment. Tools include PEDC investing in the
infrastructure that businesses rely upon and judicious use of 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 that are tied to performance of the private investment goals.
Throughout 2022, PEDC continued to coordinate implementation efforts for the Pearland
Prosperity Strategic Plan, which was adopted in early 2020. 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: (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.
Stemming from the Business Formation and early stage Growth focus area of the Pearland
Prosperity Strategic Plan, in 2022, PEDC created and begin operations of the Pearland Innovation
Hub an entrepreneurship hub for the Pearland community. PEDC partnered with The Cannon
Workplace, LLC to create and implement the hub and in April, a Navigator was hired to begin the
implementation of the plan of work. A launch event was held in May and the Hub has held several
additional events during the year including a Pitch Fest Competition. The PEDC Board appointed
the first Advisory Board for the Pearland Innovation Hub and that Board. The Advisory Board is
charged with assisting in developing the policies to ensure the Hub's success and to monitor the
agreement with the managers of the Hub. The Advisory Board has also been working with PEDC
staff and the Navigator to create a non-profit corporation for the Hub. The Hub will enhance
Pearland's innovation entrepreneurship culture by creating events, programs, and activities for
entrepreneurs and small business owners to inspire ideation, innovation and entrepreneurship
and will connect the City to local and regional entrepreneurship assistance programs, service
providers and funding sources to ensure local entrepreneurs and small businesses in Pearland
connect with these resources to maximize their growth potential and overall success.
The following highlights a few of PEDC's FY 2022 business development projects:
• Millar, Inc. continued
construction on its new
headquarters and manufacturing
facility located in Pearland's
Lower Kirby District. Founded in
1969, Millar, Inc. pioneered the
development of pressure sensor
technology, directing its design
and manufacturing expertise
toward integrating that technology
into catheters for life sciences and
clinical applications. PEDC began
working with Millar in 2017 on its
relocation to Pearland. The site
Millar selected for its facility was
part of tract owned by PEDC,
xi
which it sold to Millar. The 56,000 square -foot headquarters and manufacturing facility will
also house the company's research and development (R&D) and warehouse functions.
Located on a five -acre site on Kirby Drive just south of Beltway 8, the facility will be home
to approximately 120 employees.
• Syzygy Plasmonics has leased a
44,800 square -foot building in Pearland for its new
headquarters, R&D, and manufacturing facility.
Syzygy Plasmonics, a Houston -based startup
founded in 2018, is pioneering a technology that
produces clean, distributable hydrogen from various
feedstocks. Syzygy's platform technology is based
on a field of science called photocatalysis, where the
company is using light from LEDs that are driven by
renewable electricity to perform chemical reactions.
This technology can electrify the production of many
chemicals that form the foundation of human society, such as hydrogen, liquid fuels,
fertilizer, and other chemical raw materials. By creating these commodities using
renewable electricity, Syzygy strives to achieve its goal of preventing a gigaton of carbon
dioxide from entering the atmosphere by 2040. The PEDC and city officials began
recruitment efforts for this project with Syzygy in 2021.
• Graham Ventures began construction on two 13,800-square foot new headquarters
buildings in early 2022. Graham Ventures Inc. is a holding company for 11 franchises, the
largest of which is FranchiCzar LLC. FranchiCzar aides' franchisors with a range of
services, from lead generation to franchise consulting, investing in emerging brands, and
technology solutions. In addition to FranchiCzar, the Company created three additional
brands to add to its ever-growing portfolio — Iron 24, Math Reactor, and Valhallan. The
headquarters, located at 2880 Broadway Bend, is home to approximately 30 employees
and is expected to grow to 60.
• 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 2022, including the
construction of additional clean rooms, laboratories and office renovations. Lonza has also
acquired a 19-acre parcel of land south of the current facility and constructed a 500-space
parking lot for continued employee growth. Since the facility's opening in 2018, Lonza has
grown from around 150 to more than 850 employees at the Pearland facility.
• Three new distribution projects totaling 1,000,000 in square footage were announced in
Pearland's Lower Kirby District. Levey Group announced in November that it will be
developing Levey Logistics Park. The development will consist of two Class -A industrial
buildings, spanning approximately 650,000 square -feet. Located on a 38-acre tract near
the intersection of Beltway 8 and Almeda School Road, the cross -dock distribution building
the company has slated for the park is expected to be the largest spec logistics facility
located in Pearland. PEDC worked with two additional distribution developments that are
underway in Lower Kirby. Brennan Investment Group is constructing a 216,000
square -foot Class A distribution building south of North Spectrum Boulevard and Adkission
is constructing a 128,250 square -foot distribution building at Beltway 8 and Hooper Road.
xii
Another key initiative outlined in the Pearland 20/20 Community Strategic Plan is to optimize the
development potential of Pearland's principal commercial corridors. The State Highway 35
Redevelopment Strategy was developed in
2016 to provide detail to the Strategic Plan
initiatives and 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 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. The Rice Drier
Rd. reconstruction
project was completed
in 2021 and Halik Rd.
was completed in
2022. In addition, the Drager building on Rice Drier which has been vacant has been demolished
to allow for additional development with PEDC assistance.
Construction began in January 2022 and the
2023. PEDC is funding the entire $24.1
Improvements.
With construction of the managed toll
lanes along State Highway 288, one of
Pearland's principal corridors, completed
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. In November,
a $19.5 million contract was awarded for
the final phase of the multiple -phase
master improvements plan, which
includes landscape elements, irrigation,
lighting, water fountains, pear sculptures,
and sidewalks and gateway markers.
improvements are expected to be completed in
million cost of the 288 Corridor Master Plan
Workforce and Talent, the seventh focus area in the
Pearland Prosperity Strategic Plan, serves to connect and
enhance Pearland's talent pipeline though a collaborative
approach. PEDC partnered with Thomas P. Miller and
Associates (TPMA) to create a Workforce Development
Action Plan for the community. The final plan, approved by
the Pearland Prosperity Implementation Committee and
PEDC Board of Directors in late 2021, addresses
workforce skills gaps, career planning and work -based
learning opportunities, diversity and inclusion, and
development of young professionals. PEDC and the Pearland Chamber of Commerce hosted a
Workforce Summit event to present the Workforce Strategy Action Plan to local employers and
workforce stakeholders in April 2022 and to introduce the newly hired workforce director in charge
to oversee the implementation of the plan. The workforce director has been engaging community
partners to develop a network of training resources and to begin the process of identifying
workforce training needs. In September, a collaboration of PEDC, the Pearland Chamber of
Commerce and Pearland Workforce Solutions office led to the first community multi -industry job
fair in Pearland with 54 employers and over 300 attendees.
Convention and Visitor's Bureau
The City's Convention and Visitors Bureau (CVB), embraced the resurgence of leisure events,
sports tournaments and travel to Pearland in FY 2022. Activity included the launch of new
marketing initiatives, the expansion of sports tourism efforts and the addition of leisure -based
events to attract visitors to Pearland. Pearland's visitor economy generated $1,524,488 in hotel
occupancy tax revenue in 2022. The CVB's partnership with a nationally recognized sports
organization expanded in 2022 and the organization remains the primary driver of youth sports
tournaments in Pearland. In addition to generating additional competitor leads and bookings, the
partnership produced a total of 1,140 room nights for Pearland hotels representing a 30 percent
increase from the previous year. Pearland welcomed a total of 303 teams and an overall
attendance of 13,810 with an estimated total economic impact of $2,212,041. The City is
positioned as a viable sports destination and attracts interest by regional, sports organizations.
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 utilizes 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 bustling
suburb, fully integrated with the Houston metropolitan area. Through the Comprehensive Plan,
and associated implementation regulations such as zoning, Pearland continues to prepare for the
growth to come by focusing on the identifying forthcoming needs and setting definitive plans in
xiv
place to continue to manage this growth. To continue to stay ahead of the curve, Pearland is
currently in the process of updating the Comprehensive Plan to ensure the city is prepared for
key trends, new challenges, and the full array of opportunities ahead.
As a reminder 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, the City is well -positioned
to consider voluntary annexations for mutual benefit and coordination.
Capital Improvement Projects and Planning
wastewater ($345.8
With continued residential and
commercial development, the need to
plan and build new infrastructure and
maintain and replace existing
infrastructure is a priority. It is a priority
and will be implemented through an
aggressive capital improvement
program. The City's adopted (July 25,
2022) Five-year CIP 2023-2027 totals
$760.7 million. Projects include drainage
($66.6 million), parks ($33.1 million),
facilities ($108.2 million), streets ($119.3
million), water ($121.1 million) and
million). The City's adopted CIP also includes the proposed 2023 bond
program recommended projects. Projects selected in the proposed bond program represent
Drainage (14 projects), Parks (2 projects), Facilities (1 project) and Streets (2 projects).
In 2019, the Citizens of Pearland voted on the 2019 bond program. The program was $80 million
of projects that included Drainage, Streets, Parks and Facilities. The program is nearing the
Five-year mark and all projects are in design or in construction. Completed projects are Fire
Station 4, Shari Colman Animal Shelter, Piper Road Drainage, Mimosa Acres Drainage, and
Parks Maintenance. Projects in construction are West Lea Drainage, Willowcrest subdivision and
upcoming projects are Bailey Road expansion, Sherwood subdivision reconstruction and Hickory
Slough detention basin.
In July 2022, the City Council created the Citizens Drainage Bond Advisory Committee (the
Committee) to meet for a period of 6 months and develop and recommend projects for a drainage
bond program. The Committee selected 14 drainage projects for inclusion in the selected
proposed 2023 bond program. Projects include Veterans Road, Longwood Park subdivision,
Shady Crest and Creek View subdivision, and several other areas throughout the City.
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. In addition, the
2023 bond program proposes to construct Hughes Road expansion.
xv
Facility projects include Fire Station #7, Fire Station #11, Police Training Center, Hillhouse Road
Annex Phase 2, Natatorium Air Handling Replacement, Water Operations Building, and Orange
Street Service Center Phase 2.
Parks projects include Clear Creek Trail, Woodcreek Park Bridge, and two projects proposed in
the 2023 bond program, Hickory Slough Sportsplex and Independence Park Phase II.
Major projects for water improvements include the upcoming completion of the Surface Water
Plant Phase 1 (10 MGD) and Bailey Water Plant Improvements, FM 518 Utility Relocations
(SH288 to Cullen), Transite Pipe Waterline Replacement Program, Water Production Facility
Rehabilitation and Ground Storage Tank Rehabilitation.
Wastewater projects include upcoming completion of the JHEC Water Reclamation Facility
Expansion, Barry Rose Water Reclamation Facility Expansion, Longwood Water Reclamation
Facility decommissioning, Sanitary Sewer Rehabilitation, Lift Station 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 is a member of
H-GAC's Transportation Policy Council (TPC), with the Interim City Manager serving as an
alternate. The Interim City Manager is also a member and past -chair of the Transportation
Advisory Committee (TAC), a sub -committee of the TPC and a member of the Transportation
Improvement Program (TIP) Subcommittee.
xvi
The prior TIP calls provided major funding for ongoing and upcoming projects in and around
Pearland as depicted below:
McHard Road
City of Pearland
Mykawa to Cullen
$ 15,466,469.00
$ 32,380,531.00
$ 47,847,000.00
2020
CR 59
Brazoria County
Kirby to Kingsley
$ 1,954,000.00
$ 7,816,000.00
$ 9,770,000.00
2022
Safe Routes to School
City of Pearland
Various
$ 1,208,400.00
$ 2,553,600.00
$ 3,762,000.00
2022
Smith Ranch Road
City of Pearl and
Hughes Ranch Road to FM 518
$ 9,724,409.00
$ 3,899,128.00
$ 13,623,537.00
2023
CR 58
Brazoria County
Savannah Pkwy to CR 48
$ 1,223,200.00
$ 4,892,800.00
$ 6,116,000.00
2023
FM 521
Fort Bend County
FM 2234to SH 6
$ 15,045,400.00
$ 60,181,600.00
$ 75,227,000.00
2024
Clear Creek Trail
City of Pearland
Hughes Road to U of H
$ 3,785,872.00
$ 6,684,128.00
$ 10,470,000.00
2024
MyKawa Road
City of Pearland
FM 518to BW 8
$ 17,526,623.00
$ 2,237,680.00
$ 19,764,303.00
2026
With the growth in population throughout Pearland the need for additional capacity along our
major commercial east -west thoroughfare (FM518) has been recognized by TxDOT and H-GAC
with construction funding for the widening of the segment between SH288 and Cullen Boulevard
to six lanes allocated for 2025. Additionally, TxDOT has started the design to widen FM518 to six
lanes between Cullen Boulevard and McLean Road. Additional planning for the future has started
with H-GAC studying the needs along FM518 between McLean and Friendswood including a
more detailed look between McLean and Barry Rose in our Old Town area.
The City is continuing to move forward with the projects that have been approved in the TIP and
will continue to improve connectivity, as well as general mobility (roads and trails) throughout the
City.
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.
While inflation and supply chain issues continue to impact the world, the local economy has
remained strong and healthy. Local Pearland sales taxes have continued to grow, seeing an
increase in sales tax revenue in FY 2022 of 10.7 percent over FY 2021.
Property tax revenue is projected to maintain the strong levels that have developed, despite an
error by the Brazoria County Tax Office when calculation the total property tax base for FY 2023.
The revaluation was a one-time occurrence and was immediately addressed via FY 2023 Budget
Amendment #1. Property taxes provide a timing buffer from the standpoint that the FY 2023
budget relies upon values determined by the three county appraisal districts as of January 1,
2022. Likewise, values as of January 1, 2023, will provide the General Fund and Debt Service
xvii
Fund revenues for FY 2024. Property values have remained strong and the housing market
continues to flourish, despite the nationwide slowdown in the real estate market due to increased
borrowing costs. Looking ahead, property values as of January 1, 2023, will not come into play
until the City's FY 2024.
While about half -way into FY 2023, the City is already beginning to prepare for the FY 2024 budget
process and up -coming forecast with the continuing goal of being fiscally responsible to our
citizens. The property tax revaluation is expected to be resolved in FY 2023 with the Brazoria
County Tax Office signing an updated property tax calculation worksheet — providing the City with
enough property tax increment to address the situation in a financially sustainable and politically
acceptable manner.
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, 2021.
This was the 46th 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 2022, 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 2024. The City of Pearland received its Certificate of Investment
Policy award for developing an investment policy that meets the requirements of the Texas 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 35 consecutive years with its FY 2021 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 will submit a Popular Annual Financial Report (PAFR) to Government Finance Officers
Association (GFOA) for FY 2022. This is the fourth year in a row the City is participating in this
program.
xviii
The preparation of this report is 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,
rent son
Interim City Manager
Eatkekt
2.15. 1..1(1cerl2May 10,201309.17MIT)
Amy Buckert
Chief Financial Officer
Ron Fraser
Assistant City Manager
A.:2-41,dLet,
Kendra Murphy
Deputy Director of Finance
xix
CITY OF PEARLAND, TEXAS
Principal Officials
As of September 30, 2022
Elected Officials
Kevin Cole
Tony Carbone
Joseph Koza
Alex Kamkar
Adrian Hernandez
Layni Cade
Jeffrey Barry
Woody Owens
Appointed Officials
Trent Epperson
Darrin Coker
Letitia Farnie
City Management Position
Ron Fraser
Matt Buchanan
Amy Buckert
Frances Aguilar
Robert Upton
LaRae James
Daniel McGhinnis
Johnny Spires
Carry Capers
Vance Riley
John McDonald
Tracy Rohrbacher
Joshua Lee
Jennifer Huhn
Position
Mayor
Mayor Pro Tem
Councilmember - Position 1
Councilmember - Position 2
Councilmember - Position 3
Councilmember - Position 5
Councilmember - Position 6
Councilmember - Position 7
Position
Interim City Manager
City Attorney
Municipal Court Judge
Assistant City Manager
PEDC President
Chief Financial Officer
City Secretary
Director of Engineering and 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
Term
Expires
May
2023
2024
2025
2023
2024
2025
2025
2023
xx
CITY OF PEARLAND)
STAFF ORGANIZATION CHART?
PEARLAND COMMUNITY
MAYOR & CITY COUNCIL
CITY MANAGER]
COMMUNICATIONS
COMMUNITY
DEVELOPMENT
CONVENTION AND;
VISITORS BUREAU,
(FINANCE)
ASST. CITY MANAGER
DEPUTY CITY MANAGER
ENGINEERING AND
CAPITAL PROJECTS
(INFORMATION)
TECHNOLOGY
(LIBRARY)
PUBLIC WORKS)
HUMAN RESOURCES PARKS AN
■ RECREATION,
(PEARLAND ECONOMIC)
(DEVELOPMENT CORPORATION)
(CITY SECRETARY)
FIRE
(MUNICIPAL COURT]
cr(OFFICE OFZ
EMERGENCY
MANAGEMENT
MUNICIPAL COURT JUDGE)
‘--(LEGAL
(POLICE)
xxr
G�9
Governirient Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Pearland
Texas
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
September 30,_ 2021
C'Arieleed:11
Executive Director/CEO
Financial Section
FORV/S
2700 Post Oak Boulevard, Suite 1500 / Houston, TX 77056
P 713.499.4600 / F 713.499.4699
forvis.com
Independent Auditor's Report
The Mayor and City Council
City of Pearland, Texas
Pearland, Texas
Report on the Audit of the Financial Statements
Opinions
We have audited the 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, as of and for the
year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise
the City's basic financial statements as listed in the table of contents.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business -type activities, each major fund,
and the aggregate remaining fund information of the City, as of September 30, 2022, 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.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States (Government Auditing Standards). Our responsibilities
under those standards are further described in the "Auditor's Responsibilities for the Audit of the Financial
Statements" section of our report. We are required to be independent of the City, and to meet our other ethical
responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Emphasis of Matter
As discussed in Note 17 to the financial statements, beginning -of -year net position for governmental activities,
business -type activities and an enterprise fund has been restated to correct a misstatement. Our opinions are
not modified with respect to this matter.
As discussed in Note 1 to the financial statements, in 2022, the City adopted new accounting guidance,
Governmental Accounting Standards Board Statement No. 87, Leases. Our opinions are not modified with
respect to this matter.
As discussed in Note 19 to the financial statements, the previously reported amounts as of September 30,
2022, for cash, restricted cash, investments, restricted investments, restricted net position, unrestricted net
position and net investment in capital assets for business -type activities and an enterprise fund has been
restated to correct a misstatement. Our opinions are not modified with respect to this matter.
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
) PRAXITY"
Empowering Business Globally
The Mayor and City Council
City of Pearland, Texas
Page 2
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with
accounting principles generally accepted in the United States of America, and for 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or events,
considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for
12 months beyond the financial statement date, including any currently known information that may raise
substantial doubt shortly thereafter.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee
that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a
material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control. Misstatements are considered material if there is a
substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a
reasonable user based on the financial statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, and design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit 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 City's internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise
substantial doubt about the City's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit, significant audit findings, and certain internal control -related matters that we identified
during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion
and analysis, budgetary comparison, pension, and other postemployment benefit information be presented to
supplement the basic financial statements. Such information is the responsibility of management and, 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
The Mayor and City Council
City of Pearland, Texas
Page 3
operational, economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with GAAS, 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.
Supplementary 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 combining and individual fund statements and schedules are presented
for purposes of additional analysis and are not a required part of the basic financial statements. Such information is
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. The 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 GAAS. In our opinion, 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.
Other Information
Management is responsible for the other information included in the annual comprehensive financial report. The
other information comprises the introductory and statistical sections but does not include the basic financial
statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other
information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other information and
consider whether a material inconsistency exists between the other information and the basic financial statements,
or the other information otherwise appears to be materially misstated. If, based on the work performed, we
conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in
our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 16, 2023, on our
consideration of 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 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 City's internal control over financial reporting and compliance.
FO10V I5, ALP
Houston, Texas
May 16, 2023, except as to Note 19, which is as of October 16, 2023.
THIS PAGE LEFT BLANK INTENTIONALLY
Management's Discussion and Analysis
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis
Year Ended September 30, 2022
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 FY
ended September 30, 2022. 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-xix of this report), and the statistical section (Pages 107-148 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, 2022, by
$888.7 million (net position). Of this amount, $728 million is invested in capital assets, net
of related capital debt and $80.8 million is restricted for capital improvements, debt
service, community development programs, public safety and economic development.
• At the close of the current FY, the City's governmental funds reported combined ending
fund balances of $184.1 million, an increase of $20.6 million in comparison to the prior
year. Approximately $152.8 million of the $184.1 million is considered restricted fund
balance and primarily consists of $52.7 million for economic development and
$78.9 million for capital projects.
• As of September 30, 2022, the total fund balance for the General Fund was unassigned
and was $34.7 million or 35.5 percent of total General Fund expenditures.
• The City's long-term debt increased by $38.0 million primarily due to the issuance of new
debt.
• Effective October 1, 2021, the City adopted GASB Statement No. 87, Leases, and also
restated net position related to corrections of errors. Comparative information presented
herein has not been restated for the adoption of GASB Statement No. 87 or the
restatements due to correction of errors because the basic financial statements present
FY 2022 only.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City's basic financial
statements. The City's basic financial statements are comprised of three components:
1) Government -wide financial statements, 2) fund financial statements, and 3) notes to the
financial statements. Additionally, 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 is also included in this report. 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.
4
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2022
The Statement of Net Position presents information on all of the City's assets, deferred outflows
of resources, liabilities, and deferred inflows of resources, with the difference between the four
reported as net position. Over time, increases or decreases in net position may serve as a useful
indicator of whether the financial position of the City is improving or deteriorating.
The Statement of Activities presents information showing how the City's net position changed
during the FY. 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 13 through 15 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 FY. 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 16 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
5
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2022
Development Corporation, Tax Increment Reinvestment Zone #2, and Development Authority of
Pearland, which are considered to be major funds. Data from the non -major governmental funds
are combined into a single, aggregated presentation. Individual fund data for each of these
non -major governmental funds is provided in the form of combining statements elsewhere in this
report.
The City adopts an annual appropriated budget for its General Fund. A budgetary comparison
statement has been provided for the General Fund to demonstrate compliance with the budget.
Proprietary Funds — The City maintains two types of proprietary funds. Enterprise Funds are used
to report the same functions presented as business -type activities in the government -wide
financial statements. The City uses an Enterprise Fund to account for its Water and Sewer Fund
and Solid Waste Fund. Additionally, the City maintains an Internal Service Fund to account for
the financing of goods or services provided by one department or agency to other departments
or agencies of the City on a cost reimbursement basis. The Internal Service Fund is included in
governmental activities for government -wide reporting purposes.
Proprietary funds provide the same type of information as the government -wide financial
statements, only in more detail. The basic proprietary fund financial statements, which begin on
page 22 of this report, provide separate information for the Water and Sewer and Solid Waste
Enterprise Funds since they are considered to be a major fund of the City. The basic proprietary
fund financial statements can be found on pages 22 through 26 of this report.
Fiduciary Fund — The fiduciary fund administered by the City includes the State Court Costs
Custodial Fund. This fund includes court costs collected by the City on behalf of the State of
Texas, which are remitted to the state quarterly. Funds collected by the City Fiduciary Fund are
not presented in the government -wide financial statements as these funds are restricted and are
not available to support the programs of the City. The basic fiduciary fund financial statements can
be found on pages 27 and 28 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 29 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 73 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
$883.7 million at the close of the most recent FY.
6
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2022
By far the largest portion of the City's net position (81.9 percent) reflects its investment in capital
assets (e.g., land, infrastructure, buildings, machinery, and equipment), less any related debt
used to acquire those assets that is still outstanding. The City uses these capital assets to provide
services to citizens; consequently, these assets are not available for future spending. Although
the City's investment in its capital assets is reported net of related debt, it should be noted that
the resources needed to repay this debt must be provided from other sources, since the capital
assets themselves cannot be used to liquidate these liabilities.
Comparative Statement of Net Position
September 30, 2022 and 2021
Amounts in (000's)
Net Position
Governmental Activities Business -type Activities Total
2022 2021 2022 2021 2022 2021
Assets
Current and other assets $ 234,272 $ 206,342 $ 194,614 $ 257,312 $ 428,886 $ 463,654
Capital assets 905,348 898,673 560,499 463,619 1,465,847 1,362,292
Total assets 1,139,620 1,105,015 755,113 720,931 1,894,733 1,825,946
Deferred outflows of
resources
14,005 13,916 2,075 2,059 16,080 15,975
Liabilities
Current 27,047 29,360 33,633 24,644 60,680 54,004
Long-term liabilities
outstanding 494,120 493,796 452,854 425,313 946,974 919,109
Total liabilities 521,167 523,156 486,487 449,957 1,007,654 973,113
Deferred inflows of
resources 12,661 4,147 1,751 626 14,412
4,773
Net position
Net investment in
capital assets 511,377 493,670 216,661 161,158 728,038 654,828
Restricted 48,792 45,162 32,025 30,064 80,817 75,226
Unrestricted 59,628 52,796 20,264 81,185 79,892 133,981
Total net position $ 619,797 $ 591,628 $ 268,950 $ 272,407 $ 888,747 $ 864,035
7
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2022
Comparative Statement of Activities
September 30, 2022 and 2021
Amounts in (000's)
Changes in Net Position
Governmental Activities Business -type Activities Total
2022 2021 2022 2021 2022 2021
Revenues
Program revenues
Charges for services $ 31,094 $ 28,255 $ 62,206 $ 60,713 $ 93,300 $ 88,968
Operating grants and
contributions 20,115 20,006 35 1 20,150 20,007
Capital grants and
contributions 1,876 1,007 2,883
General revenues
Property taxes 101,524 100,075 101,524 100,075
Sales and use taxes 44,699 40,248 44,699 40,248
Franchise taxes 6,870 6,940 6,870 6,940
Investment income 472 209 1,161 94 1,633 303
Loss on disposal of assets - -
Other 5,206 4,793 45 16 5,251 4,809
Total revenues 209,980 202,402 63,447 61,831 273,427 264,233
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
Increase in Net Position
Before Transfers
Transfers
Change in Net Position
Net Position, Beginning,
as Previously Reported
Restatement: Error corrections
Net Position, Beginning,
as Restated
34,580 27,594 34,580 27,594
52,440 53,503 52,440 53,503
33,363 48,115 33,363 48,115
4,834 4,465 4,834 4,465
8,041 6,799 8,041 6,799
39,101 30,653 39,101 30,653
13,238 13,604 13,238 13,604
48,591 44,655 48,591 44,655
7,158 8,094 7,158 8,094
185,597 184,733 55,749 52,749 241,346 237,482
24,383 17,669 7,698 9,082 32,081 26,751
6,079 5,548 (6,079) (5,548)
30,462 23,217 1,619 3,534 32,081 26,751
591,629 272,406 864,035
(2,294) (5,076) (7,370)
589,335 568,411 267,330 268,873 856,665 837,284
Net Position, Ending $ 619,797 $ 591,628 $ 268,949 $ 272,407 $ 888,746 $ 864,035
The increase in total net position from the prior year of $19.7 million is primarily attributable to the
increase in capital assets funded by debt issued in the current and prior FY.
Governmental activities - Governmental activities increased the City's restated net position by
$30.5 million, thereby accounting for 113 percent of the total increase in the restated net position
of the City. Key elements of this increase are as follows.
8
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2022
• Property taxes, sales and use taxes, and franchise taxes totaled $101.5 million,
$44.7 million, and $6.9 million, respectively. These revenues increased by $5.83 million
from prior year primarily as a result of an increase in assessed taxable values driven by
increased local real estate market values and an increase in local sales and use taxes.
• The revenues were primarily offset by expenses for general government, public safety,
public works, economic development of $34.6 million, $52.4 million, $33.4 million, and
$37.4 million, respectively.
Business -type activities — Business -type activities increased the City's restated net position by
$1.6 million. Key elements of this increase are as follows:
• Charges for services of $62.2 million increased approximately $1.5 million from the prior
year due to enhancements in the efficiency of water billing and collection processes,
resulting in improved billing and collection times.
• Capital grants and contributions decreased $1 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 $48.9 million and $7.2 million for
Water and Sewer and Solid Waste, respectively. Total expenses increased from the prior
year by $3 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 FY.
The City's governmental funds reflect a combined fund balance of $184.1 million. A portion of the
combined fund balance, or $31.2 million, is unassigned and available for day-to-day operations
of the City; $30 thousand is nonspendable; $79 million is restricted for capital projects;
$52.8 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 $20.7 million from the prior
year. The increase in fund balance includes increases in the General Fund of $2.1 million, Capital
Projects Fund of $15.8 million, Pearland Economic Development Corporation of $2.4 million, Tax
Increment Reinvestment Zone #2 of $126 thousand and the Development Authority Fund of
$210 thousand. These increases in fund balance were partially offset by a decrease in fund
balance in the Debt Service Fund of $2.5 million. The General Fund's fund balance totaled
$34.7 million at year-end.
Tax Increment Reinvestment Zone #2 had expenditures totaling $12.5 million, leaving an ending
restricted fund balance of $7.2 million.
9
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2022
The Pearland Economic Development Corporation and Development Authority of Pearland, the
City's blended component units, had expenditures totaling $35.23 million, leaving an ending fund
balance of $39.7 million, and $13.1 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 Funds was $24.6 million at year-end, a $10.5 million increase from the prior year.
GENERAL FUND BUDGETARY HIGHLIGHTS
During the year, there was a $4.9 million increase in appropriations between the adopted and
amended budget. The increase in appropriations is attributable to the following:
• Motor pool equipment and vehicle replacement
• Purchase of one additional ambulance
• Replacement of Capital Project software
• Additional allocation for street and sidewalk repairs and city generators
• Cameras and software
Actual revenues of $99.6 million were $4.2 million over the amended budget mainly in
intergovernmental revenue due to COVID-19 related grant funding applied to public safety
expenses. Actual expenditures of $97.5 million were under the amended budget, resulting in a
year-end fund balance of $34.7 million, in excess of budget by $4.1 million.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets - At the end of FY 2022, the City's governmental activities and business -type
activities had invested $905.3 million and $560.5 million, respectively, in a variety of capital assets
and infrastructure, as reflected in the following schedule. This represents a net increase of $6.7
million, or 0.7 percent over the end of last FY for the governmental activities and a net increase
of $96.8 million or 20.9 percent over the end of last FY for business -type activities.
Capital Assets
Amounts in (000's)
Governmental Activities Business -type Activities Total
2022 2021 2022 2021 2022 2021
Land $ 40,401 $ 34,530 $ 3,877 $ 3,877 $ 44,278 $ 38,407
Construction in progress 133,024 180,206 229,919 185,657 362,943 365,863
Infrastructure 585,023 587,723 289,874 234,746 874,897 822,469
Buildings and improvements 136,291 83,394 21,363 22,098 157,654 105,492
Machinery and equipment 8,940 10,345 619 1,010 9,559 11,355
Furniture and fixtures 1,669 2,475 12 21 1,681 2,496
Contractual water rights - - 14,835 16,210 14,835 16,210
Total capital assets $ 905,348 $ 898,673 $ 560,499 $ 463,619 $ 1,465,847 $ 1,362,292
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.
10
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2022
Long -Term Debt — At the end of the current FY, the City had total bonds, certificates of obligation,
and financed purchase agreements outstanding of $918.2 million. Of this amount, $268.3 million
is composed of general obligation bonds, $147.4 million is composed of certificates of obligation,
and $447.6 million represents revenue bonds secured solely by specified revenue sources.
Outstanding Debt
Amounts in (000's)
Governmental Activities Business -Type Activities Total
2022 2021 2022 2021 2022 2021
General obligation bonds $ 265,615 $ 260,840 $ 2,710 $ 3,020 $ 268,325 $ 263,860
Certificates of obligation 101,660 86,220 45,710 147,370 86,220
Revenue bonds 64,810 73,235 382,785 400,840 447,595 474,075
Unamortized issuance
premium 36,212 38,710 18,575 16,917 54,787 55,627
Financed purchase agreements 131 381 - - 131 381
Total outstanding debt $ 468,428 $ 459,386 $ 449,780 $ 420,777 $ 918,207 $ 880,163
The City's general obligation bonds and certificates of obligation debt for governmental activities
increased to $367.3 million, a net increase of $20.2 million from the previous year. The increase
is due to new debt issued partially offset by scheduled principal payments. The City's debt for
business -type activities increased to $449.8 million, a net increase of $29 million from the previous
year, which was a result of new debt issued partially offset by scheduled principal payments.
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 BUDGET AND RATES
The City of Pearland continues with its forward momentum in FY 2023, less in terms of population
and more in terms of growing value. The City's sales tax revenue is expected to continue strongly,
budgeted to provide $30.1 million in FY 2023. Sales tax revenue is expected to provide
substantially to General Fund operations as well as being the funding source for our Pearland
Economic Development Corporation for a budgeted $14.0 million in FY 2023.
The City received positive ratings from Moody's Investor Services and Fitch Ratings, Inc. for its
2022 bond issuances. The City's Permanent Improvement Bonds Series 2022 for $52.1 million,
and the City's Certificates of Obligation Series 2022A and 2022B for $10.7 million and $8.4 million,
respectively, were assigned a rating of 'AA' by Fitch and 'Aa2' by Moody's. These ratings
11
CITY OF PEARLAND, TEXAS
Management's Discussion and Analysis (Continued)
Year Ended September 30, 2022
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.
The City restructured $4,420,000 in Permanent Improvement Bonds (PIB) (Series 2022).
Additionally, there was a separate cash defeasance of $9,500,000 in Certificates of Obligation
(Series 2019B), which were for TIRZ-related projects.
The City is working to invest in Internal Service Funds to assist with operating expenses moving
forward, which will help residents and businesses by stabilizing the tax rate. Internal Service
Funds will help avoid capital outlay "spikes" in tax rates. Additionally, there is a planned bond
referendum in May of 2023 for voters to have a say in streets and drainage ($105.5M), parks
($33.7M), streets, sidewalks and bridges ($26.1 M), and a new fire station ($15.9M). The City also
plans for conservative sales tax growth (3 percent) and continued strong property values
(upwards of 10 percent).
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 Kendra Murphy, Deputy Director of Finance, at 3523 Liberty Drive,
Pearland, Texas 77581, or 281-652-1698. The report and general information can be found on the
City's website at www.pearlandtx.gov.
12
Basic Financial Statements
CITY OF PEARLAND, TEXAS
Statement of Net Position
September 30, 2022
Primary Government
Business -type
Activities
Governmental (Restated -
Activities Note 17)
Total
Assets
Cash and cash equivalents $ 51,004,000 $ 8,616,994 $ 59,620,994
Investments 153,119,895 5,130,725 158,250,620
Receivables (net of allowance for
uncollectibles, where applicable) 33,641,989 9,686,861 43,328,850
Internal balances (4,948,442) 4,948,442 -
Inventories 481,997 481,997
Prepaids 29,590 29,590
Restricted cash and cash equivalents - 116,570,090 116,570,090
Restricted investments - 49,658,828 49,658,828
Lease receivable 898,641 - 898,641
Lease assets 43,520 2,021 45,541
Capital assets
Nondepreciable 173,424,671 233,795,761 407,220,432
Depreciable, net 731,923,706 326,703,220 1,058,626,926
Total capital assets 905,348,377 560,498,981 1,465,847,358
Total Assets 1,139,619,567 755,112,942 1,894,732,509
Deferred Outflows of Resources
Deferred loss on refunding 4,992,977 793,077 5,786,054
OPEB 1,324,080 214,055 1,538,135
Pension 7,687,697 1,067,815 8,755,512
Total Deferred Outflows of Resources 14,004,754 2,074,947 16,079,701
Liabilities
Accounts payable and other
accrued liabilities 16,773,416 28,583,982 45,357,398
Accrued interest payable 1,529,677 855,323 2,385,000
Unearned revenues 8,059,503 - 8,059,503
Customer deposits 642,719 4,191,561 4,834,280
Lease liability 41,623 2,021 43,644
Noncurrent liabilities
Due within one year: Bonds,
certificates of obligation,
financed purchases,
compensated absences 34,104,471 20,291,608 54,396,079
Due in more than one year:
Bonds, certificates of
obligation, financed
purchases, compensated
absences 443,457,965 430,344,422 873,802,387
Total OPEB liability 6,042,758 1,001,128 7,043,886
Net pension liability 10,514,441 1,216,706 11,731,147
Total Liabilities 521,166,573 486,486,751 1,007,653,324
Deferred Inflows of Resources
OPEB 1,991,537 368,484 2,360,021
Pension 9,956,892 1,383,004 11,339,896
Leases 712,667 - 712,667
Total Deferred Inflows of Resources 12,661,096 1,751,488 14,412,584
Net Position
Net investment in capital assets 511,376,611 216,660,709 728,037,320
Restricted for
Debt service - 18,579,022 18,579,022
Capital projects - 13,445,902 13,445,902
Community development programs 8,321,839 8,321,839
Public safety 761,499 761,499
Economic development 39,708,717 39,708,717
Unrestricted 59,627,986 20,264,017 79,892,003
Total Net Position $ 619,796,652 $ 268,949,650 $ 888,746,302
See Notes to Financial Statements 13
CITY OF PEARLAND, TEXAS
Statement of Activities
Year Ended September 30, 2022
Functions/Programs:
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
Expenses
$ 34,580,025
52,440,312
33,362,976
4,834,347
8,040,915
39,101,460
13,238,056
185,598,091
48, 592, 364
7,157,894
55,750,258
Program Revenues
Charges for
Services
Operating
Grants and
Contributions
Capital
Grants and
Contributions
$ 17,815,643 $ 5,739,554 $
5,746,468
185,864 14,007,914
5,731,653 367,846
1,613,966
31,093,594 20,115,314
55,351,683
6,854,747
35,351
62,206,430 35,351
0
0
$ 241,348,349 $ 93,300,024 $ 20,150,665 $
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
0
See Notes to Financial Statements 14
CITY OF PEARLAND, TEXAS
Statement of Activities (Continued)
Year Ended September 30, 2022
Net (Expense) Revenue and Changes in Net Position
Primary Government
Governmental
Activities
Business -type
Activities
Total
$ (11,024,828)
(46,693,844)
(19,169,198)
1,265,152
(6,426,949)
(39,101,460)
(13,238,056)
(134, 389,183)
$
$ (11,024,828)
- (46,693,844)
- (19,169,198)
- 1,265,152
(6,426,949)
(39,101,460)
(13,238,056)
0 (134,389,183)
6,794,670
(303,147)
0 6,491,523
(134, 389,183)
101,524,474
44,699,475
6,869,599
472,072
5,206,387
6,079,216
164,851,223
30,462,040
591,628,894
(2,294,282)
589, 334, 612
$ 619,796,652
6,491,523
1,161,439
45,375
(6,079,216)
(4,872,402)
1,619,121
272,406,399
(5,075,870)
267,330,529
$ 268,949,650
6,794,670
(303,147)
6,491,523
(127,897,660)
101,524,474
44,699,475
6,869,599
1,633,511
5,251,762
159,978,821
32, 081,161
864,035,293
(7,370,152)
856, 665,141
$ 888,746,302
See Notes to Financial Statements 15
CITY OF PEARLAND, TEXAS
Balance Sheet — Governmental Funds
September 30, 2022
Pearland
Debt Capital Economic
General Service Projects Development
Fund Fund Fund Corporation
Assets
Cash and cash equivalents $ 4,638,947 $ 3,417,450 $ 7,234,653 $ 360,052
Investments 30,137,452 87,791 70,114,708 37,214,044
Receivables (net of allowance for
uncollectibles, where applicable) 7,287,331 5,307,761 12,005,302 5,319,526
Prepaids and other assets - - - -
Total Assets $ 42,063,730 $ 8,813,002 $ 89,354,663 $ 42,893,622
Liabilities
Accounts payable
Customer deposits
Unearned revenue
Total Liabilities
$ 6,146,789 $ 135,080 $ 8,743,408 $ 303,304
642,719 - -
138,918 - 1,622,513
6,928,426 135,080 10,365,921 303,304
Deferred Inflows of Resources
Unavailable revenue 477,761 5,241,776 2,881,601
Total Deferred Inflows of Resources 477,761 5,241,776 0 2,881,601
Fund Balances
Nonspendable
Restricted
Unassigned
Total Fund Balances
- 3,436,146 78,988,742
34,657,543 - -
39,708,717
34,657,543 3,436,146
78,988,742 39,708,717
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances $ 42,063,730 $ 8,813,002 $ 89,354,663 $ 42,893,622
See Notes to Financial Statements 16
CITY OF PEARLAND, TEXAS
Balance Sheet — Governmental Funds (Continued)
September 30, 2022
Tax Increment
Reinvestment
Zone #2
Development
Authority of
Pearland
Other
Governmental
Funds
Total
Governmental
Funds
$ 7,213,625
50,529
$ 13,078,149
1,450
$ 5,841,214
5,480,141
3,602,265
29,590
$ 41,784,090
143,034,136
33,574,164
29,590
$ 7,264,154 $
$ 49,849 $
13,079,599 $ 14,953,210
$ 218,421,980
- $ 147,456 $
6,298,072
15,525,886
642,719
8,059,503
49,849
0
6,445,528
24,228,108
1,486,878
10,088,016
0
0
1,486,878
10,088,016
7,214,305
13,079,599
29,590 29,590
10,380,516 152,808,025
(3,389,302) 31,268,241
7,214,305
13,079,599
7,020,804 184,105,856
$ 7,264,154 $
13,079,599 $ 14,953,210 $ 218,421,980
See Notes to Financial Statements 17
CITY OF PEARLAND, TEXAS
Reconciliation of the Balance Sheet — Governmental Funds to the
Government -wide Statement of Net Position
September 30, 2022
Total Fund Balances - Governmental Funds $ 184,105,856
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.
Lease receivable
Lease asset
Lease liability
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 loss on refunding
Deferred outflows relating to OPEB activities
Deferred outflows relating to pension activities
899,222,721
898,641
43,520
(41,623)
4,992,977
1,303,095
7,621,139
Long-term liabilities are not due and payable in the current period and, therefore, are not
reported in the funds.
Bonds and financed purchases payable (468,428,354)
Compensated absences (9,084,498)
Accrued interest governmental activity debt (1,529,677)
Total OPEB liability (6,021,029)
Net pension liability (10,449,608)
Some property tax and loan revenues will not be collected for several months after the
City's fiscal year end.
Deferred inflows relating to unavailable revenue
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
Deferred inflows relating to leases
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.
10,088,016
(1,965,489)
(9,864,605)
(712,667)
19,618,237
Net Position of Governmental Activities $ 619,796,652
See Notes to Financial Statements 18
CITY OF PEARLAND, TEXAS
Statement of Revenues, Expenditures and Changes
in Fund Balances — Governmental Funds
Year Ended September 30, 2022
Pearland
Debt Capital Economic
General Service Projects Development
Fund Fund Fund Corporation
Revenues
Property taxes $ 29,937,664 $ 37,763,000 $ - $
Sales and use taxes 28,930,889 - - 14,250,278
Franchise fees 6,622,237
Licenses and permits 4,612,554
Fines and forfeitures 1,989,062
Charges for services 22,257,316
Investment earnings 98,435 41,091 525,866 224,376
Intergovernmental 4,548,225 12,210,603 12,000
Other 603,797 735,447 1,647,874 1,214,079
Total Revenues 99,600,179 38,539,538 14,384,343 15,700,733
Expenditures
Current
General government
Public safety
Public works
Community services
Parks and recreation
Economic development
Debt service
Principal
Interest and other charges
Capital outlay
Intergovernmental
Total Expenditures
Excess (Deficiency) of Revenues
Over Expenditures
Other Financing Sources (Uses)
Proceeds from sale of assets
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
Fund Balances, End of Year
14,545,343
58,350,556
12,479,013
4,585,041
6,588,930
179,299
7,543
769,296
- 1,478,204
21,505,000
14,817,653
7,289,088
458,153
46,098,920
3,939,387
250,000
29,500
10,014,021
97,505,021 43,611,741
48, 035, 277 14,232,908
2,095,158 (5,072,203)
(33,650,934) 1,467,825
5,197,799
(5,159,815)
2,621,118
41,720,000
2,953,542
6,103,531
(1,319,801)
1,154,819
(190,709)
37,984 2,621,118 49,457,272 964,110
2,133,142 (2,451,085)
32,524,401 5,887,231
15,806,338 2,431,935
63,182,404 37,276,782
$ 34,657,543 $ 3,436,146 $ 78,988,742 $ 39,708,717
See Notes to Financial Statements 19
CITY OF PEARLAND, TEXAS
Statement of Revenues, Expenditures and Changes
in Fund Balances — Governmental Funds (Continued)
Year Ended September 30, 2022
Tax Increment
Reinvestment
Zone #2
Development
Authority of
Pearland
Other
Governmental
Funds
Total
Governmental
Funds
$ 33,823,810
48,013
$
13,557
$
1,518,308
247,362
123,141
1,043,372
55,137
3,210,715
1,000,120
$ 101,524,474
44,699,475
6,869,599
4,612,554
2,112,203
23,300,688
1,006,475
19,981,543
5,201,317
33,871,823
13,557
7,198,155
209,308,328
12,521,111
10,885,603
8,175,000
1,967,936
1,411,213 15,956,556
1,142,637 59,493,193
13,957,217
179,414 4,764,455
114,850 6,703,780
27,346,101
71,079 30,180,378
2,674 17,283,459
736,780 57,619,017
7,289,088
12,521,111
21,028,539
3,658,647 240,593,244
21,350,712
(21,014,982)
3,539,508
(31,284,916)
21,224,675
(21,224,675)
439,265
(1,612,172)
1,154,819
41,720,000
2,953,542
35,586,388
(29,507,172)
(21,224,675)
21,224,675
(1,172,907)
51,907,577
126,037
209,693
7,088,268 12,869,906
2,366,601
20,622,661
4,654,203 163,483,195
$ 7,214,305 $ 13,079,599 $ 7,020,804 $ 184,105,856
See Notes to Financial Statements 20
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, 2022
Net Change In Fund Balances — Total Governmental Funds $ 20,622,661
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 $57,619,017 exceeded
depreciation expense of $43,204,344 and loss on disposal of property of $2,852,284, and other
changes in capital assets of $2,512,221 in the current period.
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.
Proceeds from issuance of long term debt
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 obligations. 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.
9,050,168
(41,720,000)
30,180,378
2,497,102
(1,260,383)
28,738
(99,976)
(643,940)
(598,363)
2,880,662
9,524,993
Change In Net Position of Governmental Activities $ 30,462,040
See Notes to Financial Statements 21
CITY OF PEARLAND, TEXAS
Statement of Net Position — Proprietary Funds
September 30, 2022
Assets
Current Assets
Cash and cash equivalents
Investments
Receivables (net of allowance for
uncollectibles, where applicable)
Inventories
Restricted cash and cash equivalents
Restricted investments
Total Current Assets
Governmental
Business -type Activities - Enterprise Funds Activities
Water and
Sewer Fund
(Restated - Solid Waste Internal
Note 17) Fund Total Service Funds
$ 8,543,613 $ 73,381 $ 8,616,994 $ 9,219,910
5,130, 725
9,165,659 521,202
116,570,090
49,658,828
189,068,915 594,583
5,130, 725 10, 085, 759
9,686,861
116,570,090
49,658,828
67,825
481,997
189,663,498 19, 855,491
Noncurrent Assets
Capital assets
Land and improvements 3,877,031 3,877,031
Construction in progress 229,918,730 229,918,730
Contractual rights to water supply 34,511,428 34,511,428
Infrastructure 465,476,995 465,476,995 67,338
Buildings 32,042,833 32,042,833 -
Machinery and equipment 5,537,454 5,537,454 8,069,542
Less accumulated depreciation (210,865,490) (210,865,490) (2,011,224)
Total Noncurrent Assets 560,498,981 0 560,498,981 6,125,656
Total Assets 749,567,896 594,583 750,162,479 25,981,147
Deferred Outflows of Resources
Deferred loss on refunding
OPEB
Pension
Total Deferred Outflows of Resources
Current Liabilities
Accounts payable and accrued expenses
Claims payable
Accrued interest payable
Customer deposits
Current portion of long-term liabilities:
Compensated absences
Bonds and permanent improvement
bonds payable
Total Current Liabilities
793,077
214,055
1,067,815
2,074,947
27,851,882
855,323
4,191,561
261,608
20,030,000
793,077
214,055
1,067,815
0 2,074,947
732,100
53,190,374 732,100
28,583,982
855,323
4,191,561
261,608
20,030,000
20,985
66,558
87,543
719,638
527,892
49,584
53,922,474 1,297,114
See Notes to Financial Statements 22
CITY OF PEARLAND, TEXAS
Statement of Net Position — Proprietary Funds (Continued)
September 30, 2022
Governmental
Business -type Activities - Enterprise Funds Activities
Water and
Sewer Fund
(Restated - Solid Waste Internal
Note 17) Fund Total Service Funds
Noncurrent Liabilities
Compensated absences $ 594,244 $ $ 594,244 $
Lease liability 34 34 -
Total OPEB liability 1,001,128 1,001,128 21,729
Net pension liability 1,216,706 1,216,706 64,833
Bonds and permanent improvement
bonds payable 429,750,144 429,750,144
Total Noncurrent Liabilities 432,562,256 0 432,562,256 86,562
Total Liabilities 485,752,630 732,100 486,484,730 1,383,676
Deferred Inflows of Resources
OPEB
Pension
Total Deferred Inflows of Resources
368,484
1,383,004
1,751,488
368,484
1,383,004
26,048
92,287
0 1,751,488 118,335
Net Position
Net investment in capital assets 216,660,709 216,660,709 6,125,656
Restricted for debt service 18,579,022 18,579,022
Restricted for capital projects 13,445,902 13,445,902
Unrestricted 15,453,092 (137,517) 15,315,575 18,441,023
Total Net Position $ 264,138,725 $ (137,517) 264,001,208 $ 24,566,679
Adjustment to reflect the consolidation of
internal services fund activities related
to enterprise funds
4,948,442
Net Position of Business -type Activities $ 268,949,650
See Notes to Financial Statements 23
CITY OF PEARLAND, TEXAS
Statement of Revenues, Expenses and Changes
in Net Position — Proprietary Funds
Year Ended September 30, 2022
Operating Revenues
Charges for sales and services
Total Operating Revenues
Business -type Activities - Enterprise Funds
Water and Solid Waste
Sewer Fund Fund Total
$ 55,351,683
55,351,683
Operating Expenses
Personnel services 10,252,899
Supplies and materials 6,715,000
Contractual services 6,522,820
Repairs and maintenance 2,753,815
Other expenses -
Depreciation and amortization 17,040,462
Total Operating Expenses 43,284,996
Operating Income (Loss) 12,066,687
Nonoperating Revenues (Expenses)
Intergovernmental 35,351
Earnings on investments 1,161,122
Loss on sale of capital assets (3,531)
Miscellaneous revenue 45,374
Debt issuance costs (434,190)
Interest expenses (5,893,671)
Net Nonoperating Revenues (Expenses) (5,089,545)
Income (Loss) Before Transfers
and Capital Contributions
Transfers in
Transfers out
Change in Net Position
Net Position, Beginning,
as Previously Reported
Restatement: Error corrections
Net Position, Beginning,
as Restated
6,977,142
135,683,573
(141,762,789)
897,926
267,816,555
(4,575,756)
263,240,799
Net Position, Ending $ 264,138,725
Reconciliation to government -wide statement of activities
Change in Net Position of enterprise funds
Adjustment for the net effect of the current year
activity between the internal service funds and
the enterprise funds
Change in Net Position of Business -type Activities
Governmental
Activities
Internal
Service Funds
$ 6,854,747 $ 62,206,430 $ 26,498,951
6,854,747 62,206,430
7,157,894
7,157,894
10,252,899
6,715,000
13,680,714
2,753,815
17,040,462
50,442,890
(303,147) 11,763,540
317
317
(302,830)
(302,830)
35,351
1,161,439
(3,531)
45,374
(434,190)
(5,893,671)
(5,089,228)
6,674,312
135,683,573
(141,762,789)
595,096
665,427 268,481,982
(500,114) (5,075,870)
165,313 263,406,112
26,498,951
619,423
13,610
12,648,088
1,407,642
15,851
1,165,409
15,870,023
10,628,928
96,380
(176,290)
(79,910)
10,549,018
10,549,018
14,017,661
14,017,661
$ (137,517) $264,001,208 $ 24,566,679
$ 595,096
1,024,025
$ 1,619,121
See Notes to Financial Statements 24
CITY OF PEARLAND, TEXAS
Statement of Cash Flows - Proprietary Funds
Year Ended September 30, 2022
Cash Flows from Operating Activities
Receipts from customers and users
Receipts from interfund charges for services
Payments to employees for salaries and benefits
Payments for interfund services used
Payments to suppliers and service providers
Net Cash Provided By (Used In) Operating Activities
Cash Flows from Noncapital Financing Activities
Transfers from other funds
Transfers to other funds
Net Cash Used In Noncapital
Financing Activities
Cash Flows from Capital and Related Financing
Activities
Acquisition and construction of capital assets
Proceeds from sale of assets
Proceeds from issuance of debt
Debt issuance costs
Principal paid on capital debt
Interest paid on capital debt
Net Cash Used In Capital and Related
Financing Activities
Cash Flows from Investing Activities
Interest on investments
Investment maturities (purchases) net
Net Cash Provided By (Used In) Investing Activities
Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
Reconciliation to the Statement of Net
Position - Proprietary Funds
Unrestricted cash and cash equivalents
Restricted cash and cash equivalents
Business -type Activities - Enterprise Funds
Water and
Sewer Fund
(Restated -
Note 17)
Solid Waste
Fund
Total
Governmental
Activities
Internal
Service
Funds
$ 58,089,751 $ 6,881,970 $ 64,971,721 $ 10,245,670
16,477,859
(10,686,940) (10,686,940) (588,761)
(3,296,621) (3,296,621)
(8,935,919) (7,130,750) (16,066,669) (14,130,941)
35,170,271
135,683,573
(141,762,789)
(6,043,865)
(113,483,136)
(3,531)
49, 614,013
(434,190)
(18,365,000)
(7,871,321)
(90,543,165)
(248,780)
0
34,921,491
135,683,573
(141,762,789)
(6,043,865)
(113,483,136)
(3,531)
49,614,013
(434,190)
(18,365,000)
(7,871,321)
0 (90,543,165)
12,003,827
0
(1,259,044)
(176,290)
(1,435, 334)
1,161,122 317 1,161,439 96,380
(22,277,036) (22,277,036) (10,085,759)
(21,115,914) 317 (21,115,597) (9,989,379)
(82,532,673) (248,463) (82,781,136) 579,114
207,646,376 321,844 207,968,220 8,640,796
$ 125,113,703 $ 73,381 $ 125,187,084 $ 9,219,910
$ 8,543,613 $ 73,381 $ 8,616,994 $ 9,219,910
116,570,090 116,570,090 -
$ 125,113,703 $ 73,381 $ 125,187,084 $ 9,219,910
See Notes to Financial Statements 25
CITY OF PEARLAND, TEXAS
Statement of Cash Flows — Proprietary Funds (Continued)
Year Ended September 30, 2022
Business -type Activities - Enterprise Funds
Water and
Sewer Fund
(Restated - Solid Waste
Note 17) Fund
Total
Governmental
Activities
Internal
Service
Funds
Reconciliation of Operating Income (Loss) to Net
Cash Provided By (Used In) Operating Activities
Operating income (loss) $ 12,066,687 $ (303,147) $ 11,763,540 $ 10,628,928
Items not requiring cash
Depreciation and amortization 17,040,462 17,040,462 1,165,409
Changes in
Receivables, net 2,738,068 27,223 2,765,291 224,578
Prepaids (371,443)
Inventories (57,836)
Accounts payable and accrued liabilities 3,702,052 27,144 3,729,196 433,113
Deposits payable 57,077 57,077 -
Compensated absences (128,002) (128,002) -
Total OPEB liability (246,966) (246,966) (14,237)
Net pension liability (1,087,388) (1,087,388) (68,507)
Deferred outflows - OPEB 54,646 54,646 (2)
Deferred inflows - OPEB 298,620 298,620 21,021
Deferred outflows - Pension (151,634) (151,634) (7,594)
Deferred inflows - Pension 826,649 826,649 50,397
Net Cash Provided By (Used In) Operating Activities $ 35,170,271 $ (248,780) $ 34,921,491 $ 12,003,827
Summary of Non Cash Capital and Related Financing
Activities
Capital asset acquisitions in accounts payable
$ 17,709,907 $
$ 17,709,907 $
See Notes to Financial Statements 26
CITY OF PEARLAND, TEXAS
Statement of Fiduciary Net Position — Fiduciary Fund
September 30, 2022
Assets
Current Assets
Cash and cash equivalents
Total Current Assets
Total Assets
Current Liabilities
Due to State of Texas
Total Current Liabilities
Total Liabilities
Net Position
Restricted
Custodial Fund
State Court
Costs Fund
$ 170,393
170,393
170,393
170,393
170,393
170,393
Total Net Position $ 0
See Notes to Financial Statements 27
CITY OF PEARLAND, TEXAS
Statement of Changes in Fiduciary Net Position — Fiduciary Fund
Year Ended September 30, 2022
Custodial Fund
State Court
Costs Fund
Additions
State court costs $ 756,060
Total Additions 756,060
Deductions
Court costs distributed to state
Total Deductions
Net increase in fiduciary net position
Net Position, Beginning
Net Position, Ending
756,060
756,060
$ 0
See Notes to Financial Statements 28
CITY OF PEARLAND, TEXAS
Notes to Financial Statements
September 30, 2022
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" on 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.
29
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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 percent). 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
30
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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
for debt service is local property taxes. The Debt Service Fund is considered a major fund for
reporting purposes.
31
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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.
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
32
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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.
Fiduciary Funds are used to account for assets held by the City in a trustee capacity or as a custodian
for other governmental agencies. The City reports the following Fiduciary Fund:
The State Court Costs Custodial Fund is used to account for the portion of municipal court fees and
fines collected by the City that are due to the State of Texas. These fees and fines are remitted
quarterly to the Texas Comptroller. Custodial funds use the economic resources measurement
focus.
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
Fund balance is 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 Chief Financial Officer.
Unassigned — Amounts that are available for any purpose. Positive amounts are reported only in
the General Fund.
33
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
City Council has authorized the Chief Financial Officer 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 three months of
recurring operating expenditures, based on current year expenditures. If the fund balance
exceeds this amount, funding non -recurring expenditures in the following FY 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 percent of the current year's budget appropriation for recurring operating expenses.
The cash equivalent 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 percent 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.
Employee Benefits Fund and Health Claims 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.
Water/Sewer Revenue Debt Coverage Reserves
Revenues shall be maintained at 1.15 times coverage in a FY 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.
34
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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 percent of the total budget (General Fund) to be used in case
of unforeseen items of expenditure.
G. Cash and Cash Equivalents
The City's cash and cash equivalents are 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 Net Asset Value (NAV), 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 observable inputs other those in Level 1; Level
3 inputs are unobservable inputs. The City's local government investment pools are recorded at NAV
as permitted by GASB Statement No. 79, Certain Investment Pools and Pool Participants, and are
exempt from reporting in the fair value hierarchy.
I. Receivables
All receivables are reported at their gross value, and where appropriate, are reduced by the
estimated portion that is expected to be uncollectible. Trade accounts receivable in excess of
120 days comprise the trade accounts receivable allowance for uncollectibles.
J. Due to and Due from Other Funds
Interfund receivables and payables arise from interfund transactions and are recorded by all funds
affected in the period in which the transactions are executed. These receivables and payables
are classified as "due from other funds" or "due to other funds." Interfund receivables and
payables which are not expected to be paid within 12 months are classified as loans from/loans
to other funds.
35
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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 and Lease Assets
Capital assets which include property, plant, equipment, infrastructure and lease assets 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 greater than one year. 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
Lease assets are amortized over the shorter of the lease term or the estimated useful life of the
underlying asset.
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
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
36
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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.
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. 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 represent a consumption of net assets 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 loss on refunding — Reported in the government -wide
statement of net position, this deferred loss on refunding results from the difference in the
carrying value of refunded debt and its reacquisition price. This amount is deferred and
amortized over the shorter of the life of the refunded or refunding debt.
• Deferred outflows of resources for pension — Reported in the government -wide financial
statement of net position, this deferred outflow results from pension plan contributions
made after the measurement date of the net pension liability and the results of 1) 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 FY. 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.
37
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
• 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 FY. 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 assets that applies to future periods 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 differences between projected
and actual earnings on pension plan investments. 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.
Q. 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 GASB Statement No. 68, Accounting and Financial Reporting for
Pensions, as amended by GASB Statement No. 71.
R. 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
38
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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.
S. 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.
T. New Accounting Standards
The following standards have been issued but have not been implemented as not yet effective.
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. 99, Omnibus 2022. The objectives of this Statement are to enhance
comparability in accounting and financial reporting and to improve the consistency of authoritative
literature by addressing (1) practice issues that have been identified during implementation and
application of certain GASB Statements and (2) accounting and financial reporting for financial
guarantees.
GASB Statement No. 100, Accounting Changes and Error Corrections —an amendment of GASB
Statement No. 62. The primary objective of this Statement is to enhance accounting and financial
reporting requirements for accounting changes and error corrections to provide more
understandable, reliable, relevant, consistent, and comparable information for making decisions
or assessing accountability.
39
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
GASB Statement No. 101, Compensated Absences. The objective of this Statement is to better
meet the information needs of financial statement users by updating the recognition and
measurement guidance for compensated absences. That objective is achieved by aligning the
recognition and measurement guidance under a unified model and by amending certain
previously required disclosures.
The City has not fully determined the effects that implementation of these statements will have on
the City's financial statements.
Adoption of GASB Statement No. 87, Leases (GASB 87)
In 2022, the City adopted GASB 87, Leases. The Statement establishes a single model for lease
accounting based on the principle that leases represent the financing of the right to use an
underlying asset. The adoption of GASB 87 resulted in changes in presentation of financial
statements and related disclosures in the notes to the financial statements. There was no effect
on beginning net position of fund balances as a result of the adoption of GASB 87.
Note 2 — Deposits (Cash) and Investments
Authorization for Deposits and Investments
The City's investment portfolio is managed in accordance with the Texas Public Funds Investment
Act, as amended, and its own Investment Policy. The Texas Public Funds Investment Act (PFIA),
as prescribed in Chapter 2256 of the Texas Government Code, regulates what types of
investments can be made, requires written investment policies, mandates training requirements
of investment officers, requires internal management reports to be produced at least quarterly,
and provides for the selection of authorized broker -dealers and investment managers.
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. As of September 30, 2022, the City's
investment portfolio contains certificates of deposit, government investment pools, and
obligations of U.S. government agencies. Each of the City's investments are in compliance with
the PFIA.
In accordance with applicable statutes, the City has a depository contract with an area bank
(depository) providing for interest rates to be earned on deposited funds and for banking charges
the City incurs for banking services received. The City may place funds with the depository in
interest and non -interest -bearing accounts. State law provides that collateral pledged as security
for bank deposits must have a fair 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 percent of fair value of principal and accrued interest.
40
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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, demand
deposits with financial institutions, and short-term investments, which have maturities at purchase
of less than three months, consisting mainly of certificates of deposits. 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. The City's investments primarily consist of government investment pools.
The City's investments in government pools are measured at net asset value. 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.
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 cash equivalents and investments at
year-end:
Total Cash and
Investments
Cash and cash equivalents $ 176,361,477
Temporary Investments
Texas CLASS 118,302,590
TexSTAR 9,342,017
LOGIC 63,120,387
FAMC discount note 14,938,454
Certificates of deposit 2,206,000
$ 384,270,925
At September 30, 2022, the City's demand deposits were covered federal depository insurance,
and pledged collateral held by the City's agent in the City's name.
The Federal Agricultural Mortgage Corporation (FAMC) discount note is valued based on price
data obtained from observed transactions and market price quotations from broker dealers and/or
pricing vendors. 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 loss on
temporary investments
$ 1,960,851
(327,340)
$ 1,633,511
The City's investments' fair value measurements are as follows at September 30, 2022.
41
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Investments by fair value level:
FAMC discount note
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)
$ 14,938,454 $ $ 14,938,454
$
The City's investments in government pools include deposits in TexSTAR, Texas CLASS and
LOGIC. 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. The investments in
government pools are measured at NAV and are exempt from reporting in the fair value hierarchy.
TexSTAR was created in April 2002 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.
LOGIC is a local government investment pool organized under the authority of the Interlocal
Cooperation Act, chapter 791, of the Texas Government Code, and the Public Funds Investment
Act, chapter 2256, of the Texas Government Code. LOGIC's investment objectives are to seek
preservation of principal, liquidity, and current income through investment in a diversified portfolio
of short-term marketable securities. Since September 2005, J.P. Morgan Investment
Management Inc. (JPMIM) has served as investment adviser to LOGIC. JPMIM is an SEC
registered investment adviser and an affiliate of J.P Morgan Asset Management (JPMAM), which
is the marketing name for the asset management business of JPMorgan Chase & Co. Hilltop
Securities Inc. (Hilltop Securities) and JPMIM serve as co -administrators to LOGIC and Hilltop
Securities provides administrative, participant support, and marketing services. Hilltop Securities
is a registered broker dealer, member of FINRA/SIPC, which provides financial advisory and
investment banking services to governmental entities across the county. JPMorgan Chase Bank
N.A. provides custodial services.
42
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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 $ 118,302,590 110
TexSTAR 9,342,017 43
LOGIC 63,120,387 63
FAMC discount note 14,938,454 146
Certificates of deposit 2,206,000 154
$ 207,909,448
Portfolio weighted average maturity 96
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 percent of the City's total investment portfolio will be invested
in a single security type. If the City elects to participate in more than one investment pool, the total
percent invested in all pools shall not exceed the maximum percent allowed.
As of September 30, 2022, the City's investment portfolio consisted of the following:
Percentage of
Total Investment
Investments Portfolio
Temporary Investments
Texas CLASS $ 118,302,590 58%
TexSTAR 9,342,017 4%
LOGIC 63,120,387 30%
FAMC discount note 14,938,454 7%
Certificates of deposit 2,206,000 1 %
$ 207,909,448 100%
Credit Risk
The Federal Agricultural Mortgage Corporation discount note was rated AA+ by Standard & Poor's
and Aaa by Moody's Investors Service.
43
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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 (Restated — Note 19)
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 $ 18,579,022
Customer deposits 4,060,768
Capital improvements 143,589,128
Total $ 166,228,918
Note 3 — Receivables
Receivables at September 30, 2022, consisted of the following:
Primary Government:
Governmental Funds:
Pearland
Economic Tax Increment Development Non -Major
Debt Capital Development Reinvestment Authority of Governmental
General Fund Service Fund Projects Fund Fund Zone #2 Pearland Funds
Total
Receivables
Property taxes,
including penalties
and interest $ 494,045 $ 782,560 $ $ $ - $ - $ $ 1,276,605
UHCL receivable 4,545,405 - - 4,545,405
Sales and other taxes 6,240,246 2,463,307 382,614 9,086,167
Interest 37,506 6,790 44,296
Grants - 9,301,725 - - - 1,717,181 11,018,906
Other 529,109 - 2,703,577 2,849,429 50,529 1,450 1,502,470 7,636,564
Gross receivable 7,300,906 5,327,965 12,005,302 5,319,526 50,529 1,450 3,602,265 33,607,943
Less allowance for
uncollectibles (13,575) (20,204) (33,779)
Net receivable $ 7,287,331 $ 5,307,761 $ 12,005,302 $ 5,319,526 $ 50,529 $ 1,450 $ 3,602,265 $ 33,574,164
44
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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 FY, 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
UHCL receivable - principal 4,483,709
Street assessments 1,486,878 -
Other 2,881,601 1,622,513
Grants and revenues prior to meeting all eligibility requirements - 6,436,990
Proprietary Funds:
$ 10,088,016 $ 8,059,503
Governmental
Business -type Activities - Enterprise Funds Activities
Water and Solid Waste Internal
Sewer Fund Fund Total Service Fund
Receivables
Customer accounts
Billed $ 5,468,316 $ 809,941 $ 6,278,257 $ 67,825
Unbilled 4,744,908 - 4,744,908
Interest 195,232 - 195,232
Allowance for
uncollectibles (1,242,797) (288,739) (1,531,536)
$ 9,165,659 $ 521,202 $ 9,686,861 $ 67,825
City utility customers are billed on the basis of monthly cycle billings. At FY-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.
Note 4 — Capital Assets
A summary of changes in the primary government's capital assets for the year ended September 30,
2022, follows.
45
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Governmental Activities:
Capital assets, not being depreciated
Land
Construction in progress
Total capital assets, not being
depreciated
Capital assets, being depreciated
Infrastructure
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Total capital assets, being
depreciated
Less accumulated depreciation
Infrastructure
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Total accumulated depreciation
Total capital assets being
depreciated, net
Governmental activities capital assets, net
Business -type Activities:
Capital assets, not being depreciated
Land
Construction in progress
Total capital assets, not being
depreciated
Capital assets, being depreciated
Water and sewer system
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Contractual water rights
Total capital assets, being
depreciated
Less accumulated depreciation
Water and sewer system
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Contractual water rights
Total accumulated depreciation
Total capital assets being
depreciated, net
Beginning
Balance, as
restated Increases Decreases Transfers Ending Balance
$ 34,529,903 $ - $ (2,852,284) $ 8,723,074 $ 40,400,693
133,092,012 54,852,113 - (54,920,147) 133,023,978
167,621,915 54,852,113 (2,852,284) (46,197,073) 173,424,671
1,123,860,182
145,787,598
30,014,563
10,051,442
67,338
1,272,742
(489,922)
292,075
45,904,998
1,124,219,595
191,692,596
30,797,383
10,051,442
1,309,713,785
1,340,080
(502,690,516) (36,510,894)
(51,021,397) (4,379,804)
(19,669,229) (2,672,766)
(7,576,337) (806,289)
(580,957,479) (44,369,753)
(489,922) 46,197,073 1,356,761,016
5,050
484,872
489,922
(539,196,360)
(55,401,201)
(21,857,123)
(8,382,626)
0 (624,837,310)
728,756,306 (43,029,673)
0 46,197,073 731,923,706
$ 896,378,221 $ 11,822,440 $ (2,852,284) $ 0 $ 905,348,377
Beginning
Balance, as
restated
Increases
Decreases
Transfers
Ending Balance
$ 3,877,031 $ - $
120,853,567 118,499, 397
124,730,598 118,499, 397
$ - $
(9,434,234)
3,877,031
229,918,730
0 (9,434,234) 233,795,761
456,042,761
32,042,833
5,491,308
153,050
34,511,428
(106,904)
9,434,234
465,476,995
32,042,833
5,384,404
153,050
34,511,428
528,241,380
0
(106,904)
9,434,234 537,568,710
(161,069,275) (14,533,575)
(9,945,103) (734,929)
(4,481,028) (387,361)
(131,865) (9,529)
(18,301,130) (1,375,068)
(193,928,401) (17,040,462)
334,312,979 (17,040,462)
103,373
103,373
(3,531)
(175,602,850)
(10,680,032)
(4,765,016)
(141,394)
(19,676,198)
0 (210,865,490)
9,434,234 326,703,220
Business -type activities capital assets, net $ 459,043,577 $ 101,458,935 $
(3,531) $ 0 $ 560,498,981
46
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Depreciation was charged to programs as follows:
Governmental activities
General government
Public safety
Public works
Community services
Parks and recreation
Business -type activities
Water and sewer
$ 2,214,865
2,446,369
38,098,012
28,842
1,581,665
44,369,753
17,040,462
Total depreciation expense, primary government $ 61,410,215
The City had active construction projects as of September 30, 2022. 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:
Project Description
Contract
Total
In Progress
Remaining
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
$ 32,347,976 $ 17,002,113
70,332,358 3,524,639
170,789,216 102,733,851
39,284,421 9,763,375
312,753,971 133,023,978
436,310,445 229,918,730
436,310,445
$ 15,345,863
66,807,719
68,055,365
29,521,046
179,729,993
206,391,715
229,918,730 206,391,715
Total Primary Government $ 749,064,416 $ 362,942,708 $ 386,121,708
Note 5 — Long-term Debt
A. Governmental Activity Debt
The City issues general obligation bonds and certificates of obligation, and upon annexation and
dissolution of Municipal Utility Districts, assumes unlimited tax and revenue obligations. The assumed
obligations were used to acquire and construct major capital facilities. General obligation bonds,
certificates of obligation, and assumed obligations from dissolved and annexed areas are for both
governmental and business -type activities. The bonds are reported in the Proprietary Funds only if
they are expected to be repaid from proprietary revenues. The general long-term bonds, certificates
of obligation and assumed obligations are paid through the Debt Service Fund from tax revenues.
47
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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.
In 2022, the City issued the tax exempt $23,530,000 Series 2022 Permanent Improvement Bonds
with maturities ranging from $2,189 to $1,342,849. The Series 2022 Permanent Improvement Bonds
were publicly sold and are repaid from the Debt Service Fund.
In 2022, the City issued the $10,295,000 Series 2022A Certificates Of Obligations with maturities
ranging from $390 to $299,040. The Series 2022A Certificates Of Obligations were publicly sold and
are repaid from the Debt Service Fund.
In 2022, the City issued the tax exempt $7,895,000 Series 2022B Certificates Of Obligations with
maturities ranging from $1,248,000 to $6,647,000. The Series 2022B Certificates Of Obligations were
publicly sold and are repaid from the General Debt Service Fund.
The following is a summary of changes in the City's total governmental long-term liabilities for the year
ended September 30, 2022. 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.
Beginning Ending Amounts Due
Balance Increases Decreases Balance in One Year
Governmental Activities
Bonds payable
General obligation bonds $ 260,840,000 $ 23,530,000 $ (18,755,000) $ 265,615,000 $ 19,525,000
Certificates of obligation 86,220,000 18,190,000 (2,750,000) 101,660,000 2,810,000
Sales tax revenue bonds 1,250,000 - (250,000) 1,000,000 250,000
Tax increment revenue bonds 71,985,000 - (8,175,000) 63,810,000 8,400,000
Unamortized discount/premium 38,709,617 2,953,542 (5,450,644) 36,212,515 -
Total bonds payable 459,004,617 44,673,542 (35,380,644) 468,297,515 30,985,000
Other liabilities
Financed purchases 388,599 121,146 (378,906) 130,839 130,839
Compensated absences 8,947,648 12,058,291 (11,871,857) 9,134,082 2,988,632
Total governmental activities
long-term liabilities $ 468,340,864 $ 56,852,979 $ (47,631,407) $ 477,562,436 $ 34,104,471
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.
A summary of the terms of general obligation bonds and certificates of obligation, as of
September 30, 2022, follows.
48
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
General Obligation Bonds
Permanent Improvement Bonds, Series 2013
Permanent Improvement and Refunding Bonds, Series 2014
Permanent Improvement Refunding Bonds, Series 2015
Permanent Improvement Bonds, Series 2015
Permanent Improvement Refunding Bonds, Series 2015A
Permanent Improvement and Refunding Bonds, Series 2016A
Permanent Improvement Refunding Bonds, Series 2016B
Permanent Improvement and Refunding Bonds, Series 2017
Permanent Improvement Bonds, Series 2018
Permanent Improvement and Refunding Bonds, Series 2019
Permanent Improvement Bonds, Series 2020
Permanent Improvement Refunding Bonds, Series 2020
Permanent Improvement Bonds, Series 2021
Permanent Improvement Bonds, Series 2022
Certificates Of Obligation
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 2019E
Certificates of Obligation, Series 2020A
Certificates of Obligation, Series 2020E
Certificates of Obligation, Series 2021A
Certificates of Obligation, Series 2021 B
Certificates of Obligation, Series 2022A
Certificates of Obligation, Series 2022E
Interest Debt
Original Issue Matures Rate (%) Outstanding
$ 9,315,000 2038 3.00-4.625 $ 6,540,000
40,410,000 2034 2.00-5.00 27,560,000
47,165,000 2032 2.00-5.00 5,330,000
8,495,000 2035 2.00-4.00 5,520,000
10,210,000 2029 2.00-3.00 32,275,000
33,275,000 2036 2.00-5.00 27,580,000
29, 840, 000 2031 2.00-5.00 16, 390, 000
59,600,000 2037 2.00-5.00 47,615,000
7,440,000 2038 2.00-5.00 5,950,000
15,755,000 2039 4.00-5.00 14,055,000
15,310,000 2040 3.00-5.00 13,780,000
27,220,000 2036 3.00-5.00 24,850,000
14,905,000 2041 2.00-5.00 14,640,000
23,530,000 2042 4.00-5.00 23,530,000
$ 265,615,000
$ 2,745,000 2038 3.00-4.625 $ 1,940,000
4,625,000 2034 2.00-4.00 2,780,000
4,860,000 2035 2.00-4.00 3,160,000
13,995,000 2036 2.00-4.00 9,795,000
6,205,000 2037 2.00-4.00 4,650,000
7,085,000 2038 2.00-5.00 5,665,000
4,465,000 2039 3.00-4.00 3,790,000
11,980,000 2030 5.00 11,980,000
8,540,000 2040 3.00-5.00 7,680,000
9,575,000 2030 5.00 9,575,000
7,010,000 2041 2.00 - 5.00 6,850,000
15,605,000 2041 5.00 15,605,000
10,295,000 2042 4.00-5.00 10,295,000
7,895,000 2042 5.00 7,895,000
$101,660,000
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,
2022, is as follows:
Pearland Economic Development Corporation
Sales Tax Revenue Refunding Bonds, Series 2016
Development Authority of Pearland
Tax Increment Revenue Bonds, Series 2013
Tax Increment Revenue Bonds, Series 2014
Tax Increment Revenue Bonds, Series 2015
Tax Increment Revenue Bonds, Series 2016
Tax Increment Revenue Bonds, Series 2017
Tax Increment Revenue Bonds, Series 2018
Tax Increment Revenue Bonds, Series 2019
Interest Debt
Original Issue Matures Rate (%) Outstanding
$ 14,640,000 2026 2.36 $ 1,000,000
$ 9,150,000 2029 3.77 $ 5,120,000
8,060,000 2029 2.72 3,930,000
66,030,000 2029 3.00 35,055,000
12,320,000 2029 2.22 7,185,000
8,555,000 2029 2.30 5,370,000
5,440,000 2029 3.41 3,995,000
4,255,000 2029 1.91 3,155,000
$ 63,810,000
$ 432,085,000
49
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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, 2022, the City did not have any
previously refunded bonds outstanding or outstanding refunding escrows.
Financed Purchases
The City has entered into financed purchase agreements for vehicles and equipment, the terms of
which expire in 2023. The following is a schedule by year of payments under the financed purchase
agreements as of September 30, 2022:
Fiscal Year
Financed Purchases
Principal Interest
2023 $ 130,839 $ 3,029
The annual requirements to amortize governmental activity general obligation bonds and certificates
of obligation outstanding at September 30, 2022, were as follows:
Fiscal Year
Governmental Activities
General Obligation Certificates of Obligation
Principal Interest Principal Interest
2023 $ 19,525,000 $ 11,489,376 $ 2,810,000 $ 4,491,419
2024 20,570,000 10,421,274 2,875,000 4,304,531
2025 21,325,000 9,409,936 2,905,000 4,200,231
2026 21,810,000 8,359,336 2,920,000 4,090,306
2027 22,670,000 7,275,711 2,945,000 3,974,231
2028-2032 107,580,000 21,281,666 63,370,000 12,241,253
2033-2037 36,290,000 6,494,416 16,055,000 2,971,913
2038-2041 15,845,000 1,311,481 7,780,000 628,619
$265,615,000 $ 76,043,196 $101,660,000 $ 36,902,503
The annual requirements to amortize blended component unit revenue bonds outstanding at
September 30, 2022, were as follows:
Fiscal Year
Governmental Activities
Sales Tax Revenue Bonds Tax Increment Revenue Bonds
Principal Interest Principal Interest
2023 $ 250,000 $ 29,500 $ 8,400,000 $ 1,739,934
2024 250,000 23,600 8,625,000 1,512,321
2025 250,000 17,700 8,860,000 1,278,086
2026 250,000 11,800 9,100,000 1,037,023
2027 9,350,000 788,940
2028-2031 - 19,475,000 804,212
$ 1,000,000 $ 82,600 $ 63,810,000 $ 7,160,516
50
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
B. Business -type Activity Debt
In 2022, the City issued the tax exempt $45,71
maturities ranging from $5,051 to $1,027,624.
publicly sold and are repaid from the Water and
The following is a summary of changes in the
year ended September 30, 2022:
Business -type Activities
Bonds payable:
Permanent improvement bonds
Certificates of obligation
Water and sewer revenue bonds
Unamortized discount/premium
Total bonds payable
Other liabilities:
Compensated absences
Total business -type activities
long-term liabilities
Beginning
Balance
0,000 Series 2022C Certificates Of Obligations with
The Series 2022C Certificates Of Obligation were
Sewer Fund.
City's total business -type long-term liabilities for the
Increases
Amounts Due
Decreases Ending Balance in One Year
$ 3,020,000 $ - $ (310,000) $
- 45,710,000 -
400,840,000 - (18,055,000)
16,917,141 3,904,013 (2,246,010)
420,777,141 49,614,013 (20,611,010) 449,780,144 20,030,000
983,854 1,395,445 (1,523,447) 855,852 261,574
2,710,000
45,710,000
382,785,000
18,575,144
$ 330,000
19,700,000
$ 421,760,995 $ 51,009,458 $ (22,134,423) $ 450,636,030 $ 20,291,608
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, 2022, is as follows:
Water and Wastewater Fund
Permanent Improvement Refunding Bonds, Series 2020
Certificates of Obligation, Series 2022C
Water and Sewer
Water and Sewer
Water and Sewer
Water and Sewer
Water and Sewer
Water and Sewer
Water and Sewer
Series 2017C
Water and Sewer
Water and Sewer
Water and Sewer
Water and Sewer
Series 2019B
Water and Sewer
Water and Sewer
Water and Sewer
Water and Sewer
Series 2021 B
System Revenue Bonds, Series 2014
System Revenue Bonds, Series 2016A
System Revenue Bonds, Series 2016B
System Revenue Bonds, Series 2016C
System Revenue Bonds, Series 2017A
System Revenue Bonds, Series 2017B
System Revenue and Refunding Bonds,
System Revenue Bonds, Series 2018A
System Revenue Bonds, Series 2018B
System Revenue Bonds, Series 2019A
System Revenue and Refunding Bonds,
System Revenue Bonds, Series 2020A
System Revenue Bonds, Series 2020B
System Revenue Bonds, Series 2021A
System Revenue and Refunding Bonds,
Original Issue
$ 3,020,000
45,710,000
9,210,000
8,880,000
11,100,000
50,100,000
10,225,000
12,025,000
60,970,000
8,650,000
19,050,000
21,000,000
34,590,000
107,600,000
7,190,000
75,000,000
Matures
2036 3.00-5.00 $ 2,710,000
2042 4.00-5.00 $ 45,710,000
2039
2036
2025
2045
2027
2047
2037
2048
2038
2049
2039
2050
2040
2051
Interest
Rate (%)
2.00-4.00
2.00-4.00
0.00-0.32
0.00-1.12
0.00-1.29
0.00-2.10
2.00-5.00
0.47-2.07
2.00-5.00
0.00-1.14
4.00-5.00
0.00-0.63
2.00-5.00
0.60-2.08
Debt
Outstanding
$ 7,440,000
6,210,000
3,700,000
39,105,000
5,175,000
10,325,000
50,520,000
7,490,000
15,235,000
18,900,000
28,685,000
100,420,000
6,470,000
73,275,000
10,370,000 2041 3.00-5.00 9,835,000
$ 382,785,000
51
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
The annual requirements to amortize Enterprise Fund revenue bonds and permanent improvement
bonds outstanding at September 30, 2022, were as follows:
Fiscal Year
Business -type Activities
Revenue Bonds Permanent Improvement bonds
Principal Interest Principal Interest
2023 $ 19,700,000 $ 7,371,640 $ 330,000 $ 127,250
2024 18,895,000 6,975,156 1,135,000 90,625
2025 19,165,000 6,607,433 1,245,000 31,125
2026 19,660,000 6,210,526
2027 19,980,000 5,717,370
2028-2032 93,835,000 20,941,626
2033-2037 73,865,000 11,195,651
2038-2042 52,070,000 5,792,249
2043-2047 43,070,000 2,953,426 - -
2048-2050 22,545,000 680,358
Fiscal Year
$ 382,785,000 $ 74,445,435 $ 2,710,000 $ 249,000
Business -Type Activities
Certificates of Obligation
Principal Interest
2023 $ $ 2,405,778
2024 2,405,000 2,165,200
2025 2,410,000 2,044,950
2026 2,405,000 1,924,450
2027 2,405,000 1,804,200
2028-2032 12,025,000 7,217,250
2033-2037 12,030,000 4,210,750
2038-2042 12,030,000 1,440,000
$ 45,710,000 $ 23,212,578
Note 6 — Interfund Transactions
A summary of interfund transfers, the purpose of which is to cover operational expenses/expenditures,
for the year ended September 30, 2022, is as follows:
Transfers in Transfers out
General Fund $ 5,197,799 $ 5,159,815
Debt Service Fund 2,621,118 -
Capital Projects Fund 6,103,531 1,319,801
Pearland Economic Development Corporation - 190,709
Tax Increment Reinvestment Zone #2 - 21,224,675
Development Authority of Pearland 21,224,675 -
Other Governmental Funds 439,265 1,612,172
Water and Sewer Fund 135,683,573 141,762,789
$ 171,269,961 $ 171,269,961
52
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Note 7 — Leases Payable
The City adopted GASB Statement No. 87, Leases, as of October 1, 2021. The primary objective of
this statement is to enhance the relevance and consistency of information about governments'
leasing activities. This statement establishes a single model for lease accounting based on the
principle that leases are financings of the right -to -use an underlying asset. Under this Statement, a
lessee is required to recognize a lease liability and an intangible right -to -use lease asset.
Governmental Activities
On October 1, 2021, the City recorded a 32-month lease as Lessee for the use of Quadient Postage
Meters. An initial lease liability was recorded in the amount of $13,232. As of year-end, the value of
the lease liability is $8,282. The City is required to make monthly fixed payments of $415. The lease
has an interest rate of 0.3280 percent. The lease asset is being amortized over the life of the lease.
The value of the right -to -use asset as of year-end of $13,232 with accumulated amortization of
$4,906 is included with Equipment on the Lease Class activities table found below.
On October 1, 2021, the City recorded a 15-month lease as Lessee for the use of FarrWest Gas
Detection Instrument. An initial lease liability was recorded in the amount of $10,966. As of
September 30, 2022, the value of the lease liability is $0. The City is required to make annual fixed
payments of $10,972. The lease has an interest rate of 0.2130 percent. The lease asset is being
amortized over the life of the lease. The value of the right -to -use asset as of year-end of $10,966
with accumulated amortization of $8,773 is included with Equipment on the Lease Class activities
table found below. The City has two extension options, each for 12 months.
On October 1, 2021, the City recorded a 24-month lease as Lessee for the use of Pearland Town
Center Office Space Rental - 11200 Broadway Street. An initial lease liability was recorded in the
amount of $40,362. As of year-end, the value of the lease liability is $20,454. The City is required to
make annual fixed payments of $40,391. The lease has an interest rate of 0.2480 percent. The lease
asset is being amortized over the life of the lease. The value of the right -to -use asset as of year-end
of $40,362 with accumulated amortization of $19,908 is included with Land on the Lease Class
activities table found below.
Governmental and Business -type Activities
On October 1, 2021, the City recorded a 17-month lease as Lessee for the use of Ricoh Multifunction
Devices. An initial lease liability was recorded in the amount of $50,456. As of year-end, the value of
the lease liability is $14,853. The City is required to make monthly fixed payments of $2,972. The
lease has an interest rate of 0.2130 percent. The lease asset is being amortized over the life of the
lease. The value of the right -to -use asset recorded in the governmental activities as of year-end of
$43,584 with accumulated amortization of $30,754 is included with Equipment on the Lease Class
activities table found below. The remainder is recorded in the business -type activities and is not
shown below.
Lessee activity for the current year and future maturities for the City's Governmental Activities for the
current year is as follows.
53
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Beginning
Balance, as Ending
restated Additions Reductions Balance
Lease Liability
Equipment
Ricoh Multifunction Devices $ 43,584 $ - $ 30,754 $ 12,830
Quadient Postage Meters 13,232 - 4,950 8,282
FarrWest Gas Detection Instrument 10,966 10,966
Total Equipment Lease Liability $ 67,782 $ 0 $ 46,670 $ 21,112
Land
Pearland Town Center Office Space
Rental - 11200 Broadway Street $ 40,362 $ - $ 19,908 $ 20,454
Total Land Lease Liability 40,362 19,908 20,454
Total Lease Liability $ 108,144 $ 0 $ 66,578 $ 41,566
Fiscal Principal Interest Total
Year Payments Payments Payments
2023 $ 38,248 $ 77 $ 38,325
2024 3,318 4 3,322
$ 41,566 $ 81 $ 41,647
Lessee activity for the current year and future maturities for the City's Business -Type Activities for
the current year is as follows:
Fiscal Principal Interest Total
Year Payments Payments Payments
2023 $ 2,023 $ 1 $ 2,024
Note 8 - Leases Receivable
As previously mentioned in Note 7, the City adopted GASB Statement No. 87, Leases, as of
October 1, 2021. Under this Statement, a lessor is required to recognize a lease receivable and a
deferred inflow of resources.
Governmental Activities
On October 1, 2021, the City recorded a 77-month lease as Lessor for the use of T-Mobile Water
Tower Lease - 2529 Cullen Blvd. An initial lease receivable was recorded in the amount of $203,896.
As of year-end, the value of the lease receivable is $174,521. The lessee is required to make annual
fixed payments of $32,308. The lease has an interest rate of 0.8040 percent. The value of the
deferred inflow of resources as of year-end was $172,147, and the City recognized lease revenue of
$31,748 during the FY. The lessee has four extension options, each for 60 months.
On October 1, 2021, the City recorded a 42-month lease as Lessor for the use of Clear Wireless
Water Tower Lease - 2838 McLean Rd. An initial lease receivable was recorded in the amount of
$752,488. As of year-end, the value of the lease receivable is $724,120. The lessee is required to
54
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
make monthly fixed payments of $30,453. The lease has an interest rate of 0.4750 percent. The
value of the deferred inflow of resources as of year-end was $540,520, and the City recognized lease
revenue of $211,968 during the FY. The lessee has four extension options, each for 60 months.
Lessor activity for the current year and future maturities for the City's Governmental Activities for the
current year is as follows:
Lease Receivable
Infrastructure
Clear Wireless Water Tower Lease -
2838 McLean Rd.
T-Mobile Water Tower Lease -
2529 Cullen Blvd.
Total Infrastructure Lease
Receivable
Total Lease Receivable
Deferred Inflow of Resources
Infrastructure
Clear Wireless Water Tower Lease -
2838 McLean Rd.
T-Mobile Water Tower Lease -
2529 Cullen Blvd.
Beginning
Balance, as Ending
restated Additions Reductions Balance
$ 752,488 $
203,896
- $ 28,368 $ 724,120
29,375 174,521
$ 956,384 $ 0 $ 57,743 $ 898,641
$ 956,384 $ 0 $ 57,743 $ 898,641
Beginning
Balance, as Ending
restated Additions Reductions Balance
$ 752,488 $ - $ 211,968 $ 540,520
203,896
31,749 172,147
Total Infrastructure Deferred Inflow of
Resources $ 956,384 $ 0 $ 243,717 $ 712,667
Total Deferred Inflow of Resources $ 956,384 $ 0 $ 243,717 $ 712,667
Fiscal Principal Interest
Year Payments Payments Total Payments
2023 $ 181,799 $ 5,858 $ 187,657
2024 396,636 3,077 399,713
2025 247,275 1,200 248,475
2026 35,776 586 36,362
2027 37,155 299 37,454
$ 898,641 $ 11,020 $ 909,661
55
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Note 9 — Fund Balance/Net Position
Fund Balance Deficits
The following funds reported deficit fund balances as of September 30, 2022:
Nonmajor Governmental Funds:
Court Technology $ 605
Grant Fund 3,361,449
U of H Fund 27,299
Proprietary Funds:
Solid Waste $ 137,517
Note 10 — 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 FY by City Ordinance,
and MissionSquare Retirement is the plan record keeper. 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 City does not contribute to the plan. 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 11 — Employee Retirement System
Texas Municipal Retirement System
Plan Description and Provisions
The City participates as one of 901 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 annual comprehensive 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
56
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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 percent 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 percent of the employee's accumulated contributions.
A summary of plan provisions for the City are as follows:
Plan Year
2020
Employee deposit rate 7.00%
Matching ratio (City to employee) 2 to 1
Years required for vesting 5
Service requirement eligibility 60/5, 0/20
(expressed as age/years of service)
Updated service credit
Annuity increase (to retirees)
100% Repeating,
Transfers
70% of CPI Repeating
At the December 31, 2021, valuation and measurement date, the following employees were
covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 301
Inactive employees entitled to but not yet receiving benefits 388
Active employees 779
Total 1,468
Contributions
The contribution rates for employees in TMRS are either 5 percent, 6 percent, or 7 percent of
employee gross earnings, and the City matching percentages are either 100 percent, 150 percent,
or 200 percent, 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 percent of their annual gross earnings during
the FY. For FY 2022, the City's contribution rate was 13.10 percent for the months in 2021 and
12.94 percent for the months in 2022. The City's contributions to TMRS for the year ended
September 30, 2022, were $7,989,951 and were equal to the required contributions.
57
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Net Pension Liability
The City's Net Pension Liability (NPL) was measured as of December 31, 2021, 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, 2021, actuarial valuation was determined using
the following actuarial assumptions:
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 are 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 are used with a four-year set -forward for males and a three-year set -forward for
females. In addition, a 3.5 percent and 3.0 percent 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.
The actuarial assumptions were developed primarily from the actuarial investigation of the
experience of TMRS over the four-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
post -retirement 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. The target allocation and best estimates of real rates of return for
each major asset class in FY 2022 are summarized in the following table.
58
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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
35.00%
6.00%
20.00%
12.00%
12.00%
5.00%
10.00%
100.00%
7.55%
2.00%
5.68%
7.22%
6.85%
5.35%
10.00%
The discount rate used to measure the Total Pension Liability was 6.75 percent. 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
Balances at October 1, 2021
Changes for the year
Service cost 9,811,113
Interest 12,984,066
Difference between expected and
actual experience 2,320,691
Contributions — employer Contributions — employee
Net investment income
Benefit payments, including refunds
of employee contributions
Administrative expenses
Other changes
Net changes 19,136,976
Balances at September 30, 2022
(5,978,894)
$ 209,577,398
Plan Fiduciary
TPL (a) Net Position (b)
NPL
(a) - (b)
$ 190,440,422 $ 170,029,694
7,623,084
4,073,416
22,200,809
$ 20,410,728
9,811,113
12,984,066
2,320,691
(7,623,084)
(4,073,416)
(22,200,809)
(5,978,894)
(102,560) 102,560
702 (702)
27,816,557 (8,679,581)
$ 197,846,251 $ 11,731,147
The following presents the net pension liability of the City, calculated using the discount rate of
6.75 percent, 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 percent) or 1-percentage-point higher
(7.75 percent) than the current rate.
59
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
1% Decrease
(5.75%)
Current Single Rate
Assumption (6.75%)
1 % Increase
(7.75%)
Net Pension Liability (Asset) $ 48,008,502 $ 11,731,147 $ (17,338,791)
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 at tmrs.com.
Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to
Pensions
For the year ended September 30, 2022, the City recognized pension expense of $4,608,703.
At September 30, 2022, the City reported deferred outflows and inflows of resources related to
pensions from the following sources:
Differences between expected and
actual economic experience
Changes in actuarial assumptions
Difference between projected and actual
pension plan investment earnings
Contributions subsequent to the
measurement date
Deferred Deferred
Outflows of Inflows of
Resources Resources
$ 2,544,455 $
424,233
5,786,824
11,339,896
Total $ 8,755,512 $ 11,339,896
Deferred outflows of resources related to pensions resulting from contributions subsequent to the
measurement date of $5,786,824 will be recognized as a reduction of the net pension liability for
the measurement year ended December 31, 2022 (i.e. recognized in the City's financial
statements at September 30, 2023). 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,
2023 $ (1,328,683)
2024 (3,818,380)
2025 (1,720,406)
2026 (1,655,555)
2027 151,816
Total $ (8,371,208)
60
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Note 12 — 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
$ 2,158,946 $ 4,884,940 $ 7,043,886
527,357
221,942
253,305
1,010,778 1,538,135
2,138,079
608,745
2,360,021
862,050
TMRS Supplemental Death Benefits Fund
Benefit Plan Description
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. No assets are accumulated in a trust that meets the criteria of paragraph 4
of GASB Statement No 75.
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
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, 2021 was as follows:
Inactive employees currently receiving benefits 225
Inactive employees entitled to but not yet receiving benefits 111
Active employees 779
1,115
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 0.11 percent 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
61
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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 1.84 percent based on the
20-Year Municipal GO AA Index rate published by bondbuyer.com is used as of the measurement
date of December 31, 2021.
Actuarial Assumptions
The City's total OPEB liability was measured at December 31, 2021, and was determined by an
actuarial valuation as of that date using the following actuarial assumptions.
Valuation Date: December 31, 2021
Methods and Assumptions:
Inflation: 2.50 percent
Salary Increases: 3.50 percent to 11.50 percent, including inflation
Discount rate: 1.84 percent. The discount rate was based on the
Fidelity Index's "20-Year Municipal GO AA Index" rate
as of December 31, 2021.
Retirees' share of benefit related costs: $0
Administrative expenses: All administrative expenses are paid through the
Pension Trust and accounted for under reporting
requirements under GASB Statement No. 68.
Mortality rates — service retirees: 2019 Municipal Retirees of Texas Mortality Tables.
The rates are projected on a fully generational basis
with Scale UMP.
Mortality rates — disabled retirees: 2019 Municipal Retirees of Texas Mortality Tables
with a four-year set -forward for males and a three-year
set -forward for females. In addition, a 3.5 percent and
3.0 percent 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.
Other Information
The actuarial assumptions used in the December 31, 2021, valuation were based on the results of
an actuarial experience study for the period December 31, 2014 to December 31, 2018.
62
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Changes in the Total OPEB Liability
Balance as of October 1, 2021
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, 2022
Total OPEB
Liability
$ 1,963,865
139,660
40,441
(35,262)
73,519
(23,277)
$ 2,158,946
Sensitivity Analysis
The following presents the total OPEB liability of the employer, calculated using the discount rate of
1.84 percent, 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 (0.84 percent) or 1-percentage-point higher
(2.84 percent) 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 (.84%) Rate (1.84%) Rate (2.84%)
Total OPEB liability $ 2,701,242 $ 2,158,946 $ 1,745,236
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to OPEB Activity
For the year ended September 30, 2022, the City recognized OPEB expense of $253,305. As of
September 30, 2022, 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 $ 63,710 $ 177,678
Changes of assumptions 461,455 44,264
Benefit payments subsequent to the
measurement date 2,192
Total $ 527,357 $ 221,942
The $2,192 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, 2023. Amounts currently reported as deferred
outflows and deferred inflows of resources related to OPEB, excluding contributions subsequent to
the measurement date, will be recognized in OPEB expense as follows.
63
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Year Ending September 30
2023 $ 73,204
2024 73,204
2025 60,657
2026 52,784
2027 38,474
Thereafter 4,900
$ 303,223
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 percent 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, 2021, the actuarial valuation date, the
following employees were covered by the benefit terms:
Inactive employees currently receiving benefits 11
Inactive employees entitled to but not yet receiving benefits
Active employees 723
Total 734
Total OPEB Liability
The City's total OPEB liability of $4,884,940 was measured as of September 30, 2022, and was
determined by an actuarial valuation as of October 1, 2021.
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:
Measurement Date:
Actuarial Cost Method:
Amortization period (in years):
October 1, 2021
September 30, 2022
Entry Age Normal as a level percentage of pay
The expected remaining service of all employees
eligible for or currently receiving OPEB through the
OPEB plan
64
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Amortization method:
Discount Rate: (/)
Salary Increases: n,
Healthcare cost trend rates: ru
Straight line amortization
4.77 percent per annum, which includes inflation
3.00 percent average which includes inflation
11.87 percent initial medical trend rate for retirees
decreasing to an ultimate rate of 4.60 percent in the
year 2041
(i) An embedded inflation rate of 2.50 percent is included in this (these) rate(s)
Mortality rates were updated and are based upon the sex distinct PUB-210 headcount weighted
mortality improvement scale MP-2019.
Discount Rate
The discount rate of 4.77 percent 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, 2021
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, 2022
Total OPEB
Liability
$ 6,488,348
531,977
169,734
28,290
(2,206,085)
(127,324)
$ 4,884,940
Assumption Changes. For the FY ended September 30, 2022, the discount rate increased from
2.43 percent to 4.77 percent.
65
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
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
4.77 percent, 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 (3.77 percent) or 1-percentage-point higher
(5.77 percent) than the current rate:
1 % Decrease in Current 1 % Increase in
Discount Discount Discount
Rate (3.77%) Rate (4.77%) Rate (5.77%)
Total OPEB liability $ 5,432,970 $ 4,884,940 $ 4,398,771
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 (6.1 percent) or 1-percentage-point higher (8.1 percent) than the
current rate:
Current
Healthcare Cost
Trend Rates
1% Decrease Assumption 1% Increase
(6.1%) (7.1 %) (8.1 %)
Total OPEB liability $ 4,232,855 $ 4,884,940 $ 5,673,069
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to OPEB
For the year ended September 30, 2022, the City recognized OPEB expense of $608,745. At
September 30, 2022, 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
$ 128,135 $ 49,654
882,643 2,088,425
$ 1,010,778 $ 2,138,079
Amounts currently reported as deferred outflows and inflows of resources related to OPEB will be
recognized in OPEB expense as follows.
66
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Year Ending September 30
2023 $ (92,966)
2024 (92,965)
2025 (150,803)
2026 (165,254)
Thereafter (625,313)
Total $ (1,127,301)
Note 13 — 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, 2022, the following
balances were reported in the governmental fund balances:
Nonspendable Restricted Assigned Unassigned
Prepaids $ 29,590 $ $ $
General obligation
bonds - 3,436,146 -
Capital projects - 78,988,742 -
Economic development 52,788,316
TIRZdevelopment - 7,214,305 -
Tourism - 6,654,985 -
Court security - 60,713 -
Public safety 462,897
Parks and recreation - 1,251,006 -
Law enforcement
(seized funds) - 297,485 -
Park development - 705,501
Sidewalks - 64,157 -
Regional detention - 197,031 -
Traffic improvements - 330,489 -
Juvenile case
management - 1,117 -
Public -access television
broadcasting - 355,135 -
Unassigned - - 31,268,241
$ 29,590 $ 152, 808, 025 $ 0 $ 31, 268, 241
Note 14 — Commitments and Contingencies
Litigation and Other Contingencies
The City was involved in various lawsuits and arbitration proceedings at September 30, 2022. 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.
67
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Reimbursements Due to Developers/Business Assistance
Pursuant to the Local Government Code, the Economic Development Corporation offers incentives
to attract and retain businesses to the City. The following are the current incentives:
Current Incentives
Amounts Paid
Original Outstanding
Amount Prior Years Current Year Balance
Adient Medical $ 40,000 $ 10,000 $ $ 30,000
Base Pair 2017 60,000 45,000 - 15,000
Coastal Swim 54,200 - 54,200
Endress+Hauser 525,000 301,000 224,000
Graham Ventures - Code Ninja 638,000 - 638,000
H-Town HealthCare 70,000 17,500 17,500 35,000
Keystone 189,000 - 189,000
KS Management -Grant 2,663,000 1,775,340 295,890 591,770
KS Management -Sales Tax 600,000 127,025 29,814 443,161
Lonza Phase 2 750,000 750,000
M H I 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 76,000 40,000
$ 8,337,200 $ 2,932,865 $ 1,720,204 $ 3,684,131
Lower Kirby Urban Center Master Plan
One of the strategies of the Pearland Prosperity Strategic Plan is to implement plans to develop the
Lower Kirby Urban Center as Pearland's most intensive mixed -use employment, residential, and
entertainment district. The Lower Kirby Master Plan identified $48 million in priority construction
projects that include drainage, water, sewer, streets, traffic, sidewalks, and streetscape necessary to
facilitate development of the area. On March 10, 2014, the City entered into a Master Financing
Agreement with Lower Kirby Pearland Management District and Pearland Municipal Management
District which outlines the process for the City to advance funds to the District(s) in order to facilitate
the development. The City will be reimbursed from the District(s) from bond sales as the area is
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, 2022 of $3,465,780 relating to these LFA's.
68
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
3/10/2014
Detention Pond
Master Drainage Plan
Regional Drainage Plan
8/24/2015
South Spectrum PER
4/26/2016
TxDOT Ditch Acquisition
2/28/2017
South Spectrum West
5/8/2017
West Conveyance Pond
7/10/2017
288 Waterline and LK Park Improvements
5/8/2019
LK Regional Detention Property Acquisition
Lower Kirby
Pearland
Management
Cost District
$ 1,947,753 0.00% $
127,410 0.00%
183,031 0.00%
Subtotal
214,137 57.40%
400,000 73.00%
5,755,789 0.00%
277,000 0.00%
1,189,000 100.00%
32,097 0.00%
27.70%
30.80%
23.90%
- 40.20%
- 27.00%
- 21.30%
- 88.80%
1,000,000 0.00%
Pearland
Municipal
Management
District #1
$ 539,528
39,268
43,717
622,513
86,124
128,508
1,228,378
246,044
- 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 one Chapter 380 agreement in effect during the current FY with Kelsey-Seybold.
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 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 percent of the sales tax remitted by Kelsey and its vendors. The agreements with the City and
the PEDC require 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 $558,766 in sales tax incentives.
69
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Note 15 — 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 FY-end September 30, 2022, 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, 2020 $ 499,228
Claims incurred 8,007,351
Claims payments (7,917,966)
Liability - September 30, 2021 588,613
Claims incurred 8,337,574
Claims payments (8,398,295)
Liability - September 30, 2022 $ 527,892
Note 16 — Financing Lease
The City has a 20-year agreement with the University of Houston Clear Lake (UHCL), which
commenced in July 2010. Under the agreement, the City issued certificates of obligation to
construct a facility to be used by and ultimately transferred to UHCL, with UHCL supporting most
of the related debt service payments on the certificates of obligation. The agreement provides
that UHCL pay the City for debt service and operating costs through March 1, 2029, when the
bond matures and the property transfers to UHCL.
70
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
The payments related to debt service to be received coincide with debt service payments the
City is required to make on the certificates of obligations that mature on March 1, 2029. At
September 30, 2022, the future minimum debt service payments to be received under the
agreement are as follows:
Fiscal year ending September 30, Payment
2023 $ 737,205
2024 716,401
2025 695,169
2026 669,142
2027 651,309
2028-2029 1,811,528
$ 5,280,754
Note 17 — Restatements
In the current FY, it came to management's attention that the City understated capital asset and
accumulated depreciation balances as recorded in the financial statements in FY 2021. As a
result, the beginning net position of the City's governmental activities, business -type activities,
and water and sewer fund has 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.
Additionally, in the current FY, 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 in FY 2021. As a result, the beginning net position of the City's business -
type activities, and solid waste fund has 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.
For the year ended September 30, 2021, these restatements result in a net decrease in the
change in net position of governmental activities of approximately $1.3 million, a net decrease in
the change in net position of business -type activities of approximately $2.5 million, a net decrease
in the change in net position of the water and sewer fund of approximately $2.4 million, and a net
decrease in the change in net position of the solid waste fund of $147 thousand.
Governmental
Activities
October 1, 2021 net position,
as previously reported $ 591,628,894
Restatement to correct beginning
balances for:
Capital assets, net of depreciation
(2,294,282)
October 1, 2021 net position,
as restated $ 589,334,612
71
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Business -Type Activities
Proprietary Fund
Water and Sewer Solid Waste Business -type
Fund Fund Activities
October 1, 2021 net position,
as previously reported $ 267,816,555 $ 665,427 $ 272,406,399
Restatement to correct beginning
balances for:
Capital assets, net of depreciation (4,575,756)
Receivables, net -
(4,575,756)
(500,114)
(4,575,756)
(500,114)
(500,114) (5,075,870)
October 1, 2021 net position,
as restated $ 263,240,799 $ 165,313 $ 267,330,529
Note 18 — Subsequent Events
Due to the overstated increase in property values as reported by Brazoria County, there was a
significant discrepancy of $10 million, leading the City of Pearland to face a shortfall in tax revenue
in the City's budgeted revenue for the year ending September 30, 2023. To fulfill its outstanding
obligations, the City had to reorganize a portion of its debt to reduce the debt requirement due in
fiscal year 2023. The City devised a strategy to offset $9.5 million through a defeasance and the
issuance of $4.42 million in refunding bonds to restructure a portion of the 2023 debt
requirements. On December 29, 2022, the City issued its $4,420,000 Permanent Improvement
Refunding Bonds, Series 2022 (the Bonds), through private placement, to refund Permanent
Improvement and Refunding Bonds, Series 2014, principal amounts of $3,165,000 and
Permanent Improvement and Refunding Bonds, Series 2016A, principal amounts of
$1,135,000. On January 19, 2023, the City defeased $8,900,000 of the City of Pearland, Texas
Certificates of Obligation, Series 2019B, with available City funds. The funds were deposited into
an escrow account that will be used to pay off the Series 2019B Bonds on March 1, 2026.
On December 20, 2022, the Development Authority of Pearland issued its $13,735,000 Tax
Increment Contract Revenue Bonds, Series 2022, with funds used to reimburse developers and
pay costs of issuance.
Note 19 — Restatements to Fiscal Year 2022 Financial Statements
Fiscal year 2022 has been restated for classification errors in the classification of cash, restricted
cash, investments and restricted investments in the Water and Sewer Fund and Business -type
activities.
72
CITY OF PEARLAND, TEXAS
Notes to Financial Statements (Continued)
September 30, 2022
Business -Type Activities
Proprietary Fund
Water and Sewer Business -type
Fund Activities
Cash and Cash Equivalents, as Previously Reported $ 57,777,345 $ 57,850,726
Restatement (49,233,732) (49,233,732)
Cash and Cash Equivalents, as Restated $ 8,543,613 $ 8,616,994
Restricted Cash and Cash Equivalents, as Previously Reported $ 67,336,358 $ 67,336,358
Restatement 49,233,732 49,233,732
Restricted Cash and Cash Equivalents, as Restated $ 116,570,090 $ 116,570,090
Investments, as Previously Reported $ 49,391,421 $ 49,391,421
Restatement (44,260,696) (44,260,696)
Investments, as Restated $ 5,130,725 $ 5,130,725
Restricted Investments, as Previously Reported $ 5,398,132 $ 5,398,132
Restatement 44,260,696 44,260,696
Restricted Investments, as Restated $ 49,658,828 $ 49,658,828
Fiscal year 2022 has been restated for errors in the classification of net position in the Water and
Sewer Fund and Business -type activities. There was no restatement to total net position.
Business -Type Activities
Proprietary Fund
Water and Sewer Business -type
Fund Activities
Net Investment in Capital Assets, as Previously Reported $ 139,301,257 $ 139,301,257
Restatement 77,359,452 77,359,452
Net Investment in Capital Assets, as Restated $ 216,660,709 $ 216,660,709
Net Position Restricted for Debt Service, As Previously Reported $ 13,087,664 $ 13,087,664
Restatement 5,491,358 5,491,358
Net Position Restricted for Debt Service, as Restated $ 18,579,022 $ 18,579,022
Net Position Restricted for Capital Projects, As Previously Reported $ 16,975,931 $ 16,975,931
Restatement (3,530,029) (3,530,029)
Net Position Restricted for Capital Projects, as Restated $ 13,445,902 $ 13,445,902
Unrestricted Net Position, as Previously Reported
Restatement
Unrestricted Net Position, as Restated
$ 94, 773, 873 $ 99, 584, 798
(79,320,781) (79,320,781)
$ 15,453,092 $ 20,264,017
73
Required Supplementary Information
(Unaudited)
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in
Fund Balances — Budget and Actual
General Fund
For the Year Ended September 30, 2022
Original Final
Budget Budget
Actual
Actual Over
(Under) Final
Budget
Revenues
Property taxes $ 31,109,155 $ 30,442,547 $ 29,937,664 $ (504,883)
Sales and use taxes 24,867,810 29,030,796 28,930,889 (99,907)
Franchise and other 6,375,698 6,444,298 6,622,237 177,939
License and permits 4,398,520 4,666,429 4,612,554 (53,875)
Fines and forfeitures 2,461,382 2,173,514 1,989,062 (184,452)
Charges for services 20,190,612 22,043,290 22,257,316 214,026
Investment earnings 98,435 98,435
Intergovernmental 4,548,225 4,548,225
Other 757,601 583,940 603,797 19,857
Total Revenues 90,160,778 95,384,814 99,600,179 4,215,365
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
Other Financing Sources (Uses)
Transfers in
Transfers out
Total Other Financing
Sources (Uses)
14,622,619
55,546,327
13,648,806
4,507,149
7,459,093
14,243,462
59,731,313
14,710,936
4,625,896
7,386,075
95,783,994 100,697,682
(5,623,216) (5,312,868)
9,441,314
(3,788,070)
9,616,314
(6,286,802)
5,653,244 3,329,512
14,545,343
58,350,556
12,479,013
4,585,041
6,588,930
179,299
7,543
769,296
301,881
(1,380,757)
(2,231,923)
(40,855)
(797,145)
179,299
7,543
769,296
97,505,021 (3,192,661)
2,095,158 7,408,026
5,197,799
(5,159,815)
(4,418,515)
1,126,987
37,984 (3,291,528)
Net Change in Fund Balances $ 30,028 $ (1,983,356) 2,133,142 $ 4,116,498
Fund Balances, Beginning of Year 32,524,401
Fund Balances, End of Year $ 34,657,543
74
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, 2022
Actual Over
Original Final (Under) Final
Budget Budget Actual Budget 2021
Revenues
Sales and use taxes $ 11,799,344 $ 11,799,344 $ 14,250,278 $ 2,450,934 $ 12,877,864
Charges for services - - 429,331
Investment earnings 100,000 100,000 224,376 124,376 35,327
Intergovernmental - 12,000 12,000 12,000
Other 18,000 18,000 1,214,079 1,196,079 6,000
Total Revenues 11,917,344 11,917,344 15,700,733 3,783,389 13,360,522
Expenditures
Current
Economic development 3,339,972 3,442,272 3,939,387 497,115 3,880,652
Debt Service
Principal 250,000 250,000 250,000 - 250,000
Interest and other charges 29,500 29,500 29,500 - 35,400
Capital Outlay 3,471,000 3,770,000 10,014,021 6,244,021 1,384,450
Total Expenditures 7,090,472 7,491,772 14,232,908 6,741,136 5,550,502
Excess (Deficiency) of Revenues
Over Expenditures 4,826,872
4,425,572 1,467,825
(2,957,747) 7,810,020
Other Financing Sources (Uses)
Proceeds from sale of assets - 1,154,819 1,154,819 7,173,996
Transfers out (17,670,209) (19,025,209) (190,709) 18,834,500 (181,628)
Total Other Financing
Sources (Uses) (17,670,209) (19,025,209) 964,110 19,989,319 6,992,368
Net Change in Fund Balance (12,843,337) (14,599,637) 2,431,935 17,031,572 14,802,388
Fund Balance, Beginning of Year 37,276,782 37,276,782 37,276,782 0 22,474,394
Fund Balance, End of Year $ 24,433,445 $ 22,677,145 $ 39,708,717 $ 17,031,572 $ 37,276,782
75
CITY OF PEARLAND, TEXAS
Notes to Required Supplementary Budget Information
For the Year Ended September 30, 2022
Budgetary Compliance
The City has complied with all material budget requirements for the year ended September 30,
2022.
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 FY-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 FY, 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 Chief Financial Officer and the City Manager prepare an annual
budget for the General Fund, Special Revenue Funds and Debt Service Fund for the ensuing FY,
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 FY, between 60 and 90 days prior to the
beginning of the FY. 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.
76
CITY OF PEARLAND, TEXAS
Schedule of Changes in Net Pension Liability and Related Ratios
Texas Municipal Retirement System
Last Eight Measurement Years
Measurement Year
2014 2015 2016 2017 2018 2019 2020 2021
Total Pension Liability
Service cost $ 5,118,873 $ 6,035,636 $ 6,756,543 $ 7,548,267 $ 7,869,363 $ 8,361,735 $ 9,324,466 $ 9,811,113
Interest 7,010,813 7,680,048 8,166,924 9,064,733 9,914,570 10,784,493 11,845,518 12,984,066
Difference between expected
and actual experience 241,450 846,833 1,159,738 33,887 41,404 249,817 847,255 2,320,691
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) (4,807,485) (5,978,894)
Net Change in Total Pension Liability 9,641,163 10,449,635 13,207,949 13,165,744 12,871,983 14,934,169 17,209,754 19,136,976
Total pension liability - beginning 98,960,025 108,601,188 119,050,823 132,258,772 145,424,516 158,296,499 173,230,668 190,440,422
Total pension liability - ending (a) $ 108,601,188 $ 119,050,823 $ 132,258,772 $ 145,424,516 $ 158,296,499 $ 173,230,668 $ 190,440,422 $ 209,577,398
Plan Fiduciary Net Position
Contributions- employer $ 4,339,785 $ 4,786,602 $ 5,253,253 $ 5,991,467 $ 6,225,163 $ 6,543,589 $ 7,258,507 $ 7,623,084
Contributions -employee 2,355,095 2,498,961 2,749,756 3,081,580 3,216,353 3,439,022 3,866,781 4,073,416
Net investment income 4,766,828 135,758 6,458,752 14,836,941 (3,818,135) 19,805,631 11,569,310 22,200,809
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) (4,807,485) (5,978,894)
Administrative expense (49,756) (82,673) (72,899) (76,869) (73,737) (111,780) (74,766) (102,560)
Other (4,091) (4,083) (3,927) (3,896) (3,853) (3,359) (2,917) 702
Net Change in Plan Fiduciary Net Position 8,677,888 3,526,503 11,509,679 20,348,080 592,437 24,258,904 17,809,430 27,816,557
Plan Fiduciary Net Position, Beginning 83,306,773 91,984,661 95,511,164 107,020,843 127,368,923 127,961,360 152,220,264 170,029,694
Plan Fiduciary Net Position, Ending (b) $ 91,984,661 $ 95,511,164 $ 107,020,843 $ 127,368,923 $ 127,961,360 $ 152,220,264 $ 170,029,694 $ 197,846,251
Net Pension Liability, Ending (a) - (b) $ 16,616,527 $ 23,539,659 $ 25,237,929 $ 18,055,593 $ 30,335,139 $ 21,010,403 $ 20,410,728 $ 11,731,147
Plan Fiduciary Net Position as a Percentage
of Total Pension Liability 84.70% 80.23% 80.92% 87.58% 80.84% 87.87% 89.28% 94.40%
Covered Payroll $ 33,615,923 $ 35,545,557 $ 39,282,225 $ 44,013,221 $ 45,939,075 $ 49,128,879 $ 55,239,728 $ 58,191,657
Net Pension Liability as a Percentage
of Covered Payroll 49.43% 66.22% 64.25% 41.02% 66.03% 42.77% 36.95% 20.16%
Notes to the Required Supplementary Information
(a) Amounts presented are for each measurement year, which end the preceding
December 31 of the City's FY-end.
(b) Ten years of data should be presented in this schedule, but data was unavailable prior to
2014.
77
CITY OF PEARLAND, TEXAS
Schedule of Contributions
Texas Municipal Retirement System
Last Ten FYs
Actuarially determined contribution
Contributions in relation to the actuarially
determined contribution
Contribution deficiency (excess)
Covered payroll
Contributions as a percentage of covered
payroll
Fiscal Year
2018
$ 6,072,762
6,072,762
44,772,623
2019 2020
2021 2022
$ 6,461,150 $ 6,818,604 $ 7,545,831 $ 7,989,951
6,461,150 6,818,604
7,545,831 7,989,951
48,297,918 51,414,583 57,237,508 61,538,157
13.56% 13.38% 13.26% 13.18% 12.98%
Fiscal Year
2013 2014 2015
2016 2017
Actuarially determined contribution $ 3,780,847
Contributions in relation to the actuarially
determined contribution 3,780,847
Contribution deficiency (excess) -
Covered payroll 28,876,260
Contributions as a percentage of covered
payroll 13.09%
$ 4,311,811 $ 4,600,419 $ 5,295,359 $ 5,924,405
4,311,811 4,600,419
30,580,987 34,650,598
14.10% 13.28%
5,295,359 5,924,405
Notes to the Required Pension System Supplementary Information
Valuation Date:
Notes:
39,566,838 43,703,166
13.38% 13.56%
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:
Other Information:
Notes:
Entry Age Normal
Level Percentage of Payroll, Closed
25 years
10 Year smoothed market; 12 percent soft corridor
2.50 percent
3.50 percent to 11.50 percent including inflation
6.75 percent
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.
There were no benefit changes during the year.
78
CITY OF PEARLAND, TEXAS
Schedule of Changes in the Total OPEB Liability and Related Ratios
Texas Municipal Retirement System Supplemental Death Benefits Fund
Last Five Measurement Years
Measurement Year
2017 2018 2019 2020 2021
Total OPEB Liability
Service cost $ 66,020 $ 82,690 $ 73,693 $ 110,479 $ 139,660
Interest 39,025 41,463 52,362 44,073 40,441
Difference between expected
and actual experience - 143,594 (224,466) (27,031) (35,262)
Change of assumptions 111,349 (99,775) 276,531 291,685 73,519
Benefit payments, including refunds of
employee contributions (4,401) (4,594) (4,913) (5,524) (23,277)
Net Change in Total OPEB Liability 211,993 163,378 173,207 413,682 195,081
Total OPEB Liability - Beginning 1,001,605 1,213,598 1,376,976 1,550,183 1,963,865
Total OPEB Liability - Ending $ 1,213,598 $ 1,376,976 $ 1,550,183 $ 1,963,865 $ 2,158,946
Covered -Employee Payroll $ 44,013,221 $ 45,939,075 $ 49,128,879 $ 55,239,728 $ 58,191,657
Total OPEB Liability as a Percentage
of Covered -Employee Payroll 2.76% 3.00% 3.16% 3.56% 3.71%
Notes to the Required Supplementary Information
Amounts presented are for each measurement year, which end the preceding December 31 of
the City's FY-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.
79
CITY OF PEARLAND, TEXAS
Schedule of Changes in the Total OPEB Liability and Related Ratios
City of Pearland Retirement Health Care Plan
Last Five Measurement Years
Measurement Year
2018 2019 2020 2021 2022
Total OPEB Liability
Service cost $ 456,161 $ 295,552 $ 364,519 $ 515,331 $ 531,977
Interest 240,852 157,119 167,755 140,612 169,734
Changes of benefit terms (2,314,150) -
Difference between expected
and actual experience 361,831 - (74,479) - 28,290
Change of assumptions 43,043 101,145 1,240,492 (203,273) (2,206,085)
Benefit payments, including refunds of
employee contributions (127,339) (66,167) (38,350) (39,277) (127,324)
Net Change in Total OPEB Liability (1,339,602) 487,649 1,659,937 413,393 (1,603,408)
Total OPEB Liability - Beginning 5,266,971 3,927,369 4,415,018 6,074,955 6,488,348
Total OPEB Liability - Ending $ 3,927,369 $ 4,415,018 $ 6,074,955 $ 6,488,348 $ 4,884,940
Covered -Employee Payroll $ 44,772,623 $ 48,297,918 $ 51,067,300 $ 54,267,466 $ 57,167,439
Total OPEB Liability as a Percentage
of Covered -Employee Payroll 8.77% 9.14% 11.90% 11.96% 8.54%
Notes to the Required Supplementary Information
Amounts presented are for each measurement year, which is the same as the City's FY-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-2018 to the
MP-2019 table. Also, the per capita claims costs and trend were updated to reflect recent
experience. For the FY ended September 30, 2022, the discount rate increased from 2.14 percent
to 2.43 percent, the mortality table has been updated to use the new PUB (10) 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 discount rate used under GASB Statement
No. 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.
80
Other Supplementary Information
Combining and Individual Fund Statements and Schedules
CITY OF PEARLAND, TEXAS
Nonmajor Governmental Funds
September 30, 2022
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.
81
CITY OF PEARLAND, TEXAS
Combining Balance Sheet — Nonmajor Governmental Funds
September 30, 2022
Assets
Cash and cash equivalents
Investments
Receivables (net of allowance for
uncollectibles, where applicable)
Prepaids and other assets
Total Assets
Liabilities
Accounts payable
Unearned revenue
Total Liabilities
Deferred Inflows of Resources
Unavailable revenue
Total Deferred Inflows of
Resources
Hotel/Motel Court City-wide Court Street Park Police
Tax Security Donation Technology Assessments Donation Seizure
$ 1,103,829 $ 61,681 $ 232,016 $ 502 $ 51 $ 1,251,381 $ 299,680
5,190,957 - -
382,614 1,486,878
29,590
$ 6,677,400 $ 61,681 $ 232,016 $ 502 $ 1,486,929 $ 1,251,381 $ 329,270
$ 22,415 $ 968 $ 1,035 $ 1,107 $ - $ 375 $ 2,195
22,415 968 1,035 1,107 0 375 2,195
1,486,878
0 0 0 0 1,486,878 0 0
Fund Balances
Nonspendable 29,590
Restricted for
Capital improvements -
Community development programs 6,654,985 60,713 - 1,251,006 -
Public safety - 230,981 297,485
Unassigned - (605) 51 29,590
Total Fund Balances 6,654,985 60,713 230,981 (605) 51 1,251,006 327,075
Total Liabilities and Fund
Balances $ 6,677,400 $ 61,681 $ 232,016 $ 502 $ 1,486,929 $ 1,251,381 $ 329,270
82
CITY OF PEARLAND, TEXAS
Combining Balance Sheet - Nonmajor Governmental Funds (Continued)
September 30, 2022
Total
Park and Traffic Nonmajor
Community Recreation Impact Juvenile Regional Educational Governmental
Safety Development Sidewalk Grant Improvement Management Detention TV U of H Funds
$ 231,916 $ 705,501 $ 64,157 $ 1,309,649 $ 330,489 $ 2,972 $ 197,031 $ 50,359 $ - $ 5,841,214
289,184 - 5,480,141
1,717,181 - - - 15,592 - 3,602,265
29,590
$ 231,916 $ 705,501 $ 64,157 $ 3,026,830 $ 330,489 $ 2,972 $ 197,031 $ 355,135 $ 0 $ 14,953,210
$ - $ - $ - $ 90,207 $ $ 1,855 $ - $ - $ 27,299 $ 147,456
- 6,298,072 - - - - 6,298,072
0 0 0 6,388,279 0 1,855 0 0 27,299 6,445,528
1,486,878
0 0 0 0 0 0 0 0 0 1,486,878
231,916
231,916
705,501 64,157
705,501 64,157
29,590
330,489 197,031 - 1,297,178
355,135 8,321, 839
1,117 - 761,499
(3,361,449) - (27,299) (3,359,712)
(3,361,449) 330,489
1,117 197,031
355,135 (27,299) 7,020,804
$ 231,916 $ 705,501 $ 64,157 $ 3,026,830 $ 330,489 $ 2,972 $ 197,031 $ 355,135 $ 0 $ 14,953,210
83
CITY OF PEARLAND, TEXAS
Combining Statement of Revenues, Expenditures and
Changes in Fund Balance - Nonmajor Governmental Funds
Year Ended September 30, 2022
Hotel/Motel Court City-wide Court Street Park Police
Tax Security Donation Technology Assessments Donation Seizure
Revenues
Sales and use taxes $ 1,518,308 $ - $ $ - $ - $ - $ -
Franchise fees - - - -
Fines and forfeitures 42,699 35,426 -
Charges for services - - 1,025,950
Investment earnings 46,617 95 355 51 2,029 467
Intergovernmental - - -
Other 25,242 - 76,195 15,661 67,043
Total Revenues 1,590,167 42,794 76,550 35,426 51 1,043,640 67,510
Expenditures
Current
General government 851,968 - 1,494
Public safety - - 15,287 - 43,445
Community services 31,056 43,756
Parks and recreation - - 114,850
Debt Service
Principal
Interest and other charges
Capital Outlay - - - - - - 60,111
Total Expenditures 851,968 31,056 16,781 43,756 0 114,850 103,556
Excess (Deficiency) of Revenues
Over Expenditures
738,199 11,738 59,769 (8,330) 51 928,790 (36,046)
Other Financing Uses
Transfers in - -
Transfers out (944) - (200,000)
Total Other Financing Uses (944) 0 0 0 0 (200,000) 0
Net Change in Fund Balances 737,255 11,738 59,769 (8,330) 51 728,790 (36,046)
Fund Balances, Beginning of Year 5,917,730 48,975 171,212 7,725 - 522,216 363,121
Fund Balances, End of Year $ 6,654,985 $ 60,713 $ 230,981 $ (605) $ 51 $ 1,251,006 $ 327,075
84
CITY OF PEARLAND, TEXAS
Combining Statement of Revenues, Expenditures and
Changes in Fund Balance - Nonmajor Governmental Funds (Continued)
Year Ended September 30, 2022
Total
Park and Traffic Nonmajor
Community Recreation Impact Juvenile Regional Educational Governmental
Safety Development Sidewalk Grant Improvement Management Detention TV U of H Funds
$ - $ - $ - $ $ - $ - $ - $ - $ - $ 1,518,308
- 247,362 247,362
- - 45,016 - 123,141
17,422 - - - - 1,043,372
1,656 100 561 4 307 2,895 55,137
- 3,210,715 - - - 3,210,715
611,390 8,865 195,724 1,000,120
0 613,046 17,522 3,219,580 561 45,020 196,031 250,257 0 7,198,155
18,084
539,667 - - - - - 1,411,213
795,840 288,065 - - 1,142,637
11,548 - 49,091 43,963 179,414
- 114,850
71,079 - 71,079
2,674 - 2,674
22,496 - 654,173 - - - - - 736,780
18,084 96,249 0 2,001,228 288,065 49,091 0 43,963 0 3,658,647
(18,084) 516,797 17,522 1,218,352 (287,504) (4,071) 196,031 206,294 0 3,539,508
250,000 189,265
(710,228) -
(701,000)
439,265
(1,612,172)
250,000 (710,228) 0 189,265 0 0 0 (701,000) 0 (1,172,907)
231,916 (193,431) 17,522 1,407,617 (287,504) (4,071) 196,031 (494,706) 2,366,601
898,932 46,635 (4,769,066) 617,993 5,188
1,000 849,841
(27,299) 4,654,203
$ 231,916 $ 705,501 $ 64,157 $ (3,361,449) $ 330,489 $ 1,117 $ 197,031 $ 355,135 $ (27,299) $ 7,020,804
85
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, 2022
Revenues
Property taxes
Investment earnings
Other
Total Revenues
Expenditures
Debt service
Principal
Interest and other charges
Intergovernmental
Total Expenditures
Original
Budget
Final
Budget
Actual
Actual Over
(Under) Final
Budget
2021
$ 39,350,712
747,205
40,097,917
$ 38,476,392
750,449
$ 37,763,000
41,091
735,447
39, 226, 841 38, 539, 538
21,815,000 21,815,000 21,505,000
14,929,004 14,929,004 14,817,653
7,591,760 7,289,085 7,289,088
44,335,764 44,033,089 43,611,741
Deficiency of Revenues
Over Expenditures (4,237,847)
Other Financing Sources (Uses)
Proceeds from issuance of debt
Premium on debt issued
Payment to escrow agent -
Transfers in 3,074,368
Total Other Financing Sources 3,074,368
Net Change in Fund Balance
Fund Balance, Beginning of Year
Fund Balance, End of Year
(1,163,479)
5,887,231
(4,806,248) (5,072,203)
3,074,368
$ (713,392) $ 38,374,498
41,091 8,425
(15,002) 755,469
(687,303) 39,138,392
(310,000) 21,030,000
(111,351) 14,685,250
3 7,116,216
(421,348) 42,831,466
(265,955) (3,693,074)
2,621,118
3,074,368 2,621,118
(1,731,880) (2,451,085)
5,887,231 5,887,231
(453,250)
27,220,000
5,402,641
(31,735,000)
2,530,075
(453,250) 3,417,716
(719,205)
(275,358)
6,162, 589
$ 4,723,752 $ 4,155,351 $ 3,436,146 $ (719,205) $ 5,887,231
86
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, 2022
Original Final
Budget Budget
Actual
Actual Over
(Under)
Final
Budget 2021
Revenues
Sales and use taxes $ 921,900 $ 1,100,000 $ 1,518,308 $ 418,308 $ 1,231,585
Investment earnings 6,000 5,200 46,617 41,417 3,834
Other - 40,903 25,242 (15,661) 12,385
Total Revenues 927,900 1,146,103 1,590,167 444,064 1,247,804
Expenditures
Current
General government 1,067,623 1,064,294 851,968 (212,326) 899,417
Total Expenditures 1,067,623 1,064,294 851,968 (212,326) 899,417
Excess (Deficiency) of Revenues
Over Expenditures (139,723)
81,809 738,199
656,390 348,387
Other Financing Uses
Transfers out - (944) (944) -
Total Other Financing Uses 0 0 (944) (944) 0
Net Change in Fund Balance (139,723) 81,809 737,255 655,446 348,387
Fund Balance, Beginning 5,917,730 5,917,730 5,917,730 - 5,569,343
Fund Balance, Ending $ 5,778,007 $ 5,999,539 $ 6,654,985 $ 655,446 $ 5,917,730
87
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, 2022
Original Final
Budget Budget
Actual
Actual Over
(Under)
Final
Budget 2021
Revenues
Fines and forfeitures $ 48,000 $ 32,500 $ 42,699 $ 10,199 $ 39,118
Investment earnings 4 6 95 89 3
Intergovernmental - - -
Total Revenues 48,004 32,506 42,794 10,288 39,121
Expenditures
Current
Community services 45,609 32,828 31,056 (1,772) 28,508
Total Expenditures 45,609 32,828 31,056 (1,772) 28,508
Net Change in Fund Balance 2,395 (322) 11,738 12,060 10,613
Fund Balance, Beginning 48,975 48,975 48,975 - 38,362
Fund Balance, Ending $ 51,370 $ 48,653 $ 60,713 $ 12,060 $ 48,975
88
CITY OF PEARLAND,
Schedule of Revenues,
Budget and Actual
Special Revenue Fund
Year Ended September
Revenues
Investment earnings
Other
Total Revenues
Expenditures
Current
General government
Public safety
Capital outlay
Total Expenditures
Net Change in Fund Balance
Fund Balance, Beginning
Fund Balance, Ending
TEXAS
Expenditures and Changes in Fund Balance -
- City -Wide Donation Fund
30, 2022
Actual Over
(Under)
Original Final Final
Budget Budget Actual Budget 2021
$ 100 $ 40 $ 355 $ 315 $ 15
29,967 37,797 76,195 38,398 42,478
30,067 37,837 76,550 38,713 42,493
- 1,494 1,494
50,459 46,500 15,287 (31,213)
50,459 46,500 16,781 (29,719)
(20,392) (8,663) 59,769 68,432
1,500
12,543
14,043
28,450
171,212 171,212 171,212 - 142,762
$ 150,820 $ 162,549 $ 230,981 $ 68,432 $ 171,212
89
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, 2022
Actual Over
(Under)
Original Final Final
Budget Budget Actual Budget 2021
Revenues
Fines and forfeitures $ 45,000 $ 28,000 $ 35,426 $ 7,426 $ 32,721
Investment earnings 100 1 - (1) -
Total Revenues 45,100 28,001 35,426 7,425 32,721
Expenditures
Current
Parks and Recreation 48,533 46,933 43,756 (3,177) 31,352
Total Expenditures 48,533 46,933 43,756 (3,177) 31,352
Net Change in Fund Balance (3,433) (18,932) (8,330) 10,602 1,369
Fund Balance, Beginning 7,725 7,725 7,725 - 6,356
Fund Balance, Ending $ 4,292 $ (11,207) $ (605) $ 10,602 $ 7,725
90
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, 2022
Revenues
Investment earnings
Other
Total Revenues
Actual Over
(Under)
Original Final Final
Budget Budget Actual Budget 2021
$
- $ 75,100 $
- 304,522
- $ (75,100) $
(304,522)
379,622 (379,622)
Expenditures
Parks and recreation
Net Change in Fund Balance - 379,622 (379,622) -
Fund Balance, Beginning - - -
Fund Balance, Ending $ 0 $ 379,622 $ 0 $ (379,622) $ 0
91
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, 2022
Actual Over
(Under)
Original Final Final
Budget Budget Actual Budget 2021
Revenues
Charges for services $ 107,550 $ 1,011,470 $ 1,025,950 $ 14,480 $ -
Investment earnings 250 215 2,029 1,814 53
Other 2,500 5,000 15,661 10,661 10,988
Total Revenues 110,300 1,016,685 1,043,640 26,955 11,041
Expenditures
Current
Parks and recreation 388,550 366,281 114,850 (251,431) 25,784
Total Expenditures 388,550 366,281 114,850 (251,431) 25,784
Other Financing Uses
Transfers out - (200,000) (200,000)
Total Other Financing Uses 0 0 (200,000) (200,000) 0
Net Change in Fund Balance (278,250) 650,404 728,790 78,386 (14,743)
Fund Balance, Beginning 522,216 522,216 522,216 - 536,959
Fund Balance, Ending $ 243,966 $ 1,172,620 $ 1,251,006 $ 78,386 $ 522,216
92
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, 2022
Actual Over
(Under)
Original Final Final
Budget Budget Actual Budget 2021
Revenues
Investment earnings $ 108 $ 40 $ 467 $ 427 $ 25
Other - 38,379 67,043 28,664 159,838
Total Revenues 108 38,419 67,510 29,091 159,863
Expenditures
Current
Public safety 37,200 97,789 43,445 (54,344) 75,333
Capital outlay 27,314 60,111 32,797 -
Total Expenditures 37,200 125,103 103,556 (21,547) 75,333
Net Change in Fund Balance (37,092) (86,684) (36,046) 50,638 84,530
Fund Balance, Beginning 363,121 363,121 363,121 - 278,591
Fund Balance, Ending $ 326,029 $ 276,437 $ 327,075 $ 50,638 $ 363,121
93
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, 2022
Revenues
Investment earnings
Other
Total Revenues
Expenditures
Current
Parks and recreation
Debt service
Original
Budget
Final
Budget
Actual
Actual Over
(Under)
Final
Budget 2021
$ 3,000 $
95,000
100 $
500,000
1,656 $ 1,556 $ 224
611,390 111,390 200,992
98,000 500,100 613,046 112,946 201,216
Principal 73,754 73,754
Interest and other charges
Capital outlay 199,660
Total Expenditures 73,754 273,414
71,079 (2,675)
2,674 2,674
22,496 (177,164)
96,249 (177,165)
Excess (Deficiency) of Revenues
Over Expenditures 24,246 226,686 516,797
Other Financing Uses
Transfers out
Total Other Financing Uses
Net Change in Fund Balance
Fund Balance, Beginning
Fund Balance, Ending
(385,000) (710,228) (710,228)
(385,000) (710,228) (710,228)
(360,754) (483,542) (193,431)
290,111
0
290,111
68,501
5,253
255,982
329,736
(128,520)
(117,000)
(117,000)
(245,520)
898,932 898,932 898,932 - 1,144,452
$ 538,178 $ 415,390 $ 705,501 $ 290,111 $ 898,932
94
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, 2022
Actual Over
(Under)
Original Final Final
Budget Budget Actual Budget 2021
Revenues
Charges for services $ 5,000 $ 17,422 $ 17,422 $ - $
Investment earnings 100 15 100 85 5
Total Revenues 5,100 17,437 17,522 85 5
Net Change in Fund Balance 5,100 17,437 17,522 85 5
Fund Balance, Beginning 46,635 46,635 46,635 - 46,630
Fund Balance, Ending $ 51,735 $ 64,072 $ 64,157 $ 85 $ 46,635
95
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, 2022
Actual Over
(Under)
Original Final Final
Budget Budget Actual Budget 2021
Revenues
Investment earnings $ $ - $ - $ - $
Intergovernmental 1,841,796 1,861,796 3,210,715 1,348,919 2,868,262
Other - - 8,865 8,865 68,494
Total Revenues 1,841,796 1,861,796 3,219,580 1,357,784 2,936,756
Expenditures
Current
General government 873,047 907,139 539,667 (367,472) 5,123,100
Public safety - 795,840 795,840 1,005,417
Community service - 11,548 11,548
Capital outlay 970,068 1,234,668 654,173 (580,495) 731,179
Total Expenditures 1,843,115 2,141,807 2,001,228 (140,579) 6,859,696
Excess (Deficiency) of Revenues
Over Expenditures (1,319) (280,011) 1,218,352 1,498,363 (3,922,940)
Other Financing Sources (Uses)
Transfers in 94,900 189,265 94,365
Transfers out - - - (1,000,000)
Total Other Financing Sources (Uses) 0 94,900 189,265 94,365 (1,000,000)
Net Change in Fund Balance (1,319) (185,111) 1,407,617 1,592,728 (4,922,940)
Fund Balance, Beginning (4,769,066) (4,769,066) (4,769,066) - 153,874
Fund Balance, Ending $ (4,770,385) $ (4,954,177) $ (3,361,449) $ 1,592,728 $ (4,769,066)
96
CITY OF PEARLAND,
Schedule of Revenues,
Budget and Actual
Special Revenue Fund
Year Ended September
Revenues
Investment earnings
Total Revenues
Expenditures
Public safety
Total Expenditures
Net Change in Fund Balance
Fund Balance, Beginning
Fund Balance, Ending
TEXAS
Expenditures and Changes in Fund Balance —
— Traffic Impact Improvement Fund
30, 2022
Original Final
Budget Budget
Actual Over
(Under)
Final
Actual Budget 2021
$ 100 $
100 $ 561 $ 461 $ 62
100 100
561 461 62
214,920 288,065 288,065
214,920 288,065 288,065
0
0
(214,820) (287,965) (287,504)
461
62
617,993 617,993 617,993 617,931
$ 403,173 $ 330,028 $ 330,489 $ 461 $ 617,993
97
CITY OF PEARLAND,
Schedule of Revenues,
Budget and Actual
Special Revenue Fund
Year Ended September
Revenues
Fines and forfeitures
Investment earnings
Total Revenues
Expenditures
Current
Community services
Total Expenditures
Net Change in Fund Balance
Fund Balance, Beginning
Fund Balance, Ending
TEXAS
Expenditures and Changes in Fund Balance —
— Juvenile Management Fund
30, 2022
Original Final
Budget Budget
$ 52,500 $ 40,000 $
100 -
52,600 40,000
Actual
45,016
4
45,020
51,984 47,580 49,091
51,984 47,580 49,091
616 (7,580) (4,071)
Actual Over
(Under)
Final
Budget
$ 5,016
4
2021
$ 41,484
1
5,020
1,511
1,511
3,509
41,485
61,413
61,413
(19,928)
5,188 5,188 5,188 - 25,116
$ 5,804 $ (2,392) $ 1,117 $ 3,509 $ 5,188
98
CITY OF PEARLAND,
Schedule of Revenues,
Budget and Actual
Special Revenue Fund
Year Ended September
Revenues
Investment earnings
Other
Total Revenues
Excess of Revenues
Over Expenditures
Other Financing Uses
Transfers out
Total Other Financing Uses
Net Change in Fund Balance
Fund Balance, Beginning
Fund Balance, Ending
TEXAS
Expenditures and Changes in Fund Balance —
— Regional Detention Fund
30, 2022
Original
Budget
$
Final
Budget
- $ 40 $
- 193,724
0
193,764
Actual
Actual Over
(Under)
Final
Budget 2021
307 $ 267 $
195,724 2,000
196,031
2,267
1,000
1,000
0
0
1,000
193,764
196,031
2,267
1,000
0 0 0 0
193,764 196,031 2,267 1,000
1,000 1,000
$ 1,000 $
194,764 $ 197,031 $ 2,267 $ 1,000
99
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, 2022
Actual Over
(Under)
Original Final Final
Budget Budget Actual Budget 2021
Revenues
Franchise fees $ 235,000 $ 220,000 $ 247,362 $ 27,362 $ 220,376
Investment earnings 1,500 500 2,895 2,395 638
Total Revenues 236,500 220,500 250,257 29,757 221,014
Expenditures
Current
Community services 159,500 111,500 43,963 67,537 28,486
Capital outlay - - - 234,687
Total Expenditures 159,500 111,500 43,963 67,537 263,173
Excess (Deficiency) of Revenues
Over Expenditures 77,000
109,000 206,294
97,294 (42,159)
Other Financing Uses
Transfers out (701,000) (701,000) (701,000) - (96,000)
Total Other Financing Uses (701,000) (701,000) (701,000) 0 (96,000)
Net Change in Fund Balance (624,000) (592,000) (494,706) 97,294 (138,159)
Fund Balance, Beginning 849,841 849,841 849,841 - 988,000
Fund Balance, Ending $ 225,841 $ 257,841 $ 355,135 $ 97,294 $ 849,841
100
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, 2022
Original Final
Budget Budget
Actual
Actual Over
(Under)
Final
Budget 2021
Other Financing Sources
Transfers in $ $ - $ - $ - $
Total Other Financing Sources 0 0 0 0 0
Net Change in Fund Balance
Fund Balance, Beginning
Fund Balance, Ending
(27,299) (27,299)
(27,299) - (27,299)
$ (27,299) $ (27,299) $ (27,299) $ 0 $ (27,299)
101
CITY OF PEARLAND, TEXAS
Schedule of Revenues, Expenditures and Changes in Fund Balance —
Budget and Actual
Capital Projects Fund
Year Ended September 30, 2022
Revenues
Investment earnings
Intergovernmental
Other
Total Revenues
Original
Budget
$ -
6,034,815
6,034,815
Expenditures
Current
Public works
Debt service
Interest and other charges -
Capital outlay 82,420,762
Total Expenditures 82,420,762
Final
Budget
$ -
6,034,815
Actual
$ 525,866
12,210,603
1,647,874
6,034,815 14,384,343
Actual Over
(Under) Final
Budget
$ 525,866
6,175, 788
1,647,874
2021
$ 116,614
16,449,841
1,878,426
8,349,528 18,444,881
1,478,204 1,478,204 1,113,038
458,153 458,153 446,467
82,420,762 46,098,920 (36,321,842) 74,232,429
82,420,762 48,035,277 (34,385,485) 75,791,934
Excess (Deficiency) of Revenues
Over Expenditures (76,385,947) (76,385,947) (33,650,934)
Other Financing Sources (Uses)
Proceeds from issuance of debt 104,176,902 104,176,902 41,720,000
Premium on debt issued - 2,953,542
Transfers in 2,912,000 2,912,000 6,103,531
Transfers out (1,319,801) (1,319,801) (1,319,801)
Total Other Financing Sources 105,769,101 105,769,101 49,457,272
Net Change in Fund Balance
Fund Balance, Beginning of Year
Fund Balance, End of Year
29,383,154 29,383,154 15,806,338
63,182,404 63,182,404 63,182,404
42,735,013 (57,347,053)
(62,456,902)
2,953,542
3,191, 531
37,520,000
7,977,121
3,552,158
(1,718,724)
(56,311,829) 47,330,555
(13,576,816) (10,016,498)
73,198, 902
$ 92,565,558 $ 92,565,558 $ 78,988,742 $ (13,576,816) $ 63,182,404
102
CITY OF PEARLAND, TEXAS
Internal Service Funds
September 30, 2022
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.
103
CITY OF PEARLAND, TEXAS
Combining Statement of Net Position - Internal Service Funds
September 30, 2022
Property
Liability Employee Health Motor
Insurance Benefits Claims Pool
Fund Fund Fund Fund Total
Assets
Current assets
Cash and cash equivalents $ 1,690,729 $ 274,386 $ 3,367,219 $ 3,887,576 $ 9,219,910
Investments - - - 10,085,759 10,085,759
Accounts receivable, net 58,142 909 7,877 897 67,825
Inventories - - - 481,997 481,997
Total current assets 1,748,871 275,295 3,375,096 14,456,229 19,855,491
Noncurrent Assets
Capital assets
Infrastructure - - - 67,338 67,338
Machinery and equipment - - - 8,069,542 8,069,542
Less accumulated depreciation - (2,011,224) (2,011,224)
Total non -current assets 0 0 0 6,125,656 6,125,656
Total assets $ 1,748,871 $ 275,295 $ 3,375,096 $ 20,581,885 $ 25,981,147
Deferred Outflows of Resources
OPEB $ 1,028 $ - $ - $ 19,957 $ 20,985
Pensions 5,330 - - 61,228 66,558
Total deferred outflows of resources 6,358 0 0 81,185 87,543
Liabilities
Current Liabilities
Accounts payable
Claims payable
Current portion of long-term liabilities:
Compensated absences
Total current liabilities
Noncurrent Liabilities
Total OPEB liability
Net pension liability
Total noncurrent liabilities
58,109
238,533 10,402 412,594 719,638
- 527,892 - 527,892
- - 49,584 49,584
58,109 238,533 538,294 462,178 1,297,114
1,538 20,191 21,729
5,068 - - 59,765 64,833
6,606 0 0 79,956 86,562
Total liabilities 64,715
Deferred Inflows of Resources
OPEB 1,447
Pensions 12,987
Total deferred inflows of resources 14,434
238,533 538,294
542,134 1,383,676
- - 24,601 26,048
- - 79,300 92,287
0
0 103,901 118,335
Net Position
Net investment in capital assets - - - 6,125,656 6,125,656
Unrestricted 1,676,080 36,762 2,836,802 13,891,379 18,441,023
Total net position $ 1,676,080 $ 36,762 $ 2,836,802 $ 20,017,035 $ 24,566,679
104
CITY OF PEARLAND, TEXAS
Combining Statement of Revenues, Expenses and
Changes In Net Position — Internal Service Funds
Year Ended September 30, 2022
Property
Liability Employee Health Motor
Insurance Benefits Claims Pool
Fund Fund Fund Fund
Total
Operating Revenues
Charges for services $ 2,861,285 $ - $ 10,036,788 $ 13,600,878 $ 26,498,951
Total operating revenues 2,861,285 0 10,036,788 13,600,878 26,498,951
Operating Expenses
Personnel services 48,336 - - 571,087 619,423
Supplies and materials - - - 13,610 13,610
Contractual services 2,291,693 10,220,915 135,480 12,648,088
Repairs and maintenance 110 - - 1,407,532 1,407,642
Other expenses - - 15,851 - 15,851
Depreciation and amortization - - - 1,165,409 1,165,409
Total operating expenses 2,340,139 0 10,236,766 3,293,118 15,870,023
Operating Income 521,146 0 (199,978) 10,307,760 10,628,928
Nonoperating Revenues (Expenses)
Investment earnings - 154 5,879 90,347 96,380
Loss on disposal of property - - (176,290) (176,290)
Total nonoperating revenues 0 154 5,879 (85,943) (79,910)
Change in Net Position 521,146 154 (194,099) 10,221,817 10,549,018
Net Position, Beginning
1,154,934 36,608 3,030,901 9,795,218 14,017,661
Net Position, Ending $ 1,676,080 $ 36,762 $ 2,836,802 $ 20,017,035 $ 24,566,679
105
CITY OF PEARLAND, TEXAS
Combining Statement of Cash Flows — Internal Service Funds
Year Ended September 30, 2022
Cash Flows from Operating Activities
Receipts from customers and users
Receipts from interfund charges for services
Payments to employees for salaries and benefits
Payments to suppliers and service providers
Net Cash Provided By (Used In) Operating Activities
Cash Flows from Capital and Related Financing
Activities
Acquisition and construction of capital assets
Proceeds from sale of assets
Net Cash Used In Capital And Related
financing activities
Cash Flows from Investing Activities
Interest on investments
Investment maturities (purchases), net
Net Cash Provided By (Used In) Investing Activities
Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year
Reconciliation of Operating Income to Net Cash
Provided By Operating Activities
Operating income (loss)
Items not requiring cash:
Depreciation
Changes in:
Accounts receivable, net
Inventories
Prepaids
Accounts payable and accrued liabilities
Total OPEB liability
Net pension liability
Deferred outflows - OPEB
Deferred inflows - OPEB
Deferred outflows - Pension
Deferred inflows - Pension
Net Cash Provided By (Used In) Operating Activities
Property
Liability
Insurance
Fund
Employee
Benefits
Fund
Health
Claims
Fund
Motor
Pool
Fund
Total
Internal
Service
Funds
$ 986,380 $
1,828,191
(49,925)
(2,235,270)
529,376
- $ 2,209,736
(386) 7,823,627
78,318 (10,294,621)
77,932
(261,258)
$ 7,049,554
6,826,427
(538,836)
(1,679,368)
11, 657, 777
$ 10,245,670
16,477,859
(588,761)
(14,130,941)
12,003,827
(1,259,044) (1,259,044)
(176,290) (176,290)
0 0 0 (1,435,334) (1,435,334)
154 5,879 90,347 96,380
- - (10,085,759) (10,085,759)
0 154 5,879 (9,995,412) (9,989,379)
529,376 78,086 (255,379) 227,031 579,114
1,161,353 196,300 3,622,598 3,660,545 8,640,796
$ 1,690,729 $ 274,386 $ 3,367,219 $ 3,887,576 $ 9,219,910
$ 521,146 $
$ (199,978) $ 10,307,760 $ 10,628,928
1,165,409 1,165,409
(46,714) (386) (3,425) 275,103 224,578
(371,443) (371,443)
- - (57,855) 19 (57,836)
56,533 78,318 298,262 433,113
(990) - (13,247) (14,237)
(5,786) (62,721) (68,507)
398 (400) (2)
1,062 19,959 21,021
153 (7,747) (7,594)
3,574 46,823 50,397
$ 529,376 $ 77,932 $ (261,258) $ 11,657,777 $ 12,003,827
106
CITY OF PEARLAND, TEXAS
Statistical Section (Unaudited)
September 30, 2022
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 108
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 118
These schedules contain information to help the reader assess the City's most significant local
revenue sources, sales and property tax.
Debt Capacity 132
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 138
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 140
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.
107
CITY OF PEARLAND, TEXAS
Net Position by Component
Last Ten FYs
Amounts in (000's)
(Accrual Basis of Accounting)
20131 2014 2015 2016 2017
Governmental Activities:
Net investment in capital assets $ 391,032 $ 397,346 $ 423,706 $ 439,923 $ 449,141
Restricted 43,413 52,209 53,883 60,640 60,310
Unrestricted 14,696 2,477 3,800 3,185 (5,045)
Total governmental activities
net position $ 449,141 $ 452,032 $ 481,389 $ 503,748 $ 504,406
Business -type activities:
Net investment in capital assets $ 165,915 $ 174,955 $ 186,819 $ 187,937 $ 205,827
Restricted 9,542 14,484 13,539 15,852 13,972
Unrestricted 16,704 15,612 12,815 13,351 6,972
Total business -type activities
net position $ 192,161 $ 205,051 $ 213,173 $ 217,140 $ 226,771
Primary government
Investment in capital assets $ 556,947 $ 572,301 $ 610,525 $ 627,860 $ 654,968
Restricted 52,955 66,693 67,422 76,492 74,282
Unrestricted 31,400 18,089 16,615 16,536 1,927
Total primary government
net position $ 641,302 $ 657,083 $ 694,562 $ 720,888 $ 731,177
1 Restated due to implementation of GASB 65 in FY 2014. FY 2013 has been restated for comparison
purposes.
108
CITY OF PEARLAND, TEXAS
Net Position by Component (Continued)
Last Ten FYs
Amounts in (000's)
(Accrual Basis of Accounting)
2018 2019 2020 2021 2022
Governmental Activities:
Net investment in capital assets $ 454,670 $ 488,077 $ 490,304 $ 493,671 $ 511,377
Restricted 67,263 56,491 44,928 45,162 48,792
Unrestricted (2,500) (734) 33,179 52,796 59,628
Total governmental activities
net position $ 519,433 $ 543,834 $ 568,411 $ 591,629 $ 619,797
Business -type activities:
Net investment in capital assets $ 210,674 $ 214,672 $ 213,081 $ 161,157 $ 216,661
Restricted 14,525 15,270 16,776 30,064 32,025
Unrestricted 20,663 29,806 39,015 81,185 20,264
Total business -type activities
net position $ 245,862 $ 259,748 $ 268,872 $ 272,406 $ 268,950
Primary government
Investment in capital assets $ 665,344 $ 702,749 $ 703,386 $ 654,828 $ 728,037
Restricted 81,788 71,761 61,704 75,226 80,817
Unrestricted 18,163 29,072 72,195 133,981 79,892
Total primary government
net position $ 765,295 $ 803,582 $ 837,283 $ 864,035 $ 888,746
109
CITY OF PEARLAND, TEXAS
Changes in Net Position
Last Ten FYs
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
20131
2014 2015 2016 2017
$ 13,358
28,944
31,690
3,807
9,524
17,411
10,534
$ 12,241
32,130
38,579
4,687
6,896
26,498
16,225
115,268 137,256
$ 17,189 $ 18,015 $ 20,121
33,179 38,933 44,343
45,894 46,449 49,221
3,641 3,711 5,107
3,731 4,820 8,823
26,159 31,330 31,293
15,569 15,946 14,422
145,362 159,204 173,330
31,289 32,444 34,266 37,941
8,324 6,664 6,417 6,833
39,613 39,108 40,683 44,774
41,475
7,059
48,534
$ 154,881 $ 176,364 $ 186,045 $ 203,978 $ 221,864
$ 6,326 $ 6,637 $ 7,624 $ 8,547 $ 9,518
7,410 2,793 4,110 4,276 3,949
3,096 322 338 320 1,395
3,264 7,375 7,771 8,520 8,026
2,209 2,290 2,412 2,218 2,001
414 430 1,209 13 3,886
44 440 747 2,595
603 434 294 -
1,388 7,612 4,589 11,123 12,459
108 337 216 - 575
182 474 1,586 -
180
52,921
29,269
36,440 24,636 10,107
78,145 58,413 67,336 62,248
29,008 28,929
8,175
7,008
30,201 43,677
6,637 6,945
2,512 30
16,273 17,677 13,177 4,094
53,456 53,614 52,527 54,746
51,916
51,544
6,549
2,027
60,120
$ 131,601 $ 112,027 $ 119,863 $ 116,994 $ 112,036
1 Restated due to implementation of GASB 65 in FY 2014. FY 2013 has been restated for comparison
purposes.
110
CITY OF PEARLAND, TEXAS
Changes in Net Position (Continued)
Last Ten FYs
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
2018 2019 2020 2021 2022
$ 20,360 $ 21,249 $ 25,504 $ 27,596 $ 34,580
43,275 47,948 51,031 53,503 52,440
53,271 46,631 44,862 48,115 33,363
4,509 4,616 4,383 4,465 4,834
7,194 7,683 8,197 6,799 8,041
29,521 33,470 28,683 30,653 39,101
14,441 14,017 14,042 13,604 13,238
172,571 175,614 176,702 184,735 185,597
41,683 39,413 45,055 44,654 48,592
7,441 7,752 7,930 8,094 7,158
49,124 47,165 52,985 52,748 55,750
$ 221,695 $ 222,779 $ 229,687 $ 237,483 $ 241,347
General government $ 10,414 $ 10,826 $ 12,424 $ 15,425 $ 17,816
Public safety 3,777 4,413 4,772 5,048 5,746
Public works 253 1,379 113 157 186
Community services 6,566 6,888 6,100 6,090 5,732
Parks and recreation 2,766 2,328 992 1,090 1,614
Economic development 3,503 1,951 460 445 -
Operating grants and contributions
General government - 6,609 1,693 5,740
Public safety 11 -
Public works 5,884 8,765 14,164 17,584 14,008
Community services 232 239 - 729 368
Parks and recreation - - - -
Economic development - - - -
Capital grants and contributions
General government - - - - -
Public safety - - - - -
Public works 19,241 16,678 7,148 1,876
Parks and recreation - - - -
Total governmental activities program revenues 52,647 53,467 52,782 50,137 51,210
Business -type activities
Charges for services
Water and sewer 55,593 55,696 54,710 52,649 55,352
Solid waste 7,842 8,621 7,755 8,064 6,855
Operating grants and contributions
Water and sewer 1,497 225 - 35
Capital grants and contributions
Water and sewer 4,613 4,113 1,456 1,007
Total business -type activities program revenues 68,048 69,927 64,146 61,720 62,242
Total primary government program revenues $ 120,695 $ 123,394 $ 116,928 $ 111,857 $ 113,452
111
CITY OF PEARLAND, TEXAS
Changes in Net Position (Continued)
Last Ten FYs
Amounts in (000's)
(Accrual Basis of Accounting)
Net (Expense)/Revenue
Governmental activities
Business -type activities
Total primary government net expense
20131 2014 2015 2016 2017
$ (37,123) $ (78,843) $ (78,026) $ (96,956) $ (121,414)
13,843 14,506 11,844 9,972 11,586
$ (23,280) $ (64,337) $ (66,182) $ (86,984) $ (109,828)
General Revenues and Other Changes in Net Position
Governmental activities
Taxes
Property taxes $ 52,230 $ 57,378 $ 62,974 $ 67,644 $ 76,686
Sales and use taxes 22,969 27,295 29,970 31,293 31,976
Franchise taxes 5,670 6,484 6,971 7,228 7,263
Unrestricted grants and contributions
Investment earnings 134 254 491 729 622
Miscellaneous 1,554 2,399 4,149 5,957 3,108
Special item - - - -
Transfers 2,269 1,607 2,828 6,464 2,417
Total governmental activities 84,826 95,417 107,383 119,315 122,072
Business -type activities
Investment earnings 68 95 325 294 396
Miscellaneous 444 682 219 166 66
Transfers (2,269) (1,607) (2,828) (6,464) (2,417)
Total business -type activities (1,757) (830) (2,284) (6,004) (1,955)
Total primary government $ 83,069 $ 94,587 $ 105,099 $ 113,311 $ 120,117
Change in Net Position
Governmental activities
Business -type activities
Total primary government
$ 47,703 $ 16,574 $ 29,357 $ 22,359 $ 658
12,086 13,676 9,560 3,968 9,631
$ 59,789 $ 30,250 $ 38,917 $ 26,327 $ 10,289
1 Restated due to implementation of GASB 65 in FY 2014. FY 2013 has been restated for comparison
purposes.
112
CITY OF PEARLAND, TEXAS
Changes in Net Position (Continued)
Last Ten FYs
Amounts in (000's)
(Accrual Basis of Accounting)
Net (Expense)/Revenue
Governmental activities
Business -type activities
Total primary government net expense
2018 2019 2020 2021 2022
$ (119,924) $ (122,147) $ (123,919) $ (134,598) $ (134,387)
18,924 22,762 11,162 8,972 6,492
$ (101,000) $ (99,385) $ (112,757) $ (125,626) $ (127,895)
General Revenues and Other Changes in Net Position
Governmental activities
Taxes
Property taxes $ 83,803 $ 89,930 $ 97,106 $ 100,075 $ 101,524
Sales and use taxes 35,437 34,872 34,928 40,248 44,699
Franchise taxes 7,358 7,480 7,270 6,940 6,870
Unrestricted grants and contributions
Investment earnings 1,651 3,293 1,626 209 472
Miscellaneous 4,691 562 4,865 4,793 5,206
Special item -
Transfers 3,103 11,364 5,460 5,548 6,079
Total governmental activities 136,043 147,501 151,256 157,814 164,851
Business -type activities
Investment earnings 1,361 2,947 1,277 94 1,161
Miscellaneous 7 2,361 13 16 45
Transfers (3,103) (11,364) (5,460) (5,548) (6,079)
Total business -type activities (1,735) (6,056) (4,170) (5,439) (4,872)
Total primary government $ 134,308 $ 141,445 $ 147,085 $ 152,375 $ 159,979
Change in Net Position
Governmental activities
Business -type activities
Total primary government
$ 16,117 $ 25,354 $ 27,336 $ 23,216 $ 30,464
17,189 16,706 6,991 3,533 1,620
$ 33,306 $ 42,060 $ 34,328 $ 26,749 $ 32,084
113
CITY OF PEARLAND, TEXAS
Fund Balances of Governmental Funds
Last Ten FYs
Amounts in (000's)
(Modified Accrual Basis of Accounting)
2013 2014 2015 2016 2017
General fund
Non -spendable $ 158 $ 202 $ 293 $ 151 $ 101
Restricted - - -
Assigned 1,554 1,394 1,406 3,994 3,000
Unassigned 16,911 17,859 19,655 16,775 11,262
Total general fund $ 18,623 $ 19,455 $ 21,354 $ 20,919 $ 14,363
All other governmental funds
Non -spendable $ 183 $ 209 $ 173 $ $ 4
Restricted
Debt service 5,192 5,951 5,835 8,276 5,912
Capital improvements 14,536 17,519 22,484 47,361 59,200
Public safety 715 390 394 342 364
Economic development 20,777 23,814 24,117 32,844 36,795
Community development programs
Tourism 2,267 2,994 3,685 4,194 4,604
Parks and recreation 985 168 105 131 262
Capital projects - other 866 - -
Other 638 918 1,149 1,264 779
Unassigned - - - (28)
Total other governmental funds $ 46,159 $ 51,963 $ 57,940 $ 94,411 $ 107,892
114
CITY OF PEARLAND, TEXAS
Fund Balances of Governmental Funds (Continued)
Last Ten FYs
Amounts in (000's)
(Modified Accrual Basis of Accounting)
2018 2019 2020 2021 2022
General fund
Non -spendable $ 136 $ 15 $ 28 $ 3 $
Restricted - - - -
Assigned 1,538 1,521 648 216
Unassigned 12,314 15,666 28,400 32,305 34,658
Total general fund $ 13,988 $ 17,202 $ 29,076 $ 32,524 $ 34,658
All other governmental funds
Non -spendable $ $ $ $ $
Restricted
Debt service 6,797 5,427 6,163 5,887 3,436
Capital improvements 43,912 52,952 73,316 63,182 78,989
Public safety 506 504 453 591 821
Economic development 44,634 34,659 44,068 57,235 60,003
Community development programs
Tourism 4,661 5,388 5,569 5,918 6,655
Parks and recreation 517 530 537 1,421 1,957
Capital projects - other - - -
Other 783 1,313 1,180 1,521 948
Unassigned (52) (28) (27) (4,796) (3,389)
Total other governmental funds $ 101,758 $ 100,745 $ 131,259 $ 130,958 $ 149,419
115
CITY OF PEARLAND, TEXAS
Changes in Fund Balances of Governmental Funds
Last Ten FYs
Amounts in (000's)
(Modified Accrual Basis of Accounting)
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
General government
Public safety
Public works
Community services
Parks and recreation
Economic development
Debt service:
Principal
Interest and other charges
Capital outlay
Intergovernmental
Total Expenditures
Excess of revenues under expenditures
Other Financing Sources (Uses)
Transfers in
Transfers out
Debt issued
Payment to Escrow Agent
Capital leases
Other
Total Other Financing Sources
2013
$ 54,475
24,942
5,999
2,989
3,534
12,982
154
4,595
7,973
117,643
2014 2015
$ 57,378 $ 62,922
27,295 29,970
6,484 6,971
4,149 4,544
3,121 3,108
13,078 14,661
254 433
2,541 3,197
4,157 7,076
118,457 132,882
2016
$ 67,569
31,293
7,228
5,677
2,931
15,313
728
15,959
5,065
151,763
2017
$ 76,562
31,976
7,263
5,435
2,654
16,015
619
16,010
5,736
162,270
7,958 8,027 10,470 11,609 11,223
26,204 29,171 32,229 36,818 40,858
7,812 8,121 10,298 13,292 17,365
3,523 3,960 3,408 4,294 4,837
7,244 7,816 5,823 6,458 6,419
17,414 25,248 25,625 31,051 29,001
15,637 15,815 23,790 19,736 24,341
15,859 16,373 16,595 15,841 15,221
22,101 15,536 24,471 31,982 43,860
4,058 4,307 4,792 4,847 6,937
127,810 134,374 157,501 175,928 200,062
(10,167) (15,917) (24,619) (24,165) (37,792)
15,515 16,507 17,043 26,062
(14,583) (16,967) (15,233) (20,844)
12,060 49,560 81,258 142,701
(33,182) (54,303) (89,638)
1,179 1,853 574 1,918
331 4,784 3,157 -
14,502 22,555 32,496 60,199
Net change in fund balances $
28,466
(26,860)
115,718
(72,608)
44,716
4,335 $ 6,638 $ 7,877 $ 36,034 $ 6,924
Debt service as a percentage of noncapital
expenditures 29.8% 27.0%
29.9%
24.8% 25.3%
116
CITY OF PEARLAND, TEXAS
Changes in Fund Balances of Governmental Funds (Continued)
Last Ten FYs
Amounts in (000's)
(Modified Accrual Basis of Accounting)
2018 2019 2020 2021 2022
Revenues
Property taxes $ 83,484 $ 90,252 $ 97,106 $ 100,528 $ 101,524
Sales and use taxes 35,437 34,872 34,928 40,248 44,699
Franchise fees 7,358 7,480 7,270 6,940 6,870
Licenses and permits 4,146 4,198 4,424 4,258 4,613
Fines and forfeitures 2,468 2,712 1,723 1,868 2,112
Charges for services 16,769 17,726 18,714 19,858 23,301
Investment earnings 1,600 3,186 1,583 208 1,006
Intergovernmental 8,579 10,329 19,480 19,880 19,982
Other 7,200 3,947 2,553 3,207 5,201
Total Revenues 167,041 174,702 187,782 196,995 209,308
Expenditures
General government 11,300 11,173 12,513 19,460 15,957
Public safety 41,273 42,716 47,218 52,191 59,493
Public works 16,968 12,596 11,693 12,483 13,957
Community services 4,313 4,219 4,452 4,249 4,764
Parks and recreation 5,959 6,065 5,483 6,102 6,704
Economic development 29,195 38,288 25,843 29,175 27,346
Debt service:
Principal 23,547 38,007 27,796 29,577 30,180
Interest and other charges 15,814 15,646 15,939 17,357 17,283
Capital outlay 43,474 39,541 38,359 77,114 57,619
Intergovernmental 7,168 7,325 7,769 7,116 7,289
Total Expenditures 199,011 215,576 197,065 254,824 240,592
Excess of revenues over (under) expenditures
Other Financing Sources (Uses)
Transfers in
Transfers out
Debt issued
Payment to Escrow Agent
Capital leases
Other
Total Other Financing Sources
(31,970) (40,874) (9,284) (57,829) (31,284)
24,456 34,200 31,561 33,261 35,586
(22,266) (22,866) (26,101) (27,713) (29,507)
24,223 44,292 44,798 46,562 44,674
(12,551) - -
- - 7,174 1,155
26,413 43,075 50,258 59,284 51,908
Net change in fund balances $ (5,557) $ 2,201 $ 40,975 $ 1,455 $ 20,624
Debt service as a percentage of noncapital
expenditures 24.9% 30.3% 27.6% 26.4% 25.9%
117
CITY OF PEARLAND, TEXAS
Spending and Growth Analysis - Governmental Funds
Last Ten FYs
Amounts in (000's)
(Modified Accrual Basis of Accounting)
Expenditures
2013 2014 2015 2016 2017
General government $ 7,958 $ 8,027 $ 10,470 $ 11,609 $ 11,223
Public safety 26,204 29,171 32,229 36,818 40,858
Public works 7,812 8,121 10,298 13,292 17,365
Community services 3,523 3,960 3,408 4,294 4,837
Parks and recreation 7,244 7,816 5,823 6,458 6,419
Economic development 17,414 25,248 25,625 31,051 29,001
Debt service - principal 15,637 15,815 23,790 19,736 24,341
Debt service - interest 15,859 16,373 16,595 15,841 15,221
Capital outlay 22,101 15,536 24,471 31,982 43,860
Intergovernmental 4,058 4,307 4,792 4,847 6,937
Total $ 127,810 $ 134,374 $ 157,501 $ 175,928 $ 200,062
Distribution of Spending
General government 6.2% 6.0% 6.6% 6.6% 5.6%
Public safety 20.5% 21.7% 20.5% 20.9% 20.4%
Public works 6.1% 6.0% 6.5% 7.6% 8.7%
Community services 2.8% 2.9% 2.2% 2.4% 2.4%
Parks and recreation 5.7% 5.8% 3.7% 3.7% 3.2%
Economic development 13.6% 18.8% 16.3% 17.6% 14.5%
Debt service - principal 12.2% 11.8% 15.1 % 11.2% 12.2%
Debt service - interest 12.4% 12.2% 10.5% 9.0% 7.6%
Capital outlay 17.3% 11.6% 15.5% 18.2% 21.9%
Intergovernmental 3.2% 3.2% 3.0% 2.8% 3.5%
Total 100.0% 100.0% 100.0% 100.0% 100.0%
Adjusted for CPI
POPULATION 104,100 106,900 112,300 117,100 121,500
PER CAPITA $ 1,228 $ 1,257 $ 1,403 $ 1,502 $ 1,647
CPI INDEX (NATIONAL) 232.96 234.75 236.70 241.40 246.37
PER CAPITA ADJ TO 2022 $ 1,561 $ 1,586 $ 1,755 $ 1,843 $ 1,979
PER CAPITA ADJ TO 2013 $ 1,228 $ 1,247 $ 1,380 $ 1,450 $ 1,557
118
CITY OF PEARLAND, TEXAS
Spending and Growth Analysis - Governmental Funds (Continued)
Last Ten FYs
Amounts in (000's)
(Modified Accrual Basis of Accounting)
Ten Average
Year Compounded
Expenditures 2018 2019 2020 2021 2022 % CHG Growth Rate
General government $ 11,300 $ 11,173 $ 12,513 $ 19,460 $ 15,957 100.5% 8.04%
Public safety 41,273 42,716 47,218 52,191 59,493 127.0% 9.54%
Public works 16,968 12,596 11,693 12,483 13,957 78.7% 6.66%
Community services 4,313 4,219 4,452 4,249 4,764 35.2% 3.41%
Parks and recreation 5,959 6,065 5,483 6,102 6,704 -7.5% -0.86%
Economic development 29,195 38,288 25,843 29,175 27,346 57.0% 5.14%
Debt service - principal 23,547 38,007 27,796 29,577 30,180 93.0% 7.58%
Debt service - interest 15,814 15,646 15,939 17,357 17,283 9.0% 0.96%
Capital outlay 43,474 39,541 38,359 77,114 57,619 160.7% 11.23%
Intergovernmental 7,168 7,325 7,769 7,116 7,289 79.6% 6.72%
Total $ 199,011 $ 215,576 $ 197,065 $ 254,824 $ 240,592 88.2% 7.28%
Distribution of Spending
General government 5.7% 5.2% 6.3% 7.6% 6.6%
Public safety 20.7% 19.8% 24.0% 20.5% 24.7%
Public works 8.5% 5.8% 5.9% 4.9% 5.8%
Community services 2.2% 2.0% 2.3% 1.7% 2.0%
Parks and recreation 3.0% 2.8% 2.8% 2.4% 2.8%
Economic development 14.7% 17.8% 13.1% 11.4% 11.4%
Debt service - principal 11.8% 17.6% 14.1% 11.6% 12.5%
Debt service - interest 7.9% 7.3% 8.1% 6.8% 7.2%
Capital outlay 21.8% 18.3% 19.5% 30.3% 23.9%
Intergovernmental 3.6% 3.4% 3.9% 2.8% 3.0%
Total 100.0% 100.0% 100.0% 100.0% 100.0%
Adjusted for CPI
Average
Compounded
Growth Rate
POPULATION 125,198 127,500 131,448 125,828 129,600 2.46%
PER CAPITA $ 1,590 $ 1,691 $ 1,499 $ 2,025.18 $ 1,856 4.70%
CPI INDEX (NATIONAL) 252.44 256.76 260.28 274.31 296.17 2.70%
PER CAPITA ADJ TO 2022 $ 1,865 $ 1,691 $ 1,499 $ 2,025 $ 1,856 1.95%
PER CAPITA ADJ TO 2013 $ 1,467 $ 1,534 $ 1,342 $ 1,720 $ 1,460 1.95%
119
CITY OF PEARLAND, TEXAS
Assessed Value and Estimated Actual Value
of Taxable Property
Last Ten FYs
Fiscal Tax
Year Year
2013 (1) 2012
2014 2013
2015 2014
2016 2015
2017 2016
2018 2017
2019 2018
2020 2019
2021 2020
2022 2021
Real Property
Residential
$ 5,042,965,503
5,530,854,515
6,000,588,340
6,687,172,478
7,800,700,555
8,160,296,748
8,388,984,355
8,795,872,742
10,759,083,987
11,111,640,283
Commercial
$ 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
1,941,047,529
1,901,930,199
Personal
Property
$ 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
865,343,567
797,254,587
Less Tax Exempt
Real Property
$ 617,274,555
627,308,465
673,524,095
677,182,023
835,697,201
916,937,992
882,979,174
903,424,894
974,936,904
1,020,672,002
Notes:
(1) Assessed valuation for FY 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 include the Tax Increment
Reinvestment Zone.
Assessed value based on adjusted tax roll at year-end.
120
CITY OF PEARLAND, TEXAS
Assessed Value and Estimated Actual Value
of Taxable Property (Continued)
Last Ten FYs
Fiscal Tax
Year Year
2013 (1) 2012 $
2014 2013
2015 2014
2016 2015
2017 2016
2018 2017
2019 2018
2020 2019
2021 2020
2022 2021
Less Other
Exemptions and
Abatements
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
813,268,531
908,022,173
Total
Total Taxable Direct
Assessed Value Tax Rate
$ 6,537,976,038 0.7051
6,996,973,518 0.7051
7,580,556,989 0.7121
8,464,775,289 0.7053
9,722,252,580 0.6812
10,563,655,075 0.6851
10,949,412,203 0.7092
11,538,475,365 0.7412
11,777,269,648 1.0000
11,882,130,894 1.0000
Estimated Actual
Taxable Value
$ 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
11,777,269,648
11,882,130,894
Notes:
(1) Assessed valuation for FY 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 include the Tax Increment Reinvestment
Zone.
Assessed value based on adjusted tax roll at year-end.
Assessed
Value as a
Percent of
Actual Taxable
Value
1 00%
100%
100%
100%
100%
100%
1 00%
100%
100%
1 00%
121
CITY OF PEARLAND, TEXAS
Direct and Overlapping Property Tax Rates
Last Ten FYs
(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
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
2021 0.305 0.415 0.720 1.319 1.383 1.398 0.183 0.342 0.436
2022 0.309 0.392 0.701 1.315 1.316 1.398 0.183 0.337 0.436
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.
122
CITY OF PEARLAND, TEXAS
Direct and Overlapping Property Tax Rates (Continued)
Last Ten FYs
(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
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
2021 0.391 0.010 0.031 0.167 0.005 0.848 0.340 0.270 0.310
2022 0.377 0.009 0.034 0.162 0.005 0.848 0.330 0.250 0.290
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.
123
CITY OF PEARLAND, TEXAS
Direct and Overlapping Property Tax Rates (Continued)
Last Ten FYs
(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
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
2021 0.460 0.530 0.820 0.730 1.000
2022 0.440 0.100 0.820 0.690 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.
124
CITY OF PEARLAND, TEXAS
Property Tax Levies and Collections
Last Ten FYs
Fiscal
Year
Ended
Sept 30,
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Taxes Levied
for the
Fiscal Year
$ 45,850,388
49,096,238
53,468,069
58,834,077
64,982,191
70,630,574
75,672,998
83,055,340
86,120,247
87,070,808
Collected within the
Fiscal Year of the Levy Collections
Percentage in Subsequent
Amount of Levy Years
$ 45,509,522
48,802,720
53,175,174
58,545,664
64,579,894
70,216,601
75,276,247
82,617,167
85,751,572
86,638,471
Source: Brazoria County Tax Office
Note: Taxes levied based on adjusted tax roll.
99.26%
99.40%
99.45%
99.51%
99.38%
99.41%
99.48%
99.47%
99.57%
99.50%
$ 302,589
246,723
186,651
136,250
220,965
226,461
222,017
Total Collections to Date
Amount
$ 45,812,111
49,049,443
53,361,825
58,681,914
64,800,859
70,443,062
75,498,264
82,617,167
85,751,572
86,638,471
Percentage
of Levy
99.9%
99.9%
99.8%
99.7%
99.7%
99.7%
99.8%
99.5%
99.6%
99.5%
125
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
Centerpoint Energy Inc
Goodgarden Owner GP
2500 Business Center Owner LP
DD Shadow Creek V LLC
W-F&B 11900 Shadow Creek VIII
Brazoria-SCR Associates LLC
Pearland Investments Inc.
Weatherford U.S., Inc.
Villas Shadow Creek Ranch LP
Walmart Real Estate Bus TR
Shadow Kirby LTD Partnership
MRP Shadow Creek LP
12400 Shadow Creek Parkway LLC
Discovery Shadow Creek Owner
Pearland Lifestyle Center LP
Total
2022 2013
Percentage Percentage
of Total City of Total City
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Value Rank Value Value Rank Value
$ 81,504,820 1 0.69% $ 68,763,470 1 0.98%
72,388,870 2 0.61%
65,672,559 3 0.55% 43,681,670 2 0.62%
58,300,000 4 0.49%
42,037,830 5 0.35% 28,444,700 4 0.41%
41,000,000 6 0.35%
40,000,000 7 0.34%
39,819,900 8 0.34%
39,299,900 9 0.33%
37,300,000 10 0.31%
$ 517,323,879
Source: Brazoria County Appraisal District
4.35%
21,154,900 10
37,689,240 3
23,179,360 9
25,000,000 7
28,229,200 5
26,391,910 6
23,731,897 8
$ 326,266,347
0.30%
0.54%
0.33%
0.36%
0.40%
0.38%
0.34%
4.66%
126
CITY OF PEARLAND, TEXAS
Principal Property Taxpayers (Table 8A)
2020 Total Taxes
Taxpayer
Property Use
Taxable Value
Taxing Unit
Tax Rate
Pearland Town Amreit SPF HCA
Shadow Healthcare
Center LP Creek LP Corp
Retail Mixed -use Retail Health
Center Care/Hospital
$82,539,900 $75,249,010 $72,689,590
Alvin ISD
1.397700
$ 1,153,660
$ 1,051,755
$ 972,244
Pearland ISD
1.318500
-
-
41,260
Houston ISD
1.136700
-
-
-
City of Pearland
0.720000
594,287
541,793
523,365
Harris County
0.391160
-
-
-
Brazoria County
0.342017
282,300
257,364
248,611
Brazoria County Special Road and Bridge
0.050000
41,270
37,625
36,345
Alvin Community College
0.183443
151,414
138,039
18,021
Harris County Hospital District
0.166710
-
-
-
Brazoria Drainage District 4
0.146000
120,508
109,864
106,127
Brazoria County C&R District
0.150000
-
-
-
Houston Community College System
0.100263
-
-
-
Pearland Municipal Management District #2
0.091750
75,730
69,041
-
Harris County Flood Control District
0.031420
-
-
-
Port of Houston Authority
0.009910
-
-
-
Harris County Dept. of Education
0.004993
-
-
-
Total Tax
$ 2,419,169
$ 2,205,481
$ 1,945,973
Paid to City of Pearland
24.6%
24.6%
26.9%
Source: Brazoria County Tax Office and Harris County Tax Office
Table does not include multiple taxpayers from the same address.
127
CITY OF PEARLAND, TEXAS
Principal Property Taxpayers (Table 8A) (Continued)
2020 Total Taxes
MHI
Taxpayer
Mar Shadow Compressor DD SCR V
Creek LP Manufacturer LLC
LLC
Property Use
Multi -family Industrial / Multi -family
Housing Manufacturing Housing
Taxable Value
$61,000,000 $43,941,476 $43,741,490
Taxing Unit
Tax Rate
Alvin ISD
1.397700
$ 852,597
$ -
$ 611,375
Pearland ISD
1.318500
-
-
-
Houston ISD
1.136700
-
499,483
-
City of Pearland
0.720000
439,200
316,379
314,939
Harris County
0.391160
-
171,881
-
Brazoria County
0.342017
208,630
-
149,603
Brazoria County Special Road and Bridge
0.050000
30,500
-
21,871
Alvin Community College
0.183443
111,900
-
80,241
Harris County Hospital District
0.166710
-
73,255
-
Brazoria Drainage District 4
0.146000
89,060
-
63,863
Brazoria County C&R District
0.150000
-
-
-
Houston Community College System
0.100263
-
44,057
-
Pearland Municipal Management District #2
0.091750
-
-
-
Harris County Flood Control District
0.031420
-
13,806
-
Port of Houston Authority
0.009910
-
4,355
-
Harris County Dept. of Education
0.004993
-
2,194
-
Total Tax
$ 1,731,887
$ 1,125,410
$ 1,241,892
% Paid to City of Pearland
25.4%
28.1 %
25.4%
Source: Brazoria County Tax Office and Harris County Tax Office
Table does not include multiple taxpayers from the same address.
128
CITY OF PEARLAND, TEXAS
Principal Property Taxpayers (Table 8A) (Continued)
2020 Total Taxes
Taxpayer
Property Use
Taxable Value
Taxing Unit
Goodgarden 2500 Business Brazoria-SCR W-F&B 11900
Center Owner Associates
Owner GP LP LLC Shadow Creek
VIII
Multi -family Multi -family Multi -family Multi -family
Housing Housing Housing Housing
$41,000,000 $ 40,000,000 $ 39,000,000 $38,900,000
Tax Rate
Alvin ISD
1.397700
$ 573,057
$ -
$ 545,103
$ 543,705
Pearland ISD
1.318500
-
631,143
-
-
Houston ISD
1.136700
-
-
-
-
City of Pearland
0.720000
295,200
340,186
280,800
288,331
Harris County
0.391160
-
-
-
-
Brazoria County
0.342017
140,227
177,425
133,387
142,076
Brazoria County Special Road and Bridge
0.050000
20,500
24,289
19,500
19,450
Alvin Community College
0.183443
75,212
-
71,543
72,300
Harris County Hospital District
0.166710
-
-
-
-
Brazoria Drainage District 4
0.146000
59,860
67,008
56,940
56,794
Brazoria County C&R District
0.150000
-
-
-
-
Houston Community College System
0.100263
-
-
-
-
Pearland Municipal Management District #2
0.091750
-
-
-
-
Harris County Flood Control District
0.031420
-
-
-
-
Port of Houston Authority
0.009910
-
-
-
-
Harris County Dept. of Education
0.004993
-
-
-
-
Total Tax
$ 1,164,056
$ 1,240,051
$ 1,107,273
$ 1,122,656
% Paid to City of Pearland
25.4%
27.4%
25.4%
25.7%
Source: Brazoria County Tax Office and Harris County Tax Office
Table does not include multiple taxpayers from the same address.
129
CITY OF PEARLAND, TEXAS
Taxable Sales by Category
Last Ten Calendar Years
(in thousands of dollars)
Calendar Year
2013 2014 2015 2016 2017
Retail Trade $ 828,225 $ 871,813 $ 961,565 $ 999,033 $ 1,042,624
Accommodations and Food Services 215,705 240,961 272,540 298,860 316,070
Real Estate/Rental/Leasing 55,811 61,392 48,024 32,786 44,540
Manufacturing 34,562 51,274 41,175 40,192 39,860
Wholesale Trade 34,356 42,915 41,491 48,114 49,702
Other Services (Except Public Admin) 34,119 38,539 40,373 40,181 41,711
Information 24,369 29,602 33,614 33,449 35,824
Construction 24,367 26,350 32,168 24,655 21,363
Arts, Entertainment & Recreation 13,569 14,692 15,555 16,020 16,344
Mining, Quarrying, Oil and Gas 12,865 14,520 7,285 8,141 11,682
Admin/Support/Waste Mgmt/Remediation 13,344 12,963 12,808 12,725 14,489
Professional/Scientific/Technical 11,210 10,531 11,307 12,177 6,689
Health Care/Social Assistance 1,065 3,205 5,007 2,307 3,751
Finance/Insurance 1,246 1,483 2,226 2,182 2,108
Agriculture, Forestry, Fishing 772 728 1,609 2,112 3,471
Transportation/Warehousing 318 406 285 372 560
Educational Services 372 350 393 406 439
Utilities 7 7 -
Total $ 1,306,282 $ 1,421,731 $ 1,527,425 $ 1,573,712 $ 1,651,227
City direct sales tax rate b
1.00% 1.00% 1.00% 1.00% 1.00%
Source: State Comptroller's Office
a 2022 taxable sales through 1st quarter of 2022.
b The City direct sales tax rate includes the City only
and not the Pearland Economic Development Corp. (4B).
130
CITY OF PEARLAND, TEXAS
Taxable Sales by Category (Continued)
Last Ten Calendar Years
(in thousands of dollars)
Calendar Year
2018 2019 2020 2021 2022 a
Retail Trade $ 1,056,690 $ 1,030,791 $ 1,056,636 $ 1,252,310 $ 291,805
Accommodations and Food Services 341,462 375,329 343,407 435,702 112,746
Real Estate/Rental/Leasing 44,467 - 39,671 30,393 15,371
Manufacturing 39,133 32,215 20,889 21,765 6,114
Wholesale Trade 56,347 58,202 47,894 61,786 14,705
Other Services (Except Public Admin) 43,812 42,928 41,106 50,165 -
Information 39,187 34,340 22,832 26,644 6,388
Construction 27,310 33,948 31,595 36,189 7,757
Arts, Entertainment & Recreation 17,127 - 15,182 19,263 5,190
Mining, Quarrying, Oil and Gas 11,125 3,794 2,287 2,528 570
Admin/Support/Waste Mgmt/Remediation 16,918 17,681 18,258 7,760
Professional/Scientific/Technical 8,371 30,721 8,852 11,512 1,911
Health Care/Social Assistance 3,355 - 4,386 3,175 17
Finance/Insurance 1,906 43,987 1,853 3,094 537
Agriculture, Forestry, Fishing 2,496 - 2,049 3,654 916
Transportation/Warehousing 678 763 538 234 50
Educational Services 512 5,103 390 1,017 133
Utilities - - 5 284
Total $ 1,710,896 $ 1,692,121 $ 1,657,253 $ 1,977,974 $ 471,971
City direct sales tax rate b 1.00%
Source: State Comptroller's Office
a 2022 taxable sales through 1st quarter of 2022.
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%
131
CITY OF PEARLAND, TEXAS
Outstanding Debt by Type
Last Ten FYs
(dollars in thousands, except per capita)
Fiscal
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Governmental Activities
General
Obligation Certificates
Bonds of Obligation
$ 236,199
246,791
261,998
262,865
283,140
278,175
269,520
268,680
260,840
265,615
Revenue
Bonds
$ 64,690 $ 75,125
56,505 80,186
50,030 77,012
50,070 91,370
37,505 97,215
41,750 98,025
51,620 85,065
66,405 81,445
86,220 73,235
101,660 64,810
Unamortized Capital
Premiums/ Lease
(Discounts) Obligations
$ 6,159
10,122
16,185
18,793
25,832
23,844
26,639
29,963
38,710
36,213
$ 3,681
4,344
3,629
4,229
1,838
1,282
761
541
381
131
Business -type Activities
Revenue Certificates
Bonds of Obligation
$ 105,690 $
102,517
108,099
173,570
196,200
214,705
232,415
335,435
400,840
382,785
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
45,710
Permanent
Improvement
Bonds
$ 14,020
12,865
11,305
9,775
7,360
4,845
4,480
4,110
3,020
2,710
132
CITY OF PEARLAND, TEXAS
Outstanding Debt by Type (Continued)
Last Ten FYs
(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
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 15.1% 6,296 5,657
2021 16,917 - 880,163 14.6% 6,696 6,139
2022 18,575 918,208 15.3% 7,085 6,585
Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
133
CITY OF PEARLAND, TEXAS
Ratio of Net General Bonded Debt to Assessed
Value and Net Bonded Debt Per Capita
Last Ten FYs
(dollars in thousands, except per capita)
Less Debt Ratio of Net Percentage
Fiscal Tax General Service Net Bonded Bonded Debt to of Personal
Year Year Bonded Debt a Funds Debt Assessed Value Income b Per Capita b
2013 2012 $ 321,068 $ 4,992 $ 316,076 4.8% 8.9% $ 3,036
2014 2013 326,283 4,643 321,640 4.6% 8.4% 3,009
2015 2014 339,518 4,536 334,982 4.4% 8.2% 2,983
2016 2015 341,503 5,034 336,469 4.0% 7.3% 2,873
2017 2016 353,837 8,276 345,561 3.6% 8.0% 2,844
2018 2017 348,614 5,911 342,703 3.2% 6.7% 2,737
2019 2018 433,605 6,797 426,808 3.9% 8.0% 3,348
2020 2019 335,085 5,427 329,658 2.9% 5.5% 2,508
2021 2020 347,060 5,427 341,633 2.9% 5.7% 2,636
2022 2021 367,275 3,436 363,839 3.1% 6.0% 2,807
Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.
a Includes general obligation bonds and certificates of obligation.
b Population and personal income data can be found in demographic and economic statistics table.
134
CITY OF PEARLAND, TEXAS
Direct and Overlapping Governmental Activities Debt
September 30, 2022 and 2021
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 Management
District
Pasadena ISD
Pearland ISD
Port of Houston Authority
Total Estimated Overlapping
Debt as of
September 30,
2022
$ 26, 515, 000
879, 220, 000
56,490,000
10, 290, 000
17, 670, 000
19,435,000
21, 215, 000
11, 900, 000
4,530,000
54, 840, 000
34, 665, 000
7,780,000
56, 505, 000
547,784,567
1, 093, 033, 215
6,320,000
713, 005, 000
81, 540, 000
41,165, 000
28, 510, 000
714, 955, 000
401,235,000
469,434,000
The City $ 347,060,000
Total Direct and Estimated Overlapping Debt
Population
Per Capita Debt - Direct and Overlapping Debt
Overlapping
Percent Amount
27.55%
31.83%
20.40%
0.31%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
0.78%
0.24%
0.24%
0.24%
0.24%
100.00%
100.00%
1.79%
79.21 %
0.24%
100.00%
$ 7,304,883
279, 855, 726
11, 523, 960
31,899
17, 670, 000
19, 435, 000
21,215,000
11, 900, 000
4,530,000
54, 840, 000
34, 665, 000
7,780,000
56, 505, 000
4,272,720
2,623,280
15,168
1,711,212
195,696
41,165, 000
28, 510, 000
12, 797, 695
317, 818, 244
1,126, 642
937, 492,125
347, 060, 000
$ 1, 284, 552,125
125,828
$ 10,209
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.
135
CITY OF PEARLAND, TEXAS
Direct and Overlapping Governmental Activities Debt (Continued)
September 30, 2021 and 2020
Taxing Jurisdiction
Debt as of
September 30, Overlapping
2021 Percent Amount
Alvin Community College District $ 24,305,000 25.06% $ 6,090,833
Alvin ISD 968,580,000 29.60% 286,699,680
Brazoria County 213,253,313 20.11% 42,885,241
Brazoria County MUD No. 6 8,065,000 0.30% 24,195
Brazoria County MUD No. 17 16,185,000 100.00% 16,185,000
Brazoria County MUD No. 18 16,470,000 100.00% 16,470,000
Brazoria County MUD No. 19 19,275,000 100.00% 19,275,000
Brazoria County MUD No. 21 24,545,000 1.58% 387,811
Brazoria County MUD No. 22 45,085,000 1.90% 856,615
Brazoria County MUD No. 23 12,850,000 100.00% 12,850,000
Brazoria County MUD No. 26 - 0.00% -
Brazoria County MUD No. 28 56,300,000 100.00% 56,300,000
Brazoria County MUD No. 34 32,845,000 100.00% 32,845,000
Brazoria County MUD No. 35 7,375,000 100.00% 7,375,000
Brazoria-Fort Bend County MUD No. 1 44,375,000 100.00% 44,375,000
Clear Creek ISD 1,011,865,000 0.92% 9,309,158
Fort Bend County 839,325,542 0.75% 6,294,942
Fort Bend County Drainage District 24,530,000 0.75% 183,975
Friendswood ISD 196,190,000 0.04% 78,476
Harris County (a) 1,863,542,125 0.23% 4,286,147
Harris County Dept. of Education 20,185,000 0.23% 46,426
Harris County Flood Control District 807,875,000 0.23% 1,858,113
Harris County Hospital District 76,385,000 0.23% 175,686
Harris-Brazoria Counties MUD No. 509 46,995,000 100.00% 46,995,000
Houston Community College Sys 469,970,000 **
Houston ISD 2,336,360,000 0.14% 3,270,904
Lower Kirby Pearland Management
District 29,160,000 100.00% 29,160,000
Pasadena ISD 792,040,000 1.87% 14,811,148
Pearland ISD 379,670,000 79.20% 300,698,640
Port of Houston Authority 469,434,397 0.23% 1,079,699
San Jacinto CCD 551,322,427 ** -
Total Estimated Overlapping 960,867,687
The City $ 415,695,000
100.00% 415,695,000
Total Direct and Estimated Overlapping
Debt $ 1, 376, 562, 687
Population 125,828
Per Capita Debt - Direct and Overlapping Debt
$ 10,940
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.
136
CITY OF PEARLAND, TEXAS
Pledged Revenue Coverage
Last Ten FYs
Amounts in (000's)
Water and Sewer Revenue Bonds
Net
Less: Revenue Debt Service
Fiscal Gross Operating Available for
Year Revenues Expenses Debt Service Principal Interest Total Coverage
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 22,996 7,630 4,918 12,548 1.83
2017 52,005 24,178 27,827 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
2021 52,681 25,550 27,131 18,055 9,743 27,798 0.98
2022 56,590 26,245 30,345 19,700 7,372 27,072 1.12
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.
137
CITY OF PEARLAND, TEXAS
Demographic and Economic Statistics
Last Ten FYs
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)
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 8 28,568 6.7%
2021 129,600 6,015,060 46,413 36.1 14.2 8 28,568 4.1 %*
2022 129,600 5,758,128 44,430 35.3 14.2 8 28,568 3.2%
(A) Pearland Economic Development Corporation, 2021 American Community Survey five-year estimates. Note: Personal
Income is calculated by multiplying Per Capita Personal Income by Population.
(B) Texas Education Agency - Beginning in FY 2018, school enrollment was obtained by surveying each school located in
the City limits and ETJ. Data unavailable for FY 2021, therefore FY 2020 is the most current data available.
(C) Local Area Unemployment Statistics (LAUS) Report, *Data as of September 2021.
138
CITY OF PEARLAND, TEXAS
Principal Employers
Current Year and Nine Years Ago
Employer
Pearland ISD
Wal-Mart
Kelsey Seybold
Lonza
Alvin ISD
City of Pearland
Memorial Hermann
HCA (Pearland Medical Center)
HEB
Dover Energy
Merit Medical
Home Depot
Kemlon
Super Target
Bass Pro Shop
Davis Lynch (Forum Energy)
Total
Sources:
Pearland Economic Development Corp.
2022
Percentage
of Total City
Employees* Rank Employment
2,700 1
1,413 2
850 3
753 4
768 5
520 6
450 7
255 8
240 9
228 10
8,177
4.26%
2.23%
1.34%
1.19%
1.21%
0.82%
0.71%
0.40%
0.38%
0.36%
12.92%
2013
Percentage
of Total City
Employees Rank Employment
2,450 1 5.37%
1,185 2 2.60%
800 3 1.75%
614 4 1.35%
350 5 0.77%
230 7 0.50%
200 10 0.44%
205 8 0.45%
200 9 0.44%
275 6 0.60%
6,509 14.27%
"For 2022, the above list does not include retail employers, such as Wal-Mart, Super Target, Lowe's, Home Depot, HEB or
Kroger.
139
CITY OF PEARLAND, TEXAS
Full-time Equivalent City Government
Employees by Function/Program
Last Ten FYs
2013 2014 2015 2016 2017
Function/Program
Governmental activities
General government 44 45 52 62 52
Public safety 295 313 339 370 370
Public works 57 60 67 54 65
Community services 51 53 40 42 50
Parks and recreation 101 99 88 89 84
Business -type activities
Water and sewer 99 101 105 106 109
Component unit
Economic development 5 9 5 5 5
Total 652 680 696 728 735
Source: City Budget
140
CITY OF PEARLAND, TEXAS
Full-time Equivalent City Government
Employees by Function/Program (Continued)
Last Ten FYs
2018 2019 2020 2021 2022
Function/Program
Governmental activities
General government 54 55 66 64 98
Public safety 379 390 408 424 433
Public works 73 85 80 76 60
Community services 46 46 48 47 49
Parks and recreation 89 90 94 97 98
Business -type activities
Water and sewer 114 108 117 134 148
Component unit
Economic development 6 6 6 6 7
Total
Source: City Budget
761 780 819 848 893
141
CITY OF PEARLAND, TEXAS
Operating Indicators by Function/Program
Last Ten FYs
2013 2014 2015 2016 2017
Function/Program
GENERAL GOVERNMENT
Finance
Number of purchase orders 2,671 2,640 2,377 2,159 589
Number of budget transfers 465 548 489 362 750
Number of invoices paid 23,512 21,486 22,212 26,675 24,548
Average number of employees paid per month 1,527 1,548 1,523 1,536 1,704
Human Resources
Number of hires 94 98 131 194 170
Number of applications received 7,642 8,507 9,132 10,420 13,010
Legal
Number of resolutions and ordinances prepared 254 243 271 279 276
Information Technology
Average monthly service requests 843 838 854 871 894
Number of PCs supported 454 575 649 680 706
PUBLIC SAFETY
Police
Fire
Part 1 crimes 2,115 2,098 2,411 2,202 2,193
Traffic crashes 1,529 1,590 1,761 1,728 1,813
Arrests 6,946 6,705 5,781 5,044 4,865
Citizen calls for service 29,242 29,744 31,474 31,744 31,945
Traffic stops 52,945 43,783 33,472 35,764 37,025
Priority 1 average response time 4:15 3:50 4:16 4:11 3:40
Total number of arson incidents 6 7 1 7 4
Fires investigated 16 25 20 27 19
Total annual inspections 1,958 1,644 1,640 1,244 2,607
Total code violation cases 2,244 2,140 4,596 2,560 2,302
Total calls for service 10,789 15,048 17,407 9,904 9,965
Patients treated 6,537 6,936 7,180 6,117 4,610
Sources: Various city departments.
142
CITY OF PEARLAND, TEXAS
Operating Indicators by Function/Program (Continued)
Last Ten FYs
2018 2019 2020 2021 2022
Function/Program (continued)
GENERAL GOVERNMENT
Finance
Number of purchase orders 1,811 1,673 1,724 2,090 2,126
Number of budget transfers 552 509 472 475 609
Number of invoices paid 21,547 17,641 16,482 17,387 16,424
Average number of employees paid per month 1,641 1,665 1,713 1,800 845
Human Resources
Number of hires 163 183 161 212 242
Number of applications received 15,452 17,382 16,610 12,226 12,450
Legal
Number of resolutions and ordinances prepared 290 340 307 310 308
Information Technology
Average monthly service requests 325 400 347 380 335
Number of PCs supported 715 732 782 810 794
PUBLIC SAFETY
Police
Fire
Part 1 crimes 1,962 2,175 1,934 1,876 2,325
Traffic crashes 2,150 2,150 1,719 1,857 1,850
Arrests 4,844 4,604 2,613 3,018 3,903
Citizen calls for service 31,579 32,548 30,341 31,092 33,842
Traffic stops 33,101 33,559 21,764 26,806 30,710
Priority 1 average response time 4:03 3:53 3:59 4:00 4:29
Total number of arson incidents 2 2 4 9 8
Fires investigated 15 23 60 47 54
Total annual inspections 3,123 1,263 1,155 569 589
Total code violation cases 2,034 2,387 1,577 1,866 1,321
Total calls for service 10,666 10,720 10,587 12,677 13,114
Patients treated 6,273 7,181 7,618 8,891 7,788
Sources: Various city departments.
143
CITY OF PEARLAND, TEXAS
Operating Indicators by Function/Program (Continued)
Last Ten FYs
2013 2014 2015 2016 2017
Function/Program (continued)
PUBLIC WORKS
Fleet Maintenance
Fleet maintenance jobs completed 3,817 3,860 3,887 1,452 1,797
Preventative maintenance performed 611 610 437 750 742
Other Public Works
Fuel issued (gallons) 350,186 353,890 332,745 265,669 331,005
Street sweeping (miles) 1,155 871 648 1,160 1,112
Street signs maintained/replaced 884 993 1,477 1,370 1,179
Total work orders completed 18,346 21,212 25,873 31,163 25,688
PARKS AND RECREATION
Al Parks and Recreation
ROW maintained - acres 251 251 550 459 327
Trees maintained 6,312 6,313 6,430 7,922 8,355
Acres of city property mowed 1,035 1,035 1,116 632 664
Total number of park work orders received 140 180 147 190 114
Parkland - acres 138 138 138 337 388
Total number of special events held 22 20 19 16 19
Total number of tournaments held 1 3 - 26 -
Number of recreation classes offered (1) 281 272 306 384 265
Average monthly attendance (all locations) (2) 18,980 21,366 14,371 19,636 16,814
Sources: Various city departments.
Information not presented was not available at time of publication.
(1) In FY2020 and FY2021, recreation classes were cancelled due to COVID-19.
(2) In FY2020 and FY2021, attendance was down due to COVID-19.
144
CITY OF PEARLAND, TEXAS
Operating Indicators by Function/Program (Continued)
Last Ten FYs
2018 2019 2020 2021 2022
Function/Program (continued)
PUBLIC WORKS
Fleet Maintenance
Fleet maintenance jobs completed 1,382 1,998 1,632 1,704 1,699
Preventative maintenance performed 663 856 645 721 784
Other Public Works
Fuel issued (gallons) 315,941 323,734 351,123 277,230 375,002
Street sweeping (miles) 1,815 497 564 453 671
Street signs maintained/replaced 1,471 1,511 4,638 662 856
Total work orders completed 24,529 20,791 17,696 17,431 16,153
PARKS AND RECREATION
All Parks and Recreation
ROW maintained - acres 345 404 381 299 353
Trees maintained 8,523 8,873 9,223 10,873 13,688
Acres of city property mowed 443 523 523 561 561
Total number of park work orders received 147 55 19 22 51
Parkland - acres 392 547 547 547 547
Total number of special events held 17 23 13 11 35
Total number of tournaments held 5 12 18 19 9
Number of recreation classes offered (1) 868 908 289 237 1,753
Average monthly attendance (all locations) (2) 24,035 19,518 9,661 9,872 33,371
Sources: Various city departments.
Information not presented was not available at time of publication.
(1) In FY2020 and FY2021, recreation classes were cancelled due to COVID-19.
(2) In FY2020 and FY2021, attendance was down due to COVID-19.
145
CITY OF PEARLAND, TEXAS
Operating Indicators by Function/Program (Continued)
Last Ten FYs
2013 2014 2015 2016 2017
Function/Program (continued)
COMMUNITY SERVICES
Animal Control
Animal services calls for service 5,167 5,822 5,230 5,484 5,153
Animal shelter live release % 42% 48% 53% 54% 56%
Inspection Services
Total building inspections 26,274 28,434 36,497 37,206 34,880
Total permits issued 10,630 13,972 18,186 14,612 13,075
Number of plans reviewed 939 1,185 1,584 1,349 1,278
Municipal Court
Number of trials (3) 885 839 856 443 656
Number of charges (3) 27,439 23,182 19,223 17,611 16,334
Warrants cleared (3) 10,328 9,050 7,476 7,525 8,463
WATER AND SEWER
Distribution and Collection
Fire hydrant maintenance and inspections (3) 1,399 837 612 854 186
Backed up sewer repairs 286 334 305 497 545
Water mains repaired 380 111 189 120 102
Water Production
Water produced - wells
(in millions of gallons) 2,859 2,470 1,933 2,190 2,417
Surface water purchased
(in millions of gallons) 1,816 2,133 2,276 2,517 2,584
Billing and Collections
Annual meter reads 403,220 414,499 428,265 445,154 461,502
Number of bills 387,997 388,338 400,662 417,312 471,549
Wastewater Treatment
Wastewater treated
(in millions of gallons) 2,530 2,493 3,067 3,367 3,455
Sources: Various city departments.
Information not presented was not available at time of publication.
(3) In FY2020 and FY2021, COVID-19 impacted Municipal Court operations.
(4) Prior to FY2020, fire hydrant maintenance and inspections was contracted out.
146
CITY OF PEARLAND, TEXAS
Operating Indicators by Function/Program (Continued)
Last Ten FYs
2018 2019 2020 2021 2022
Function/Program (continued)
COMMUNITY SERVICES
Animal Control
Animal services calls for service 4,699 4,582 4,596 5,237 4,420
Animal shelter live release % 56% 55% 80% 94% 93%
Inspection Services
Total building inspections 36,774 36,481 30,781 29,525 27,919
Total permits issued 8,894 7,270 5,545 11,066 10,794
Number of plans reviewed 1,971 2,419 2,196 1,926 2,052
Municipal Court
Number of trials (3) 567 664 390 233 506
Number of charges (3) 15,463 19,020 9,577 11,351 13,159
Warrants cleared (3) 5,801 6,095 3,757 3,873 4,866
WATER AND SEWER
Distribution and Collection
Fire hydrant maintenance and inspections (3) 114 87 2,358 903 1,412
Backed up sewer repairs 308 196 233 178 60
Water mains repaired 126 125 114 121 252
Water Production
Water produced - wells
(in millions of gallons) 3,024 2,333 3,816 2,211 2,939
Surface water purchased
(in millions of gallons) 2,545 2,754 2,975 2,506 2,533
Billing and Collections
Annual meter reads 467,910 469,499 469,908 486,717 464,691
Number of bills 445,446 449,933 452,465 460,147 482,741
Wastewater Treatment
Wastewater treated
(in millions of gallons) 3,308 3,775 3,577 3,737 3,380
Sources: Various city departments.
Information not presented was not available at time of publication.
(3) In FY2020 and FY2021, COVID-19 impacted Municipal Court operations.
(4) Prior to FY2020, fire hydrant maintenance and inspections was contracted out.
147
CITY OF PEARLAND, TEXAS
Capital Asset Statistics by Function/Program
Last Ten FYs
Fiscal Year
2013 2014 2015 2016 2017
Function/Program
PUBLIC SAFETY
Police
Police stations 1 1 1 1 1
Police vehicles 157 161 143 186 194
Police K9s - 2 4 5
FARO Laser Scanning System (1) - 1 1
Pole Camera System (2) - - -
Animal Services
Animal Services building (shelter) 1 1 1 1 1
Animal Services vehicles (2) - 10 10 10
Fire
Fire stations
Fire vehicles
Ambulances (3)
EMS
Ambulances (3)
6 6 6 6 7
26 26 26 42 56
- 9 7 9 9
9
PUBLIC WORKS
Other public works
Streets (miles) 839 844 842 936 928
Vehicle inventory 374 375 372 451 385
Traffic signals 81 81 73 87 91
PARKS AND RECREATION
Parks and recreation
Developed acreage 138 138 168 334 388
Pools 3 3 3 3 3
Outdoor basketball courts 6 6 6 6 6
Soccer fields 12 12 12 18 12
Activity buildings 3 3 3 3 3
Baseball/softball fields 4 4 4 6 14
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 5 5
Lift stations 75 76 73 74 72
Distribution and Collection
Water mains (miles)
Sanitary sewers (miles)
469 488 509 537 546
400 415 433 440 448
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) Purchased in FY20. Includes a pole camera and an under the door camera.
(3) Beginning in FY15, Animal Services moved to Police Department.
(4) Beginning in FY14, EMS was rolled into the Fire Department.
148
CITY OF PEARLAND, TEXAS
Capital Asset Statistics by Function/Program (Continued)
Last Ten FYs
2018 2019 2020 2021 2022
Function/Program
PUBLIC SAFETY
Police
Police stations 1 1 1 1 1
Police vehicles 209 211 210 201 202
Police K9s 5 5 5 4 4
FARO Laser Scanning System (1) 1 1 1 1 1
Pole Camera System (2) - - 1 1 3
RKT GPS System for crash recon - - 1
DJI Zenmuse P1 Camera (Drone) - - 1
Mavic 2 Enterprise Drones - - 5
SWAT Negotiations Control System - - 1
Ballistic Shield - - 1
Animal Services
Animal Services building (shelter) 1 1 1 1 1
Animal Services vehicles (2) 11 11 11 11 11
Fire
Fire stations 6 5 6 6 6
Fire vehicles 60 61 56 55 41
Ambulances (3) 10 10 9 9 10
EMS
Ambulances (3) - - -
PUBLIC WORKS
Other public works
Streets (miles) 940 978 978 971 971
Vehicle inventory 338 434 502 443 626
Traffic signals 96 97 100 104 109
PARKS AND RECREATION
Parks and recreation
Developed acreage 392 443 458 458 458
Pools 3 2 2 2 2
Outdoor basketball courts 6 8 8 8 8
Soccer fields 14 12 12 11 13
Activity buildings 3 4 4 4 4
Baseball/softball fields 16 16 16 16 17
WATER AND SEWER
Water Production
Water wells 10 10 10 10 10
Pumping stations 3 3 3 3 2
Ground storage tanks 15 15 15 16 16
Elevated towers 6 6 6 6 6
Wastewater
Treatment plants 5 6 5 5 5
Lift stations 78 69 69 68 68
Distribution and Collection
Water mains (miles) 551 553 553 538 545
Sanitary sewers (miles) 456 459 459 453 455
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) Purchased in FY20. Includes a pole camera and an under the door camera.
(3) Beginning in FY15, Animal Services moved to Police Department.
(4) Beginning in FY14, EMS was rolled into the Fire Department.
149
CITY OF PEARLAND
3519 LIBERTY DRIVE I PEARLAND, TEXAS 77581
281.652.1600 I PEARLANDTX.GOV
FORV/S
2700 Post Oak Boulevard, Suite 1500 / Houston, TX 77056
P 713.499.4600 / F 713.499.4699
forvis.com
Independent Auditor's Report
The Mayor and City Council
City of Pearland, Texas
Pearland, Texas
Opinions
We have audited the 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, as of and for the
year ended September 30, 2022, and the related notes to the financial statements, which collectively
comprise the City's basic financial statements as listed in the table of contents.
In our opinion, the accompanying financial statements referred to above present fairly, in all material
respects, the respective financial position of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City, as of September 30, 2022, 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.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America (GAAS). Our responsibilities under those standards are further described in the "Auditor's
Responsibilities for the Audit of the Financial Statements" section of our report. We are required to be
independent of the City, and to meet our other ethical responsibilities, in accordance with the relevant
ethical requirements relating to our audit. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinions.
Emphasis of Matter
As discussed in Note 17 to the financial statements, beginning -of -year net position for governmental
activities, business -type activities and an enterprise fund has been restated to correct a misstatement. Our
opinion is not modified with respect to this matter.
As discussed in Note 1 to the financial statements, in 2022, the City adopted new accounting guidance,
Governmental Accounting Standards Board Statement No. 87, Leases. Our opinions are not modified
with respect to this matter.
As discussed in Note 19 to the financial statements, the previously reported amounts as of September 30,
2022, for cash, restricted cash, investments, restricted investments, restricted net position, unrestricted
net position and net investment in capital assets for business -type activities and an enterprise fund has
been restated to correct a misstatement. Our opinions are not modified with respect to this matter.
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
"-) PRAXITY
��� Empowering Business Globally
The Mayor and City Council
City of Pearland, Texas
Page 2
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a
going concern for 12 months beyond the financial statement date, including any currently known
information that may raise substantial doubt shortly thereafter.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance
and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a
material misstatement when it exists. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control. Misstatements are considered material
if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment
made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements.
• Obtain an understanding of internal control relevant to the audit 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 City's internal control. Accordingly, no such opinion is
expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about the City's ability to continue as a going concern for a
reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control -related
matters that we identified during the audit.
The Mayor and City Council
City of Pearland, Texas
Page 3
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis, budgetary comparison, pension, and other postemployment benefit information
be presented to supplement the basic financial statements. Such information is the responsibility of
management and, 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 GAAS, 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.
Supplementary 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 combining and individual fund statements and
schedules are presented for purposes of additional analysis and are not a required part of the basic
financial statements. Such information is 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. The 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 GAAS. In our opinion, 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.
Other Information
Management is responsible for the other information included in the annual comprehensive financial
report. The other information comprises the introductory and statistical sections but does not include the
basic financial statements and our auditor's report thereon. Our opinions on the basic financial
statements do not cover the other information, and we do not express an opinion or any form of
assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information and the
basic financial statements, or the other information otherwise appears to be materially misstated. If,
based on the work performed, we conclude that an uncorrected material misstatement of the other
information exists, we are required to describe it in our report.
FORV IS, LLP
Houston, Texas
May 16, 2023, except as to Note 19, which is as of October 16, 2023.
City of Pearland,
Texas
Single Audit Reports
September 30, 2022
City of Pearland, Texas
September 30, 2022
Contents
Schedule of Expenditures of Federal Awards 1
Notes to the Schedule of Expenditures of Federal Awards 3
Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance with
Government Auditing Standards — Independent Auditor's Report 4
Report on Compliance for Each Major Federal Program,
Report on Internal Control Over Compliance, and
Report on Schedule of Expenditures of Federal Awards
Required by the Uniform Guidance — Independent Auditor's Report 6
Schedule of Findings and Questioned Costs 9
Summary Schedule of Prior Audit Findings 15
City of Pearland, Texas
Schedule of Expenditures of Federal Awards
Year Ended September 30, 2022
Federal Grantor/Pass-through Grantor/
Program or Cluster Title
Federal
Assistance Pass -through Entity Passed Through Total Federal
Listing Number Identifying Number to Subrecipients Expenditures
U.S. Department of Housing and Urban Development
Direct Programs
CDBG — Entitlement Grants Cluster
Community Development Block Grants /Entitlement Grants (HUD PY 2018) 14.218 B-18-MC-48-0400 $ - $ 44,035
Community Development Block Grants /Entitlement Grants (HUD PY2019) 14.218 B-19-MC-48-0400 16,550 16,550
Community Development Block Grants /Entitlement Grants - COVID 19 Stimulus CV1 (HUD PY20) 14.218 B-20-MW-48-0400 - 21,657
Community Development Block Grants /Entitlement Grants - COVID 19 Stimulus CV3 (HUD PY20) 14.218 B-20-MW-48-0400 55,878 67,017
Community Development Block Grants/Entitlement Grants (HUD PY2021- CoP FY2022) 14.218 B-21-MC-48-0400 51,262 230,363
Total CDBG — Entitlement Grants Cluster 123,690 379,622
Passed Through Texas General Land Office (GLO)
Community Development Block Grants- Disaster Recovery Grants (CDBG-DR Buyouts) 14.228 20-066-037-C245 - 6,605
Community Development Block Grants- Disaster Recovery Grants (CDBG-DR Infrastructure) 14.228 20-065-106-C288 6,605
Community Development Block Grants- Disaster Recovery Grants (CDBG-DR Infrastructure) 14.228 20-065-106-C288 - 30,763
Community Development Block Grants- Disaster Recovery Grants (CDBG-DR Infrastructure) 14.228 20-065-106-C288 7,876
Community Development Block Grants- Disaster Recovery Grants (CDBG-DR Infrastructure) 14.228 20-065-106-C288 - 29,986
Total Community Development Block Grants / State's Program and Non -Entitlement Grants in Hawaii 0 81,835
Total U.S. Department of Housing and Urban Development
U.S. Department of Justice
Direct Program
Equitable Sharing Program
Passed Through Drug Enforcement Agency
Organizational Crime Drug Enforcement Task Force
123,690 461,457
16.922 TX0201000 - 48,289
16.111 N/A 3,289
Passed Through Texas Office of the Governor — Criminal Justice Division (CJD)
Victims of Crime Act 16.575 23623-08 - 119,213
Total U.S. Department of Justice
O 170,791
U.S. Department of Transportation
Passed Through Texas Department of Transportation
Highway Planning and Construction Cluster
McHard Road (TR1405) 20.205 CSJ - 0912-31-290 - 10,243,228
Hughes Ranch Road (TR1201) 20.205 CSJ - 0912-31-311 1,692,180
Total Highway Planning and Construction Cluster 0 11,935,408
Highway Safety Cluster
DWI STEP COMP Grant 20.600 2022-pearlaPD-S-IYG-00096 9,310
DWI STEP CMV Grant 20.600 2022-pearlaPD-S-CMV-00029 - 11,418
Total Highway Safety Cluster 0 20,728
Total U.S. Department of Transportation
O 11,956,136
U.S. Department of Treasury
Direct Program
American Rescue Plan Act - Public Health Emergency Response COVID-19 21.027 SLT-0851 - 72,958
American Rescue Plan Act - Public Health Emergency Response COVID-19 21.027 SLT-0851 39,325
American Rescue Plan Act - Payroll for Public Safety Response to COVID-19 21.027 SLT-0851 - 4,418,330
American Rescue Plan Act - Program Administration COVID-19 21.027 SLT-0851 60,286
Total Coronavirus State and Local Fiscal Recovery Funds 0 4,590,899
Total U.S. Department of Treasury
O 4,590,899
The Accompanying Notes are an Integral Part of this Schedule. 1
City of Pearland, Texas
Schedule of Expenditures of Federal Awards (Continued)
Year Ended September 30, 2022
Federal Grantor/Pass-through Grantor/
Program or Cluster Title
Federal
Assistance Pass -through Entity
Listing Number Identifying Number
Passed Through Total Federal
to Subrecipients Expenditures
U.S. Environmental Protection Agency
Passed Through Texas Water Development Board
Drinking Water State Revolving Fund (DWSRF) Cluster
Capitalization Grants for Drinking Water State Revolving Funds (Meter Change -Out WA1702) 66.468 L1000612 $ $ 35,268
Capitalization Grants for Drinking Water State Revolving Funds (SWP WA1605) 66.468 L1000612 - 57,869,113
Total Drinking Water State Revolving Fund (DWSRF) Cluster 0 57,904,381
Total U.S. Environmental Protection Agency
O 57,904,381
U.S. Department of Homeland Security
Passed Through Texas Division of Emergency Management
Disaster Grants - Public Assistance (Hurricane Ike) 97.036 TX-DR1791 10,154
Passed Through Texas Water Development Board
Flood Mitigation Assistance - Home Elevation Program 97.029 1900012532 - 8,630
Direct Program
Staffing for Adequate Fire and Emergency Response(SAFER) 97.083 EMW-2018-FH-00545 622,393
Total U.S. Department of Homeland Security
Executive Office of the President
Passed Through Drug Enforcement Agency
High Intensity Drug Trafficking Areas Program
Total Executive Office of the President
Total Federal Awards Expended
O 641,177
95.001 G21HN0028A - 12,242
O 12,242
$ 123,690 $ 75,737,083
The Accompanying Notes are an Integral Part of this Schedule. 2
City of Pearland, Texas
Notes to the Schedule of Expenditures of Federal Awards
September 30, 2022
Note 1: Basis of Presentation
The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal
award activity of the City of Pearland, Texas (the City) under programs of the federal government
for the year ended September 30, 2022. The information in this Schedule is presented in
accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
(Uniform Guidance). Because the Schedule presents only a selected portion of the operations of
the City, it is not intended to and does not present the financial position, changes in net position
or cash flows of the City.
Note 2: Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such
expenditures are recognized following the cost principles contained in the Uniform Guidance or
other applicable guidance, wherein certain types of expenditures are not allowable or are limited
as to reimbursement. The City reports expenditures of federal awards for amounts provided to
subrecipients when paid in cash.
Note 3: Indirect Cost Rate
The City has elected not to use the 10 percent de minimis indirect cost rate allowed under the
Uniform Guidance.
Note 4: Federal Loan Programs
The City has outstanding loan commitments under the Capitalization Grants for Clean Water
State Revolving Funds (CFDA 66.458) and Capitalization Grants for Drinking Water State
Revolving Funds (CFDA 66.468) from the Texas Water Development Board (TWDB), as a
pass -through agency for the Environmental Protection Agency. As of September 30, 2022, the
outstanding loan payable balances were:
Program Title
Federal Loan Balance
Assistance Listing September 30,
Number 2022
Clean Water State Revolving Funds: Series 2016 A 66.458 $ 6,210,000
Clean Water State Revolving Funds: Series 2016 B 66.458 3,700,000
Clean Water State Revolving Funds: Series 2016 C 66.458 39,105,000
TWDB Drinking Water State Revolving Funds: Series 2017 A 66.468 5,175,000
TWDB Drinking Water State Revolving Funds: Series 2017 B 66.468 10,325,000
TWDB Drinking Water State Revolving Funds: Series 2018 A 66.468 7,490,000
TWDB Drinking Water State Revolving Funds: Series 2019 A 66.468 18,900,000
TWDB Drinking Water State Revolving Funds: Series 2020 A 66.468 104,010,000
TWDB Drinking Water State Revolving Funds: Series 2021 A 66.468 73,275,000
3
FORV/S
2700 Post Oak Boulevard, Suite 1500 / Houston, TX 77056
P 713.499.4600 / F 713.499.4699
forvis.com
Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance with
Government Auditing Standards
Independent Auditor's Report
Audit Committee and City Council
City of Pearland, Texas
Pearland, Texas
We have audited, in accordance with the 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 (Government Auditing Standards), the financial
statements of the governmental activities, the business -type activities, each major fund, and the
aggregate remaining fund information of City of Pearland, Texas, as of and for the year ended
September 30, 2022, and the related notes to the financial statements, which collectively comprise the
City's basic financial statements, and have issued our report thereon dated May 16, 2023, except as to
Note 19, which is as of October 16, 2023, which contained an "Emphasis of Matter" paragraph regarding
a change in accounting principle and restatements of the prior year and previously issued current year
financial statements.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal control
over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in
the circumstances for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do
not express an opinion on the effectiveness of the City's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a
timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough to merit attention by those charged
with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph and was
not designed to identify all deficiencies in internal control that might be material weaknesses or significant
deficiencies, and therefore, material weaknesses or significant deficiencies may exist that were not
identified. We identified certain deficiencies in internal control, described in the accompanying schedule
of findings and responses as items 2022-001, 2022-002 and 2022-003, that we consider to be material
weaknesses.
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
"') PRAXITV
��� Empowering Business Globally
Audit Committee and City Council
City of Pearland, Texas
Page 5
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on
the financial statements. However, providing an opinion on compliance with those provisions was not an
objective of our audit, and accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards.
The City's Response to Findings
Government Auditing Standards requires the auditor to perform limited procedures on the City's response
to the findings identified in our audit and described in the accompanying schedule of findings and
questioned costs. The City's response was not subjected to the other auditing procedures applied in the
audit of the financial statements, and accordingly, we express no opinion on the response.
Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entity's internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
FOIVt S,LLP
Houston, Texas
May 16, 2023, except as to Note 19 and Finding 2022-003, which is as of October 16, 2023.
FORV/S
2700 Post Oak Boulevard, Suite 1500 / Houston, TX 77056
P 713.499.4600 / F 713.499.4699
forvis.com
Report on Compliance for Each Major Federal Program,
Report on Internal Control Over Compliance, and
Report on Schedule of Expenditures of Federal Awards
Required by the Uniform Guidance
Independent Auditor's Report
Audit Committee and City Council
City of Pearland, Texas
Pearland, Texas
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited City of Pearland, Texas's compliance with the types of compliance requirements
identified as subject to audit in the OMB Compliance Supplement that could have a direct and material
effect on each of the City's major federal programs for the year ended September 30, 2022. The City's
major federal programs are identified in the summary of auditor's results section of the accompanying
schedule of findings and questioned costs.
In our opinion, The City complied, in all material respects, with the compliance requirements referred to
above that could have a direct and material effect on each of its major federal programs for the year
ended September 30, 2022.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America (GAAS); the standards applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller General of the United States (Government Auditing
Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in
the "Auditor's Responsibilities for the Audit of Compliance" section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in
accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each
major federal program. Our audit does not provide a legal determination of the City's compliance with the
compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design,
implementation, and maintenance of effective internal control over compliance with the requirements of
laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City's
federal programs.
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
"') PRAXITV
��� Empowering Business Globally
Audit Committee and City Council
City of Pearland, Texas
Page 7
Auditor's Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the
compliance requirements referred to above occurred, whether due to fraud or error, and express an
opinion on the City's compliance based on our audit. Reasonable assurance is a high level of assurance
but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with
GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material
noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is
higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control. Noncompliance with the compliance requirements
referred to above is considered material, if there is a substantial likelihood that, individually or in the
aggregate, it would influence the judgment made by a reasonable user of the report on compliance about
the City's compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform
Guidance, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material noncompliance, whether due to fraud or error, and
design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the City's compliance with the compliance
requirements referred to above and performing such other procedures as we considered
necessary in the circumstances.
• Obtain an understanding of the City's internal control over compliance relevant to the audit in
order to design audit procedures that are appropriate in the circumstances and to test and report
on internal control over compliance in accordance with the Uniform Guidance, but not for the
purpose of expressing an opinion on the effectiveness of the City's internal control over
compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and any significant deficiencies and material weaknesses in
internal control over compliance that we identified during the audit.
Report on Internal Control Over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a
federal program on a timely basis. A material weakness in internal control over compliance is a
deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a
reasonable possibility that material noncompliance with a type of compliance requirement of a federal
program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in
internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over
compliance with a type of compliance requirement of a federal program that is less severe than a material
weakness in internal control over compliance, yet important enough to merit attention by those charged
with governance.
Audit Committee and City Council
City of Pearland, Texas
Page 8
Our consideration of internal control over compliance was for the limited purpose described in the
"Auditor's Responsibilities for the Audit of Compliance" section above and was not designed to identify all
deficiencies in internal control over compliance that might be material weaknesses or significant
deficiencies in internal control over compliance. Given these limitations, during our audit we did not
identify any deficiencies in internal control over compliance that we consider to be material weaknesses,
as defined above. However, material weaknesses or significant deficiencies in internal control over
compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of the
Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Report on Schedule of Expenditures of Federal Awards Required by the Uniform
Guidance
We have audited the financial statements of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of City of Pearland, Texas, as of and for the
year ended September 30, 2022, and the related notes to the financial statements, which collectively
comprise the City's basic financial statements. We have issued our report thereon dated May 16, 2023,
except as to Note 19, which is as of October 16, 2023, which contained an unmodified opinion on those
financial statements and "Emphasis of Matters" paragraphs regarding a change in accounting principle
and restatements of prior year and previously issued current year financial statements. Our audit was
conducted for the purpose of forming opinions on the financial statements that collectively comprise the
basic financial statements. The accompanying schedule of expenditures of federal awards is presented
for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the
basic financial statements. Such information is 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. The information has been subjected to the auditing procedures applied in the audit of the
financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our opinion,
the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the
basic financial statements as a whole.
FOM1 I5, LL-P
Houston, Texas
May 16, 2023
City of Pearland, Texas
Schedule of Findings and Questioned Costs
Year Ended September 30, 2022
Section 1 — Summary of Auditor's Results
Financial Statements
1. Type of report the auditor issued on whether the financial statements audited were prepared in
accordance with GAAP:
® Unmodified ❑ Qualified n Adverse n Disclaimer
2. Internal control over financial reporting:
Significant deficiency(ies) identified? ❑ Yes ® None reported
Material weakness(es) identified? ® Yes n No
3. Noncompliance material to the financial statements noted? ❑ Yes ® No
Federal Awards
4. Internal control over major federal awards programs:
Significant deficiency(ies) identified? n Yes ® None reported
Material weakness(es) identified? ❑ Yes ® No
5. Type of auditor's report issued on compliance for major federal awards programs:
® Unmodified n Qualified n Adverse n Disclaimer
6. Any audit findings disclosed that are required to be reported by
2 CFR 200.516(a)? ❑ Yes ® No
7. Identification of major federal programs:
Assistance Listing Number Name of Federal Program or Cluster
21.027 Coronavirus State and Local Fiscal Recovery Funds
66.468 Drinking Water State Revolving Fund (DWSRF) Cluster
8. Dollar threshold used to distinguish Type A and Type B federal programs: $2,272,112
9. Auditee qualified as a low -risk auditee? ❑ Yes ® No
9
City of Pearland, Texas
Schedule of Findings and Questioned Costs (Continued)
Year Ended September 30, 2022
Section II — Financial Statement Findings
Reference
Number
2022-001
Finding
Finding: Capital Assets
Criteria or Specific Requirement: Management is responsible for establishing and maintaining
effective internal controls over financial reporting. Effective internal controls are an important
component of a system that helps ensure transactions are recorded timely and in the proper
reporting period, thereby providing accurate financial data. Specifically, the City should have
controls in place to ensure that all capital assets are complete, properly recorded and reported in the
proper period. Accounting principles generally accepted in the United States of America (US
GAAP) that address the proper recognition and accounting of capital assets include:
• GASB Statement No. 34, Basic Financial Statements — and Management's Discussion and
Analysis — for State and Local Governments
• GASB Statement No. 37, Basic Financial Statements — and Management's Discussion and
Analysis — for State and Local Governments: Omnibus — an amendment of GASB
Statements No. 21 and No. 34
• Various implementation guidance issued by GASB
Conditions:
Completed Projects not Capitalized:
The City did not capitalize several construction projects when completed resulting in an
understatement of accumulated depreciation in Governmental Activities. An audit adjustment
was proposed and recorded by the City to restate beginning of year net position by approximately
$2.3 million to properly reflect beginning of year accumulated depreciation, and to record
depreciation expense of approximately $1.6 million for the year ended September 30, 2022.
The City did not capitalize several construction projects when completed resulting in an
understatement of accumulated depreciation in business type activities and the water and sewer
fund. An audit adjustment was proposed and recorded by the City to restate beginning of year net
position by approximately $4.6 million to properly reflect beginning of year accumulated
depreciation, and to record depreciation expense of approximately $2.6 million for the year
ended September 30, 2022.
Completed Projects not Capitalized Timely:
The City understated depreciation expense and accumulated depreciation in government type
activities for projects placed in service during the current year by approximately $786,000 for the
year ended September 30, 2022.
Beginning net position of government type activities, business type activities, and the water and
sewer fund is overstated by approximately $2 million, $451,000, and $451,000, respectively, as a
result of understated depreciation amounts in the prior year. The understatements are the result of
the City placing all completed projects during the year into service as of the last day of the fiscal
year, rather than the specific date that the project was completed during the year.
10
City of Pearland, Texas
Schedule of Findings and Questioned Costs (Continued)
Year Ended September 30, 2022
Section II — Financial Statement Findings (Continued)
Reference
Number
2022-001
2022-002
Finding
Finding: Capital Assets (Continued)
Capital Asset Tracking:
The City's subsidiary ledger for capital assets does not agree to the City's trial balance amounts,
some differences are due to entries into the system made in implementation of the capital asset
subledger in prior years.
Capital Projects:
The City incorrectly reported $5.1 million in capital project costs. An audit adjustment was
proposed and recorded by the City to capitalize the project costs.
Governmental Activities:
The City uses fund 810 to capture capital asset activity related to Governmental Activities during
the year. The City was unable to reconcile capital outlay expenditures in the governmental funds
to the fund 810 additions during the year, resulting in an unlocated difference of $2.7 million
Effect: The conditions noted above resulted in adjustments as indicated above.
Cause: The City experienced significant changes in staffing in the finance department.
Finding is a repeat finding; see prior year Finding 2021-002.
Recommendation: We recommend the City reconcile the capital asset data within the asset
accounting module to the general ledger on at least a quarterly basis. Training should also continue
for all City personnel with responsibility over capital assets to ensure an understanding of the asset
accounting module and proper recording and recognition of capital assets. We also recommend
communication with the project managers at least quarterly to ensure projects are properly
transferred to a depreciable asset category once the project is complete and placed in operations.
Should the City experience future significant changes in the finance department, we recommend
that the City consider extending the year-end close timeline to allow time for City staff to review
balances and supporting reconciliations prior to beginning the financial statement audit.
Views of Responsible Officials: The City agrees with the finding. See separate report for planned
corrective actions.
Finding: Accrued Revenues and Liabilities
Criteria or Specific Requirement: Management is responsible for establishing and maintaining
effective internal controls over financial reporting. Effective internal controls are an important
component of a system that helps ensure transactions are recorded timely and in the proper
reporting period, thereby providing accurate financial data. Specifically, the City should have
controls in place to ensure that all accrued revenues and liabilities are properly recorded.
Accounting principles generally accepted in the United States of America (US GAAP) that address
the proper recognition and accounting of accrued revenues and liabilities include the following.
11
City of Pearland, Texas
Schedule of Findings and Questioned Costs (Continued)
Year Ended September 30, 2022
Section II — Financial Statement Findings (Continued)
Reference
Number
2022-002
Finding
Finding: Accrued Revenues and Liabilities (Continued)
Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial
Statements — and Management's Discussion and Analysis — for State and Local Governments,
GASB Statement No. 33 Accounting and Financial Reporting for Nonexchange Transactions,
GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance
Contained in Pre -November 30, 1989 FASB and AICPA Pronouncements, paragraph 23,
GASB Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related
Insurance Issues (GASB Cod. sec. C50), as amended by GASB Statement No. 30, Risk
Financing Omnibus, an amendment of GASB Statement No. 10 and GASB Statement No. 66,
Technical Corrections-2012—an amendment of GASB Statements No. 10 and No. 62, and
various implementation guidance issued by GASB
Condition: Misstatements of various accrued revenues and liabilities as of September 30, 2022,
included:
• Unbilled accounts receivable for the Solid Waste Fund was overstated by approximately
$500,000 in the prior year. An adjustment was proposed and recorded by the City to correct
beginning net position of the Solid Waste Fund.
• The City did not record grants receivable for eligible expenditures incurred through
year-end. An audit adjustment of approximately $5.8 million was proposed and recorded by
the City to accrue grant revenues for eligible grant expenditures incurred through year-end.
• The City did not record compensated absences liabilities for the Water and Sewer Fund and
for the Internal Service Funds. Audit adjustments of approximately $856 thousand and $50
thousand, respectively, were proposed and recorded by the City to record the liabilities.
• The City recorded retainage payables for the Water and Sewer Fund (Business -type
Activities) projects in Governmental Activities. An audit adjustment of $8 4 million was
proposed and recorded by the City to remove the retainage payables from Governmental
Activities, and to record them in the Water and Sewer Fund and Business -type Activities.
• The City recorded transactions related to the payroll for the pay period ended September 30,
2022, and paid on October 7, 2022, as a reduction of cash as of September 30, 2022. An
audit adjustment of approximately $1.5 million was proposed and recorded by the City to
record the transactions as accrued payroll as of year-end, and to adjust cash.
• The City understated incurred but not reported health care claims by approximately
$412,000 as of September 30, 2022. An audit adjustment was proposed and recorded by the
City to correct the balance.
Effect: The conditions noted above resulted in proposed audit adjustments as indicated above.
Cause: The City experienced significant changes in staffing in the finance department.
12
Section II —
Reference
Number
2022-002
2022-003
City of Pearland, Texas
Schedule of Findings and Questioned Costs (Continued)
Year Ended September 30, 2022
Financial Statement Findings (Continued)
Finding
Finding: Accrued Revenues and Liabilities (Continued)
Recommendation: We recommend that the City establish policies and procedures over year-end
accruals of both revenue and liabilities and create comprehensive year-end checklists to be
followed. Should the City experience future significant changes in the finance department staffing,
we recommend that the City consider extending the year-end close timeline to allow time for City
staff to reconcile accounts, prepare year-end workpapers and also for internal review of the
reconciliations and workpapers prior to beginning the financial statement audit.
Views of Responsible Officials: The City agrees with the finding. See separate report for planned
corrective actions.
Finding: Restricted Assets and Net Position Classification
Criteria or Specific Requirement: Management is responsible for establishing and maintaining
effective internal controls over financial reporting. Effective internal controls are an important
component of a system that helps ensure transactions are recorded timely and in the proper
reporting period, thereby providing accurate financial data. Specifically, the City should have
controls in place to ensure that all financial statement balances are properly classified. Accounting
principles generally accepted in the United States of America (US GAAP) that address the proper
classification of proprietary fund restricted assets and net position include:
Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial
Statements — and Management's Discussion and Analysis —for State and Local Governments,
and various implementation guidance issued by GASB
Condition: The City misstated the amounts previously reported for cash, restricted cash,
investments, restricted investments, net investment in capital assets, restricted net position and
unrestricted net position in the business -type activities and an enterprise fund financial statements
as of September 30, 2022.
Effect: The conditions noted above resulted in restatements as indicated above.
Cause: The City experienced significant changes in staffing in the finance department.
Recommendation: We recommend that the City establish policies and procedures over the review
of financial statements to ensure balances are properly classified prior to issuance of the financial
statements.
Views of Responsible Officials: The City agrees with the finding. See separate report for planned
corrective actions.
13
City of Pearland, Texas
Schedule of Findings and Questioned Costs (Continued)
Year Ended September 30, 2022
Section III — Federal Award Findings and Questioned Costs
Reference Number Finding
No matters are reportable.
14
City of Pearland, Texas
Summary Schedule of Prior Audit Findings
Year Ended September 30, 2022
Reference
Number Summary of Finding Status
2021-001
2021-002
Finding: Grant Revenues Resolved
Finding: Capital Assets Unresolved
See Repeat Finding 2022-001
15
FORV/S
Report to the Honorable
Mayor and City Council
Members
City of Pearland, Texas
Results of the 2022 Financial Statement
Audit, Including Required Communications
Houston, Texas
September 30, 2022
forvis.com
FORVIS is atrademark of FORVIS. LLP. registration of which is pending with the U.S. Patent and Trademark Office
Required Communications Regarding Our Audit Strategy and
Approach (AU-C 260)
The following matters are required communications we must make to you, including these responsibilities:
Overview and Responsibilities
Matter Discussion
Scope of Our This report covers audit results related to your financial statements and supplementary
Audit information:
Our
Responsibilities
Audit Scope and
Inherent
Limitations to
Reasonable
Assurance
FO R V/S
• As of and for the year ended September 30, 2022
• Conducted in accordance with our contract dated June 9, 2022
FORVIS is responsible for forming and expressing opinions about whether the financial
statements that have been prepared by management, with the oversight of those charged
with governance, are prepared in accordance with accounting principles generally accepted in
the United States of America (GAAP).
An audit performed in accordance with auditing standards generally accepted in the United
States of America (GAAS) is designed to obtain reasonable, rather than absolute, assurance
about the financial statements. The scope of our audit tests was established in relation to the
financial statements taken as a whole and did not include a detailed audit of all transactions.
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas 1 October 16, 2023
Matter Discussion
Extent of Our
In addition to areas of interest and noting prior communications made during other phases of
Communication the engagement, this report includes communications required in accordance with GAAP that
are relevant to the responsibilities of those charged with governance in overseeing the
financial reporting process, including audit approach, results, and internal control. The
standards do not require the auditor to design procedures for the purpose of identifying other
matters to be communicated with those charged with governance.
Independence
Your
Responsibilities
Distribution
Restriction
FO R V/S
The engagement team, others in our firm, as appropriate, and our firm, have complied with all
relevant ethical requirements regarding independence.
Our audit does not relieve management or those charged with governance of your
responsibilities. Your responsibilities and ours are further referenced in our contract.
This communication is intended solely for the information and use of the following and is not
intended to be, and should not be, used by anyone other than these specified parties:
• The City Council, Audit Committee, and Management
• Others within the City
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
2
October 16, 2023
Ur Ur Wr I/ Mr 1V
Government Auditing Standards
Matter Discussion
Additional
GAGAS
Reporting
Reporting
Limitations
We also provided reports as of September 30, 2022, on the following as required by GAGAS:
• Internal control over financial reporting and on compliance and other matters based on
an audit of the financial statements performed in accordance with GAGAS
Our consideration of internal control over financial reporting and our tests of compliance were
not designed with an objective of forming an opinion on the effectiveness of internal control or
on compliance, and accordingly, we do not express such an opinion.
Uniform Guidance Overview and Responsibilities
9
Matter Discussion
Scope of Our We also provided reports as of September 30, 2022, on the following as required by U.S.
Audit Office of Management and Budget (OMB) Uniform Guidance:
• Opinion on compliance for each major federal award program
• Report on internal control over compliance
• Schedule of Expenditures of Federal Awards
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
3
October 16, 2023
Discussion
Audit Scope and
Inherent
Limitations to
Reasonable
Assurance
FO R V/S
A compliance audit performed in accordance with OMB Uniform Guidance is designed to
obtain reasonable, rather than absolute, assurance about whether noncompliance with the
types of compliance requirements described in the OMB Compliance Supplement that could
have a direct and material effect on a major federal award program occurred.
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
4
October 16, 2023
INF
Other Information Accompanying the Audited Financial Statements
The audited financial statements are presented along with management's annual comprehensive financial report.
Management, or those charged with governance, is responsible for preparing the annual report.
We were not engaged to audit the information contained in the annual report, and as a result, our opinions do not
provide assurance as to the completeness and accuracy of the information contained therein.
As part of our procedures, we read the entire report to determine if financial information discussed in sections
outside the financial statements materially contradicts the audited financial statements. If we identify any such
matters, we bring them to management's attention and review subsequent revisions.
Auditor Objectives Related to Other Information
Our objectives related to the other information accompanying the audited financial statements were to:
• Consider whether a material inconsistency exists between the other information and the financial statements
• Remain alert for indications that:
o A material inconsistency exists between the other information and the auditor's knowledge obtained in
the audit, or
o A material misstatement of fact exists or the other information is otherwise misleading
• Respond appropriately when we identify that such material inconsistencies appear to exist or when we
otherwise become aware that other information appears to be materially misstated. Potential responsive
actions would include requesting management to correct the identified inconsistency
• Include the appropriate communication in our auditor's report, disclosing the procedures performed on the
Other Information, as well as the results obtained:
o No material inconsistencies were identified
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas 5 October 16, 2023
Qualitative Aspects of Significant Accounting Policies and Practices
The following matters are detailed in the following pages and included in our assessment:
Significant Accounting Policies
Significant accounting policies are described in Note 1 of the audited financial statements.
With respect to new accounting standards adopted during the year, we call to your attention the following topics
detailed in the following pages:
• GASB 87, Leases
Unusual Policies or Methods
With respect to significant unusual accounting policies or accounting methods used for significant unusual
transactions (significant transactions outside the normal course of business or that otherwise appear to be unusual
due to their timing, size, or nature), we noted the following:
• No matters are reportable
Alternative Accounting Treatments
We had discussions with management regarding alternative accounting treatments within GAAP for policies and
practices for material items, including recognition, measurement, and disclosure considerations related to the
accounting for specific transactions as well as general accounting policies, as follows:
• No matters are reportable
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
6
October 16, 2023
lEriff
Management Judgments and Accounting Estimates
Accounting estimates are an integral part of financial statement preparation by management, based on its
judgments. Significant areas of such estimates for which we are prepared to discuss management's estimation
process and our procedures for testing the reasonableness of those estimates include:
• Unbilled accounts receivable
• Allowance for uncollectible receivables
• Pension liability
• OPEB liability
• Incurred but not reported self -insured claims liabilities
• Useful lives of capital assets
Financial Statement Disclosures
The following areas involve particularly sensitive financial statement disclosures for which we are prepared to
discuss the issues involved and related judgments made in formulating those disclosures:
• Employee retirement system — TMRS
• Other postemployment liabilities
• Restatements to Fiscal Year 2022 Financial Statements
Our Judgment About the Quality of the City's Accounting Principles
During the course of the audit, we made the following observations regarding the City's application of accounting
principles:
• The City implemented GASB 87, Leases, during the period ending September 30, 2022.
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas 7 October 16, 2023
• The City restated beginning net position for correction of errors related to capital assets and accounts
receivable.
• The City restated balances as previously reported in the previously issued financial statements as of
September 30, 2022, to correct errors in the previously reported balances for cash, restricted cash,
investments, restricted investments, net investment in capital assets, restricted net position and unrestricted
net position in the business -type activities and the water and sewer fund.
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
8
October 16, 2023
Significant Accounting Policies and Alternative Treatments — Details
GASB 87, Leases
Effective October 1, 2021, the City adopted GASB 87, Leases. GASB 87 creates one model for recognizing leases
for both lessees and lessors. Substantially all leases are recognized on the lessee's statement of net position.
In the activity statement, lessees no longer report rent expense for the previously classified operating leases but
instead report interest expense on the liability and amortization expense related to the asset. Lessors recognize a
lease receivable and corresponding deferred inflow of resources. Interest income associated with the receivable are
recognized using the effective interest method.
Adoption of GASB 87 required significant time to identify a complete list of lease contracts for consideration of
adoption and measure the lease assets and liabilities for recognition. In addition, due to adoption of the standard,
the City's key performance indicators related to the statement of net position are likely not comparable to historical
results.
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
9
October 16, 2023
Adjustments Identified by Audit
During the course of any audit, an auditor may propose adjustments to financial statement amounts. Management
evaluates our proposals and records those adjustments that, in its judgment, are required to prevent the financial
statements from being materially misstated.
A misstatement is a difference between the amount, classification, presentation, or disclosure of a reported financial
statement item and that which is required for the item to be presented fairly in accordance with the applicable
financial reporting framework.
Proposed and Recorded Adjustments
Auditor -proposed and management -recorded entries include the following:
• Construction in progress, depreciable assets, depreciation expense, accumulated depreciation, expenses and
beginning net position
• Compensated absences liabilities
• Retainage payable and capital project expense/expenditures and related construction in progress
• Incurred but not reported health care claim liabilities and related health care claim expenses
• Accrued payroll and related liabilities
• Cash
• Sales taxes payable
• Grant revenues and receivables
• Accounts payable
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
10
October 16, 2023
Wr
• Adjustments to convert modified accrual basis statements to full accrual statements related to (outsourced to
FORVIS):
o Beginning net position/fund balance
o Adjustments to record TMRS Supplemental Death Benefit Fund total OPEB liability and related amounts
including deferred outflows of resources and deferred inflows of resources
o Adjustments to record Retiree Healthcare Plan total OPEB liability and related amounts including
deferred outflows of resources and deferred inflows of resources
o Adjustments to record TMRS net pension liability and related amounts including deferred outflows of
resources and deferred inflows of resources
o Adjustment to report internal service fund balances as government type activities, and reflect internal
balance related to portion attributable to business type activities as internal balances
o Reclassifications to convert from fund financial statements to government wide financial statements
Uncorrected Misstatements
Some adjustments proposed were not recorded because their aggregate effect is not currently material; however,
they involve areas in which adjustments in the future could be material, individually or in the aggregate.
Uncorrected audit misstatements pertaining to the latest period presented that were determined by management to
be immaterial, both individually and in the aggregate, but more than trivial to the financial statements as a whole are
included as an attachment to this communication.
While these uncorrected misstatements were deemed to be immaterial to the current -year financial statements, it is
possible that the impact of these uncorrected misstatements, or matters underlying these uncorrected
misstatements, could potentially cause future -period financial statements to be materially misstated.
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
11
October 16, 2023
INF Eir lEr=r1NrW
Nature of Uncorrected Misstatements
• Depreciation expense, accumulated depreciation, and beginning net position
• Capital assets and expense
• Revenues and beginning net position related to understated fuel inventory balances in the prior year, with the
correction recorded through current year revenue
• Revenues and beginning net position related to refund issued in prior year that was incorrectly posted against
revenue in the prior year instead of decreasing the liability, with the correction recorded through current year
revenue
• Payroll liability accruals, retirement expense and cash related to the October 7, 2022 pay date, that was
recorded in error as a cash transaction on September 30, 2022
• Leases receivable and deferred inflow of resources
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
12
October 16, 2023
WIWW
Other Required Communications
Other Material Communications
Listed below are other material communications between management and us related to the audit:
• Management representation letter (see Attachments)
• We orally communicated to management other deficiencies in internal control identified during our audit that
are not considered material weaknesses or significant deficiencies
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
13
October 16, 2023
Required Communications Regarding Internal Control (AU-C 265)
Consideration of Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements of the City as of and for the year ended
September 30, 2022, in accordance with GAAP, we considered the City's internal control over financial reporting
(internal control).
This consideration served as a basis for designing audit procedures that are appropriate in the circumstance for the
purpose of expressing our opinion on the financial statements.
However, this consideration was not for the purpose of expressing an opinion on the effectiveness of the City's
internal control.
Accordingly, we do not express an opinion on the effectiveness of the City's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraphs and was not
designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies
and, therefore, material weaknesses or significant deficiencies may exist that were not identified.
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
14
October 16, 2023
Ur Ur W Tr Tr
Categorizing Deficiencies by Severity
Deficiency
A deficiency in internal control
exists when the design or
operation of a control does not
allow management or employees,
in the normal course of performing
their assigned functions, to prevent
or detect and correct
misstatements on a timely basis.
Significant Deficiency
A significant deficiency is a
deficiency, or combination of
deficiencies, in internal control that
is less severe than a material
weakness, yet important enough to
merit attention by those charged
with governance.
Material Weakness
A material weakness is a
deficiency, or a combination of
deficiencies, in internal control,
such that there is a reasonable
possibility that material
misstatements of the City's
financial statements will not be
prevented or detected and
corrected on a timely basis.
Identified Deficiencies
We identified deficiencies in internal control that we consider to be material weaknesses.
Material Weaknesses
Refer to the Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government
Auditing Standards.
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas 15 October 16, 2023
Attachments
Management Representation Letter
As a material communication with management, included herein is a copy of the representation letter provided by
management at the conclusion of our engagement.
Schedule of Uncorrected Misstatements
The detail of uncorrected misstatements identified as a result of our engagement are included herein.
Accounting Matters to Watch — Future Accounting Standards
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
16
October 16, 2023
liMa Mr
Appendix
Management Representation Letter
FORV/S
FORV1S is a trademark of FORVIS, LLP, registration o1 which is pending with the U.S_ Patent and Trademark Office
City of Pearland, Texas October 16, 2023
DocuSign Envelope ID: AC6CBD5F-7609-421C-867B-DB27B10E1AFB
Representation of:
City of Pearland, Texas
3519 Liberty Drive
Pearland, Texas 77581
Provided to:
FORVIS, LLP
Certified Public Accountants
2700 Post Oak Blvd, Suite 1500
Houston, Texas 77056
The undersigned ("We") are providing this letter in connection with FORVIS' audit of our financial
statements as of and for the year ended September 30, 2022.
We are also providing this letter in connection with:
• Your audit of our compliance with requirements applicable to each of our major federal awards
programs as of and for the year ended September 30, 2022.
Our representations are current and effective as of the date of FORVIS' report: October 16, 2023.
Our engagement with FORVIS is based on our contract for services dated: June 9, 2022, as amended on
September 18, 2023.
Our Responsibility & Consideration of Material Matters
We confirm that we are responsible for the fair presentation of the financial statements subject to FORVIS'
report in conformity with accounting principles generally accepted in the United States of America.
We are also responsible for adopting sound accounting policies; establishing and maintaining effective
internal control over financial reporting, operations, and compliance; and preventing and detecting fraud.
Certain representations in this letter are described as being limited to matters that are material. Items are
considered material, regardless of size, if they involve an omission or misstatement of accounting
information that, in light of surrounding circumstances, makes it probable that the judgment of a reasonable
person relying on the information would be changed or influenced by the omission or misstatement. An
omission or misstatement that is monetarily small in amount could be considered material as a result of
qualitative factors.
Confirmation of Matters Specific to the Subject Matter of FORVIS' Report
We confirm, to the best of our knowledge and belief, the following:
Broad Matters
1. We have fulfilled our responsibilities, as set out in the terms of our contract, for the preparation
and fair presentation of the financial statements in accordance with accounting principles generally
accepted in the United States of America.
2. We acknowledge our responsibility for the design, implementation, and maintenance of:
DocuSign Envelope ID: AC6CBD5F-7609-421C-867B-DB27B10E1AFB
City of Pearland, Texas
Page 2
a. Internal control relevant to the preparation and fair presentation of financial statements
that are free from material misstatement, whether due to fraud or error.
b. Internal control to prevent and detect fraud.
3. We have provided you with:
a. Access to all information of which we are aware that is relevant to the preparation and fair
presentation of the financial statements, such as financial records and related data,
documentation, and other matters.
b. Additional information that you have requested from us for the purpose of the audit.
c. Unrestricted access to persons within the entity from whom you determined it necessary
to obtain audit evidence.
4. We have responded fully and truthfully to all your inquiries.
Government Auditing Standards
5. We have a process to track the status of audit findings and recommendations.
6. We have provided our views on any findings, conclusions, and recommendations, as well as our
planned corrective actions with respect thereto, to you for inclusion in the findings and
recommendations referred to in your report on internal control over financial reporting and on
compliance and other matters based on your audit of the financial statements performed in
accordance with Government Auditing Standards.
Nonattest Services
7. You have provided nonattest services, including the following, during the period of this
engagement:
• Preparing a draft of the annual comprehensive financial report
• Calculating net position in capital assets for the water and sewer fund and business -type
activities
8. With respect to these services:
a. We have designated a qualified management -level individual to be responsible and
accountable for overseeing the nonattest services.
b. We have established and monitored the performance of the nonattest services to ensure
they meet our objectives.
c. We have made any and all decisions involving management functions with respect to the
nonattest services and accept full responsibility for such decisions.
d. We have evaluated the adequacy of the services performed and any findings that resulted.
e. Established and maintained internal controls, including monitoring ongoing activities.
f. We have received the deliverables from you and have stored these deliverables in
information systems controlled by us. We have taken responsibility for maintaining internal
control over these deliverables.
DocuSign Envelope ID: AC6CBD5F-7609-421C-867B-DB27B10E1AFB
City of Pearland, Texas
Page 3
Financial Statements & Reports
9. We have reviewed and approved a draft of the financial statements and related notes referred to
above, which you prepared in connection with your audit of our financial statements. We
acknowledge that we are responsible for the fair presentation of the financial statements and
related notes.
10. The entity has restated the 2022 financial statements to conform with accounting principles
generally accepted in the United States of America. Management has provided you with all
relevant information regarding the restatement. We are not aware of any other known matters that
required correction in the financial statements.
11. With regard to other information that is presented in the form of our annual comprehensive financial
report:
a. We confirm that the annual comprehensive financial report comprises the annual report
for the entity.
b. We have reviewed and approved the final draft of the annual report.
Transactions, Records, & Adjustments
12. The entity has appropriately reconciled its general ledger accounts to their related supporting
information. All related reconciling items considered to be material were identified and included on
the reconciliations and were appropriately adjusted in the financial statements..
13. We have everything we need to keep our books and records.
Governmental Accounting & Disclosure Matters
14. With regard to deposit and investment activities:
a. Disclosures of deposit and investment balances and risks in the financial statements are
consistent with our understanding of the applicable laws regarding enforceability of any
pledges of collateral.
b. Restricted assets as reported in the proprietary funds are properly stated and include all
funds required to be reported as required by Governmental Accounting Standards Board
Statement No. 34.
c. We have title to all cash and investment accounts as reported in the financial statements.
15. Components of net position (net investment in capital assets, restricted, and unrestricted) and
classifications of fund balance (nonspendable, restricted, committed, assigned, and unassigned)
are properly classified and, if applicable, approved.
16. We have appropriately disclosed the entity's policy regarding whether to first apply restricted or
unrestricted resources when an expense is incurred for purposes for which both restricted and
unrestricted net position/fund balance is available and have determined that net position is
properly recognized under the policy.
17. The supplementary information required by the Governmental Accounting Standards Board,
consisting of management's discussion and analysis, budgetary comparisons, pension, and other
postemployment benefit information, has been prepared and is measured and presented in
conformity with the applicable GASB pronouncements, and we acknowledge our responsibility for
DocuSign Envelope ID: AC6CBD5F-7609-421C-867B-DB27B10E1AFB
City of Pearland, Texas
Page 4
the information. The information contained therein is based on all facts, decisions, and conditions
currently known to us and is measured using the same methods and assumptions as were used
in the preparation of the financial statements. We believe the significant assumptions underlying
the measurement and/or presentation of the information are reasonable and appropriate. There
has been no change from the preceding period in the methods of measurement and presentation.
General Government Matters
18. We have exercised due care in the preparation of the introductory and statistical sections included
in our annual comprehensive financial report (ACFR) and are not aware of any information
contained therein that is inconsistent with the information contained in our basic financial
statements.
Accounting & Disclosure
19. Except as reflected in the financial statements, there are no:
a. Arrangements with financial institutions involving compensating balances or other
arrangements involving restrictions on cash balances, lines of credit, or similar
arrangements.
�DocuSigned by:
Trenf pperso'n, City Manager
tepperson@pearlandtx.gov
rcr
na
DtHcocuQ Signed by:
Amy �o� D�Das
uckert, Chief Financial Officer
abuckert@pearlandtx.gov
Appendix B
Schedule of Uncorrected Misstatements
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
October 16, 2023
DocuSign Envelope ID: 3F863D5B-6721-4B9C-A718-1EC057F71661
City of Pearland, Texas
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the financial
statements if the uncorrected misstatements identified were corrected.
Governmental Activities (Government -Wide Statements)
QUANTITATIVE ANALYSIS
Total Assets & Deferred Outflows
Total Liabilities & Deferred Inflows
Total Net Assets
General Revenues & Transfers
Net Program Revenues/ Expenses
Change in Net Assets
Before
Misstatements
Misstatements
Subsequent to
Misstatements
% Change
1,153,624,321
2,305,179
1,155,929,500
0.20%
(533,827,669)
622,375
(533,205,294)
-0.12%
(619,796,652)
(2,927,554)
(622,724,206)
0.47%
(164,851,223)
5,704
(164,845,519)
134,389,183
(1,919,047)
132,470,136
-1.43%
(30,462,040)
(1,913,343)
(32,375,383)
6.28%
DocuSign Envelope ID: 3F863D5B-6721-4B9C-A718-1EC057F71661
Client: City of Pearland, Texas
Period Ending: September 30, 2022
Description
Financial Statement Line Item
Factual (F),
Judgmental (J) or
Projected (P)
Assets
Governmental Activities (Government -Wide Statements)
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Liabilities
DR (CR)
DR (CR)
To adjust for difference in capital
asset and related accumulated
depreciation values as recorded in
the trial balance and the capital asset
trarkinn system
F
3,019,825
0
To record depreciation on assets
completed and capitalized during the
current year, but under depreciated.
F
(785,499)
0
Turnaround effect from prior year
passed AJE regarding
understatement of depreciation on
capital assets capitalized in prior
F
(1,986,936)
0
VPars
To adjust for unlocated difference in
F
capital outlay expenditures and fund
810 capital outlay additions.
2,685,868
0
To correct for error in recording of
GASB 87 record lease receivable
F
and deferred inflow of resources for
Clear Wireless.
(628,079)
622,375
Total passed adjustments
2,305,179
622,375
Net Program
General Revenues Revenues/
& Transfers Expenses
Net Assets
DR (CR)
DR (CR)
DR (CR)
0
(18,678)
(3,001,147)
0
785,499
0
0
0
1,986,936
0
(2,685,868)
0
5,704
0
0
5,704 (1,919,047) (1,014,211)
'Impact on Change in Net Assets
(1,913,343)I
'Impact on Net Assets
(2,927,554)1
Net Effect on Following Year
Change in Net
Assets
Net Assets
DR (CR)
DR (CR)
3,019,825
(3,019,825)
(785,499)
785,499
(1,986,936)
1,986,936
0
0
0
0
247,390
(247,390)
DocuSign Envelope ID: 3F863D5B-6721-4B9C-A718-1EC057F71661
City of Pearland, Texas
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the financial
statements if the uncorrected misstatements identified were corrected.
Business Type Activities (Government -Wide Statements)
QUANTITATIVE ANALYSIS
Total Assets & Deferred Outflows
Total Liabilities & Deferred Inflows
Total Net Assets
General Revenues & Transfers
Net Program Revenues/ Expenses
Change in Net Assets
Before
Misstatements
Misstatements
Subsequent to
Misstatements
% Change
757,187,889
(1,085,716)
756,102,173
-0.14%
(488,238,239)
(488,238,239)
(268,949,650)
1,085,716
(267,863,934)
-0.40%
4,872,402
4,872,402
(6,491,523)
(25,911)
(6,517,434)
0.40%
(1,619,121)
(25,911)
(1,645,032)
1.60%
DocuSign Envelope ID: 3F863D5B-6721-4B9C-A718-1EC057F71661
Client: City of Pearland, Texas
Period Ending: September 30, 2022
Description
Financial Statement Line Item
Factual (F),
Judgmental (J) or
Projected (P)
Assets
Business Type Activities (Government -Wide Statements)
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Liabilities
DR (CR)
DR (CR)
To adjust for difference in capital
asset and related accumulated
depreciation values as recorded in
the trial balance and the capital asset
trarkinn system
F
(634,669)
0
Turnaround effect from prior year
passed AJE regarding
understatement of depreciation on
capital assets capitalized in prior
years.
F
(451,047)
0
Total passed adjustments
(1,085,716)
0
rver rrogram
General Revenues Revenues/
& Transfers Expenses
Net Assets
DR (CR)
DR (CR)
DR (CR)
0
(25,911)
660,580
0
0
451,047
0
(25,911) 1,111,627
(Impact on Change in Net Assets
(25,911)1
(Impact on Net Assets
1,085,716
Net Effect on Following Year
Change in Net
Assets
Net Assets
DR (CR)
DR (CR)
(634,669)
634,669
(451,047)
451,047
(1,085,716) 1,085,716
DocuSign Envelope ID: 3F863D5B-6721-4B9C-A718-1EC057F71661
City of Pearland, Texas
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the
financial statements if the uncorrected misstatements identified were corrected.
Capital Projects Fund
QUANTITATIVE ANALYSIS
Total Assets & Deferred Outflows
Total Liabilities & Deferred Inflows
Total Fund Balance
Revenues
Expenditures
Change in Fund Balance
Before
Misstatements
Misstatements
Subsequent to
Misstatements
% Change
89,354,663
(165,234)
89,189,429
-0.18%
(10,365,921)
(10,365,921)
(78,988,742)
165,234
(78,823,508)
-0.21 %
(14,384,343)
(14,384,343)
48,035,277
48,035,277
(15,806,338)
(15,806,338)
DocuSign Envelope ID: 3F863D5B-6721-4B9C-A718-1EC057F71661
Client: City of Pearland, Texas
Period Ending: September 30, 2022
Description
Financial Statement Line Item
Capital Projects Fund
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Factual (F), Assets & Deferred Liabilities &
Judgmental (J) or Outflows Deferred Inflows
Projected (P) DR (CR)
DR (CR)
To reduce accounts receivable for
payment received from the state in
the prior year, but remaining in
accounts receivable as of 9/30/22
F
(165,234)
0
Accounts receivable
(165,234)
Beginning fund balance
Total passed adjustments
(165,234)
0
Revenues Expenditures Fund Balance
DR (CR)
DR (CR)
DR (CR)
0
0
165,234
165,234
0
0
165,234
(Impact on Change in Fund Balance
0
(Impact on Fund Balance
165,234
Net Effect on Following Year
Change in Fund Fund
Balance Balance
DR (CR)
DR (CR)
0
0
DocuSign Envelope ID: 3F863D5B-6721-4B9C-A718-1EC057F71661
City of Pearland, Texas
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the
financial statements if the uncorrected misstatements identified were corrected.
Aggregate Remaining Fund Information
QUANTITATIVE ANALYSIS
Total Assets & Deferred Outflows
Total Liabilities & Deferred Inflows
Total Fund Balance
Revenues
Expenditures
Change in Fund Balance
Before
Misstatements
Misstatements
Subsequent to
Misstatements
% Change
40,992,523
40,992,523
(8,993,165)
(8,993,165)
(31,999,358)
(31,999,358)
(38,871,835)
103,280
(38,768,555)
-0.27%
19,786,912
(125,449)
19,661,463
-0.63%
(58,658,747)
(22,169)
(58,680,916)
0.04%
DocuSign Envelope ID: 3F863D5B-6721-4B9C-A718-1EC057F71661
Client: City of Pearland, Texas
Period Ending: September 30, 2022
Description
Financial Statement Line Item
Judgmental (J) or Outflows
Projected (P)
Aggregate Remaining Fund Information
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Factual (F), Assets & Deferred Liabilities &
Deferred Inflows
DR (CR)
DR (CR)
To record correction to 9/30/21 FYE
533.3
Fuel Inventory adjustment prepared
by the City as restatement of
beginning net position.
0
0
To increase beginning net position
related to refund issued to Gehan
533.8
Homes issued in a prior year, but
recorded as a reduction of revenue in
the prior year instead of a reduction
of liablity.
0
0
Total passed adjustments
0
0
Revenues Expenditures Fund Balance
DR (CR)
DR (CR)
DR (CR)
0
(125,449)
125,449
103,280
0
(103,280)
103,280
(125,449)
22,169
(Impact on Change in Fund Balance
(22,160)1
(Impact on Fund Balance
0
Net Effect on Following Year
Change in Fund Fund
Balance Balance
DR (CR)
DR (CR)
0
0
0
DocuSign Envelope ID: 3F863D5B-6721-4B9C-A718-1EC057F71661
City of Pearland, Texas
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the
financial statements if the uncorrected misstatements identified were corrected.
General Fund
QUANTITATIVE ANALYSIS
Total Assets & Deferred Outflows
Total Liabilities & Deferred Inflows
Total Fund Balance
Revenues
Expenditures
Change in Fund Balance
Before
Misstatements
Misstatements
Subsequent to
Misstatements
% Change
42,063,730
(485,098)
41,578,632
-1.15%
(7,406,187)
751,721
(6,654,466)
-10.15%
(34,657,543)
(266,623)
(34,924,166)
0.77%
(99,600,179)
(5,749)
(99,605,928)
0.01%
97,505,021
(260,874)
97,244,147
-0.27%
(2,133,142)
(266,623)
(2,399,765)
12.50%
DocuSign Envelope ID: 3F863D5B-6721-4B9C-A718-1EC057F71661
Client: City of Pearland, Texas
Period Ending: September 30, 2022
Description
Financial Statement Line Item
General Fund
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Factual (F), Assets & Deferred Liabilities &
Judgmental (J) or Outflows Deferred Inflows
Projected (P) DR (CR)
DR (CR)
To reverse accruals for accrued
F
retirement benefits and employee
deductions for payroll with pay date
of October 7 2022
(581,139)
842,013
To record lease receivable and
F
deferred inflow of resources for Clear
Wireless lease related to GASB 87
implementation.
96,041
(90,292)
Total passed adjustments
(485,098)
751,721
Revenues Expenditures Fund Balance
DR (CR)
DR (CR)
DR (CR)
0
(260,874)
0
(5,749)
0
0
(5,749)
(260,874)
0
'Impact on Change in Fund Balance
(266,623)1
(Impact on Fund Balance
(266,623)1
Net Effect on Following Year
Change in Fund Fund
Balance Balance
DR (CR)
DR (CR)
260,874
(260,874)
(5,749)
5,749
255,125
(255,125)
DocuSign Envelope ID: 3F863D5B-6721-4B9C-A718-1EC057F71661
City of Pearland, Texas
ATTACHMENT
This analysis and the attached "Schedule of Uncorrected Misstatements (Adjustments Passed)" reflect the effects on the fmancial
statements if the uncorrected misstatements identified were corrected.
Water & Sewer Fund
QUANTITATIVE ANALYSIS
Current Assets
Non -Current Assets & Deferred Outflows
Current Liabilities
Non -Current Liabilities & Deferred Inflows
Current Ratio
Total Assets & Deferred Outflows
Total Liabilities & Deferred Inflows
Total Net Position
Operating Revenues
Operating Expenses
Nonoperating (Revenues) Exp
Change in Net Position
Before
Misstatements
Misstatements
Subsequent to
Misstatements
% Change
189,068,915
(634,669)
188,434,246
-0.34%
562,573,928
(451,047)
562,122,881
-0.08%
(53,190,374)
(53,190,374)
(434,313,744)
(434,313,744)
3.555
3.543
-0.34%
751,642,843
(1,085,716)
750,557,127
-0.14%
(487,504,118)
(487,504,118)
(264,138,725)
1,085,716
(263,053,009)
-0.41 %
(55,351,683)
(55,351,683)
43,284,996
(25,911)
43,259,085
-0.06%
5,089,545
5,089,545
(897,926)
(25,911)
(923,837)
2.89%
DocuSign Envelope ID: 3F863D5B-6721-4B9C-A718-1EC057F71661
Client: City of Pearland, Texas
Period Ending: September 30, 2022
Description
Financial Statement Line Item
Factual (F),
Judgmental (J) or
Projected (P)
Water & Sewer Fund
SCHEDULE OF UNCORRECTED MISSTATEMENTS (ADJUSTMENTS PASSED)
Assets & Deferred Outflows Liabilities & Deferred Inflows
Current
DR (CR)
Noncurrent
DR (CR)
Current
DR (CR)
Noncurrent
DR (CR)
Difference in capital asset and
related accumulated depreciation
values as recorded in the trial
balance and the capital asset
rr��4inn e.,ercm
F
(634,669)
0
0
0
Turnaround effect from prior year
passed AJE regarding
understatement of depreciation on
capital assets capitalized in prior
F
0
(451,047)
0
0
Total passed adjustments
Net Effect on Following Year
Operating Operating Nonoperating Change in Net
Revenues Expenses (Revenues) Exp Net Position Position Net Position
DR (CR)
DR (CR) DR (CR) DR (CR)
0
(25,911)
0
660,580
0
0
0
451,047
(634,669) (451,047)
(25,911)
1,111,627
(Impact on Change in Net Position
(25,911)1
(Impact on Net Position
1,085,716
DR (CR)
DR (CR)
(634,669)
634,669
0
0
(634,669) 634,669
IMPF
Appendix
Accounting Matters to Watch — Future Accounting Standards
FO R V/S
FORVIS is a trademark of FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Office
City of Pearland, Texas
October 16, 2023
Accounting Matters to Watch — Future Accounting Standards
ilGASB Statement No. 91, Conduit Debt Obligations (FY 2023)
1
GASB Statement No. 94, Public -Private and Public -Public Partnerships
and Availability Payments Arrangement (FY 2023)
Er
GASB Statement No. 96, Subscription -Based Information Technology
Arrangements (FY 2023)
GASB Statement No. 99, Omnibus 2022 (FY 2023 and FY 2024)
GASB Statement No. 100, Accounting Changes and Error Corrections —
an amendment of GASB Statement No. 62 (FY 2024)
GASB Statement No. 101, Compensated Absences (FY 2025)
FORV/S
FORVIS is a trademark at FORVIS, LLP, registration of which is pending with the U.S. Patent and Trademark Othce
City of Pearland, Texas October 16, 2023