R2007-025 2007-02-26
RESOLUTION NO. R2007-25
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND,
TEXAS, ACCEPTING THE CITY'S COMPREHENSIVE ANNUAL
FINANCIAL REPORT AS PREPARED BY THE ACCOUNTING FIRM OF
NULL-LAIRSON.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That certain comprehensive annual financial report as prepared by
Null-Lairson, a copy of which is attached hereto as Exhibit "A" and made a part hereof for
all purposes, is hereby authorized and approved.
Section 2. That the City Council accepts the City's comprehensive annual
financial report.
PASSED, APPROVED and ADOPTED this the 26th day of February, A.D., 2007.
~a
TOM REID
MAYOR
ATTEST:
APPROVED AS TO FORM:
U,,---. Ir~
DARRIN M. COKER
CITY ATTORNEY
r
I
,.
City of Pearland, Texas
Comprehensive Annual
Financial Report
Exhibit "A"
Resolution R2007 -25
For the year ended
September 30, 2006
lillI' Y P"'I."~
"lid Pllh"1
.ui ...Ii
_/
ATLA
II Greenway Plaza,Suite 1515 NuIllairson One Sugar.Creek Ctr.Blvd.,.
Suite 920
Hausion,.TX.77046 Pearland,TX 77478
(713)67.1-1515 cERTIFIED14.11311C ACCOUNTANTS 281.242.8600
Fax (713):621-1570 PROFESSIONAL CORPORATION Fax:281.242.7333
To the Honorable Mayor and Members
of the City Council
City of Pearland,Texas
We have audited the accompanying financial statements of the governmental activities, the
business4ype activities, the aggregate-discretely presented component units, each major fund,
and the aggregate'remaining fund information of City of Pearland, Texas, (the "City") as of and
for the year ended September 30, 2000,-.which collectively comprise the City's.basic 'financial
statements as listed in the table of"contents. These financial statements are the responsibility of
City's management Our responsibility is to express opinions on these financial statements based
on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial .audits ''containedinG°verument
Auditing StandardS, issued by the Comptroller General Of the United States. Those standards
require that we plan and perform the 'audit to obtain reasonable:assurance about whether-the
financial.statements are free. Of Material misstatement. An audit.includes examining, on a test
basis, evidence supporting the amounts and,disclosures in the financial statements.,An audit also
includes assessing the' accounting principles used and. Significant estimates made by
management, as well:as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis'for'our Opinions.
In our opinion, the financial,statements,referred to.above present fairly, in all material respects,
the',respective financial position of the governmental activities,the business-type Activities, the
Aggregate discretely presented component units, each major fund, and the aggregate remaining
fund information of the City of Pearland, Texas, as of September 30, 2006, And the respective
Changes in financial position and cash flows,where applicable, thereof for the year then ended,in
conformity with accounting principles generally accepted in the.United States Of America.
In accordance With Gailerinnew Auditing Standards; we have also issued our report dated
December 29, 2006 on our consideration of the City's internal control over financial reporting
and on our tests of its compliance with certain provisions or laws, regulations, contracts, and
grantS.That report,which has been issued separately from this document,is an integral part of an
audit performed in accordance with Government Auditing Standards and should be read in
conjunction with thisseport in considering the results of our audit.
1
The Management's Discussion and .Analysis On pages 3 through 13, bildgetary comparison
information and Required Pension System Supplementary Information on pages 59 through 61
are not required parts of the basic financial statements but are supplementary information
required by.accounting principles generally accepted in the United States of-America, We have.
applied certain limited procedures, which consisted principally of inquiries of management
regarding the methods of measurement and presentation of the supplementary information.
110W.ever,we did not audit the information and express opirtioxfortit.
Our audit was Conducted for the purpose of forming opinions on the.financial statements that
collectively comprise the City of Penland,.Texas' basic financial statements. Combining and
individual notimajOr fund financial statements and schedules are presented for purposes of
additional analysis and are not a'required part of the basic financial statements. This information
has been subjected to the auditing procedures applied in the audit of the basic financial
statements and,in our opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
:51.111 Re
Houston,Texas
December 29,2006
2
Bill Eisen
City Manager
CITY OF PEARLAND, TEXAS
A
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
Fiscal Year Ended
September 30, 2006
Officials Issuing Report
Nick Finan and
Mickiel Hodge
Assistant City
Managers
Claire Manthei
Director of Finance
Rick Overgaard
Assistant Director of
Finance
(this page intentionally left blank.)
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL FINANCL4L REPORT
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION
Letter of Transmittal
Principal Officials ix
Organization Chart x
GFOA Certificate of Achievement xi
FINANCIAL SECTION
Independent Auditors' Report
Management's Discussion and Analysis
Basic Financial Statements
Government -Wide Financial Statements:
Statement of Net Assets
Statement of Activities
Fund Financial Statements:
Balance Sheet — Governmental Funds
1
3
17
18
20
Reconciliation of the Governmental Fund Balance Sheet to the Statement of 21
Net Assets
Statement of Revenues Expenditures, and Changes in Fund Balances — 22
Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures, and Changes in 23
Fund Balance of Governmental Funds to the Statement of Activities
Statement of Net Assets — Proprietary Fund
Statement of Revenues, Expenses and Changes in Fund Net Assets —
Proprietary Fund
Statement of Cash Flows — Proprietary Fund
Discretely Presented Component Units
Combining Statement of Net Assets
Combining Statement of Activities
Notes to the Financial Statements
Required Supplementary Information:
General Fund — Schedule of Revenues, Expenditures, and Changes in Fund
Balances — Budget and Actual
Notes To Required Supplementary Budget Information
Required Pension System Supplementary Information
24
25
26
28
29
30
59
60
61
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL FINANCL4L REPORT
TABLE OF CONTENTS
Page
FINANCIAL SECTION (continued)
Other Supplementary Information
Combining and Individual Fund Statements and Schedules
Combining Balance Sheet - Nonmajor Governmental Funds 66
Combining Statement of Revenues, Expenditures and Changes in Fund 70
Balances — Nonmajor Governmental Funds
Schedules of Revenues, Expenditures, and Changes in Fund Balance —
Budget and Actual:
Debt Service Fund 74
Hotel Motel Tax Fund 75
Court Secuiity Fund 76
City Wide Donations Fund 77
Court Technology Fund 78
Regional Detention Fund 79
Park Donations Fund 80
State Police Seizure Fund 81
Federal Police Fund 82
Parks and Recreation Development Fund 83
Sidewalk Fund 84
Community Services Fund 85
Grant Fund 86
Street Assessments Fund 87
Component Unit Fund Information
Balance Sheets — Governmental Funds
Schedules of Revenues, Expenditures and Changes in Fund Balance
Long -Term Debt Amortization Schedules
Combining Schedule of Governmental Long -Term Debt 94
Combining Schedule of Enterprise Fund Long -Term Debt 98
Combining Schedule of Revenue Bonds Payable of Peailand Economic 100
Development Corporation
Combining Schedule of Revenue Bonds Payable of Development Authority 101
of Peailand
90
91
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
Page
UNAUDITED STATISTICAL SECTION
Net Assets by Component 105
Changes in Net Assets 106
Fund Balances of Governmental Funds 108
Changes in Fund Balances of Governmental Funds 110
Assessed Value and Estimated Actual Value of Taxable Property 112
Property Tax Rates - Direct and Overlapping Governments 114
Property Tax Levies and Collections 116
Principal Property Taxpayers 117
Taxable Sales by Category 118
Ratio of Net General Bonded Debt to Assessed Value snd Net Bonded Debt Per 120
Capita
Ratios of General Bonded Debt to Assessed Value and Net Bonded Debt per 122
Capita
Direct and Overlapping Governmental Activities Debt 123
Pledged Revenue Coverage 124
Demographic and Economic Statistics 125
Principal Employers 126
Full-time Equivalent City Government Employees by Function/Program 127
Operating Indicators by Function/Program 128
Capital Asset Statistics by Function/Program 130
(this page intentionally left blank.)
INTRODUCTORY SECTION
(this page intentionally left blank.)
March 1, 2007
To the Honorable Mayor, Members
Of City Council, and Citizens of the
City of Pearland, Texas
State law requires that the City shall have its records and accounts audited annually and shall
have an audited financial statement prepared based on the audit. We are pleased to submit to you
the Comprehensive Annual Financial Report for the City of Pearland, Texas (the "City") for the
fiscal year ended September 30, 2006. This report is published in order to provide the City
Council, our Citizens, and other interested parties with detailed information concerning the
financial conditions and activities of the City.
Management assumes full responsibility for the completeness and reliability of the information
contained in this report, based upon a comprehensive framework of internal control that it has
established for this purpose. Because the cost of internal control should not exceed anticipated
benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial
statements are free of any material misstatements.
Null-Lairson, P.C., Certified Public Accountants, have issued an unqualified (or "clean") opinion
on the City of Pearland's financial statements for the year ended September 30, 2006. The
independent auditor's report is located at the front of the financial section of this report.
Management's discussion and analysis (MD&A) immediately follows the independent auditor's
report and provides a narrative introduction, overview and analysis of the basic financial
statements. MD&A complements this letter of transmittal and should be read in conjunction
with it.
PROFILE OF THE GOVERNMENT
The City of Pearland, incorporated in 1959, is located across the northern end of Brazoria
County and shares a common border with Houston, Texas to the north. The City also extends
into Fort Bend and Harris Counties. The City of Pearland, encompassing approximately 48
square miles is the fastest growing city in Brazoria County, increasing from approximately
18,000 residents in 1990 to 80,503 residents estimated as of December 2006.
19 LIBERTY DRIVE PFARLA
D, TEXAS 77381-5416 e 281-652-1600 0 www.ei.pearland.tx.us
i
The City of Pearland is a home -rule City operating under a Council -Manager form of
government. Policy -making and legislative authority are vested in a governing council (Council)
consisting of the mayor and five other members. The Mayor and all Council 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 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 full range of municipal services is provided by the City of Pearland including public safety
(police, fire, and emergency medical services); solid waste; water and wastewater utilities; public
improvements; repair and maintenance of infrastructure recreational and community activities;
and general administrative services.
As an independent political subdivision of the State of Texas, the City is considered a primary
government. Pursuant to standards established by the Governmental Accounting Standards
Board (GASB), the City also reports for all funds for which the City, as the primary government,
is financially accountable. As such, this report includes financial activities of three component
units as follows: The Pearland Economic Development Corporation was created by the City in
1995 under the Texas Development Corporation Act of 1979 for the purpose of promoting,
assisting, and enhancing economic and related development activities on behalf of the City. The
Tax Increment Reinvestment Zone (TIRZ #2) was created in 1998 for the purposes of
development and redevelopment in the Zone Area, better known as Shadow Creek Ranch. The
City participates in the Zone by contributing tax increments produced in the Zone to the Tax
Increment Fund. The Development Authority of Pearland was created in 2004 to provide
financing for the development of the Zone.
LOCAL ECONOMY
Located minutes away from Downtown Houston Texas, the nation's second largest seaport, the
world-renowned Texas Medical Centel, and NASA -Johnson Space Center, Pearland is the
premier location for residential and commercial growth. With abundant land, business facilities,
a sound infrastructure, and a diverse work force supported by educational programs, Pearland's
growth has been consistent and will continue to be sustained over time with continued residential
and commercial development.
The total construction value of all building permits issued during calendar year 2006 totaled over
$621 million, the majority of which can be attributable to residential construction. New single-
family housing permits totaled 2,072 with a construction value of $393 million. The number of
permits declined by 538 from 2005, however Pearland continues to grow at a respectable pace.
Residential permitting activity is anticipated to remain at this level for several years as the
development of a 3,300 acre master planned community, Shadow Creek Ranch continues.
Shadow Creek Ranch homes are priced from $140,000 to $1 million and ultimate development
will consist of as many as 7,000 single-family homes, 1,800 assisted living units, and 3,900
multi -family units and offer 700 acres of greenbelts and packs, 300 acres of recreational lakes,
ii
and commercial and retail centers. Commercial development tends to follow residential
development. The City of Pearland is experiencing and will continue to experience retail and
office development. For calendar year 2006, the City had 66 commercial permits with a value of
$173 million.
The Promenade Shops at Shadow Creek, an 800,000 square foot lifestyle center, is tentatively
scheduled to open in 2008. A 136 000 square foot Bass Pro Shop is currently under construction
and is expected to open in the fall of 2007. The Promenade Shops is part of The Spectrum at
Clear Creek, a new 1,000-acre mixed -use business and technology park, which will target
emerging companies working in advanced sciences. The development will blend components of
industrial flex, office and corporate campus uses with retail, leisure, and other lifestyle
components. First phase of infrastructure is complete and pre -leasing for the first office building
has begun.
Nashville based HCA, Inc. has completed a three-story 81,500 square foot medical complex,
which includes a medical office building outpatient diagnostics and an emergency center. HCA,
Inc. is in the planning stages of a 60-bed hospital wing and there are future plans for a 240-bed
hospital. Memorial Hermann Hospital has a 22-acre campus and an 80,000 square foot medical
office building nearing completion. There are also plans for a 125-bed hospital complex.
Shadow Creek Ranch Town Center, opening in the fall of 2007 will be a 600,000 square foot
open-air pedestrian regional shopping center. The center, which features the Memorial Hermann
complex, will also include the largest HEB on the Gulf Coast, Academy Sports, Hobby Lobby,
and other shopping and dining opportunities.
Pearland Town Center, a 1,000,000 square foot mixed -use center will have varied attractions
including anchors of major department stores. Macy's, Dillard's and Barnes & Noble will
anchor the center with phase one expected to open in July 2008.
Sales tax continues to increase for Pearland as continued growth and development occur. Sales
tax receipts for fiscal year 2006 totaling $14.5 million was an increase of 25% over fiscal year
2005. For the first two quarters of 2006, 71% of taxable sales are retail trade according to the
State of Texas Comptroller information. New homes as well as new retail openings account for
some of the increase, however, Pearland is becoming a regional shopping destination for those
further south.
iii
MAJOR INITIATIVES
The City of Pearland continues to experience dramatic growth and new opportunities. The City
Council, staff, and community share a vision that combines progress and innovation with prudent
controls to shape Pearland's future even as it becomes one of the largest suburbs in the Houston
area. Our slogan "Where town and country meet" reinforces the message that Pearland will
maintain its small-town feel despite becoming a mid -sized city.
The Old Town Site
The historic center of Pearland, the Old Town Site, has received special attention over the last
several years with a focus on careful planning that will result in a substantially revitalized
neighborhood. The City adopted the Old Townsite District Development Plan (Plan) and
accordingly formulated and adopted new zoning regulations for the Old Townsite. The new
zoning regulations and development guidelines will allow the area to develop into a pedestrian
friendly, mixed -use area as envisioned in the Plan. The City was awarded a "Planning Award"
by the Texas American Planning Association, in October 2006 for this project.
Community Appearance
The City of Pearland continues to pride itself on a clean, attractive appearance in the midst of
unprecedented growth. Maintaining close collaboration with the Keep America Beautiful
affiliate has resulted in a growing number of successful programs to reduce littering, encourage
recycling, and educate citizens on a variety of environmental issues. Participation at the
Recycling Center continues to grow, strengthened by the highly popular Household Hazardous
Waste Collection program.
City staff and volunteers have worked together to improve the effectiveness of the volunteer -
driven "Eyes of Pearland" community appearance program. Volunteers supplement the efforts of
City code enforcement staff to address structures or fences in ill repair, high weeds, "bandit"
signs, and other violations of local ordinances. Citizen Police Academy graduates continue to
assist with handicapped -parking violations, while also supporting code enforcement efforts in the
removal of illegal signs.
The City has also implemented a new program call ` Pearland Proud', whereby City employees
from all departments are involved in spotting and calling in code -violations, dead animals, street
light outages, picking up signs, etc. Where we work is our home. The employees treat the City
with respect, are proud of the City, and keep the City clean and in good working order. How
employees act as individuals reflects on the entire City.
Combined, these efforts provide a community appearance where all can be proud to live, shop,
work, and play.
iv
Public Safety
Among numerous other reasons, families move to Pearland for a high degree of personal safety
and a low crime rate. The City Council continues to emphasize public safety, adding a minimum
of five to six new police officers each year to keep pace with growth. The Police Department has
expanded traffic and commercial vehicle enforcement with added motorcycle and DOT -certified
officers, while capitalizing on improved computer equipment to improve crime tracking and
analysis. Community policing remains a focus, with crime prevention, victim assistance, and
youth intervention programs further reinforcing the City's small-town feel.
The City has formed a committee of the public safety leadership in the City to begin planning for
the addition of paid firefighting personnel. This committee, which included the leadership of the
volunteer fire department, has developed a plan to begin combined volunteer -paid personnel
operations in October 2007. A Director of Fire Services has been hired to lead the effort and the
Department. The City plans to hire twenty (20) full-time personnel to man fire stations during
the day and use volunteers for nights and weekends as well as to supplement the paid personnel
during the days.
The City is also in the process of designing and constructing a 79,800 square foot public safety
facility. The facility includes a police station including a jail, a state of the art Emergency
Operations Center, court facilities, fire marshals office and an annex for utility bill paying and a
county annex. A planned bond referendum also includes the construction of a two -bay 9,500
square foot Fire Station located off Kirby Drive. The facility will have living quarters to
accommodate a 24/7 fire and EMS operation.
Educational Enrichment Initiatives
The City and The University of Houston are in negotiations for a joint partnership to bring higher
education to Pearland. The first building is targeted to open for junior senior, and master classes
in January 2009. Neighboring Junior Colleges would feed into the education system. Approval
by the Univeisity of Houston Board of Regents and the higher education coordinating board is
expected in April 2007.
v
Growth Management
Over the past several years, the City has adopted and updated a number of codes to enhance the
value and attractiveness of new development. The City continues to monitor and modify the
Unified Development Code adopted in February 2006. The City will also re-evaluate the
Comprehensive Plan adopted in 1999 and the update in 2004, to determine if any modifications
are required. It is anticipated that the revisions will be completed by December 2007.
Through Strategic Partnership Agreements, the City has a responsible and financially sound plan
for the annexation of municipal utility districts (MUD) in our extra -territorial jurisdiction. In
December of 2005, the City welcomed approximately 5,000 new residents to the City with the
annexation of Brazoria MUD #5. In December of 2006, the City welcomed another 5,000 new
residents with the annexation of Brazoria MUD #1.
Infrastructure Planning
With continued residential and commercial growth and to plan for the future, the need to build
new infrastructure and maintain existing infrastructure will be a priority and will be implemented
through an aggressive capital improvement program. The City has $29.8 million voted but, un-
issued bond authorization remaining from its 2001 bond referendum, which is expected to be
issued in fiscal year 2007. As such, the City has been working on identifying projects for a 2007
bond referendum to ensure that the City maintains a quality of life that the citizens have come to
expect. The bond package, as it currently stands, totals $162 million of which 52% is for
thoroughfare projects, 22% for parks & recreation, 22% for drainage improvements, and 4% for
facilities. Depending upon City Council review and approval, the actual amount of the bond
package may change.
Major thoroughfare projects include the expansion of Cullen Blvd. from a two-lane asphalt road
to a four lane concrete boulevard between FM518 to Beltway 8, extension of the Dixie Farm
Road widening south of FM518 to SH35, reconstruction of Mykawa from Beltway 8 to FM518,
and widening of Bailey Road between FM1128 and Veterans to concrete Major drainage
projects include Cowart Creek diversion and regional detention for the Bailey Road corridor,
expansion of the D L Smith detention pond by approximately 150 acre-feet, an additional 200
acre-feet of storage in the Hickory Slough watershed, and improvements to Town Ditch that will
provide adequate conveyance for the 100-year storm flows. Majoi Park projects include a
recreation and natatorium facility in partnership with the school district. The facility will include
a 50-meter indoor pool for competitive swimming and an indoor recreation center. Also
included is a soccer complex, expansion and renovation of the Knapp Senior Center, and phase I
development of the Shadow Creek Ranch Park Facility projects include Fire Station #6 to be
located off Kirby Drive and an 11,500 square feet expansion and renovation to the Tom Reid
Library.
It is anticipated that the City will submit the bond propositions for the May 2007 election.
vi
Transportation Improvements and Strategic Planning
Charged with planning, establishing, and maintaining an effective transportation system in the
midst of such dramatic growth, the City of Pearland is involved in numerous activities to face
this challenge. Majoi components of our $92.5 million transportation bond program (passed in
2001) are complete and the City is planning for an $84 million transportation bond program that
will construct major projects over the next five to seven years as mentioned previously.
The City is also involved in regional efforts for long-range transportation planning. The Mayor is
a member of H-GAC's Transportation Policy Council (TPC) and an Assistant City Manager is a
member of the Technical Advisory Committee (TAC), a sub -committee of the TPC. The H-
GAC has been working to develop the 2008-2011 Transportation Improvement Program (TIP),
which is the implementation plan for the Regional Transportation Plan. The area cities, as well
as other local public agencies including TXDOT, Metro, Houston, the Port Authority to name a
few have submitted the candidate projects for TIP funding and the TAC is working to forward a
recommendation in March to the TPC for consideration. This effort involves allocating about
$260 million dollars for the region. The City is also working with TXDOT to develop a viable
corridor for SH35. Various alignments have been presented to City Council and a public
meeting will be held in March. This process will ultimately lead to TXDOT completing their
Major Investment Study for that corridor and then begin project planning for a project that will
take about 11 to 12 years to complete.
The City of Pearland and various agencies and organizations have been working to provide a
commuter type service to Houston via either a Park and Ride type facility or commuter van
pooling. The City continues to work with Metro and developers along the SH288 corridor to
explore ways to provide a commuter Park and Ride to downtown Houston, mainly the Texas
Medical Center area. The discussions are in preliminary stages of identifying partners and
sources of funding. The City has also been working with the Texas Medical Center South Main
Alliance, Urban Trans and others to increase awareness of the van pooling opportunities along
the same corridor. Seeking a realistic balance of a private -public partnership utilizing grant
dollars, federal funds, developer participation, and possible contributions by the City and other
cities in Brazoria County as well as identifying rider participation and a parking facility is all
crucial to a successful program. It is expected that the City will continue to explore these
opportunities throughout the coming year.
Surface Water Planning
The City continues to make strides to ensure adequate water for today and for the future through
the purchase of surface water. This surface water initiative not only ensures an adequate water
supply through 2022, but also alleviates subsidence by reducing our dependence on groundwater.
By 2022, the City estimates that it will need 40 million gallons per day (MGD) of surface water,
which is approximately two-thirds of the City s total water needs.
Building upon major surface water purchases since 2003, the City has increased capacity that
currently results in 6.1 MGD in surface water. The City is also participating in the expansion of
the City of Houston South IH ast Water Purification Plant that will provide the City an additional
vii
10 million gallons per day. Construction in the expansion is expected to begin in 2007. The
City's share of the expansion totals $17 milhon and an additional $29 million is needed for
distribution of the water. A number of years ago, the City entered into an interim water supply
agreement with the Gulf Coast Water Authority that reserves the right for the City to purchase
surface water. In 2006, the City participated in the Gulf Coast Water Authority purchase of the
Chocolate Bayou Watei Company. This participation will make a minimum of 10 milhon
gallons per day of additional water available to the City. The City continues to look and pursue
other surface water options in order to meet the needs of the future.
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, 2005. This was the 29th consecutive year that the government has received this prestigious
award.
In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily
readable and efficiently organized comprehensive annual financial report. This report must
satisfy both generally accepted principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement
Program's requirements, and we aie submitting it to GFOA to determine its eligibility for
another certificate.
In addition, the government also received the GFOA' s Distinguished Budget Presentation Award
for its annual budget document. In order to qualify for the Distinguished Budget Presentation
Award, the government's budget document had to be judged proficient as a policy document, a
financial plan, an operations guide, and a communications device.
The preparation of this report was accomplished with the dedicated service of the entire 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,
William Eisen, City Manager Claire Manthei, Director of Finance
viii
CITY OF PEARLAND, TEXAS
PRINCIPAL OFFICIALS
Elected Officials
Tom Reid
Richard Tetens
Helen Beckman
Steve Saboe
Felicia Kyle
Kevin Cole
Appointed Officials
Bill Eisen
Darrin Coker
Glenn Chaney
City Management
Nicholas Finan
Mickiel Hodge
Claire Manthei
Fred Welch
Roland Garcia
Jeff Sundseth
Young Lorfing
Danny Cameron
Mary Hickling
Chris Doyle
Doug Kneupper
Kola Olayiwola
Jon Branson
Paul Jamison
DeDe Williams
Lata Krishnarao
Trent Epperson
Position
Mayor
Council Member at Large - Position One, Mayor Pro-Tem
Council Member at Large - Position Two
Council Member at Large - Position Three
Council Member at Large - Position Four
Council Member at Large - Position Five
Position
City Manager
City Attorney
Municipal Court Judge
Position
Assistant City Manager
Assistant City Manager
Director of Finance
Executive Director PEDC
Interim Fire Marshal/ Emergency Management Services
Director of Emergency Medical Services
City Secretary
Director of Public Works
Director of Human Resources
Police Chief
City Engineer
Director of Inspections
Director of Parks and Recreation
Fire Chief
Head Librarian
Director of Planning
Projects Director
Term
Expires
May
2008
2007
2009
2008
2009
2007
ix
CITY OF PEARLAND, TEXAS
ORGANIZATIONAL CHART
Organizational Chart
CITIZENS OF
PEARLAND
I
MAYOR AND
CITY COUNCIL
MUNICIPAL JUDGES
CITY ATTORNEY
ASSISTANT
CITY MANAGER
BOARDS &
COMMISSIONS
CITY MANAGER
PUBLIC WORKS
ENGINEERING
PROJECT
MANAGEMENT
PARKS &
RECREATION
POLICE
FIRE
EMERGENCY
MEDICAL SERVICES
ASSISTANT
CITY MANAGER
COMMUNITY
DEVELOPMENT
MUNICIPAL COURT
ANIMAL CONTROL
PLANNING
PUBLIC AFFAIRS
FIRE MARSHAL
EMERGENCY
MANAGEMENT
CITY SECRETARY
HUMAN
RESOURCES
DIRECTOR OF
FINANCE
INFORMATION
TECHNOLOGY
W & S
REVENUE
COLLECTIONS
ACCOUNTING
BUDGET
PURCHASING
x
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presentrdto
City of Pearland
Texas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2005
A Ccitiflcate ofAchivern cct lux Excellence in Financial
Reporting is presented by free Government Finance Offlccts
Atociotinn ofthc United States and Canada to
povcrmmcnt wilts ani public etuploy+ee retirement
cys2nz stifiace cornprchenrive Animal fiunncial
reports (CAFRs) achieve the highest
standards in povennxnt accotutting
and financial reporting,
President
Executive Director
(this page intentionally left blank.)
FINANCIAL SECTION
(this page intentionally left blank.)
11 Greenway Plaza, Suite 1515
Houston TX 77046
(713) 621-1515
Fax: (713) 621-1570
AYL
NullLairson
CERTIFIED PUBLIC ACCOUNTANTS
PROFESSIONAL CORPORATION
To the Honorable Mayor and Members
of the City Council
City of Pearland, Texas
One Sugar Creek Ctr. Blvd.,
Suite 920
Pearland, TX 77478
281.242.8600
Fax: 281.242.7333
We have audited the accompanying financial statements of the governmental activities, the
business -type activities, the aggregate discretely presented component units, each major fund,
and the aggregate remaining fund information of City of Pearland, Texas, (the "City") as of and
for the year ended September 30, 2006, which collectively comprise the City's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of
City's management. Our responsibility is to express opinions on these financial statements based
on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business -type activities, the
aggregate discretely presented component units, each major fund, and the aggregate remaining
fund information of the City of Pearland, Texas, as of September 30, 2006, and the respective
changes in financial position and cash flows, where applicable, thereof for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated
December 29, 2006 on our consideration of the City's internal control over financial reporting
and on our tests of its compliance with certain provisions or laws, regulations contracts, and
grants That report, which has been issued separately from this document, is an integral part of an
audit performed in accordance with Govei nment Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.
1
The Management's Discussion and Analysis on pages 3 through 13, budgetary comparison
information and Required Pension System Supplementary Information on pages 59 through 61
are not required parts of the basic financial statements but are supplementary information
required by accounting principles generally accepted in the United States of America. We have
applied certain limited procedures, which consisted principally of inquiries of management
regarding the methods of measurement and presentation of the supplementary information.
However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Pearland, Texas' basic financial statements. Combining and
individual nonmajor fund and component unit fund financial statements as well as long-term
debt amortization and schedules are presented for purposes of additional analysis and are not a
required part of the basic financial statements. This information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial statements taken as a whole.
The introductory and statistical sections are presented for the purpose of additional analysis and
are not a required part of the basic financial statements. These sections have not been subjected
to the auditing procedures applied in the audit of the basic financial statements and accordingly,
we express no opinion on them.
AA,7,,asis,
Houston, Texas
December 29, 2006
2
MANAGEMENT' S
DISCUSSION AND ANALYSIS
(this page intentionally left blank.)
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the City of Pearland we offer readers of the City's financial statements this
narrative overview and analysis of the financial activities of the City for the fiscal year ended
September 30, 2006.
FINANCIAL HIGHLIGHTS
• The assets of the primary government of the City of Pearland exceeded its liabilities as of
September 30, 2006, by $105.5 million (net assets). Of this amount, $9.6 million
(unrestricted net assets) may be used to meet the City's ongoing obligations to citizens
and creditors in accordance with the City's fund designation and fiscal policies.
• The City's total net assets increased by $36.6 million.
• At the close of the current fiscal year, the City of Pearland's governmental funds reported
combined ending fund balances of $72.2 million, an increase of $13.4 million in
comparison with the prior year. Approximately $53.8 million of this ending balance can
be attributed to work in progress for capital projects.
• As of September 30, 2006, the unreserved, undesignated fund balance for the General
Fund was $10.0 million or 28% of total General Fund expenditures.
• The City of Pearland's General Obligation and Certificates of Obligation debt increased
to $186.6 million, a net increase of $38.1 million over the previous year. The key factor
was the sale of $32.2 million in Permanent Improvement and Refunding Bonds.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City's basic financial
statements. The City's basic financial statements are comprised of three components: (1)
government -wide financial statements, (2) fund financial statements and (3) notes to the financial
statements. This report also contains other supplementary information in addition to the basic
financial statements themselves.
Government -wide Financial Statements — The government -wide financial statements are
designed to provide readers with a broad overview of the City's finances, in a manner similar to
a private -sector business.
The Statement of Net Assets presents information on all of the City's assets and liabilities, with
the difference between the two reported as net assets. Over time, increases or decreases in net
assets may serve as a useful indicator of whether the financial position of the City is improving
of deteriorating.
The Statement of Activities presents information showing how the City's net assets changed
during the fiscal year. All changes in net assets are reported when the underlying event giving
rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and
expenses aie 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).
3
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
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 of Pearland
include general government, public safety, public works, community services and parks and
recreation. The business -type activities of the City include water and sewer.
The government -wide financial statements can be found on pages 17 through 19 of this report.
The government -wide financial statements include not only the City of Pearland, itself (known as
the primary government), but also a legally separate Economic Development Corporation, Tax
Increment Reinvestment Zone (TIRZ) and the Development Authority of Pearland for which the
City of Pearland is financially accountable. Financial information for these component units is
reported separately from the financial information presented for the primary government, itself.
Fund Financial Statements - A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The City,
like other state and local governments, uses fund accounting to ensure and demonstrate
compliance with finance -related legal requirements. All funds of the City can be divided into
two categories — governmental funds and proprietary funds.
Governmental Funds — Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government -wide financial statements
However, unlike the government -wide financial statements, governmental fund financial
statement focus on current sources and uses of spendable resources, as well as on balances of
spendable resources available at the end of the fiscal year. Such information may be useful in
evaluating a government's near -term financing requirements.
Because the focus of governmental funds is narrower than that of the government -wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government -wide financial statements
By doing so, readers may better understand the long-term impact of the government's near -term
financing decisions. Both the governmental funds balance sheet and the governmental fund
statements of revenues, expenditures, and changes in fund balance provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
Beginning on page 20 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 and other funds, which
are considered to be major funds Data from the other 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 of Pearland 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.
4
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Proprietary Funds — The City maintains one type of proprietary fund. Enterprise Funds are used
to report the same functions presented as business -type activities in the government -wide
financial statements. The City uses an Fnterprise Fund to account for its Water and Sewer Fund.
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 34 of this report, provide separate information for the Water and Sewer Enterprise Fund
since it is considered to be a major fund of the City.
The basic proprietary fund financial statements can be found on pages 24 through 26 of this
report.
Combining Component Unit Financial Statements - The City's three discretely presented
component units shown in aggregate on the face of the government -wide financial statements have
individual information for each of the major discretely presented component units presented in the form
of combining statements immediately following the fund financial statements of the primary
government.
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 30 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 59 of this report.
Government -wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government's
financial position. In the case of the City, assets exceeded liabilities by $105.5 million at the
close of the most recent fiscal year.
By far the largest portion of the City's net assets (74 percent) reflects its investment in capital
assets (e.g. land 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.
5
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
COMPARATIVE SCHEDULE OF NET ASSETS
September 30, 2006 and 2005
Amounts in (000's)
Governmental Activities
2006 2005
Current and other assets $ 79,129 $ 65,343
Capital assets 143,139 92,505
Total Assets
Other liabilities
Long-term liabilities
outstanding 174,625 133,263
180,697 142,117
Total Liabilities
Net assets:
Invested in capital assets,
nets of related debt
Restricted
Unrestricted
Total Net Assets
222,268 157,848
6,072 8,854
24,569
8,085
8,917
3,084
6,862
5,785
$ 41,571 $ 15,731
Business -type
2006
$ 21,256
100,944
122,200
3,166
55,061
58,227
53,144
10,129
700
$ 63,973
Activities
2005
$ 17,835
88,846
106,681
6,662
46,798
53,460
45,642
7,027
552
$ 53,221
Totals
2006
$ 100,385
244,083
344,468
9,238
229,686
238,924
77,713
18,214
9,617
$ 105,544
2005
$ 83,178
181,351
264,529
15,516
180,061
195,577
48,726
13,889
6,337
$ 68,952
An additional portion of the City's net assets (17 percent) represent resources that are subject to
external restrictions on how they may be used. The remaining balance of unrestricted net assets (9
percent) may be used to meet the government's ongoing obligations to citizens and creditors.
6
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
COMPARATIVE SCHEDULE OF CHANGES IN NET ASSETS
For the Years Ended September 30, 2006 and 2005
Amounts in (000's)
Governmental Activities
2006
Revenues
Program revenues:
Charges for services
Operating grants and
contributions
Capital grants and
contributions
Property taxes
Sales and use taxes
Franchise taxes
Unrestricted investment earnin;
Other
Total Revenues
2005
14,094 $ 12,309
1,426
15,749
21,845
9,980
3,426
2,991
526
70,038
Expenses
General government
Public safety
Public works
Community services
Parks and recreation
Interest on long-term debt
Business -type activities:
Water and sewer
Total Expenses
Increase (decrease) in net
assets before transfers
Transfers
Increase in net assets
Net assets - beginning
13,914
12,471
6,562
2,895
2,952
6,559
45,352
Net assets - ending
24,686
1,154
25,840
15,731
41,571
1,155
1,118
19,805
8,026
3,097
1,863
828
48,201
8,714
11,857
12,858
2,939
5,115
41,483
6,718
359
7,077
8,654
$ 15,731
Business -type Activities
2006 2005
Totals
2006
2005
$ 13,849 $ 11,220 $ 27,943 $
474
13,434
682
28,439
16,533
16,533
11,906
(1,154)
10,752
53,221
8,365
399
19,984
13,624
13,624
6,360
(359)
6,001
47,221
$ 63,973 $
53,221
1,900
29,183
21,845
9,980
3,426
3,673
526
98,478
13,914
12,471
6,562
2,895
2,952
6,559
16,533
61,886
36,592
36,592
68,952
23,529
1,155
9,483
19,805
8,026
3,097
2,262
828
68,185
8,714
11,857
12,858
2,939
5,115
13,624
55,107
13,078
13,078
55,875
$ 105,544 $
68,952
At the end of the current fiscal year, the City is able to report positive balances in all three
categories of net assets, both for the government as a whole, as well as for its separate
governmental and business -type activities.
7
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
The most significant changes in net assets occurred with a net increase in net assets invested in
capital assets net of related debt of $29.0 million as a result of assets received due to the
annexation of a municipal utility district and the contribution of capital assets from the City's
discretely presented component units.
The remaining increase in the government s net assets of approximately $7.6 million from the
occurred in both restricted and unrestricted net assets primarily in governmental activities as
discussed below.
Governmental activities - Governmental activities increased the City's net assets by $25.8
million, thereby accounting for 71 percent of the total growth in the net assets of the City. Key
elements of this increase are as follows:
• Program revenues from operating and capital grants increased by $20.0 million from
the prior year. This category of revenues reflects contributions from component units of
infrastructure and funds for infrastructure and other projects.
• Other significant changes in revenues can be seen in sales and use taxes. This category
(primarily sales and hotel occupancy taxes) increased due to the strengthening of the
local economy and continued increase in retail establishments within the City.
• Transfer in from business -type activities of $1.2 million for discretionary contributions
to the governmental debt service and contraction activities accounted another portion of
this increase.
$25,000
$20,000
$15,000
$10,000
$5,000
Expenses and Program Revenues - Governmental Activities
fi\
P
4'� CO
'`ofi
tIQ)
\fi
bel
8
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Revenues by Source - Governmental Activities
Charges for
services
16%
Other
4%
Property taxes
25%
Franchise taxes
11%
Grants and
contributions
19%
Sales and use taxes
25%
Business -type activities - Business -type activities increased the City s net assets by $10.8 million,
accounting for 29 percent of the total growth in the government's net assets. Key elements of this
increase are as follows.
• Charges for services increased approximately $2.6 million over the prior year primarily
due to an increase in water usage due to lower than average rainfall levels.
• Capital grants for infrastructure relating to water and sewer facilities (from impact fees
and annexed municipal utility district assets) amounted to $13.4 million for the year.
$30,000
$25,000
$20,000
c $15,000
a
$10,000
$5,000
Expenses and Program Revenues - Business -type Activities
Water and sewer
9
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Revenues by Source - Business -type Activities
Other
2%
Grants and
contributions
49%
Charges for
services
49%
Increases in business activity expense for the year of approximately $2.9 million due to major repairs
and renovations being completed in the current fiscal year also contributed to the increase.
Transfers out to the governmental activities of $1.2 million off set the increase of net assets before
transfers of $11.9 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, unreserved fund balance may serve as
a useful measure of the City's net resources available for spending at the end of the fiscal year.
The City's governmental funds reflect a combined fund balance of $72.2 million. Of this, $10.0
million is unreserved and available for day-to-day operations of the City $4.7 million is reserved
for debt service and the balance is reserved or designated for capital projects and other projects.
There was an increase in the combined fund balance of $13.4 million from the prior year. The
increase in fund balance includes a $2.4 million increase in fund balance of the general fund as well
as an increase in the capital projects fund of approximately $9.4 million due to the proceeds of
recent bond issues.
With a current year increase of $2.4 million, the General Fund's fund balance totaled $10.6 million
at year end.
10
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
In the Capital Projects Fund the City spent $36.9 million on various improvement projects.
Additionally, the City issued $32.2 million in Permanent Improvement bonds and received
contributions from the General Fund and component units totaling $2.6 million leaving an ending
fund balance of $53.0 million.
Proprietary Funds - As the City's business -type activities contain only one activity (water and
sewer services) the City s proprietary funds provide the same type of information found in the
government -wide financial statements.
GENERAL FUND BUDGETARY HIGHLIGHTS
During the year there was a $1.3 million increase in appropriations between the original and
final amended budget. The increase in appropriations is attributable to carryover funding from
prior year encumbrances and projects budgeted in the previous year but still in progress.
Budget estimates for revenues and other sources increased by approximately $3.2 million for the
year as well to reflect the increases in revenues (primarily sales tax) to reflect the actual revenues
recognized during the year.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets - At the end of fiscal year 2006, the City s governmental activities and business -
type activities had invested $143.1 million and $100.9 million, respectively, rn a variety of capital
assets and infrastructure, as reflected 1n the following schedule. This represents a net decrease of
$7.0 million, or seven percent over the end of last fiscal year for the business -type activities capital
assets and a change of $50.6 million or 55% for the governmental activities capital assets,
Land
Construction in progress
Infrastructure
Buildings and improvements
Machinery and equipment
Total Captial Assets
Governmental Activities Business -Type Activities Totals
2006 2005
$ 3,715 $
74,022
44,160
17,836
3,406
$ 143,139 $
2,717
45,327
34,583
6,418
3,460
92,505
2006 2005
$ 414
21,083
47,781
23,133
8,532
$ 100,943
2006
$ 368 $ 4,128
19,425 95,106
57,229 91,941
22,610 40,969
8,348 11,938
$ 107,979 $ 244,082
2005
$ 3,085
64,752
91,812
29,028
11,808
$ 200,484
Construction in progress at year-end represents numerous ongoing projects, the largest of which
relate to street and water and Sewer improvement projects.
11
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Long -Term Debt - At the end of the current fiscal year, the City had total bonds, certificates of
obligation, notes, and capital leases outstanding of $227.5 million. Of this amount, $90.3 million
is composed of general obligation bonds, 96.3 million is composed of certificates of obligation and
$40.2 million represents revenue bonds secured solely by specified revenue sources.
General obligation bonds
Revenue bonds
Certificates of obligation
Capital leases payable
Compenated absences
Governmental Activities Business -Type Activities
2006 2005
2006 2005
$ 90,305 $ 60,175 $ $
81,275
309
3,099
$ 171,889
72,390
396
3,315 418
$ 136,276 $ 55,588
40,170 32,480
15,000 15,880
415
$ 48,775
Totals
2006
$ 90,305
40,170
96,275
309
3,517
2005
$ 60,175
32,480
88,270
396
3,730
$ 227,477 $ 185,051
The City had multiple debt issuances during the year involving general obligation refunding bonds,
and certificates of obligation. The net effect of these issuances and the debt retired during the year
was an increase in total debt of $42.4 million or 22.9 percent.
Current ratings on debt issues are as follows:
General obligation bonds
Revenue bonds
Moody's
Investors
Service
Al
A2
Standard and
Poors
A+
A
In fiscal year 2006, the City received a ratings upgrade from Moody's Investor Service for its water
and sewer revenue bonds, from an A3 to an A2
All of the City's bond issues have been successful in qualifying for bond insurance resulting in
ratings of "Aaa", "AAA" and "AAA" ratings from Moody's, Standard & Poors and Fitch,
respectively.
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
'A2" and "A" fiom Moody's and Standard & Poors, respectively. The DAP bonds are rated BBB
by Standard and Pools. Their bonds have also qualified for bond insurance. Therefore, the PEDC
and DAP bonds are rated "Aaa' and "AAA" by Moody's and Standard & Poors, respectively.
12
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES
A primary factor in the 2007 budget is how the overall economy affects the City of Pearland's
growth. Pearland continues to be one of the fastest growing cities in the Houston area.
Developments such as, Shadow Creek Ranch, the Lakes at Highland Glen and Southern Trials
have all contributed to this growth. New single family housing starts totaled 2,312 for 2006 and
construction value was $438 million. This continued growth creates the need to expand services
and provide infrastructure.
The Pearland City Council approved a $39.7 million Geneial Fund budget for fiscal year 2006 —
2007. This is a 4.5% increase over the 2005 — 2006 adopted budget. This increase includes 23
full-time employees to provide for base services, keep up with growth, and to serve the
anticipated annexation of Brazoria County MUD #1. The budget incorporates a tax rate reduction
of 3.22% to $0.6527 per $100 of valuation.
In the budgetary process, water and sewer revenues were anticipated to increase 25% through
rate and volume increases
REQUESTS FOR INFORMATION
The financial report is designed to provide our citizens, customers, investors and creditors with a
general overview of City's finances. If you have questions about this report or need any additional
financial information, contact Claire Manthei, Director of Finance, at 3519 Liberty Drive, Pearland,
Texas 77581, or call (281) 652-1600. For general information, visit the City's website at
www.cityofpearland.com
13
(this page intentionally left blank.)
14
BASIC FINANCIAL STATEMENTS
15
(This page intentionally left blank.)
16
CITY OF PEARLAND, TEXAS
STATEMENT OF NET ASSETS
September 30 2006
ASSETS
Cash and Equivalents
Investments
Receivables, net of allowance for
uncollectibles
Inventories
Prepaid items
Restricted cash and investments
Capital Assets
Capital assets not subject to depreciation
Capital assets , net of accumulated
depreciation
Total Capital Assets
Total Assets
LIABILITIES
Accounts payable and accrued liabilities
Accrued interest
Unearned revenues
Customer deposits
Long-term liabilities
Due within one year
Due in more than one year
Total liabilities
NET ASSETS
Invested in capital assets, net of related
debt
Restricted for:
Debt Service
Other projects
Unrestricted
Total net assets
See Notes to Financial Statements.
Primary Government
Governmental
Activities
$ 49,182,583
24,024,670
5,837,850
54,908
28,925
77,737,014
65,402,066
143,139,080
222,268,016
4,563,958
625,110
650,530
232,450
3,157,943
171,467,499
180,697,490
24,569,259
4,063,041
4,021,258
8,916,968
$ 41,570,526
Business -type
Activities
$ 43,622
1,808,617
19,403,861
21,497,128
79,446,744
100,943,872
122,199,972
1,446,352
187,814
20,802
1,511,380
2,100,030
52,961,000
58,227,378
53,143,735
352,738
9,776,345
699,776
$ 63,972,594
Total
Discretely
Presented
Component
Units
$ 49,226,205 $
24,024,670
7,646,467
54,908
28,925
19,403,861
99,234,142
144,848,810
244,082,952
344,467,988
6,010,310
812,924
671,332
1,743,830
5,257,973
224,428,499
23 8,924,868
77,712,994
4,415,779
13,797,603
9,616,744
$ 105,543,120
6,389,549
3,448,107
864,825
13,014,729
23,717,210
98,167
89,265
1,960,000
38,749,728
40, 897,160
2,174,602
(19,354,552)
$ (17,179,950)
17
CITY OF PEARLAND, TEXAS
STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2006
Functions/Programs
Primary government
Governmental Activities
General government
Public safety
Public works
Community services
Parks and recreation
Interest on long-term debt
Total governmental activities
Business -type activities:
Water and sewer
Total business -type activities
Expenses
13,913,528
12,471,207
6,561,555
2,894,851
2,952,329
6,558,908
45,352,378
16,532,722
16,532,722
Total primary government $ 61,885,100 $
Program Revenue
Charges for
Services
Operating
Grants and
Contributions
Capital Grants
and
Contributions
$ 1,239,521 $
2,627,073 111,239
4,331,168
6,311,659 55,002
824,518 20,674
14,094,418
Component Units
Pearland Economic Development
Corporation
TIRZ Developments
Development Authority of
Pearland 9,250,386
1,426,436
15,742,684
6,000
15,748,684
13,849,201 473,947 13,433,840
13,849,201 473,947 13,433,840
27,943,619 $ 1,900,383 $ 29,182,524
$ 8,910,132 $
1,421,796
Total component units $ 19,582,314 $
See Notes to Financial Statements.
General revenues:
Taxes:
Property taxes
Sales and use taxes
Franchise taxes
Unrestricted investment earnings
Miscellaneous
Transfers
Total general revenues and transfers
Change in net assets
Net assets - beginning
Net assets - ending
18
Net (Expense) Revenue and Changes in Net Assets
Primary Government
Governmental
Activities
$ (12,674,007)
(9,732,895)
13,512,297
3,471,810
(2,101,137)
(6,558,908)
(14,082,840)
(14,082,840)
21,845,231
9,979,706
3,426,352
2,991,139
526,111
1,153,720
39,922,259
25,839,419
15,731,107
$ 41,570,526
Business -type
Activities
$
11,224,266
11,224,266
11,224,266
681,249
(1,153,720)
(472,471)
10,751,795
53,220,799
$ 63,972,594
Total
$ (12,674,007)
(9,732,895)
13,512,297
3,471,810
(2,101,137)
(6,558,908)
(14,082,840)
11,224,266
11,224,266
(2,858,574)
21,845,231
9,979,706
3,426,352
3,672,388
526,111
39,449,788
36,591,214
68,951,906
$ 105,543,120
Component
Units
$ (8,910,132)
(1,421,796)
(9,250,386)
(19,582,314)
5,354,319
4,821,342
739,368
10,915,029
(8,667,285)
(8,512,665)
$ (17,179,950)
CITY OF PEARLAND, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2006
ASSETS
Cash and cash equivalents
Investments
Receivables net of allowance
for uncollectibles
Inventories
Prepaid expenses
Total assets
General Fund
$ 2,269,889
6,502,990
4,541,115
54,908
28,925
$ 13,397,827
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Accrued expenditures
Deposits
Deferred revenue
Total liabilities
Fund balances:
Reserved for:
Inventories
Encumbrances
Prepaid expenses
Debt service
Unreserved, reported in
General fund
Special revenue funds
Capital projects funds
Total fund balances
Total liabilities and fund
balances
$ 759,615
726,297
232,450
1,082,096
2,800,458
54,908
552,256
28,925
9,961,280
10,597,369
$ 13,397,827
See Notes to Financial Statements.
Debt Service
$ 2,640,419
2,007,852
467,851
$ 5,116,122
29,851
427,970
457,821
4,658,301
4,658,301
Capital
Projects Fund
$ 40,528,127
15,364,939
659,841
$ 56,552,907
$ 3,051,161
15,267
530,000
3,596,428
52,956,479
52,956,479
Other
Governmental
Funds
$ 3,744,148
148,889
169,043
$ 4,062,080
29,205
40,822
3,215,232
806,026
4,021,258
Total
Governmental
Funds
$ 49,182,583
24,024,670
5,837,850
54,908
28,925
$ 79,128,936
$ 3,822,393
771,415
232,450
2,069,271
6,895,529
54,908
552,256
28,925
4,658,301
9,961,280
3,215,232
53,762,505
72,233,407
$ 5,116,122 $ 56,552,907 $ 4,062,080 $ 79,128,936
20
CITY OF PEARLAND, TEXAS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
STATEMENT OF NET ASSETS
September 30, 2006
Total fund balance, governmental funds $ 72,233,407
Amounts reported for governmental activities in the Statement of Net Assets are different
because:
Capital assets used in governmental activities are not current financial resources and therefore
are not reported in this fund financial statement, but are reported in the governmental activities
of the Statement of Net Assets.
Certain other long-term assets are not available to pay current period expenditures and
therefore are not reported in this fund financial statement, but are reported in the governmental
activities of the Statement of Net Assets.
Some liabilities, (such as Capital Lease Contract Payable, Long-term Compensated Absences,
and Bonds Payable ), are not due and payable in the current period and are not included in the
fund financial statement, but are included in the governmental activities of the Statement of
Net Assets.
143,139,080
1,418,741
Bonds and capital leases payable (171,526,300)
Compensated absences (3,099,142)
Accrued interest not reflected in Governmental funds (595,260)
Net Assets of Governmental Activities in the Statement of Net Assets
See Notes to Financial Statements.
41,570,526
CITY OF PEARLAND, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended September 30, 2006
REVENUES
Property taxes
Sales and use taxes
Franchise fees
Licenses and permits
Fines and forfeitures
Charges for services
Investment earnings
Intergovernmental
Other
Total revenues
EXPENDITURES
Current
General government
Public safety
Public works
Community services
Parks and recreation
Debt Service:
Principal
Interest and other charges
Bond issuance costs
Capital outlay
Intergovernmental
Total Expenditures
Excess (deficiency) of revenues over
expenditures
OTHER FINANCING SOURCES
(USES)
General obligation debt issued
Premium on general obligation debt
Payments to refunded bond escrow agent
Transfers in
Transfers out
Total other financing sources and uses
Net change in fund balances
Fund balances - beginning
Fund balances - ending
See Notes to Financial Statements.
General Fund
$ 11,413,806
9,712,118
3,426,352
4,066,914
1,934,882
8,734,090
516,775
448,502
252,704
40,506,143
6,284,996
12,685,081
9,727,972
2,739,532
4,308,250
35,745,831
4,760,312
1,655,653
(4,021,367)
(2,365,714)
2,394,598
8,202,771
$ 10,597,369
Debt Service
$ 10,736,081
142,407
291,786
11,170,274
3,429,108
6,546,227
1,683,678
11,659,013
(488,739)
8,000,000
4,141
(8,004,139)
1,291,909
1,291,911
803,172
3,855,129
$ 4,658,301
Capital
Projects Fund
2,235,649
6,994,659
1,157,710
10,388,018
224,849
36,706,096
36,930,945
(26,542,927)
33,865,000
89,403
2,589,500
(589,828)
35,954,075
9,411,148
43,545,331
$ 52,956,479
Other
Governmental
Funds
267,588
102,708
96,308
117,239
333,596
917,439
96,248
184,516
31,256
66,548
378,568
538,871
314,519
(86,666)
227,853
766,724
3,254,534
$ 4,021,258
Total
Governmental
Funds
$ 22,149,887
9,979,706
3,426,352
4,066,914
2,037,590
8,734,090
2,991,139
7,852,186
1,744,010
62,981,874
6,381,244
12,869,597
9,727,972
2,770,788
4,374,798
3,429,108
6,546,227
224,849
36,706,096
1,683,678
84,714,357
(21,732,483)
41,865,000
93,544
(8,004,139)
5,851,581
(4,697, 861)
35,108,125
13,375,642
58,857,765
$ 72,233,407
22
CITY OF PEARLAND, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2006
Net change in fund balances - total governmental funds: $ 13,375,642
Amounts reported for Governmental Activities in the Statement of Activities are different because:
Governmental funds report outlays for capital assets as expenditures because such outlays use
current financial resources. In contrast, the Statement of Activities reports only a portion of the
outlay as expense. The outlay is allocated over the assets' estimated useful lives as depreciation
expense for the period.
This is the amount by which capital outlays $45,438,872 exceeded depreciation $2,904,946 in the
current period.
42,533,926
Capital Assets contributed by discretely presented component units that do not represent current
assets and are not reflected in the governmental fund financial statements. 8,100,000
Governmental funds do not present revenues that are not available to pay current obligations. In
contrast, such revenues are ieported in the Statement of Activities when earned.
Governmental funds report bond proceeds as current financial resources. In contrast, the Statement
of Activities treats such issuance of debt as a liability Governmental funds report repayment of
bond principal as an expenditure, In contrast, the Statement of Activities treats such repayments as a
reduction in long-term liabilities. This is the amount by which proceeds exceeded repayments.
Some expenses reported in the statement of activities do not require the use of current financial
resources and these are not reported as expenditures in governmental funds:
Accrued interest not reflected in Governmental funds
Change in net assets of governmental activities
See Notes to Financial Statements.
246,261
(38,344,382)
(72,028)
$ 25,839,419
CITY OF PEARLAND, TEXAS
STATEMENT OF NET ASSETS
PROPRIETARY FUND
September 30, 2006
ASSETS
Current assets:
Cash and cash equivalents
Accounts Receivable, net of allowance for doubtful accounts
Restricted cash and cash equivalents
Restricted investments
Total current assets
Non -current assets:
Capital Assets:
Land and improvements
Construction in progress
Infrastructure
Buildings
Machinery and equipment
Less Accumulated depreciation
Total non -current assets
Total assets
LIABILITIES
Current Liabilities:
Accounts payable and accrued expenses
Accrued interest payable
Customer deposits
Deferred revenue
Compensated absences - current portion
Bonds and certificates of obligation payable - current portion
Total current liabilities
Non -current liabilities:
Compensated absences
Bonds and certificates of obligation payable
Total non -current liabilities
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt
Restricted for debt service
Restricted for capital projects
Unrest' icted
Total net assets
See Notes to Financial Statements.
Business -type
Activities -
Enterprise Fund
Water and Sewer
Fund
$ 43,622
1,808,617
17,783,400
1,620,461
21,256,100
413,699
21,083,429
72,594,008
23,132,786
8,532,461
(24, 812,511)
100,943,872
122,199,972
1,446,352
187,814
1,511,380
20,802
60,030
2,040,000
5,266,378
358,613
52,602,387
52,961,000
58,227,378
53,143,735
352,738
9,776,345
699,776
$ 63,972,594
24
CITY OF PEARLAND, TEXAS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUND
For the Year Ended September 30, 2006
REVENUES
Charges for services
OPERATING EXPENSES
Personal services
Supplies and materials
Contractual services
Repairs and maintenance
Other expenses
Depreciation
Total Operating Expenses
Operating income (loss)
NON -OPERATING REVENUES (EXPENSES)
Earnings on investments
Operating grants and contributions
Interest expense
Total non -operating revenue (expenses)
Income (loss) before contributions and transfers
Capital contributions
Transfers in
Transfers out
Change in net assets
Total net assets - beginning as restated
Total net assets - ending
See Notes to Financial Statements.
Business -type
Activities -
Enterprise Fund
Water and Sewer
Fund
$ 13,849,201
3,216,442
3,479,851
3,008,513
1,455,889
67,096
3,064,550
14,292,341
(443,140)
681,249
473,947
(2,240,380)
(1,085,185)
(1,528,325)
13,433,840
159,001
(1,312,721)
10,751,795
53,220,799
63,972,594
CITY OF PEARLAND, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUND
For the Year Ended September 30, 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users
Disbursed for personnel services
Disbursed for goods and services
Net cash provided (used) by operating activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers from other funds
Transfers to other funds
Operating grants and contributions
Net cash provided by (used by) noncapital financing activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from the sale of equipment
Capital grants and contributions
Proceeds from the sale of bonds
Principal payments on debt
Issuance costs
Acquisition and construction of capital assets
Net cash used by capital and related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments
Interest received
Interest paid
Cash and equivalents, beginning of year
Unrestricted cash and equivalents
Restricted cash and equivalents
See Notes to Financial Statements.
Net cash provided by (used by) investing activities
Net decrease in cash and equivalents
Business -type
Activities -
Enterprise Funds
Water and Sewer
Fund
14,584,942
(3,273,604)
(8,072, 531)
3,238,807
159,001
(1,312,721)
473,947
(679,773)
8,731,013
14,166,547
(7,035,000)
(596,956)
(11,669,778)
3,595,826
(1,620,461)
681,249
(2,330,024)
(3,269,236)
Cash and equivalents, at end of year $
2,885,624
14,941,398
17,827,022
43,622
17,783,400
17,827,022
26
Reconciliation of operating income to net cash provided by
operating activities
Operating income (loss)
Adjustments to reconcile operating income to net cash provided by
operating activities:
Depreciation
(Increase) decrease in accounts receivable
Increase (decrease) in accounts payable
Increase (decrease) in salaries payable
Increase (decrease) in customer deposits
Increase (decrease) in deferred revenue
Net cash provided by operating activities
Business -type
Activities -
Enterprise Funds
Water and Sewer
Fund
$
(443,140)
3,064,550
463,692
(61,182)
(57,162)
257,610
14,439
$
3,238,807
27
CITY OF PEARLAND, TEXAS
DISCRETELY PRESENTED COMPONENT UNITS GOVERNMENTAL ACTIVITIES
COMBINING STATEMENT OF NET ASSETS
September 30, 2006
ASSETS
Cash and equivalents
Investments
Receivables -less allowance for
uncollectibles
Restricted cash
Total assets
LIABILITIES
Accounts payable and accrued expenses
Accrued interest
Non -current liabilities:
Due within one year
Due in more than one year
Total liabilities
Pearland
Economic
Development
Corporation
TIRZ
Developments
Development
Authority of
Pearland
$ 3,239,475 $ 3,129,862 $
3,448,107
864,825
10,840,127
18,392,534 3,129,862
26,768 54,573
89,265
405,000
19,742,117
20,263,150
54,573
NET ASSETS
Restricted -debt service
Unrestricted (1,870,616)
Total net assets $ (1,870,616) $
See Note to Financial Statements.
Total Component
Units
20,212 $ 6,389,549
3,448,107
864,825
2,174,602 13,014,729
2,194,814 23,717,210
16,826
98,167
89,265
1,555,000 1,960,000
19,007,611 38,749,728
20,579,437 40,897,160
2,174,602 2,174,602
3,075,289 (20,559,225) (19,354,552)
3,075,289 $ (18,384,623) $ (17,179,950)
28
CITY OF PEARLAND, TEXAS
DISCRETELY PRESENTED COMPONENT UNITS GOVERNMENTAL ACTIVITIES
COMBINING STATEMENT OF ACTIVITIES
For the year ended September 30, 2006
Functions/Programs
Component Unit
Pearland Economic
Development Corporation
TIRZ Developments
Development Authority of
Pearland
Expenses
8,910,132
1,421,796
9,250,386
19,582,314
General revenues:
Taxes:
Property taxes
Sales and use tax
Unrestricted investment earnings
Transfers
Total general revenues
Change in net assets
Net assets, beginning
Net assets, ending
See Note to Financial Statements.
Net (Expense) and Changes in Net Assets
Pearland
Economic
Development TIRZ
Corporation Developments
Development
Authority of
Pearland
Totals
$ (8,910,132) $ $
(1,421,796)
(9,250,386)
$ (8,910,132)
(1,421,796)
(9,250,386)
(8,910,132) (1,421,796)
(9,250,386)
(19,582,314)
4,821,342
582,217
5,403,559
(3,506,573)
1,635,957
$ (1,870,616)
5,354,319
71,559
(2,151,892)
3,273,986
1,852,190
1,223,099
$ 3,075,289
85,592
2,151,892
2,237,484
(7,012,902)
(11,371,721)
$ (18,384,623)
5,354,319
4,821,342
739,368
10,915,029
(8,667,285)
(8,512,665)
$ (17,179,950)
29
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Pearland Texas (the "City") was incorporated in December 1959, and adopted a "Home Rule
Charter" February 6, 1971. The Charter, as amended provides for a Council -Manager form of government and
provides services authorized by its charter. Presently, these services include police 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 volunteer department The City is governed by an elected mayor
and five -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. Discretely presented component
units, are reported in a separate column in the government -wide statements to emphasize that they
are legally separate from the primary government. Based on these considerations, the City's financial
statements include the following discretely presented component units: the Pearland Economic
Development Corporation (PEDC)• the Tax Increment Reinvestment Zone (TIRZ #2); and the
Development Authority of Pearland. 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. Additionally prescribed criteria under
generally accepted accounting principles include: considerations pertaining to organizations for
which the primary government is financially accountable; and considerations pertaining to other
organizations for which the nature and significance of their relationship with the primary
government are such that exclusion would cause the reporting entity's financial statements to be
misleading or incomplete. The component units discussed below ate included in the City's
reporting entity because of the significance of their operational or financial relationships with the
City.
30
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
A. Financial Reporting Entity (continued)
Discretely Presented Component Units:
Pearland Economic Development Corporation (PEDC)
In 1995, the citizens of Pearland established the Pearland Economic Development Corporation
(PEDC) to help the citizens and public officials of Pearland attract new businesses and existing
businesses to expand. The mechanism to fund the operations of the corporations is through a
sale tax levy at a rate of one-half of one percent (1/2%). The PEDC is fiscally dependent upon
the primary government because, besides appointing the Board, the City Council also must
approve the PEDC's budget and any debt issuances.
Tax Increment Reinvestment Zone (TIRZ #2)
In 1998, the Tax Increment Reinvestment Zone (TIRZ #2) was established for a period of 30
years or until dissolved by the City. The TIRZ #2 provides tax assisted property development
and/or redevelopment in specific geographic areas in accordance with applicable state laws
Besides appointing Board members, the City Council must also approve any debt issuances
done on behalf of the TIRZ.
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. Besides appointing Board members, the City Council must also
approve any debt issuances done on behalf of the TIRZ
B. Government -wide and Fund Financial Statements
The government -wide financial statements (i.e., the Statement of Net Assets and the Statement of
Changes in Net Assets) report information about the City as a whole These statements include all
activities of the primary government and its component units. For the most part, the effect of
interfund activity has been eliminated from the government -wide statements Exceptions to this
general rule are charges between the City's business -type and governmental funds. Elimination of
these charges would distort the direct costs and program revenues reported for the various
functions concerned. Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are reported separately from business -type activities, which rely to a
significant extent on fees and charges for support
The statement of activities demonstrates the degree to which the direct expenses of a given function
or segment is offset by program revenues. Direct expenses are those that are clearly identifiable
with a specific function or segment. Program revenues include 1) charges to customers or applicants
who purchase, use or directly benefit from goods services, or privileges provided by a given
function or segment and 2) grants and contributions that are restricted to meeting the operational or
capital requirements of a particular function or segment. Taxes and other items not properly
included among program revenues are reported instead as general revenues.
31
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government -wide financial statements and all proprietary funds are reported using the economic
esources measurement focus and the accrual basis of accounting. Revenues are recognized when
earned and expenses are recorded when a liability is incurred, regardless of the timing of the related
cash flows. With this measurement focus, all assets and all liabilities associated with the operations
of these activities are included on the statements of net assets. Proprietary fund equity consists of
retained earnings. Proprietary fund -type operating statements present increases (i.e., revenues)
and decreases (i.e. expenses) in net total assets. Furniture and equipment capitalized in the
Proprietary Fund Types are valued at cost.
The governmental fund financial statements are presented on a current financial resources
measurement focus and modified accrual basis of accounting. This is the manner in which these
funds are normally budgeted. Revenues are recognized as soon as they are both measurable and
available. Measurable means that the amount of the transaction can be determined and available
means collectible within the current period or soon enough thereafter to pay liabilities of the current
period. For this purpose, the City considers revenues to be available if they are collected within 60
days of the end of the current fiscal period. Revenues susceptible to accrual include property taxes,
sales and use taxes, franchise fees charges for services and interest on temporary investments.
Other receipts become measurable and available when cash is received by the government and are
recognized as revenue at that time.
Under modified accrual accounting, expenditures are recognized in the accounting period in which
the liability is incurred, if measurable, except for interest on general long-term debt, which is
recognized when due. Since the governmental fund statements are presented on a different
measurement focus and basis of accounting than the government -wide statements' governmental
column, a reconciliation is presented which briefly explains the adjustments necessary to reconcile
fund -based financial statements with the governmental column of the government -wide
presentation.
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, administrative services, public works, parks and
recreation, community development, and public safety.
32
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (continued)
The Debt Service Fund is used to account for the payment of interest and principal on all
general obligation bonds and other governmental long-term debt of the City. The primary
source of revenue for debt service is local property taxes. The Debt Service Fund is
considered a major fund for reporting purposes.
The Capital Projects Fund is used to account for the expenditures of resources accumulated
from sales tax revenues and the sale of bonds and related interest earnings for capital
improvement projects. The Capital Projects Fund is considered a major fund for reporting
purposes.
The 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 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.
Private -sector standards of accounting and financial reporting issued prior to December 1, 1989,
generally are followed to the extent that those standards do not conflict with or contradict guidance
of the Governmental Accounting Standards Board. Governments also have the option of
following subsequent private -sector guidance for their business -type activities and enterprise funds,
subject to this same limitation. All assets, 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.
Operating revenues include charges for services. Operating expenses include costs of materials,
contracts, personnel and depreciation. In accordance with GASB Statement No 20, the City has
elected to follow GASB statements issued after November 30, 1989, rather than the Financial
Accounting Standards Board, in accounting for enterprise funds.
As a general rule, the effect of interfund activity has been eliminated fiom 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.
33
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (continued)
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods
in connection with a proprietary fund's principal ongoing operations. The principal operating
revenues of the City's Enterprise Fund are charges to customers for sales and services Operating
expenses for Enterprise Funds include the cost of sales and services, administrative expenses, and
depreciation on capital assets. All revenue and expenses not meeting this definition are reported as
nonoperating revenue and expense
D. Encumbrances
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the
expenditure of funds are recorded in order to reserve that portion of the applicable appropriation, is
employed in the governmental funds. Open encumbrances are reported as reservations of fund
balances since they do not constitute expenditures or liabilities. Encumbrances outstanding at year-
end are appropriately provided for in the subsequent year's budget.
E. Cash and Cash Equivalents
The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-
term investments with original maturities of three months or less from the date of acquisition For
the purpose of the statement of cash flows, the Proprietary Fund Types consider temporary
investments with maturity of three months or less when purchased to be cash equivalents.
The City pools cash resources of its various funds to facilitate the management of cash. Cash
applicable to a particular fund is readily identifiable. The balance in the pooled cash accounts is
available to meet current operating requirements. Cash in excess of current requirements is invested
in various interest -bearing accounts and securities and disclosed as part of the City's investments.
The City pools excess cash of the various individual funds to purchase these investments. These
pooled investments are reported in the combined balance sheet as Investments in each fund based on
each fund's share of the pooled investments Interest income is allocated to each respective individual
fund, monthly, based on their respective share of investments in the pooled investments.
F. Investments
Investments consist of United States (US) Government Agency securities. The City reports all
investments at fair value based on quoted market prices at year-end date.
G. 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 180
days comprise the trade accounts receivable allowance for uncollectibles.
34
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
H. 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" or 'due from component unit/primary
government" or "due to component unit/primary government" if the transactions are between the
primary government and its component unit. Interfund receivables and payables which are not
expected to be paid within 12 months are classified as loans from/loans to other funds, component
units, or primary government.
I. Inventories and Prepaid Items
Inventory, which consists of fuel and auto parts for use in the City's vehicles, is stated at cost (first -
in first -out method). Expenditures are recognized as the fuel and auto parts are consumed rather
when purchased
J. Restricted Assets
Certain proceeds of the Enterprise Fund and Economic Development Corporation 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 Development Authority bonds and are reported as restricted assets.
K. Capital Assets
Capital assets which include property, plant, equipment and infrastructure, are reported in the
applicable governmental or business -type activities columns in the government -wide financial
statements. The City defines capital assets as assets with an initial, individual cost of more than
$1 000 and an estimated useful life in excess of one year Such assets are recorded at historical cost
or estimated historical cost if purchased or constructed. Donated capital assets are recorded at
estimated fair market value at the date of donation. The costs of normal maintenance and repairs
that do not ad to the value of the asset or materially extend assets' lives are not capitalized.
1'he City has elected to delay implementation of the requirements of GASB Statement No. 34 related
to infrastructure (roads sidewalks, etc) assets acquired prior to October 1, 2002 The City has
implemented the general provisions of GASB Statement No. 34 and will complete the implementation
of the retroactive provisions for infrastructure no later than September 30, 2007.
35
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
K. Capital Assets (continued)
Property, plant, and equipment are depreciated using the straight-line method over the following
useful lives:
Estimated
Asset Description Useful Life
Buildings and improvements 20-45
Machinery and equipment 5-15
Infrastructure 40-50
L. Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused vacation, sick and
holiday pay benefits.
Employees hired prior to October 1, 2005 earn vacation leave at the rate of 15 days per year from 1
to 15 years of service, 20 days per year for service of 16 to 19 years, and 25 days per year for service
of 20 years or more. Employees, who are not classified and are hired after October 1, 2005, earn
vacation at a rate of 10 days per year from 1-6 years of service, 15 days per year for 7-15 years of
service and 20 days for over 16 years of service. Effective October 1, 2005, employees are no longer
able to carry over unused vacation from one year to the next with the exception of police department
personnel in classified positions Employees are required to use their vacation in the year it is earned
Employees who are unable to use their vacation due to departmental scheduling or staffing problems
may, with the City Manager's approval, receive compensation for half of the remaining balance up to
a maximum of forty (40) hours.
City employees receive 11 paid holidays per year. Employees 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. Employees may be paid or receive compensatory time. The maximum accrual for overtime is
160 hours, except for employees involved in public safety who can accrue up to 320 hours.
All sick leave benefits are accumulated and paid to employees upon separation from the City.
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.
M. 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.
36
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 2 — DEPOSITS (CASH) AND INVESTMENTS
Authorization for Deposits and Investments
The Texas Public Funds Investment Act (PFIA), as prescribed in Chapter 2256 of the Texas
Government Code, regulates deposits and investment transactions of the City.
In accordance with applicable statutes, the City has a depository contract with an area bank
(depository) providing for interest rates to be earned on deposited funds and for banking charges
the City incurs for banking services received. The City may place funds with the depository in
interest and non -interest bearing accounts. State law provides that collateral pledged as security
for bank deposits must have a market value of not less than the amount of the deposits and must
consist of (1) obligations of the United States or its agencies and instrumentalities; (2) direct
obligations of the State of Texas or its agencies; (3) other obligations, the principal and interest
on which are unconditionally guaranteed or insured by the State of Texas; and/or (4) obligations
of states, agencies, counties cities, and other political subdivisions of any state having been rated
as to investment quality by a nationally recognized investment rating firm and having received a
rating of not less than A or its equivalent. City policy requires the collateralization level to be at
least 102% of market value of principal and accrued interest.
The Council has adopted a written investment policy regarding the investment of City funds as
required by the Public Funds Investment Act (Chapter 2256, Texas Government Code). The
investments of the City are in compliance with the City's investment policy. The City's
investment policy is more restrictive than the PFIA requires. It is the City's policy to restrict its
direct investments to obligations of the U S. Government or U.S. Government Agencies, fully
collateralized certificates of deposit, banker's acceptances mutual funds, repurchase agreements
and local government investment pools The maximum maturity allowed is three years from date
of purchase. The City's investment policy does not allow investments in collateralized mortgage
obligations.
•
Deposit and Investment Amounts
The City's cash and investments are classified as: cash and cash equivalents, investments, and
restricted cash and investments. The cash and cash equivalents include cash on hand, deposits
with financial institutions, and short-term investments, which have maturities at purchase of less
than three months, consist mainly of certificates of deposit. The restricted cash and investments
are assets restricted for specific use. The restricted cash and investments include cash on deposit
with financial institutions. For better management of cash, the City pools the cash, based on the
City's needs, into either bank/sweep accounts, or in longer -term investments in U.S. Government
Securities. However each fund's balance of cash and investments is maintained in the books of
the City.
The deposit and investment policies for the Pearland Economic Development Corporation, TIRZ
Developments, and Development Authority of Pearland are substantially the same as the City.
37
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 2 — DEPOSITS (CASH) AND INVESTMENTS (continued)
The following schedule shows the City's recorded cash and investments at year-end:
Total Fair Value
Primary
Government Component Units
Cash deposits $ 68,630,066 $ 19,404,278
FHLMC discount note 11,141,243
FNMA discount note 12,883,427 3,448,107
$ 92,654,736 $ 22,852,385
Quoted market prices are the basis of the fair value for US Treasury and Agency securities. The
amount of increase or decrease in the fair value of investments during the current year is included
in the City's investment income as follows:
Interest income $ 4,218,159
unrealized gain (loss) on temporary investments 193,596
Investment earnings $ 4,411 755
Investment Risks
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:
Temporary Investments
FHLMC discount note
FNMA discount note
Weighted
Total Fair Average Maturity
Value (days)
$ 11,141,243
16,331,534
$ 27,472,777
108
105
Portfolio weighted average maturity 106
The City measures interest rate risk using the weighted average maturity method for the portfolio.
The City's investment policy specifies a maximum weighted average maturity of 365 days or 12
months based on the stated maturity date for each investment in the portfolio.
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
three years or 1 095 days from date of purchase. The settlement date is considered the date of
purchase.
38
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 2 — DEPOSITS (CASH) AND INVESTMENTS (continued)
Concentration of Credit Risk
The City's investment policy does not address diversification requirements. However, as of
September 30 2006, the City had investments in U.S. Agency securities that exceeded five
percent of the total investment portfolio at year-end.
Investment Type
Total Fair
Value
Percentage of
Total Portfolio
FHLMC discount note
FNMA discount note
Total
Credit Risk
$ 11,141,243
16,331,534
$ 27,472,777
41%
59%
100%
Federal Home Loan Mortgage Corporation Discount Notes and Federal National Mortgage
Association Discount Notes (FNDN) agency notes were rated AAA by Standard & Poor s, AAA
by Fitch Ratings, and Aaa by Moody's Investors Service.
All credit ratings meet acceptable levels required by guidelines prescribed by both the PFIA and
the City's investment policy. A public fund investment pool must be continuously rated no lower
than AAA or AAAm or no lower than investment grade by at least one nationally recognized
rating service and have a weighted average maturity no greater than 90 days Investments with
minimum required ratings do not qualify as authorized investments during the period the
investment does not have the minimum rating.
Restricted Assets
The Enterprise Funds have restricted certain cash and investments for customer deposits, reserve and
emergency expenditures, capital improvements cash restricted for others, and revenue bond debt
service. Because of certain bond covenants, the Enterprise Fund is 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
Customer deposits
Capital improvements
Total
Primary
Government
Component Units
540,552
1,511,380
17,351,929
$ 19,403,861
$ 2,174,602
10,840,127
$ 13,014,729
39
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - RECEIVABLES
Receivables at September 30, 2006 consist of the following:
Primary Government:
Governmental Funds:
Receivables
Property taxes, including
penalties and interest
Sales and other taxes
Fines and forfeitures
Interest
Other
Allowance for uncollectibles
Proprietary Funds:
Receivables
Customer accounts
Interest
Other Non Major
Capital Projects Governmental
General Fund Debt Service Fund Fund Funds
Total
$
1,224,251 $
1,727,831
605,116
38,927
953,211
(8,221)
476,586 $
(8,735)
659,841
$
$ 1,700,837
1,727,831
80,256 685,372
38,927
88,787 1,701,839
(16,956)
$ 4,541,115 $
467,851 $ 659,841 $ 169,043 $ 5,837,850
Water and Sewer
Fund
$ 2,232,550
834
Allowance for uncollectibles (448,711)
$ 1,808,617
Component Units:
Receivables
Sales and other taxes
Interest
Total
Pearland
Economic
Development
Corporation
$ 857,173
7,652
$ 864,825
•
40
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 3 — RECEIVABLES (continued)
Governmental funds report deferred revenue in connection with receivables for revenues that are not
considered to be available to liquidate liabilities of the current period. At the end of the current fiscal
year, the various components of deferred revenue reported in the governmental funds were as follows:
Unavailable Unearned
Delinquent property taxes receivable - general fund $ 402,829 $
Delinquent property taxes receivable - debt service fund 427,970
Municipal fines and forfeitures 587,943
Surety - public improvements - capital projects fund 530,000
Grants and revenues prior to meeting all eligibility requirements 120,528
Total Deferred Revenue for Governmental Funds $ 1,418,742 $ 650,528
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, 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.
41
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - CAPITAL ASSETS
A summary of changes in the primary government's capital assets for the year ended September 30, 2006,
follows:
Governmental Activities:
Capital assets not being depreciated:
Land
Construction in progress
Total capital assets not being depreciated
Other capital assets:
Infrastructure
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Total other capital assets
Less accumulated depreciation for:
Infrastructure
Buildings and improvements
Machinery and equipment
Total accumulated depreciation
Other capital assets, net
Totals
Business -type Activities:
Capital assets not being depreciated:
Land and intangibles
Construction in progress
Total capital assets not being depreciated
Other capital assets:
Water and sewer system
Buildings and improvements
Machinery and equipment
Total other capital assets
Less accumulated depreciation
Other capital assets, net
Totals
Primary Government
Balance
September 30,
2005
Reclassification/
Increases (Decreases)
Balance
September 30,
2006
2,717,453
45,326,958
997,321 $
28,695,282
3,714,774
74,022,240
48,044,411
29,692,603
77,737,014
38,596,399
12,901,650
9,282,167
10,803,793
11,774,745
1,267,729
(758,198)
49,400,192
24,676,395
9,791,698
60,780,216
(4,014,681)
(6,483,279)
(5,821,517)
(16,319,477)
44,460,739
$ 92,505,150 $
23,846,267
(1,225,349)
(356,966)
(1,322,625)
(2,904,940)
20,941,327
50,633,930 $
(758,198)
758,198
758,198
83,868,285
(5,240,030)
(6,840,245)
(6,385,944)
(18,466,219)
65,402,066
143,139,080
Balance
September 30,
2005
Reclassification/
Increases (Decreases)
Balance
September 30,
2006
$ 367,962 $
19,424,558
45,738 $
2,445,527
(786,656)
413,699
21,083,429
19,792,520
2,491,265
(786,656)
21,497,128
59,855,918
22,610,028
8,347,893
90,813,839
(21,760,109)
69,053,730
$ 88,846,250 $
11,951,434
522,758
196,716
12,670,908
(3,064,550)
9,606,358
12,097,623 $
786,656
(12,148)
774,508
12,148
786,656
72,594,008
23,132,786
8,532,461
104,259,255
(24,812,511)
79,446,744
100,943,872
42
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - CAPITAL ASSETS (continued)
Depreciation was charged to programs as follows:
General government
Public safety
Public works
Community services
Total Governmental Activity
$ 713,830
541,950
1,504,390
144,770
$ 2,904,940
Water and sewer $ 3,064,550
Total Business -Type Activity $ 3,064,550
The City has active construction projects as of September 30, 2006. The projects include
various improvements to streets, drainage and facilities as well as and water and sewer
improvements. At year-end, the City s contractual commitments on projects were as follows:
Project Description
Drainage Improvement
Building Improvements
Street Improvement
Water and sewer
Improvements
Totals
Total In
Progress
22,866,245
98,610
51,057,385
21,083,429
$ 95,105,669
Remaining
Commitment
2,699,679
16,307,390
102,241,857
64,029,657
$ 185,278,583
43
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM DEBT
A. General Obligation Bonds and Certificates of Obligation
The City issues general obligation bonds and certificates of obligation and, upon annexation and
dissolution of Municipal Utility Districts, assumes unlimited tax and revenue obligations The
assumed obligations were used to acquire and construct major capital facilities. General obligation
bonds, certificates of obligation, and assumed obligations from dissolved and annexed areas are for
both governmental and business -type activities. The bonds are reported in the Proprietary Funds only
if they are expected to be repaid from proprietary revenues. The general long-term bonds,
certificates of obligation and assumed obligations are paid through the Debt Service Fund from tax
revenues.
The following is a summary of changes in the City's total governmental long-term liabilities for the
year ended September 30, 2006. In general, the City uses the General and Debt Service funds to
liquidate governmental long-term liabilities.
Governmental Activities:
Bonds payable:
General obligation bonds
Certificates of obligation
Annexed utility district bonds
Deferred amount for issuance premium
Less deferred amounts on refunding
Less. bond issuance costs
Total bonds payable
Obligations under capital leases
Compensated absences
Balance Balance
Oct. 1, 2005 Additions (Reductions) Sept. 30, 2006
60,175,000
72,390,000
1,458,694
(789,621)
(663,459)
$ 32,165,000
9,700,000
8,320,000
93,631
(111,623)
(371,840)
$ (2,035,000) $
(815,000)
(8,320,000)
(63,361)
46,686
38,251
Amounts Due
Within One
Year
90,305,000 $
81,275,000
1,488,964
(854,558)
(997,048)
2,085,000
490,000
132,570,614
395,659
3,314,699
49,795,168
92,043
(11,148,424)
(178,760)
(215,557)
171,217,358
308,942
3,099,142
2,575,000
184,880
398,063
Total Governmental Activities $ 136,280,972 $
49,887,211
$ (11,542,741) $
174,625,442 $
3,157,943
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 requited 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)
operating transfers from both the General Fund and the Water and Sewer Enterprise Fund. Transfers
fiom the Enterprise Funds are approved at the discretion of City Council and are not intended to
service a specific bond series.
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM DEBT (continued)
A summary of the terms of general obligation bonds and certificates of obligation, as of September 30, 2006,
follows:
Series
Original Issue Matures
Interest Debt
Rate (%) Outstanding
General Obligation Bonds
General Obligation Bonds, Series 2001
Permanent Improvement and Refunding Bonds,
Permanent Improvement and Refunding Bonds,
Permanent Improvement and Refunding Bonds,
Permanent Improvement and Refunding Bonds,
Total General Obligation Bonds
Certificates of Obligation
Certificates of Obligation, Series 2001
Certificates of Obligation, Series 2002
Certificates of Obligation, Series 2003
Certificates of Obligation, Series 2004
Certificates of Obligation, Series 2006
Total Certificates of Obligation
Prior Year Refunding
Series 2000
Series 2003
Series 2005
Series 2006
1,900,000
10,830,000
15,000,000
37,015,000
32,165,000
11,650,000
25,000,000
25,000,000
21,000,000
9,700,000
2009
2028
2029
2029
2022
2027
2023
2028
2029
4.80-4.90
4.00-6.00
3.25-5.00
4.00-5.00
920,000
5,665,000
14,540,000
37,015,000
32,165,000
90,305,000
5.00-6.00 $
5.10-5.08
3.00-4.50
4.00-5.25
3.65-4.68
10,020,000
22,025,000
18,630,000
20,900,000
9,700,000
81,275,000
In prior years, the City defeased certain general obhgation 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, 2006, $17 2 million of previously refunded bonds outstanding were
considered defeased.
Current Year Refunding of Long -Term Debt
The City issued $8,165,000 of general obligation refunding bonds to provide resources to purchase U.S.
Government State and Local Government Series securities that were placed in an irrevocable trust for the
purpose of generating resources for all future debt service payments of $8 001,623 of general obligation
bonds. As a result, the refunded bonds of $7,890,000 are considered to be defeased and the liability has
been removed from the governmental activities column of the statement of net assets. The reacquisition
price exceeded the net carrying amount of the old debt by $111,623. This amount is being netted against
the new debt and amortized over the remaining life of the refunded debt, which is shorter than the life of
the new debt issued. This advance refunding was undertaken to increase total debt service payments over
the next 14 years by $ 3,960,438 and resulted in an economic gain of $9,121.
45
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM DEBT (continued)
Capital Lease Obligations
The City has entered into certain capital lease agreements in order to purchase public safety and
management information systems equipment and other construction related equipment. The capital
lease obligations are paid out of the General and Debt Service Funds.
Following is a summary of future lease payments due on this equipment:
Lease
Fiscal Year Obligations
2007 $ 184,880
2008 118,775
2009 15,993
Total 319,648
Less interest portion (10,706)
Obligations under Capital Leases $ 308,942
46
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM DEBT (continued)
The annual requirements to amortize governmental activity general obligation bonds and certificates
of obligation outstanding at September 30, 2006 are as follows:
Fiscal Year
Ending
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Governmental Activities
General Obligation Certificates of Obligation
Principal Interest Principal Interest
$ 2,085,000
2,185,000
2,855,000
2,195,000
2,375,000
2,530,000
2,635,000
2,750,000
2,875,000
3,015,000
2,050,000
2,240,000
2,520,000
2,715,000
2,860,000
3,015,000
4,005,000
5,805,000
6,115,000
6,43 5,000
6,770,000
8,960,000
11,315,000
$ 90,305,000
$ 4,524,657 $
4,040,961
3,924,160
3,815,399
3,724,521
3,624,636
3,517,108
3,402,561
3,274,824
3,135,033
3,022,305
2,935,330
2,835,499
2,718,046
2,588,202
2,450,797
2,286,212
2,049,662
1,756,950
1,448,762
1,135,256
763,538
273,650
$ 63,248,069 $
490,000 $
540,000
1,560,000
2,790,000
3,010,000
3,340,000
3,500,000
3,655,000
3,820,000
4,000,000
4,490,000
4,605,000
4,960,000
5,120,000
5,360,000
5,605,000
5,040,000
3,690,000
3,835,000
4,100,000
4,280,000
2,635,000
850,000
81,275,000 $
3,864,361
3,771,183
3,724,802
3,611,780
3,463,983
3,308,771
3,148,327
2,989,991
2,823,418
2,648,723
2,461,173
2,260,313
2,046,674
1,814,293
1,564,609
1,301,499
1,046,474
833,373
650,456
462,622
263,244
99,825
19,125
48,179,019
47
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM DEBT (continued)
B. Enterprise Fund Debt
The following is a summary of changes in the City's total business -type long-term liabilities for the year
ended September 30, 2006.
Business -type Activities:
Bonds payable:
Certificates of obligation
Water and sewer revenue bonds
Premium on bond issuance
Deferred issuance costs
Other liabilities:
Compensated absences
Total Business -type Activities
Balance
Oct. 1, 2005
$ 15,880,000 $
32,480,000
(252,204)
Additions
13,845,000
321,547
(596,956)
(Reductions)
(880,000) $
(6,155,000)
Balance
Sept. 30, 2006
Amounts Due
Within One
Year
15,000,000 $ 915,000
40,170,000 1,125,000
321,547
(849,160)
48,107,796
13,569,591
(7,035,000)
54,642,387 2,040,000
415,316
52,623
(49,296)
418,643
60,030
$ 48,523,112 $
13,622,214
$ (7,084,296) $
55,061,030 $
2,100,030
A summary of the terms of certificates of obligation and revenue bonds recorded in the Enterprise Funds as
of September 30 2006, is as follows:
Series
Original Issue Matures
Interest
Rate (%)
Debt
Outstanding
Water and Wastewater Fund
Water and Sewer System Revenue Bonds, Series 1996 B
Water and Sewer System Adjustable Rate Revenue Bonds, Series
1999 (1)
Water and Sewer System Revenue Bonds, Series 2001
Water and Sewer System Revenue Bonds, Series 2003
Certificates of Obligation, Series 1998
Water and Sewer System Revenue and Refunding Bonds, Series
2006
Total Utility System Fund
8,870,000
8,000,000
10,000,000
9,500,000
17,100,000
13,845,000
2008
2020
2023
2025
2018
4.20-4.40 $
3.75
4.37-6.25
4.00-6.00
3.10-3.80
1,010,000
6,980,000
9,500,000
8,835,000
15,000,000
2031 3.74-4.82 13,845,000
$ 55,170,000
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM DEBT (continued)
The annual requirements to amortize governmental activity revenue bonds and certificates of
obligation outstanding at September 30, 2006 are as follows:
Fiscal Year
Ending
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Revenue Bonds
Principal
$ 1,125,000
1,180,000
1,245,000
1,305,000
1,370,000
1,435,000
1,500,000
1,570,000
1,640,000
1,715,000
1,895,000
1,975,000
2,055,000
2,140,000
2,225,000
2,335,000
2,445,000
1,600,000
1,600,000
1,150,000
1,205,000
1,265,000
1,330,000
1,395,000
1,470,000
$ 40,170,000
Interest
$ 1,828,614
1,783,380
1,729,919
1,669,361
1,611,111
1,543,986
1,474,224
1,404,811
1,337,811
1,267,474
1,193,461
1,117,341
1,037,494
953,344
864,994
757,081
643,781
529,869
461,494
393,119
338,494
278,244
214,994
146,831
75,338
$ 24,656,569
Certificates of Obligation
Principal
$ 915,000
945,000
980,000
1,015,000
1,050,000
1,090,000
1,125,000
1,170,000
1,210,000
1,250,000
2,090,000
2,160,000
$ 15,000,000
Interest
$ 521,073
492,006
461,198
428,271
393,158
355,698
316,100
274,498
230,760
184,938
121,790
41,040
$ 3,820,528
49
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM DEBT (continued)
C. Component Unit Long -Term Debt
The following is a summary of the long-term debt transactions of the Pearland Economic
Development Corporation and the Development Authority of Pearland for the year ended
September 30, 2006:
Pearland Economic Development
Corporation
Sales tax revenue bonds
Deferred amount for issuance premium
Deferred Toss on refunding
Deferred issuance costs
Compensated absences
Development Authority of Pearland
Tax Inclement Revenue Bonds
Deferred issuance costs
Deferred amount for issuance discount
Balance
Oct. 1, 2005
10,590,000 $
155,448
(189,626)
(256,439)
14,540
13,995,000
(927,778)
Amounts Due
Balance Within One
Additions (Reductions) Sept. 30, 2006 Year
10,235,000 $
(102,808)
44,500
9,775,000
(695,027)
(86,013)
(345,000) $
(7,212)
16,418
13,138
(20,842)
(1,535,000)
32,702
3,727
20,480,000 $ 400,000
148,236
(173,208)
(346,109)
38,198 5,000
22,235,000 1,555,000
(1,590,103)
(82,286)
23,381,145 $
19,170,652 $ (1,842,069) $
40,709,728 $
1,960,000
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
2006 are as follows:
Series
Original Issue Matures
Interest Debt
Rate (%) Outstanding
Pearland Economic Development Corporation
Sales Tax Revenue Bonds, Series 2005
Sales Tax Revenue Bonds, Series 2006
Development Authority of Pearland
Tax Increment Revenue Bonds, Series 2005
Tax Increment Revenue Bonds, Series 2006
Total Component Unit Long -Term Debt
10,590,000
10,235,000
2026 2.30-4.42 $ 10,245,000
2030 3.66-4.75 10,235,000
13,995,000 2028
9,775,000 2028
2.50-5.00
3.50-4.75
13,180,000
9,055,000
$ 42,715,000
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - LONG-TERM DEBT (continued)
The annual requirements to amortize component unit revenue bonds outstanding at September 30, 2006 are
as follows:
Fiscal Year
Ending
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Revenue Bonds
Pearland Economic
Development Corporation
Principal
$ 400,000
525,000
545,000
565,000
585,000
610,000
635,000
660,000
690,000
720,000
760,000
795,000
835,000
875,000
910,000
950,000
995,000
1,040,000
1,090,000
1,140,000
1,190,000
1,255,000
1,320,000
1,390,000
$ 20,480,000
F. Legal Compliance
Interest
$ 1,003,562
888,369
870,144
851,669
831,506
809,256
784,906
757,406
728,856
698,956
664,756
628,669
590,575
556,125
519,625
481,075
439,200
395,138
348,538
299,325
247,838
188,338
128,725
66,025
$ 13,778,581
Development Authority of Pearland
Principal
$ 1,555,000
635,000
645,000
670,000
695,000
725,000
755,000
790,000
825,000
865,000
905,000
945,000
975,000
1,025,000
1,070,000
1,125,000
1,180,000
1,235,000
1,300,000
1,365,000
1,440,000
1,510,000
Interest
$ 1,038 268
984 893
961 964
937 214
910 277
881 262
849 974
816 346
780 289
742 194
702 654
659 841
614 541
567 741
518 131
466 756
411 350
353 225
289 956
223 351
152 701
78 176
$ 22,235,000 $ 13,941,104
Long-term debt assumed by the City upon dissolution of annexed municipal utility district in fiscal
year 2006 has been recorded as part of the City's long-term debt A portion of the assumed debt is
related to assets recorded in the Water and Sewer Fund. Even though the debt is related to assets
recorded in the Water and Sewer Fund, the debt is considered general obligation debt based on
Texas law. The annexed debt was defeased during fiscal year 2006.
51
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 6 — FUND EQUITY / NET ASSETS
The City records fund balance reserves on the fund level to indicate that a portion of the fund balance
is legally restricted for a specific future use or to indicate that a portion of the fund balance is not
available for expenditures
NOTE 7 - INTERFUND TRANSACTIONS
A summary of interfund transfers, the purpose of which is to cover operational expenses/expenditures, for the
year ended September 30 2006, is as follows:
Transfers Out
Capital Projects Fund
General Fund
General Fund
General Fund
General Fund
Water and Sewer Fund
Water and Sewer Fund
Non Major Governmental Fund
Transfers In Amounts Purpose
General Fund
Capital Projects Fund
Debt Service Fund
Non Major Governmental Funds
Water and Sewer Fund
General Fund
Debt Service Fund
General Fund
NOTE 8 - DEFERRED COMPENSATION PLAN
$ 589,828
2,589,500
958,347
314,520
159,000
979,161
333,562
86,666
$ 6,010,584
Transfer for engineering costs and other
capital project costs
Transfer funds for capital projects costs
Debt service payments
Transfer of funds to park and recreation
activities
Annual scheduled transfer of funds for water
and sewer services
Transfer funds for administrative costs
Debt service payments
Transfer funds for administrative costs
The City maintains, for its employees, a tax -deferred compensation plan meeting the requirements of
Internal Revenue Code Section 457. The plan was established in the 1995 fiscal year by City Ordinance
and Nationwide Retirement Solutions and SRC Retirement Corporation were appointed as plan
administrators. The deferred compensation is not available to employees until termination retirement,
death, or unforeseen emergency. The plan's trust arrangements are established to protect deferred
compensation amounts of employees under the plan from any other use other than intended under the plan
(eventual payment to employees deferring the compensation) in accordance with federal tax laws.
Amounts of compensation deferred by employees under plan provisions are disbursed bi-weekly by the
City to a third party administrator. The third party administrator handles all funds in the plan and makes
investment decisions and disburses funds to employees in accordance with plan provisions.
52
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - EMPLOYEE RETIREMENT SYSTEM
Plan Description and Provisions
The City provides pension benefits for all of its full-time employees through a nontraditional, joint
contributory, defined benefit plan in the state-wide Texas Municipal Retirement System ("TMRS'), one
of 801 currently administered by TMRS, an agent multiple -employer public employee retirement system.
Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City -
financed monetary credits, with 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 a percent (100%, 150%, or 200%) of the employee's accumulated
contributions. In addition, the City can grant, as often as annually, another type of monetary credit
referred to as an updated service credit which is a theoretical amount which, when added to the
employee's accumulated contributions and the monetary credits for service since the plan began would be
the total monetary credits and employee contributions accumulated, with interest, if the current
employee contribution rate and City matching percent had always been in existence and if the
employee's salary had always been the average of his salary in the last three years that are one year before
the effective date. At retirement, the benefit is calculated as if the sum of the employee s accumulated
contributions with interest, and the employer -financed monetary credits, with interest, were used to
purchase an annuity.
The plan provisions are adopted by the City Council of the City, within the options available in the state
statutes governing TMRS and within the actuarial constraints also in the statutes. Plan provisions for the
City were as follows:
Deposit Rate* 7%
Matching Ratio (City to Employee): 2 to 1
A member is vested after 5 years
Members can retire at ages 60 and above with 5 or more years of service or with 20 years of service
regardless of age.
Contributions
Under the state law governing TMRS, the Actuary annually determines the City's contribution rate. This
rate consists of the normal cost contribution rate and the prior service contribution rate, both of which
are calculated to be a level percent of payroll from year to year. The normal cost contribution rate
finances the currently accruing monetary credits due to City matching percent, which are the obligation
of the City as of an employee's retirement date, not at the time the employee's contributions are made.
The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the
obligation of the City to each employee at the time his retirement becomes effective. The prior service
contribution rate amortizes the unfunded (over funded) actuarial liability (asset) over the remainder of
the plan's 25-year amortization period. The unit credit actuarial cost method is used for determining
the City contribution rate. Both the employees and the City make contributions monthly. Since the City
needs to know its contribution rate in advance to budget for it, there is a one-year delay between the
actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect.
53
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - EMPLOYEE RETIREMENT SYSTEM (continued)
The City's total payroll in fiscal year 2006 was $17.1 million and the City's contributions were
based on a payroll of $17.0 million. Contributions made by employees totaled $1.2 million, and the
City made contributions of $1.7 million during the fiscal year ended September 30 2006.
Three year trend information is presented below:
Annual Pension Cost (APC)
Percentage of APC Contributed
NPO at the End of Period
2006
$ 1,730,700 $
100%
$ - $
2005
1480,301 $
100%
$
2004
1 371,452
100%
Because the actuary determines contribution rates on an annual basis and the City pays the calculated rate
each month, the City will always have a net pension obligation (NPO) of zero at the beginning and end of
the period, and the annually required contributions (ARC) will always equal contributions made.
A schedule of funding progress for TMRS for the three most recent actuarial valuations may be found
in the required supplementary information section of the City s Annual Financial Report.
All assumptions for the December 31, 2005 valuations are contained in the 2005 TMRS
Comprehensive Annual Financial Report, a copy of which may be obtained by writing to P.O. Box
149153, Austin, Texas 78714-9153. The following is a summary of the actuarial assumptions:
Actuarial Cost Method
Amortization Method
Remaining Amortization Period
Asset Valuation Method
Actuarial Assumptions:
Investment Rate of Return
Projected Salary Increases
Includes Inflation At
Cost -of -Living Adjustments
Unit Credit
Level Percent of Payroll
25 Years - Open Period
Amortized Cost
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Litigation and Other Contingencies
7%
None
3.5%
None
The City was involved m various lawsuits and arbitration proceedings at September 30, 2006. 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.
54
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 10 - COMMITMENTS AND CONTINGENCIES (continued)
Arbitrage Rebate
In accordance with the provisions of the Internal Revenue Code, sections 103, 103A, and 148, as
amended, a governmental debt issuance must qualify and maintain tax-exempt status by satisfying certain
arbitrage requirements contained in these provisions. As part of the requirements certain amounts earned
on the non -purpose investment of debt issuance proceeds, in excess of the yield on an issue, earned as
arbitrage, will be required to be paid to the U.S. Treasury. As part of this process, the City annually
determines potential arbitrage liabilities on its debt issues, on component unit debt issues and on debt
issues assumed by the City from various Municipal Utility Districts. As of September 30, 2006 the City
does not have any arbitrage liabilities.
Reimbursement due to Developers
In 2004, the City, along with the Reinvestment Zone Number Two (the Zone), and the Development
Authority of Pearland (the Authority), component units of the City, entered into an agreement with a
developer to reimburse the developer all or a portion of the project costs to implement the Shadow
Creek Ranch Development TIRZ (TIRZ Plan). As projects implementing the TIRZ Plan are
completed, the Zone Board may recommend to the City that the Authority reimburse developers on
behalf of the Zone and the City. The Zone Board will forward to the City and the Authority all of the
necessary and required documentation supporting the requested reimbursement and a determination
of the exact amount requested for reimbursement, including a calculation of the amount of interest to
be reimbursed on funds advanced for the projects. In addition all monies available in the Tax
Increment Fund shall be transferred to the escrow agent no less than once per year and no later than
the fifteenth day of each August, subject to the retention by the City of: (1) an amount equal to the
City's administrative costs connected with the Zone and the TIRZ Plan, as provided in the TIRZ plan
(36% of the City's Tax Increment, but not more than $0.255, in years four through eight and 64% of
the City's Tax Increment, but not more than $0.44, in years nine through 30) shall be retained by the
City; (2) amounts required to be maintained in the Alvin ISD Suspense Account; (3) an amount
sufficient to pay reasonable current and anticipated administrative and operating costs of the Zone, as
determine by the Zone Board.
NOTE 11 - RISK MANAGEMENT
The City is exposed to various risks of loss related to torts: theft of, darnage 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-1RP), 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 year-end September 30, 2006 the City believed the amounts paid on
Workers' Compensation would not change significantly from the amounts recorded.
55
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 12 - SUBSEQUENT EVENTS
Surface Water — Interim Water Supply Agreement with Gulf Coast Water Authority
On November 6, 2006, the City of Pearland entered into an interim water supply agreement with the
Gulf Coast Water Authority. The contract reserves the right for the City of Pearland to purchase up to
14.3 million GPD of the Brazos River surface water at a mutually agreed upon delivery point. The
Authority has entered into a contract with the Chocolate Bayou Water Company to purchase all of the
real and personal property, including water rights. The City of Pearland agrees to pay the Authority
its pro -rate share (40.19%) of the debt ($27,805,000 principal amount) that the Authority will issue to
purchase these assets In two years, the City of Pearland can either prepay it's obligation with
respect to the outstanding principal amount of the bonds, through the issuance of City debt or the City
can continue to pay the Authority it's pro-rata share of the annual debt service.
Development Authority of Pearland Issuance Debt
On October 2, 2006, the Development Authority of Pearland approved the issuance of $9,970,000 in
Tax Increment Contract Revenue Bonds, Series 2006. The proceeds of the bonds will be used to pay
eligible project costs pursuant to the Plan. The City and the TIRZ #2 Board have approved total
reimbursements to the Developer of approximately $64.9 million. Pursuant to such reimbursement
approval, the Developer has been reimbursed $31.4 million which includes $9,104,000 from this
issuance and $2.2 million in a cash contribution in November of 2006. The Plan, as amended,
estimates that throughout the life of the TIRZ, the Authority will finance total infrastructure project
costs of approximately $160,750,000
Water/Sewer Rate Increase
The City of Pearland increased water/sewer revenues 25% through a rate increase effective with
October 1, 2006 consumption. The rate increase will generate an additional $3.0 million in revenues
The increase is necessary to fund needed capital improvement projects, mainly the purchase of 10
MGD capacity in the expansion of the City of Houston Southeast Water Purification Plant and to
meet bond coverage requirements. This is the first change in water and sewer rates for at least six
years.
Monthly Rates are as follows:
Water — Residential/Commercial Single Unit
Base — 2000 gallons
Volume per 1000 — over 2,000 gallons
Previous Current
$10.89 $11.98
$2.02 $2.73
Water — Residential/Commercial Multi -Unit
Base — 2000 gallons $9.90 $10.89
Volume per 1000 — over 2,000 gallons $1.82 $2 71
Sewer
Base — 2000 gallons
Volume per 1000 — over 2,000 gallons
$11.39 $12 53
$1.46 $2.06
56
REQUIRED SUPPLEMENTARY INFORMATION
57
(This page intentionally left blank)
58
CITY OF PEARLAND, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES - BUDGET AND ACTUAL
For the year ended September 30, 2006
REVENUES
Property taxes
Sales and use taxes
Franchise fees
Licenses and permits
Fees and forfeitures
Charges for services
Investment earnings
Intergovernmental
Other
Total Revenues
Budgeted Amounts
Original Final
$ 11,154,650
8,056,000
3,130,500
3,673,570
1,935,625
7,702,721
290,000
123,000
369,500
36,435,566
EXPENDITURES
Current
General government
Public safety
Public works
Community services
Parks and recreation
Total Expenditures
Excess (deficiency) of revenues over
expenditures
6,761,935
12,382,510
9,806,160
2,936,322
4,126,361
36,013,288
422,278
OTHER FINANCING SOURCES (USES)
1,575,323
(1,997,601)
Transfers in
Transfers out
Total other financing sources and
uses
Net change in fund balances
Fund balances, beginningof year
(422,278)
8,202,771
Fund balances at year end $
8,202,771
$ 11,099,556
9,829,660
3,291,065
3,848,491
1,725,228
8,505,393
420,000
490,829
475,726
39,685,948
6,519,885
12,817,577
10,469,657
2,874,080
4,664,037
37,345,236
2,340,712
1,634,681
(4,024,567)
(2,389,886)
(49,174)
7,702,771
$ 7,653,597
Variance with
Final Budget -
Positive
Actual (Negative)
$ 11,413,806 $
9,712,118
3,426,352
4,066,914
1,934,882
8,734,090
516,775
448,502
252,704
40,506,143
6,284,996
12,685,081
9,727,972
2,739,532
4,308,250
35,745,831
4,760,312
1,655,653
(4,021,367)
(2,365,714)
2,394,598
8,202,771
$ 10,597,369
314,250
(117, 542)
135,287
218,423
209,654
228,697
96,775
(42,327)
(223,022)
820,195
234,889
132,496
741,685
134,548
355,787
1,599,405
2,419,600
20,972
3,200
24,172
2,443,772
500,000
$ 2,943,772
CITY OF PEARLAND, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY BUDGET INFORMATION
Year ended September 30, 2006
BUDGETARY COMPLIANCE
The City of Pearland has complied with all material budget requirements for the year ended
September 30, 2006.
Annual appropriated budgets are adopted for the General, Special Revenue and Debt Service Funds,
using the same basis of accounting as for financial reporting. All annual appropriations lapse at
fiscal year end. Project length budgets are adopted for the Capital Project Funds. The City, for
management control, approves a financial plan for the Enterprise Fund. City Council approves the
annual budget for the Pearland Economic Development Corporation, which is included in the
City's financial reporting entity.
Expenditures may not legally exceed budgeted appropriations at the fund level (i.e. General Fund,
Debt Service Fund, etc.). Expenditure requests, which would require an increase in total budgeted
appropriations, must be approved by City Council through a formal budget amendment. At any
time in the fiscal year, the Council may make emergency appropriations to meet a pressing need
for public expenditure in order to protect the public health, safety, or welfare. The Council has the
power to transfer any unencumbered funds allocated by the budget from one activity, function, or
department, to another activity, function, or department, to re -estimate revenues and expenditures,
and to amend the budget.
Because City Council adopts the budget at the fund level, management has the authority to transfer
available funds allocated by the budget from one function/department or activity to another function
or activity within the same department. In cooperation with the directors and department heads of
the City, the Budget Manager, the Director of Finance and the City Manager prepare an annual
budget for the General Fund, Special Revenue Funds and Debt Service Fund for the ensuing
fiscal year, in a form and style as deemed desirable by the City Manager The City Manager shall
submit to the Council, for its review, consideration, and revision, both a letter describing the
proposed new budget, as well as a balanced budget for the forthcoming fiscal year, between 60
(sixty) and 90 (ninety) days piior to the beginning of the fiscal year. The budget, as adopted, must
set forth the appropriations for services, functions, and activities of the various City departments
and agencies, and shall meet all fund requirements provided by law and required by bond
covenants. Capital projects are budgeted on a project -length basis.
Amounts reported in the accompanying financial statements represent the amended budgeted
amount plus all supplemental appropriations.
60
CITY OF PEARLAND, TEXAS, TEXAS
REQUIRED PENSION SYSTEM SUPPLEMENTARY INFORMATION
September 30, 2006
TEXAS MUNICIPAL RETIREMENT SYSTEM (UNAUDITED)
Schedule of Funding Progress
Actuarial
Valuation Date
December 31,
2006
2005
2004
Actuarial Value
of Assets
$ 24,661,930
21,971,144
18,772,272
Actuarial
Accrued
Liabilities
$ 29,638,024
26,517,882
23,190,084
Percentage
Funded
83%
83%
81%
Unfunded
Actuarial
Accrued
Liability
(UAAL)
4 976,094
4 546,738
4 417,812
Annual
Covered
Payroll
$ 15,233 614
13,703 115
12,731 012
(UAAL) as a
Percentage of
Covered Payroll
33%
33%
35%
(this page intentionally left blank)
62
COMBINING AND INDIVIDUAL FUND
STATEMENTS AND SCHEDULES
63
(This page intentionally left blank)
64
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
To account for the proceeds of specific revenue sources that are legally restricted to expenditures
for specific purposes.
Hotel/Motel Tax - A fund created to account for hotel/motel occupancy tax revenue.
Court Security - A fund created to account for the receipt and expenditure of revenues from
court fines for court security.
City Wide Donation — A fund created to account for miscellaneous donations for all city
departments except parks.
Court Technology — This fund is used to account for the receipt and expenditure of revenues
from court fines for court technology.
Regional Detention Fund — A fund created to account for the regional detention development.
Park Donation — A fund used to account for park special event donations and the development
of parks. This fund also includes funds from the tree trust donations.
State Police - Seizure Fund — A fund created to account for state seizure funds which are used
solely for law enforcement purposes.
Federal Police Fund — A fund created to account for federal seizure funds and can only be used
to support activities that result in further seizures.
Park and Recreation Development — A fund created to account for the development of parks.
Sidewalk Fund — A fund created to account for resources designated for sidewalks.
Community Services — To account for expenditures related to community services.
Grants Fund — To account for revenues and expenditures associated with federal, state, and local
grants.
Street Assessments - A fund created to account for resources for street assessments.
65
CITY OF PEARLAND, TEXAS
BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
September 30, 2006
Hotel Motel City Wide
Tax Court Security Donations Court Technology
ASSETS
Cash and cash equivalents $ 790,629 $ 108,697 $ 55,566 $ 196,818
Investments
Receivables (net of allowance for
uncollectibles) 73,051 2,864 3,521
Total assets $ 863,680 $ 111,561 $ 55,566 $ 200,339
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ $ $ 9,804 $
Deferred revenue 2,894 3,521
Total liabilities 2,894 9,804 3,521
Fund balances:
Unreserved, reported in
Special revenue funds 863,680 108,667 45,762 196,818
Capital projects funds
Total fund balances 863,680 108,667 45,762 196,818
Total liabilities and fund balances $ 863,680 $ 111,561 $ 55,566 $ 200,339
Page 1 of 2
Parks and
Regional State Police- Recreation
Detention Park Donations Seizure Fund Federal Police Development
$ 107,400 $ 264,035 $ 120,058 $ 27,295 $ 1,129,687
$ 107,400 $ 264,035 $ 120,058 $ 27,295 $ 1,129,687
$
107,400 264,035 120,058 27,295 1,129,687
107,400 264,035 120,058 27,295 1,129,687
$ 107,400 $ 264,035 $ 120,058 $ 27,295 $ 1,129,687
CITY OF PEARLAND, TEXAS
BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
September 30, 2006
ASSETS
Cash and cash equivalents
Investments
Receivables (net of allowance for
uncollectibles)
Total assets
Sidewalk
Community
Services
$ 151,060 $
$ 151,060 $
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $
Deferred revenue
Total liabilities
$
Fund balances:
Unreserved, reported in
Special revenue funds 151,060
Capital projects funds
Total fund balances 151,060
Total liabilities and fund balances $ 151,060 $
Grant Fund Street Assessments
$ 113,796 $ 679,107
148,889
88,787
820
$ 202,583 $ 828,816
1,813
200,770
200,770
$ 202,583
22,790
22,790
806,026
806,026
$ 828,816
Page 2 of 2
Totals
$ 3,744,148
148,889
169,043
$ 4,062,080
$ 11,617
29,205
40,822
3,215,232
806,026
4,021,258
$ 4,062,080
69
CITY OF PEARLAND, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30, 2006
REVENUES
Sales and use taxes
Fines and forfeitures
Investment earnings
Intergovernmental
Other
Total revenues
EXPENDITURES
Current
General government
Public safety
Community services
Parks and recreation
Total Expenditures
Excess (deficiency) of revenues
over expenditures
OTHER FINANCING SOURCES
(USES)
Transfers in
Transfers out
Net change in fund balances
Fund balances - beginning
Fund balances - ending
Hotel Motel Tax Court Security
$ 267,588 $
46,856
22,403 2,969
289,991
96,248
96,248
193,743
193,743
669,937
863,680
49,825
1,716
1,716
48,109
(31,873)
16,236
92,431
$ 108,667
City Wide
Donations
1,170
54,502
55,672
16,185
16,185
39,487
39,487
6,275
$ 45,762
Court
Technology
55,852
5,194
61,046
3,814
3,814
57,232
57,232
139,586
$ 196,818
Page 1 of 2
Parks and
Regional State Police- Recreation
Detention Park Donations Seizure Fund Federal Police Development
2,923 7,197 3,204 747 25,370
6,000
2,348 20,674 38,273 178,632
5,271 27,871 41,477 747 210,002
10,500
7,409 59,139
7,409
10,500 59,139
5,271 20,462 30,977 747 150,863
235,731
5,271 20,462 30,977 747 386,594
102,129 243,573 89,081 26,548 743,093
$ 107,400 $ 264,035 $ 120,058 $ 27,295 $ 1,129,687
CITY OF PEARLAND, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30, 2006
REVENUES
Sales and use taxes
Fines and forfeitures
Investment earnings
Intergovernmental
Other
Total revenues
EXPENDITURES
Current
General government
Public safety
Community services
Parks and recreation
Total Expenditures
Excess (deficiency) of revenues
over expenditures
OTHER FINANCING SOURCES
(USES)
Transfers in
Transfers out
Net change in fund balances
Fund balances - beginning
Fund balances - ending
Sidewalk
3,619
35,226
38,845
38,845
3 8, 845
112,215
Community
Services
1,940
3,941
5,881
48,846
48,846
(42,965)
35,100
(54,793)
(62,658)
62,658
$ 151,060 $
Grant Fund
5,728
111,239
116,967
125,170
9,541
134,711
(17,744)
43,688
25,944
174,826
$ 200,770
Street
Assessments
13,844
13,844
13,844
13,844
792,182
$ 806,026
Page 2 of 2
Totals
$ 267,588
102,708
96,308
117,239
333,596
917,439
96,248
184,516
31,256
66,548
378,568
538,871
314,519
(86,666)
766,724
3,254,534
$ 4,021,258
73
CITY OF PEARLAND, TEXAS
DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2006
with comparative actual totals for the year ended September 30, 2005
REVENUES
Taxes:
Property taxes
Investment earnings
Intergovernmental
Total Revenues
EXPENDITURES
Debt Service:
Prmcipal
Interest
Intergovernmental
Total Expenditures
Revenues over (under) expenditures
OTHER FINANCING SOURCES /
(USES)
Proceeds from long-term debt
Payments to refunding escrow agent
Transfers from other funds
2006
Final Budget
$ 10,728,697
84,948
990,723
11,804,368
4,107,055
6,546,929
1,683,678
12,337,662
(533,294)
8,004,141
(8,004,141)
1,291,909
Total other financing sources (uses) 1,291,909
Net change in fund balance
Fund balances, beginning of year
758,615
3,855,129
Actual
Variance
Positive /
(Negative)
$ 10,736,081 $
142,407
291,786
11,170,274
3,429,108
6,546,227
1,683,678
11,659,013
(488,739)
8,004,141
(8,004,139)
1,291,909
1,291,911
803,172
3,855,129
Fund balances at year end $ 4,613,744 $ 4,658,301
7,384
57,459
(698,937)
(634,094)
677,947
702
678,649
44,555
2
2
44,557
$
2005
$ 10,095,935
57,687
10,153,622
3,534,534
5,027,376
1,083,896
9,645,806
507,816
339,561
339,561
847,377
3,007,752
44,557 $ 3,855,129
CITY OF PEARLAND, TEXAS,
SPECIAL REVENUE FUND - HOTEL/MOTEL TAX
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2006
with comparative actual totals for the year ended September 30, 2005
2006
Budget Actual
REVENUES
Hotels occupancy tax $ 251,500 $ 267,588
Investment Income 16,000 22,403
Total Revenues 267,500 289,991
EXPENDITURES
Current
General government 157,500
Total Expenditures 157,500
Net change in fund balance 110,000
Fund balances, beginning of year 669,937
Fund balances at year end $ 779,937
96,248
96,248
193,743
669,937
Variance
Positive /
(Negative)
$ 16,088
6,403
22,491
61,252
61,252
83,743
2005
$ 185,396
7,759
193,155
80,313
80,313
112,842
557,095
$ 863,680 $ 83,743 $ 669,937
CITY OF PEARLAND, TEXAS,
SPECL4L REVENUE FUND - COURT SECURITY
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2006
with comparative actual totals for the year ended September 30, 2005
2006
Budget
Variance
Positive /
Actual (Negative) 2005
REVENUES
Fines and forfeitures $ 42,700 $ 46,856 $ 4,156 $ 39,988
Investment earnings 2,500 2,969 469 1,137
Total Revenues 45,200 49,825 4,625 41,125
EXPENDITURES
Current:
Community services 545 1,716 (1,171) 3,266
Total Expenditures 545 1,716 (1,171) 3,266
Revenues over (under) expenditures 44,655 48,109 3,454 37,859
Other Financing Sources (Uses)
Transfers (out) (31,873) (31,873) (10,363)
Net change in fund balance 12,782 16,236 3,454 27,496
Fund balances, beginning of year 92,431 92,431 64,935
Fund balances at year end $ 105,213
$ 108,667 $ 3,454 $ 92,431
76
CITY OF PEARLAND, TEXAS,
SPECIAL REVENUE FUND - CITY WIDE DONATIONS
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2006
with comparative actual totals for the year ended September 30, 2005
REVENUES
Investment earnings
Other income
2006
Total Revenues
Budget Actual
$ 500 $
48,330
48,830
EXPENDITURES
Current:
Community services 4,683
Total Expenditures 4,683
Net change in fund balance 44,147
Fund balances, beginning of year 6,275
Fund balances at year end $
1,170
54,502
55,672
16,185
16,185
39,487
6,275
Variance
Positive /
(Negative)
$ 670
6,172
6,842
(11,502)
(11,502)
(4,660)
2005
245
12,610
12,855
8,968
8,968
3,887
2,388
50,422 $ 45,762 $ (4,660) $ 6,275
CITY OF PEARLAND, TEXAS,
SPECIAL REVENUE FUND - COURT TECHNOLOGY
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2006
with comparative actual totals for the year ended September 30, 2005
2006
Budget
Variance
Positive /
Actual (Negative) 2005
REVENUES
Fines and forfeits $ 51,000 $ 55,852 $ 4,852 $ 51,586
Investment earnings 3,408 5,194 1,786 1,934
Total Revenues 54,408 61,046 6,638 53,520
EXPENDITURES
Current:
Community services 2,307 3,814 (1,507) 3,004
Total Expenditures 2,307 3,814 (1,507) 3,004
Net change in fund balance 52,101 57,232 5,131 50,516
Fund balances, beginning of year 139,586 139,586 89,070
Fund balances at year end $ 191,687 $ 196,818 $ 5,131 $ 139,586
78
CITY OF PEARLAND, TEXAS,
SPECIAL REVENUE FUND - REGIONAL DETENTION
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2006
with comparative actual totals for the year ended September 30, 2005
REVENUES
Investment earnings
Other income
2006
Budget
Total Revenues
$ 1,600
2,348
3,948
Net change in fund balance 3,948
Fund balances, beginning of year 102,129
Actual
2,923
2,348
5,271
5,271
102,129
Fund balances at year end $ 106,077 $ 107,400
Variance
Positive /
(Negative)
$ 1,323
1,323
1,323
2005
1,211
49,258
50,469
50,469
51,660
$ 1,323 $ 102,129
CITY OF PEARLAND, TEXAS,
SPECIAL REVENUE FUND - PARK DONATIONS
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2006
with comparative actual totals for the year ended September 30, 2005
REVENUES
Investment earnings
Other
Total Revenues
EXPENDITURES
Current:
Parks and recreation
Total Expenditures
2006
Budget Actual
3,850 $
22,322
26,172
8,000
8,000
Net change in fund balance 18,172
Fund balances, beginning of year 243,573
Fund balances at year end $
261,745
7,197
20,674
27,871
7,409
7,409
20,462
243,573
$ 264,035
Variance
Positive /
(Negative)
2005
$ 3,347 $
(1,648)
1,699
591
591
2,290
3,155
15,018
18,173
16,971
16,971
1,202
242,371
$ 2,290 $ 243,573
CITY OF PEARLAND, TEXAS,
SPECIAL REVENUE FUND - STATE POLICE - SEIZURE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2006
with comparative actual totals for the year ended September 30, 2005
2006
REVENUES
Investment earnings
Other
Total Revenues
EXPENDITURES
Current:
Public safety
Budget Actual
$
2,492 $
30,077
32,569
10,500
Total Expenditures 10,500
Net change in fund balance 22,069
Fund balances, beginning of year 89,081
Fund balances at year end $ 111,150
Variance
Positive /
(Negative)
2005
3,204 $ 712 $ 1,307
38,273
41,477
10,500
10,500
30,977
89,081
$ 120,058
8,196
8,908
8,908
25,542
26,849
17,661
17,661
9,188
79,893
$ 8,908 $ 89,081
CITY OF PEARLAND, TEXAS,
SPECL4L REVENUE FUND - FEDERAL POLICE
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2006
with comparative actual totals for the year ended September 30, 2005
2006
Budget Actual
REVENUES
Investment earnings $
Total Revenues
400
400
Net change in fund balance
Fund balances, beginning of year
Fund balances at year end $
400
26,548
Variance
Positive /
(Negative)
2005
747 $ 347 $ 344
747
747
26,548
347
344
347 344
26,204
26,948 $ 27,295 $
347 $ 26,548
CITY OF PEARLAND, TEXAS,
SPECIAL REVENUE FUND - PARK AND RECREATION DEVELOPMENT
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2006
with comparative actual totals for the year ended September 30, 2005
REVENUES
Investment earnings
Intergovernmental
Other
2006
Budget
$ 17,188
6,000
153,930
Total Revenues 177,118
EXPENDITURES
Current:
Parks and recreation 726,018
Total Expenditures 726,018
Revenues over (under) expenditures (548,900)
Other Financing Sources (Uses)
Transfers from other funds 195,731
Total other financing sources (uses) 195,731
Net change in fund balance (353,169)
Fund balances, beginning of year 743,093
Actual
Variance
Positive /
(Negative)
2005
$ 25,370 $ 8,182 $ 8,346
6,000
178,632 24,702 185,998
210,002
59,139
59,139
150,863
235,731
235,731
386,594
743,093
Fund balances at year end $ 389,924 $ 1,129,687
32,884
666,879
666,879
699,763
40,000
40,000
739,763
$ 739,763
194,344
194,344
194,344
548,749
$ 743,093
CITY OF PEARLAND, TEXAS,
SPECIAL REVENUE FUND - SIDEWALK
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2006
wills comparative actual totals for the year ended September 30, 2005
REVENUES
Investment earnings
Other
2006
Budget Actual
$ 1,795 $
25,110
Total Revenues 26,905
Revenues over (under) expenditures
Other Financing Sources (Uses)
Transfers (to) other funds
26,905
Total other financing sources (uses)
Net change in fund balance 26,905
Fund balances, beginning of year 112,215
3,619
35,226
38,845
38,845
3 8, 845
112,215
Fund balances at year end $ 139,120 $ 151,060
Variance
Positive /
(Negative)
$ 1,824
10,116
11,940
11,940
2005
$ 1,924
36,950
38,874
38,874
(180,000)
(180,000)
11,940 (141,126)
253,341
$ 11,940 $ 112,215
CITY OF PEARLAND, TEXAS,
SPECIAL REVENUE FUND - COMMUNITY SERVICES
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2006
with comparative actual totals for the year ended September 30, 2005
2006
Budget Actual
REVENUES
Investment earnings $ 2,281 $ 1,940
Other 3,904 3,941
Total Revenues
EXPENDITURES
Current:
Public safety
Total Expenditures
6,185 5,881
Revenues over (under) expenditures
44,585
44,585
OTHER FINANCING SOURCES /
(USES)
Transfers from other funds
Transfers (to) other funds
Total other financing sources (uses)
(38,400)
35,100
(59,358)
(24,258)
Net change in fund balance
Fund balances, beginning of year
(62,658)
62,658
Fund balances at year end $
48,846
48,846
(42,965)
35,100
(54,793)
(19,693)
(62,658)
62,658
Variance
Positive /
(Negative)
2005
$ (341) $
37
(304)
(4,261)
(4,261)
(4,565)
4,565
4,565
797
3,806
4,603
28,790
(24,187)
32,000
32,000
7,813
54,845
$ $ 62,658
CITY OF PEARLAND, TEXAS,
SPECIAL REVENUE FUND - GRANT FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACTUAL
For the Year Ended September 30, 2006
with comparative actual totals for the year ended September 30, 2005
REVENUES
Investment earnings
Intergovernmental
Total Revenues
EXPENDITURES
Current:
General government
Public safety
Community services
Capital outlay
Total Expenditures
Revenues over (under) expenditures
OTHER FINANCING SOURCES /
(USES)
Transfers from other funds
Total other financing sources (uses)
Net change in fund balance
Fund balances, beginning of year
2006
Budget Actual
$ 3,385
140,572
$ 5,731
111,239
143,957 116,970
144,045
11,139
155,184
(11,227)
6,000
6,000
(5,227)
174,826
Fund balances at year end $
125,173
9,541
134,714
(17,744)
43,688
43,688
25,944
174,826
169,599 $
200,770
Variance
Positive /
(Negative)
2005
$ 2,346 $
(29,333)
(26,987)
18,872
1,598
20,470
(6,517)
37,688
37,688
31,171
866
398,388
399,254
1,260
261,551
91,694
354,505
44,749
50,000
50,000
94,749
80,077
$ 174,826
CITY OF PEARLAND, TEXAS,
SPECIAL REVENUE FUND - STREET ASSESSMENTS
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2006
with comparative actual totals for the year ended September 30, 2005
2006
Budget
Variance
Positive /
Actual (Negative) 2005
REVENUES
Investment earnings $ 7,468 $ 13,844 $ 6,376 $ 26,009
Other 198,928
Total Revenues 7,468 13,844 6,376 224,937
Net change in fund balance
7,468 13,844 6,376 224,937
Fund balances, beginning of year 792,270 792,182 567,245
Fund balances at year end $ 799,738 $ 806,026 $ 6,376 $ 792,182
(This page intentionally left blank.)
88
COMPONENT UNITS
(this page intentionally left blank.)
DISCRETELY PRESENTED COMPONENT UNITS
FUND BASED FINANCIAL STATEMENTS
89
CITY OF PEARLAND, TEXAS, TEXAS
DISCRETELY PRESENTED COMPONENT UNITS
BALANCE SHEETS - GOVERNMENTAL FUNDS
September 30, 2006
ASSETS
Cash and equivalents
Investments
Receivables -less allowance for
uncollectibles
Restricted cash
Total assets
LIABILITIES
Accounts payable and accrued expenses
Total liabilities
FUND BALANCE
Reserved for construction
Reserved for debt service
Unreserved
Pearland
Economic
Development
Corporation
Tax Increment
Reinvestment
Zone #2
$ 3,239,475 $
3,448,107
864,825
10,840,127
18,392,534
33,549
33,549
Total fund balance
Total Liabilities and Fund Balance $
10, 840,127
7,518,858
18,358,985
18,392,534
Reconciliation from Fund balance to Net Assets
Fund Balance
Less revenue bonds payable
Less other long-term liabilities
Less interest payable
Net Assets
Development
Authority of
Pearland
Total Component
Units
3,129,862 $ 20,212 $
3,129,862
54,573
54,573
3,075,289
3,075,289
$ 3,129,862
18,358,985 $
(20,108,919)
(38,198)
(82,484)
2,174,602
2,194,814
16,826
16,826
6,389,549
3,448,107
864,825
13,014,729
23,717,210
104,948
104,948
2,174,602
3,386
2,177,988
$ 2,194,814 $
10, 840,127
2,174,602
10,597,533
23,612,262
23,717,210
3,075,289 $ 2,177,988 $ 23,612,262
(20,562,611) (40,671,530)
(38,198)
(82,484)
(1,870,616) $
3,075,289 $ (18,384,623) $ (17,179,950)
90
CITY OF PEARLAND, TEXAS
DISCRETELY PRESENTED COMPONENT UNITS
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS
For the Year Ended September 30, 2006
REVENUES
Taxes:
Property taxes
Sales and use taxes
Intergovernmental
Investment earnings
Total revenues
Pearland
Economic
Development
Corporation
$
4,821,342
582,218
5,403,560
EXPENDITURES
Current:
General government
Economic development
Debt Service
Principal
Interest
Bond issuance cost
Intergovernmental -City
Total Expenditures
Revenues over (under) expenditures
OTHER FINANCING SOURCES /
(USES)
1,148,585
345,000
421,400
102,808
7,211,662
Transfers from other component units
Transfers (to) other component units
Issuance of Revenue bonds
Total other financing sources (uses)
9,229,455
(3,825,895)
Changes in fund balance
Fund balances, beginning as restated
Fund balances, ending
Reconciliation from changes in fund
balance to changes in net assets
Change in Fund Balance
Add Principal payments
Bond Issuance costs
Add changes in interest payable
Add changes in other long-term liabilities
Changes in Net Assets
10,235,000
10,235,000
6,409,105
11,949,880
$
TIRZ
Developments
Development
Authority of
Pearland
$ 5,354,319 $
71,559
5,425,878
1,421,796
85,592
85,592
48,619
8,100,000
1,535,000
1,064,986
781,040
352
1,421,796 11,529,997
4,004,082 (11,444,405)
(2,151,892)
2,151,892
9,775,000
(2,151,892) 11,926,892
1,852,190
1,223,099
18,358,985 $
$
482,487
1,695,501
3,075,289 $ 2,177,988
6,409,105 $ 1,852,190
345,000
96,881
(82,484)
(10,275,075)
$ (3,506,573) $ 1,852,190
$ 482,487
1,535,000
744,611
(9,775,000)
$ (7,012,902)
Total
Component
Units
$ 5,354,319
4,821,342
739,369
10,915,030
48,619
10,670,381
1,880,000
1,486,386
883,848
7,212,014
22,181,248
(11,266,218)
2,151,892
(2,151,892)
20,010,000
20,010,000
8,743,782
14,848,892
$ 23,592,674
$ 8,743,782
1,880,000
841,492
(82,484)
(20,050,075)
$ (8,667,285)
(this page intentionally left blank.)
92
LONG-TERM DEBT AMORTIZATION SCHEDULES
93
CITY OF PEARLAND, TEXAS
COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT
BY MATURITY DATE
September 30, 2006
Permanent Improvement Refunding Bonds Series 2000
Fiscal Year
Ending Principal
2007 $ 1,800,000
2008 1,885,000
2009 1,980,000
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Fiscal Year
Ending
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
$ 5,665,000
Interest
230,700
142,260
48,510
$ 421,470
Total
$ 2,030,700
2,027,260
2,028,510
6,086,470
Certificates of Obligation, Series 2001
Principal
115,000
560,000
575,000
600,000
630,000
655,000
700,000
730,000
790,000
835,000
880,000
930,000
980,000
1,040,000
$ 10,020,000
Interest
$ 477,823
477,823
474,373
456,923
431,423
407,173
380,641
352,123
321,198
287,673
251,375
211,958
169,500
124,250
76,500
26,000
$ 4,926,752
Total
$ 477,823
477,823
589,373
1,016,923
1,006,423
1,007,173
1,010,641
1,007,123
1,021,198
1,017,673
1,041,375
1,046,958
1,049,500
1,054,250
1,056,500
1,066,000
14,946,752
G.O. Series 2001 (TIRZ Obligation)
Principal
$ 235,000
250,000
260,000
175,000
$ 920,000
Interest
$ 31,298
21,840
11,895
3,413
$ 68,445
Total
$ 266,298
271,840
271,895
178,413
$ 988,445
Certificates of Obligation, Series 2006
Principal
25,000
25,000
50,000
125,000
315,000
335,000
355,000
370,000
395,000
405,000
405,000
505,000
470,000
500,000
525,000
555,000
585,000
605,000
730,000
765,000
805,000
850,000
$ 9,700,000
Interest
$ 534,360
457,257
455,726
453,429
448,069
434,594
414,688
393,557
371,354
349,654
330,932
314,074
294,838
274,001
253,146
230,912
207,218
181,991
155,363
125,325
91,688
56,363
19,125
$ 6,313,301
Total
$ 534,360
482,257
480,726
503,429
573,069
749,594
749,688
748,557
741,354
744,654
735,932
719,074
799,838
744,001
753,146
755,912
762,218
766,991
760,363
855,325
856,688
861,363
869,125
$ 16,013,301
94
Fiscal Year
Ending
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Fiscal Year
Ending
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Permmanent Improvement Bonds, Series 2003
Principal
$
140,000
335,000
350,000
370,000
390,000
410,000
435,000
455,000
725,000
765,000
805,000
845,000
885,000
935,000
980,000
1,030,000
1,085,000
1,140,000
1,200,000
1,260,000
$ 14,540,000
Interest
$ 664,504
664,504
660,304
646,054
625,504
603,904
581,104
557,104
535,016
516,129
492,529
462,729
430,826
396,266
359,283
320,153
278,613
234,000
186,413
136,350
83,700
28,350
$ 9,463,335
Certificates of Obligation, Series 2003
Principal
$ 390,000
415,000
435,000
1,110,000
1,175,000
1,235,000
1,295,000
1,035,000
1,090,000
1,145,000
1,210,000
1,180,000
1,240,000
1,310,000
1,380,000
1,455,000
1,530,000
$ 18,630,000
Interest
$ 744,520
732,445
719,695
685,420
631,233
580,095
531,114
488,203
449,408
407,488
361,533
313,733
265,333
213,023
156,188
95,944
32,513
$ 7,407,883
Total
$ 664,504
664,504
800,304
981,054
975,504
973,904
971,104
967,104
970,016
971,129
1,217,529
1,227,729
1,235,826
1,241,266
1,244,283
1,255,153
1,258,613
1,264,000
1,271,413
1,276,350
1,283,700
1,288,350
$ 24,003,335
Total
$ 1,134,520
1,147,445
1,154,695
1,795,420
1,806,233
1,815,095
1,826,114
1,523,203
1,539,408
1,552,488
1,571,533
1,493,733
1,505,333
1,523,023
1,536,188
1,550,944
1,562,513
Page 1 Of 2
Permanent Improvement & Refund Bonds, Series
2005
Principal
$
425,000
1,635,000
1,705,000
1,775,000
1,845,000
1,930,000
2,010,000
2,115,000
865,000
995,000
380,000
385,000
395,000
405,000
875,000
2,625,000
2,760,000
2,900,000
3,045,000
4,010,000
3,935,000
$ 37,015,000 $
Interest
1,680,164
1,680,164
1,673,258
1,637,739
1,578,223
1,514,039
1,445,011
1,370,664
1,281,814
1,178,689
1,108,514
1,071,314
1,043,624
1,027,893
1,011,658
994,756
967,338
882,900
748,275
606,775
465,763
297,000
98,375
25,363,946
Total
$ 1,680,164
1,680,164
2,098,258
3,272,739
3,283,223
3,289,039
3,290,011
3,300,664
3,291,814
3,293,689
1,973,514
2,066,314
1,423,624
1,412,893
1,406,658
1,399,756
1,842,338
3,507,900
3,508,275
3,506,775
3,510,763
4,307,000
4,033,375
$ 62,378,946
Certificates of Obligation, Series 2004
Principal
$ 100,000 $
100,000
290,000
340,000
365,000
380,000
385,000
710,000
710,000
730,000
1,030,000
1,070,000
1,160,000
1,175,000
1,195,000
1,210,000
1,510,000
1,580,000
1,625,000
1,675,000
1,730,000
1,830,000
Interest
960,959 $
956,959
949,159
936,559
922,459
907,559
892,259
870,359
841,959
813,159
777,959
735,424
689,129
635,394
574,650
511,519
440,119
359,006
280,969
205,672
126,931
43,463
Total
1,060,959
1,056,959
1,239,159
1,276,559
1,287,459
1,287,559
1,277,259
1,580,359
1,551,959
1,543,159
1,807,959
1,805,424
1,849,129
1,810,394
1,769,650
1,721,519
1,950,119
1,939,006
1,905,969
1,880,672
1,856,931
1,873,463
$ 26,037,883 $ 20,900,000 $ 14,431,621 $ 35,331,621
95
(this page intentionally left blank.)
96
CITY OF PEARLAND, TEXAS
COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT
BY MATURITY DATE
September 30, 2006
Fiscal Year
Ending
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Fiscal Year
Ending
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Permanent Improvement & Refund Bonds, Series
2006
Principal
$ 50,000
50,000
50,000
50,000
320,000
385,000
400,000
410,000
430,000
445,000
460,000
480,000
1,335,000
1,485,000
1,580,000
1,675,000
2,150,000
2,150,000
2,270,000
2,395,000
2,525,000
3,690,000
7,380,000
$ 32,165,000
Interest
$ 1,917,992
1,532,194
1,530,194
1,528,194
1,520,794
1,506,694
1,490,994
1,474,794
1,457,994
1,440,216
1,421,263
1,401,288
1,361,050
1,293,888
1,217,263
1,135,888
1,040,263
932,763
822,263
705,638
585,794
438,188
175,275
$ 27,930,877
Total
$ 1,967,992
1,582,194
1,580,194
1,578,194
1,840,794
1,891,694
1,890,994
1,884,794
1,887,994
1,885,216
1,881,263
1,881,288
2,696,050
2,778,888
2,797,263
2,810,888
3,190,263
3,082,763
3,092,263
3,100,638
3,110,794
4,128,188
7,555,275
$ 60,095,877
Certificates of Obligation, Series 2002
Principal
$
695,000
730,000
770,000
810,000
855,000
900,000
950,000
1,000,000
1,055,000
1,115,000
1,175,000
1,235,000
1,305,000
1,375,000
1,445,000
1,525,000
1,605,000
1,695,000
1,785,000
Interest
$ 1,146,700
1,146,700
1,125,850
1,079,450
1,030,800
979,350
929,625
885,750
839,500
790,750
739,375
685,125
627,875
567,625
504,125
437,125
366,625
292,375
214,125
131,625
44,625
Total
$ 1,146,700
1,146,700
1,820,850
1,809,450
1,800,800
1,789,350
1,784,625
1,785,750
1,789,500
1,790,750
1,794,375
1,800,125
1,802,875
1,802,625
1,809,125
1,812,125
1,811,625
1,817,375
1,819,125
1,826,625
1,829,625
$ 22,025,000 $ 14,565,100 $ 36,590,100
Page 2 of 2
Total All Series
Principal
$ 2,575,000
2,725,000
4,415,000
4,985,000
5,385,000
5,870,000
6,135,000
6,405,000
6,695,000
7,015,000
6,540,000
6,845,000
7,480,000
7,835,000
8,220,000
8,620,000
9,045,000
9,495,000
9,950,000
10,535,000
11,050,000
11,595,000
12,165,000
$ 171,580,000
Interest
$ 8,389,018
7,812,144
7,648,962
7,427,179
7,188,504
6,933,407
6,665,435
6,392,552
6,098,242
5,783,756
5,483,478
5,195,643
4,882,173
4,532,339
4,152,811
3,752,296
3,332,686
2,883,035
2,407,406
1,911,384
1,398,500
863,363
292,775
$ 111,427,088
Total
$ 10,964,018
10,537,144
12,063,962
12,412,179
12,573,504
12,803,407
12,800,435
12,797,552
12,793,242
12,798,756
12,023,478
12,040,643
12,362,173
12,367,339
12,372,811
12,372,296
12,377,686
12,378,035
12,357,406
12,446,384
12,448,500
12,458,363
12,457,775
$ 283,007,088
97
CITY OF PEARLAND, TEXAS
COMBINING SCHEDULE OF ENTERPRISE FUND LONG-TERM DEBT
BYMATURITYDATE
September 30, 2006
Fiscal Year
Ending
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Water & Sewer System Revenue Bonds, Series
1996B
Principal
$ 495,000
515,000
$ 1,010,000
Interest
$ 43,945
22,660
$ 66,605
Total
$ 538,945
537,660
$ 1,076,605
Water & Sewer System Revenue Bonds, Series 2001
Fiscal Year
Ending
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Principal
190,000
200,000
210,000
230,000
240,000
255,000
270,000
290,000
300,000
320,000
340,000
365,000
390,000
420,000
1,730,000
1,825,000
1,925,000
$ 9,500,000
Interest
$ 480,005
468,130
455,630
442,505
428,130
413,130
397,830
386,018
372,968
359,093
343,893
327,573
309,688
290,188
269,188
182,688
91,438
$ 6,018,090
Total
$ 670,005
668,130
665,630
672,505
668,130
668,130
667,830
676,018
672,968
679,093
683,893
692,573
699,688
710,188
1,999,188
2,007,688
2,016,438
$ 15,518,090
Water & Sewer System Adiustable Rate Revenue
Bonds, Series 1999
Principal
$ 195,000
205,000
215,000
220,000
230,000
240,000
250,000
260,000
270,000
290,000
1,080,000
1,125,000
1,175,000
1,225,000
$ 6,980,000
Interest
$ 263,495
261,218
253,320
238,688
230,436
221,811
212,813
203,438
193,688
183,375
172,688
132,188
90,000
45,938
$ 2,703,095
Total
$ 458,495
466,218
468,320
458,688
460,436
461,811
462,813
463,438
463,688
473,375
1,252,688
1,257,188
1,265,000
1,270,938
$ 9,683,095
Water & Sewer System Revenue Bonds, Series 2003
Principal
$ 245,000
260,000
270,000
285,000
300,000
315,000
330,000
340,000
355,000
365,000
375,000
385,000
390,000
395,000
395,000
410,000
420,000
1,500,000
1,500,000
$ 8,835,000
Interest
$ 383,513
373,717
363,313
352,513
341,113
323,113
304,213
285,238
271,638
257,438
242,838
227,838
212,438
196,350
179,563
162,775
145,350
127,500
63,750
$ 4,814,204
Total
$ 628,513
633,717
633,313
637,513
641,113
638,113
634,213
625,238
626,638
622,438
617,838
612,838
602,438
591,350
574,563
572,775
565,350
1,627,500
1,563,750
$ 13,649,204
Water and Sewer System Revenue and Refunding Bonds, Series
2006
Fiscal Year
Ending
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Principal
550,000
570,000
600,000
625,000
650,000
680,000
710,000
745,000
100,000
100,000
100,000
100,000
100,000
100,000
100,000
100,000
100,000
1,150,000
1,205,000
1,265,000
1,330,000
1,395,000
1,470,000
$ 13,845,000
Interest
$ 657,656
657,656
657,656
635,656
611,431
585,931
559,369
530,119
499,519
467,569
434,044
429,744
425,369
420,869
416,244
411,619
406,994
402,369
397,744
393,119
338,494
278,244
214,994
146,831
75,338
$ 11,054,575
Total
$ 657,656
657,656
1,207,656
1,205,656
1,211,431
1,210,931
1,209,369
1,210,119
1,209,519
1,212,569
534,044
529,744
525,369
520,869
516,244
511,619
506,994
502,369
497,744
1,543,119
1,543,494
1,543,244
1,544,994
1,541,831
1,545,338
$ 24,899,575
Certificates of Obligation, 1998
Principal
$ 915,000
945,000
980,000
1,015,000
1,050,000
1,090,000
1,125,000
1,170,000
1,210,000
1,250,000
2,090,000
2,160,000
$ 15,000,000
Interest
$ 521,073
492,006
461,198
428,271
393,158
355,698
316,100
274,498
230,760
184,938
121,790
41,040
$ 3,820,528
Total
$ 1,436,073
1,437,006
1,441,198
1,443,271
1,443,158
1,445,698
1,441,100
1,444,498
1,440,760
1,434,938
2,211,790
2,201,040
$ 18,820,528
PEARLAND ECONCOMIC DEVELOPMENT CORPORATION
COMBINING SCHEDULE OF REVENUE BONDS PAYABLE
BYMATURITYDATE
September 30, 2006
Fiscal Year
Ending
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Sales Tax Revenue Bonds, Series 2005
Principal
350,000
360,000
375,000
385,000
400,000
410,000
425,000
445,000
460,000
480,000
505,000
530,000
555,000
575,000
600,000
625,000
650,000
675,000
705,000
735,000
Interest
412,275
402,650
391,850
380,600
368,088
355,088
340,738
323,738
305,938
287,538
263,538
238,288
211,788
189,588
166,588
141,988
116,363
89,550
61,200
31,238
$ 10,245,000 $ 5,078,625
Total
$ 762,275
762,650
766,850
765,600
768,088
765,088
765,738
768,738
765,938
767,538
768,538
768,288
766,788
764,588
766,588
766,988
766,363
764,550
766,200
766,238
$ 15,323,625
Sales Tax Revenue Bonds, Series 2006
Principal
50,000
165,000
170,000
180,000
185,000
200,000
210,000
215,000
230,000
240,000
255,000
265,000
280,000
300,000
310,000
325,000
345,000
365,000
385,000
405,000
1,190,000
1,255,000
1,320,000
1,390,000
$ 10,235,000
Interest
591,287
485,719
478,294
471,069
463,419
454,169
444,169
433,669
422,919
411,419
401,219
390,381
378,788
366,538
353,038
339,088
322,838
305,588
287,338
268,088
247,838
188,338
128,725
66,025
$ 8,699,956
Total
641,287
650,719
648,294
651,069
648,419
654,169
654,169
648,669
652,919
651,419
656,219
655,381
658,788
666,538
663,038
664,088
667,838
670,588
672,338
673,088
1,437,838
1,443,338
1,448,725
1,456,025
$ 18,934,956
DEVELOPMENT AUTHORITY OF PEARLAND
COMBINING SCHEDULE OF REVENUE BONDS PAYABLE
BY MATURITY DATE
September 30, 2006
Fiscal Year
Ending
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
Tax Increment Revenue Bonds, Series 2006
Principal
715,000
275,000
270,000
280,000
290,000
300,000
315,000
330,000
340,000
360,000
375,000
390,000
390,000
410,000
425,000
450,000
470,000
485,000
510,000
530,000
560,000
585,000
Interest
395,898
370,873
360,904
350,779
339,929
328,329
315,954
302,566
288,129
272,829
257,529
241,216
223,666
206,116
187,256
168,131
147,319
125,581
103,150
79,563
54,388
27,788
$ 9,055,000 $
5,147,893
Total
1,110,898
645,873
630,904
630,779
629,929
628,329
630,954
632,566
628,129
632,829
632,529
631,216
613,666
616,116
612,256
618,131
617,319
610,581
613,150
609,563
614,388
612,788
$ 14,202,893
Tax Increment Revenue Bonds, Series 2005
Principal
840,000
360,000
375,000
390,000
405,000
425,000
440,000
460,000
485,000
505,000
530,000
555,000
585,000
615,000
645,000
675,000
710,000
750,000
790,000
835,000
880,000
925,000
$ 13,180,000
Interest
642,370
614,020
601,060
586,435
570,348
552,933
534,020
513,780
492,160
469,365
445,125
418,625
390,875
361,625
330,875
298,625
264,031
227,644
186,806
143,788
98,313
50,388
Total
1,482,370
974,020
976,060
976,435
975,348
977,933
974,020
973,780
977,160
974,365
975,125
973,625
975,875
976,625
975,875
973,625
974,031
977,644
976,806
978,788
978,313
975,388
$ 8,793,211 $ 21,973,211
(this page intentionally left blank.)
102
UNAUDITED STATISTICAL SECTION
(this page intentionally left blank.)
104
CITY OF PEARLAND, TEXAS
NET ASSETS BY COMPONENT
Last Four Fiscal Years*
(Accrual Basis of Accounting)
Governmental Activities
Invested in capital assets, net of related
debt
Restricted
Unrestricted
Total governmental activities net assets
Business -type activities
Invested in capital assets, net of related
debt
Restricted
Unrestricted
Total business -type activities net assets
Primary government
Invested in capital assets
Restricted
Unrestricted
Total Primary government net assets
•
2003
$ (4,777,139)
4,151,464
3,209,643
$ 2,583,968
16,779,525
25,749,450
$42,528,975
12,002,386
4,151,464
28,959,093
$ 45,112,943
2004
$ (2,537,520)
6,390,504
6,745,647
$10,598,631
27,044,323
18,985,578
$46,029,901
24,506,803
6,390,504
25,731,225
$56,628,532
2005
$ 3,084,208
6,861,792
5,785,107
$ 15,731,107
45,641,648
7,026,775
552,376
$ 53,220,799
48,725,856
13,888,567
6,337,483
$ 68,951,906
2006
$ 24,569,259
8,084,299
8,916,968
$ 41,570,526
53,143,735
10,129,083
699,776
$ 63,972,594
77,712,994
18,213,382
9,616,744
$ 105,543,120
105
CITY OF PEARLAND, TEXAS
CHANGES IN NET ASSETS
Last Four Fiscal Years*
(Accrual Basis of Accounting)
Expenses
Governmental activities
General government
Public safety
Public works
Community services
Parks and recreation
Interest on long-term debt
Total government activities expenses
Business -type activities:
Water and sewer
Total primary government expenses
Program Revenue
Governmental activities
Charges for services:
General government
Public safety
Public works
Community services
Parks and recreation
Operating grants and contributions
General government
Public safety
Public works
Community services
Parks and recreation
Capital grants and contributions
General government
Public safety
Public works
Parks and recreation
Total governmental activities program revenues
Business -type activities:
Charges for services
Operating grants and contributions
Capital grants and contributions
Total business -type activities program revenues
Total primary government program revenues
Net (Expense)/Revenue
Governmental activities
Business -type activities
Total primary government net expense
2003
2004
$ 6,274,853 $
9,645,369
9,728,975
2,873,903
4,558,650
33,081,750
9,643,086
$ 42,724,836
2005
7,314,239 $
10,524,915
9,912,937
2,700,356
5,549,292
36,001,739
8,714,401
11,856,643
12,858,259
2,939,228
5,115,039
41,483,570
15,265,350
$ 51,267,089 $
$ 161,108 $
1,997,580
5,547,177
865,899
5,454
370,286
11,663
324,268
13,769
1,617,638
585,886
11,500,728
8,809,189
9,881,756
18,690,945
$ 30,191,673
2006
$ 13,913,528
12,471,207
6,561,555
2,894,851
2,952,329
6,558,908
45,352,378
13,624,497 16, 532, 722
55,108,067 $ 61,885,100
506,081 $
2,974,714
6,863,769
695,682
838,918
16,999
1,318,518
755,988
13,970,669
185,235 $
3,639,966
7,221,015
1,263,190
2,380
673,276
478,875
799,999
311,921
5,792
14,581,649
11,892,876
47,293
6,932,959
18,873,128
32,843,797 $
11,219,499
8,365,452
19,584,951
34,166,600
2,627,073
4,331,168
6,311,659
824,518
1,239,521
111,239
55,002
20,674
15,742,684
6,000
31,269,538
13,849,201
473,947
13,433,840
27,756,988
$ 59,026,526
$ (21,581,022) $ (22,031,070) $ (26,901,921) $ (14,082,840)
9,047,859 3,607,778 5,960,454 11,224,266
$ (12,533,163) $ (18,423,292) $ (20,941,467) $ (2,858,574)
106
General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes:
Property taxes
Sales and use taxes
Franchise taxes
Investment earnings
Miscellaneous
Transfers
Total governmental activities
Business -type activities:
Investment earnings
Transfers
Total business -type activities
Total primary government
Change in Net Assets
Governmental activities
Business -type activities
Total primary government
2003
$ 15,120,150
6,008,388
2,533,475
170,594
741,313
728,000
25,301,920
2004
$ 17,907,163
6,932,948
2,883,188
1,115,100
782,165
524,110
30,144,674
196,094
(728,000)
(531,906)
$ 24,770,014
417,258
(524,110)
(106,852)
$ 30,037,822
2005
$ 19,804,541
8,026,207
3,097,163
1,863,323
827,589
359,482
33,978,305
399,275
(359,482)
39,793
2006
$ 21,845,231
9,979,706
3,426,352
2,991,139
526,111
1,153,720
39,922,259
681,249
(1,153,720)
(472,471)
$ 34,018,098 $ 39,449,788
3,720,898
8,515,953
8,113,604
3,500,926
7,076,384
6,000,247
$ 12,236,851
$ 11,614,530
$ 13,076,631
25,839,419
10,751,795
$ 36,591,214
107
CITY OF PEARLAND, TEXAS
FUND BALANCES OF GOVERNMENTAL FUNDS
Last ten Fiscal Years
(Modified Accrual Basis of Accounting)
General fund
Reserved
Unreserved
Total General Fund
All other governmental funds
Reserved for debt service
Unreserved, report in:
Special revenue funds
Capital projects funds
1997
$ 332,807
2,357,489
$ 2,690,296
$
1998
1999
2000
$ 256,333 $ 155,481 $ 294,544
3,212,516 4,302,011 4,910,665
$ 3,468,849 $ 4,457,492 $ 5,205,209
930,485 $ 273,742 $ 208,324 $ 681,148
54,174
11,264,381
Total other governmental funds $ 12,249,040
145,225
8,422,316
290,650
5,03 8,188
603,463
5,114,075
$ 8,841,283 $ 5,537,162 $ 6,398,686
108
2001
$ 471,659
6,092,283
$ 6,563,942
$ 1,544,987
860,684
3,653,754
$ 6,059,425
2002
2003
$ 285,925 $ 51,794
4,739,021 5,309,938
$ 5,024,946 $ 5,361,732
2004
$ 70,066
8,215,524
$ 8,285,590
2005
2006
$ 70,873 $ 636,089
8,131,898 9,961,280
$ 8,202,771 $ 10,597,369
$ 2,229,529 $ 2,130,321 $ 3,007,752 $ 3,855,129
877,073
28,493,719
1,724,267
41,254,664
2,848,603
46,579,796
2,462,3 52
44,337,513
$ 31,600,321 $ 45,109,252 $ 52,436,151 $ 50,654,994
$ 4,658,301
3,215,232
53,762,505
$ 61,636,038
109
CITY OF PEARLAND, TEXAS
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
(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
Debt service:
Principal
Interest and other charges
Intergovernmental
Capital outlay
Total expenditures
Excess of revenues over (under) expenditures
Other Financing Sources (Uses)
Transfers in
Transfers out
Bonds issued
Capital leases
Other
Total other financing sources (uses)
Net change in fund balances
Debt service as a percentage of noncapital
expenditures
1997
1998
$ 6,394,544 $
2,599,557
1,478,261
524,197
529,152
1,648,617
567,466
197,764
919,588
14,859,146
2,357,621
4,238,647
4,334,123
1,137,045
1,200,000
1,251,033
5,687,525
20,205,994
961,000
(128,000)
11,750,000
300,000
(92,525)
12,790,475
7,443,627
16.9%
7,255,540
2,973,059
1,703,715
615,805
576,856
1,800,682
914,806
345,674
1,180,321
17,366,458
2,834,021
5,026,554
4,925,693
1,588,383
1,280,000
1,993,010
4,141,295
21,788,956
951,000
(128,000)
595,182
1,418,182
(3,004,316)
18.5%
1999
$ 8,192,927
3,484,454
1,943,545
955,819
675,691
2,960,214
489,860
1,499,020
20,201,530
3,690,296
5,698,238
5,137,708
1,598,521
1,440,000
1,769,693
4,511,168
23,845,624
1,368,000
(464,384)
425,000
1,328,616
(2,315,478)
16.6%
2000
$ 9,272,373
3,745,460
2,022,789
1,469,799
731,959
3,061,545
318,631
2,084,331
22,706,887
3,971,691
5,952,191
5,635,397
1,781,610
1,605,000
1,459,038
1,679,600
22,084,527
1,685,967
(922,967)
10,894,532
151,676
(10,822,328)
986,880
1,609,240
15.0%
110
2001
$ 10,833,292
4,862,571
2,303,730
1,896,728
856,641
3,202,767
333,677
1,961,306
26,250,712
4,235,344
6,692,138
5,974,667
2,662,369
1,680,000
1,595,682
4,516,726
27,356,926
1,022,768
(128,000)
894,768
(211,446)
14.3%
2002
$ 12,857,995
5,103,241
2,453,829
2,256,638
845,322
3,651,825
648,821
9,001,288
1,583,678
38,402,637
16,224,977
8,303,376
7,603,804
2,932,228
1,920,000
2,374,302
12,239,136
51,597,823
4,381,668
(3,751,981)
38,550,000
(1,900,000)
37,279,687
24,084,501
10.9%
2003
$ 15,120,150
6,008,388
2,533,475
2,682,456
1,421,799
3,982,070
170,594
2,398,159
1,133,484
35,450,575
5,852,201
9,649,861
8,769,722
2,827,318
2,040,000
4,469,223
23,567,632
57,175,957
1 533,766
(805,766)
34,652,693
35,380,693
13,655,311
19.4%
2004
$ 17,890,685
6,932,707
2,883,188
3,440,848
1,608,316
5,259,748
1,115,100
3,039,724
1,076,304
43,246,620
6,221,366
10,142,216
8,709,151
2,904,299
3,000,000
5,664,560
18,057,884
54,699,476
1,431,473
(907,363)
184,000
21,000,000
94,443
21,802,553
10,349,697
111
23.6%
2005
$ 19,745,387
8,026,207
3,097,163
3,863,592
1,934,967
6,138,610
1,863,323
2,381,504
1,172,313
48,223,066
6,749,574
11,081,461
10,449,814
2,747,179
3,534,534
5,555,065
1,083,896
28,660,851
69,862,374
4,869,599
(4,510,117)
37,015,000
271,193
(15,926,435)
21,719,240
79,932
22.1%
2006
$ 22,149,887
9,979,706
3,426,352
4,066,914
2,037,590
8,734,090
2,991,139
7,852,186
1,744,010
62,981,874
6,381,244
12,869,597
9,727,972
2,770,788
4,374,798
3,429,108
6,771,076
1,683,678
36,706,096
84,714,357
5,851,581
(4,697,861)
41,958,544
(8,004,139)
35,108,125
13,375,642
21.2%
CITY OF PEARLAND, TEXAS
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE
OF TAXABLE PROPERTY
Last Fiscal Year
Real Property
Less Tax Less Other
Fiscal Tax Personal Exempt Real Exemptions and
Year Year Residential Commercial Property Property Abatements
2006 2005 $ 2,664,192,960 $ 1,009,432,370 $ 310,036,660 $ 269,648,350 $ 133,137,398
Notes:
Information not presented was not available at time of publication.
Agricultural Property and Productivity Loss in Commercial
112
Assessed Value
as a Percent of
Total Taxable Total Direct Estimated Actual Actual Taxable
Assessed Value Tax Rate Taxable Value Value
$ 3,580,876,242 $ 0.695 $ 3,580,876,242 100%
CITY OF PEARLAND, TEXAS
DIRECT AND OVERLAPPING PROPERTY TAX RATES
LAST TEN FISCAL YEARS
(rate per $100 of assessed value)
Fiscal
Year
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
City Direct Rates
M&O
Rate
$ 0.440
0.440
0.440
0.440
0.435
0.430
0.406
0.346
0.339
0.345
I & S
Rate
$ 0.255
0.255
0.255
0.255
0.260
0.256
0.280
0.350
0.356
0.329
Total
Direct
$ 0.695
0.695
0.695
0.695
0.695
0.686
0.686
0.696
0.695
0.674
Overlapping Rates a
Pearland
Independent
School Brazoria
District County
$ 1.769 $
1.777
1.862
1.650
1.820
1.837
1.837
1.809
1.792
1.792
Source: Brazoria County and Harris County Appraisal District.
0.358
0.358
0.358
0.400
0.400
0.420
0.420
0.420
0.362
0.348
Port of
Harris Houston
County Authority
$0
0
0
0
0
0
0
0
0
0
.419
.417
. 370
. 350
. 384
. 360
. 360
. 388
. 400
.400
Note: The city's basic property tax rate may be increased only by a majority vote
of the city's residents. Rates for debt service are set based on each year's
requirements.
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.
114
$ 0.016
0.021
0.020
0.018
0.018
0.020
0.020
0.020
0.017
0.015
Harris
County
Flood
Control
$ 0.080
0.080
0.031
0.062
0.048
0.050
0.050
0.042
0.033
0.033
Harris
County
Hospital
District
$ 0.124
0.124
0.147
0 203
0.190
0.190
0.190
0.190
0.190
0.192
MUD
No. 17
$ 0.750
0.750
0.750
0.750
0.750
0.750
0.750
MUD
No. 18
$ 0.650
0.650
0.650
0.650
0.650
0.650
0.640
MUD MUD
No. 19 No. 26
$ 0.800
0.800
0.800
0.800
0.800
0.800
0.800
$ 0.850
0.850
0.850
0.850
115
CITY OF PEARLAND, TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
Fiscal
Year
Ended
Sept 30,
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Taxes Levied
for the
Fiscal Year
$ 6,343,113
7,062,826
8,147,473
9,174,224
10,864,049
12,890,902
14,869,170
17,987,752
20,979,391
24,212,025
Collected within the
Fiscal Year of the Levy
Percentage
Amount of Levy
$ 6,235,954
6,957,153
7,992,304
9,022,542
10,609,654
12,477,283
14,575,297
17,633,986
20,576,812
23,690,031
Source: Brazoria County Tax Office
Collections
in Subsequent
Years
98.31% $
98.50%
98.10%
98.35%
97.66%
96.79%
98.02%
98.03%
98.08%
97.84%
Total Collections to Date
Percentage
Amount of Levy
98,371 $
92,883
139,000
117,769
225,214
355,075
227,842
260,424
262,935
6,334,325
7,050,036
8,131,304
9,140,311
10,834,868
12,832,358
14,803,139
17,894,410
20,839,747
23,690,031
99.9%
99.8%
99.8%
99.6%
99.7%
99.5%
99.6%
99.5%
99.3%
97.8%
116
CITY OF PEARLAND, TEXAS
PRINCIPAL PROPERTY TAX PAYERS
CURRENT YEAR AND NINE YEARS AGO
Taxpayer
Club Sun
Weatherford U.S., Inc.
Centerpoint Energy
Wal-Mart
Pearland Investments Ltd
MHI Partnership Ltd
Perry Homes
Shadow Creek Ranch Dev Co
Shadow Creek Ranch Develop
Lowe's Home Centers
Aggreka, Inc.
Southwestern Bell Telephone
Houston Lighting & Power
K-Mart
Whispering Winds
Continental 34 Ltd
Pearland Remington Ltd
Texas Windmill Apartments
Total
2006
Taxable
Assessed
Value
$ 83,037,360
33,721,540
21,748,680
18,652,320
18,529,310
12,008,030
17,768,220
17,743,250
12,754,930
12,683,070
$ 248,646,710
Source: Brazoria County Appraisal District
Percentage
of Total City
Taxable
Assessed
Rank Value
1
2
3
4
5
6
7
8
9
10
33.40%
13.56%
8.75%
7.50%
7.45%
4.83%
7.15%
7.14%
5.13%
5.10%
MEI
6.81%
1997
Taxable
Assessed
Value
Percentage
of Total City
Taxable
Assessed
Rank Value
$
26,102,540 1
8,185,230 4
IIM
es
mil
9,601,570
8,918,020
8,113,730
7,696,180
6,452,760
6,093,140
5,140,100
4,493,430
$ 90,796,700
2
3
5
6
7
8
9
10
28.75%
9.01%
m 10
OPP
10.57%
9.82%
8.94%
8.48%
7.11%
6.71%
5.66%
4.95%
9.95%
CITY OF PEARLAND, TEXAS
TAXABLE SALES BY CATEGORY
LAST TEN CALENDAR YEARS
(in thousands of dollars)
Agriculture, Forestry, Fishing
Mining
Construction
Manufacturing
Transportation, Communications, Uti
Wholesale Trade
Retail Trade
Finance, Insurance, Real Estate
Services
Other
1997
1998
2,637 $
698
14,670
8,048
1,580
11,480
133,083
316
49,299
1999
1,537 $
450
19,680
9,369
1,958
12,403
149,747
1,777
46,738
2000
1,495 $
299
23,170
8,464
1,955
10,873
180,126
1,646
43,177
2001
1,732 $
434
20,124
12,018
1,929
9,062
218,485
2,161
52,158
1,783
1,222
16,902
15,648
2,083
13,269
253,792
2,940
61,834
Total $ 221,811 $ 243,659 $ 271,205 $ 318,103 $ 369,473
City direct sales tax rate b
Source: State Comptroller's Office.
a 2006 taxable sales thru 2nd quarter of 2006.
1.00%
1.00%
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%
118
2002
$ 1,780
2,730
16,086
12,009
2,021
13,213
299,222
3,080
57,859
$ 408,000
1.00%
2003
2004
$ 2,033 $
2,890
14,037
13,113
4,783
13,601
378,378
3,327
55,786
$ 487,948
1.0O%
2,861
2,076
11,971
13,889
5,930
20,130
431,226
3,387
60,071
593
$ 552,134
1.00%
2005
$ 3,110
1,073
11,604
33,309
16,974
28,838
492,818
1,958
62,752
17,435
$ 669,871
1.00%
2006 a
$ 1,518
963
8,728
20,653
4,599
19,839
254,334
1,254
30,536
14,938
$ 357,362
1.00%
CITY OF PEARLAND, TEXAS
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
(dollars in thousands, except per capita)
Fiscal
Year
Governmental Activities
General
Obligation
Bonds
1997 $
1998
1999
2000
2001
2002
2003
2004
2005
2006
Certificates
of Obligation
Bonds
17,160 $
16,155
15,105
13,760
12,610
13,335
26,880
25,345
60,175
90,305
18,190
17,915
17,525
16,210
15,680
51,585
70,650
90,185
72,390
81,275
Capital
Lease
Obligations
$ 300
750
826
381
75
184
396
309
Business -Type Activities
Revenue
Bonds
Certificates
of Obligation
Bonds
$ 9,745 $
9,400
9,045
16,675
16,140
25,570
34,485
33,505
32,480
40,170
17,100
17,100
17,050
17,000
16,925
16,835
16,735
15,880
15,000
Capital
Lease
Obligations
$
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
* Information not avaialble.
121
62
120
Total
Primary
Government
$ 45,395
61,441
59,663
64,076
61,505
107,415
148,850
165,954
181,321
227,059
Percentage
of Personal
Income
*
*
6.2%
5.8%
9.5%
10.6%
10.3%
9.3%
9.2%
Per
Capita
$ 1,297
1,661
1,728
1,643
1,519
2,492
3,167
3,073
2,895
2,862
121
CITY OF PEARLAND, TEXAS
RATIO OF NET GENERAL BONDED DEBT TO ASSESSED
VALUE AND NET BONDED DEBT PER CAPITA
Last Ten Fiscal Years
(dollars in thousands, except per capita)
Fiscal Tax
Year Year
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
General
Obligation
Bonds
Less Debt
Service
Funds
$ 35,350 $
51,170
49,730
47,020
45,290
81,845
114,365
132,265
148,445
186,580
2,142
274
208
681
1,545
2,230
2,130
3,008
3,855
4,658
Net
Bonded
Debt
$ 33,208
50,896
49,522
46,339
43,745
79,615
112,235
129,257
144,590
181,922
Ratio of Net
Bonded Debt
to Assessed
Value
3.8%
5.0%
4.2%
3.5%
2.8%
4.2%
5.5%
5.5%
4.0%
4.1%
Percentage
of Personal
Income a
Note: Details regarding the city's outstanding debt can be found in the notes to the financial
a Population data can be found in demographic and economic statistics table.
* Information not avaialble.
4.5%
4.1%
7.0%
8.0%
8.0%
7.4%
7.4%
Per
Capita a
$ 949
1,376
1,434
1,188
1,080
1,847
2,388
2,394
2,308
2,293
122
CITY OF PEARLAND, TEXAS
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
September 30, 2006
(dollars in thousands, except per capita)
Taxing Jurisdiction
Alvin Community College District
Brazoria County
Brazoria County MUD No. 17
Brazoria County MUD No. 18
Brazoria County MUD No. 19
Brazoria County MUD No. 26
Pearland ISD
Harris County (a)
Harris County Flood Control District
Port of Houston Authority
Total Overlapping Debt
City Direct Debt
Total Direct and Overlapping Debt
Population
Per Capita Debt -Direct and Overlapping Debt
Gross
Debt
$ 19,375
54,630
23,295
30,465
35,930
56,265
269,648
1,735,196
24,525
357,105
171,889
Sources: Individual Jurisdictions and/or Texas Municipal Reports.
a Debt amounts are as of January 1, 2007.
Overlapping
Percentage
Amount
5.22% $
6.97%
100.00%
99.86%
100.00%
100.00%
90.16%
0.02%
0.02%
0.02%
100%
1,011
3,808
23,295
30,422
35,930
56,265
243,114
347
5
71
394,269
171,889
566,158
79,322
7,137
CITY OF PEARLAND, TEXAS
PLEDGED REVENUE COVERAGE
Last Ten Fiscal Years
Fiscal
Year
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Water & Sewer Revenue Bonds
Gross
Revenues
$ 4,977,187
5,992,075
7,186,535
8,745,437
8,727,219
9,037,143
9,022,909
12,357,427
11,618,774
15,004,397
Less:
Operating
Expenses
Net
Revenue
Available for
Debt Service
$ 2,835,919 $
3,369,917
3,464,094
3,899,289
4,946,621
5,243,633
6,281,753
10,877,383
8,606,809
11,227,791
2,141,268
2,622,158
3,722,441
4,846,148
3,780,598
3,793,510
2,741,156
1,480,044
3,011,965
3,776,606
Debt Service
Principal
$ 240,000
345,000
370,000
535,000
570,000
575,000
980,000
1,025,000
1,075,000
1,125,000
Interest
$ 539,199
437,523
408,848
784,886
760,490
1,159,030
1,635,163
1,504,240
1,459,365
1,828,614
Total
$ 779,199
782,523
778,848
1,319,886
1,330,490
1,734,030
2,615,163
2,529,240
2,534,365
2,953,614
Coverage
2.75
3.35
4.78
3.67
2.84
2.19
1.05
0.59
1.19
1 28
124
CITY OF PEARLAND, TEXAS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Fiscal
Year
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Population (A)
35,000
37,000
34,535
39,000
40,500
43,103
47,000
54,000
62,634
79,322
Personal
Income (in
$000's)
*
$ 1,025,934
1,065,393
1,133,868
1,400,741
1,609,362
1,951,801
2,471,832
Per Capita
Personal
Income (B)
$
(A) Estimated
(B) Pearland Economic Development Corporation
(C) Pearland Independent School District
(D) Bureau of Labor Statistics
* Information not presented is not avaialble.
*
26,306
26,306
26,306
29,803
29,803
31,162
31,162
Median
Age (B)
*
34.0
34.0
34.0
35.1
35.1
35.5
33.4
Education
level in
Years of
Schooling
14.1
14.1
14.1
14.3
14.3
14.3
14.3
14.3
14.3
14.3
School
Enrollment Unemployment
(C) Rate (D)
9,000
9,200
9,500
9,700
10,224
11,700
12,103
13,401
14,236
16,179
4.5%
3.7%
4.1%
3.8%
3.6%
4.3%
4.7%
4.5%
4.6%
3.6%
125
CITY OF PEARLAND, TEXAS
PRINCIPAL EMPLOYERS
Current Year and One Year Ago
Employer
Pearland ISD
Wal-Mart
City of Pearland
Weatherford
Randall's
Kemlon
TurboCare
Super Target
Te1e-flow
Lowes
Davis -Lynch
Packaging Service Co.
Total
2005
Percentage
of Total City
Employees Rank Employment
1,820 1
800 2
429 3
250 4
250 5
185 6
175 7
150 8
140 9
132 10
125
115
4,571
Source: Pearland Economic Development Corp.
7.26%
3.19%
1.71%
1.00%
1.00%
0.74%
0.70%
0.60%
0.56%
0.53%
0.50%
0.46%
18.23%
2006
Percentage
of Total City
Employees Rank Employment
1,978 1
800 2
456 3
191 5
225
168
150
132
125
115
4,340
4
6
7
8
9
10
7.47%
3.02%
1.72%
0.72%
0.85%
0.63%
0.57%
0.50%
0.47%
0.43%
16.39%
126
CITY OF PEARLAND, TEXAS
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Full-time Equivalent Employees as of Sept 30
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Function/Program
Governmental Activities
General Government 39 48 51 52 54 59 74 39 50 66
Public Safety 85 86 106 137 137 160 162 190 200 203
Public Works 17 16 17 20 21 21 24 44 46 45
Community Services 7 8 10 8 8 11 17 41 41 47
Parks and Recreation 42 61 59 66 66 70 72 73 75 57
Business Type Activities
Water & Sewer 46 45 47 48 49 51 56 62 53 62
Component Unit
Economic Development 4 4 4 4 4 4 4 4 4 4
Total 240 268 294 335 339 376 409 453 469 484
Source: City Budget
127
CITY OF PEARLAND, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM,
LAST FOUR FISCAL YEARS
Function/Program
GENERAL GOVERNMENT
Finance
Number of purchase orders
Number of budget transfers
Number of invoices paid
Average number of employees paid per month
Human Resources
Number of hires
Number of interviews conducted
Number of applications received
Legal
Number of resolutions and ordinances prepared
Information Technology
Average monthly service requests
Number of PC's supported
PUBLIC SAFETY
Police
Fire
EMS
Number of police calls resulting in dispatch
Total police arrests made
Dispatched calls per patrol officer
Commercial vehicles equipment violations
UCR Part I cases assigned
Total number of arson incidents
Fires investigated
Total annual inspections
Total calls for service
Total calls for service
Patients treated
PUBLIC WORKS
Fleet Maintenance
Fleet maintenance jobs completed
Preventative maintenance performed
Other Public Works
Fuel issued (gallons)
Street sweeping (miles)
Street signs maintained/replaced
Total work orders completed
Fiscal Year
2003
3,953
61
N/A
764
69
320
2,318
261
275
175
23,706
4,234
677
991
398
8
33
300
644
N/A
2,858
3,593
1,348
143 686
145
865
15,463
2004
3,667
82
N/A
848
58
292
2,541
268
300
185
25,849
4,222
680
1,104
398
6
71
1,059
889
3,297
3,124
3,850
1,501
183,000
790
758
16,888
2005
3,183
117
21,180
930
77
333
3,138
234
350
205
27,443
3,753
704
1,015
418
4
70
965
1,168
3,941
3,848
3,950
2,251
220,000
790
1,170
19 327
2006
3,180
203
22,440
1,022
118
360
2,808
295
400
230
30,496
4,909
662
1,257
366
11
120
1,484
1,210
4,458
4,163
4,877
1,877
301,229
790
1,392
21,626
Function/Program
PARKS AND RECREATION
All Parks and recreation
ROW maintained - acres
Ponds maintained - acres
City lots - acres
City facilities - acres
Parkland - acres
Total number of special events held
Total number of tournaments held
Number of recreation classes offered
Average monthly attendance (all locations)
COMMUNITY SERVICES
Animal Control
Number of animals at shelter
Total number of calls for service
Community Development
Total building inspections
Total code violation cases
Total permits issued
Number of plans reviewed
Municipal Court
Number of h ials
Number of charges
Warrants cleared
WATER & SEWER
Distribution and Collection
Fire hydrant maintenance and inspections
Backed up sewer repairs
Water mains repaired
Water Production
Water produced - wells
(in millions of gallons)
Surface Water Purchased
(in millions of gallons)
Billing & Collections
Annual meter reads
Number of bills
Wastewater Treatment
Wastewater treated
(in millions of gallons)
Sources: Various city departments.
Fiscal Year
2004
760
N/A
N/A
N/A
N/A
24
N/A
N/A
2,543
2,357
3,721
35,007
5,242
11,515
2,136
1,667
24,494
N/A
1,730
313
29
1,465
118
N/A
146,055
1,467
2005
N/A
N/A
N/A
N/A
N/A
23
N/A
632
5,211
1,834
3,535
44,973
3 687
13,738
2,482
2,195
20,964
N/A
1,730
261
37
1,850
280
N/A
N/A
1,386
2006
N/A
N/A
N/A
N/A
N/A
24
N/A
1,170
5,977
2,228
5,443
53,924
2,792
15,289
3,026
2,800
18 275
N/A
1,967
278
71
1,925
683
211,956
192,014
1,398
2007
478
372
66
146
120
20
6
1,189
9,251
2,898
4,600
53,535
1,932
14,438
2,431
2,277
23,401
6,251
2,531
249
150
2,039
1,064
252,000
216,394
1,816
129
CITY OF PEARLAND, TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM,
LAST FOUR FISCAL YEARS
Function/Program
PUBLIC SAFETY
Police
Fire
EMS
Fiscal Year
2003 2004 2005 2006
Police stations 1 1 1 1
Police vehicles 89 100 109 112
Fire stations 4 4 4 4
Fire vehicles 14 15 15 16
EMS Stations 3 3 3 3
EMS Ambulances 5 5 5 5
PUBLIC WORKS
Other public works
Streets (miles)a 202 232 248 365
Streetlights 3,425 3,425 3,494 3,563
Traffic signals 43 43 47 48
PARKS AND RECREATION
Parks and recreation
Developed acreage 124 124 124 120
Pools N/A 1 1 1
Outdoor basketball courts N/A N/A N/A 7
Soccer fields N/A N/A N/A 8
Activity buildings 2 2 3 3
Baseball/Softball Fields 4 4 4 4
WATER AND SEWER
Water Production
Water wells 8 8 9 10
Pumping stations 2 2 2 2
Ground storage tanks 10 10 10 13
Elevated towers 4 4 4 5
Wastewater
Treatment Plants 4 4 4 5
Lift Stations 74 74 78 82
Distribution and Collection
Water mains (miles) 240 250 296 363
Sanitary sewers (miles) 230 240 279 328
Sources: Various city departments.
Note: No capital asset indicators are available for the general government and communityservices
functions.
130
• Exhibit
Resolution No. R2007-025
CITY OF PEARLAND, TEXAS
FEDERAL SINGLE AUDIT REPORT
For the Year Ended September 30,2006
FILE COPY
CITY SECRETARY'S OFFICE
DO REMOVE
Page
Independent Auditors' 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 1
Independent Auditors' Report on Compliance with the Requirements Applicable
to Each Major Program and on Internal Control Over Compliance in
Accordance with OMB Circular A-133 3
Schedule of Expenditures of Federal Awards 5
Notes to Schedule of Expenditures of Federal Awards 6
Schedule of Findings and Questioned Costs 7
Independent Auditors'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
To the Honorable Mayor and
Members of City Council
City of Pearland, Texas
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the aggregate discretely presented component units, each major fund, and the aggregate
remaining fund information of City of Pearland, Texas, (the "City") as of and for the year ended
September 30, 2006, which collectively comprise the City's basic financial statements and have issued
our report thereon dated December 29, 2006. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to financial
audits contained in Government Auditing Standards, issued by the Comptroller General of the United
States.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial reporting in
order to determine our auditing procedures for the purpose of expressing our opinion on the financial
statements and not to provide an opinion on the internal control over financial reporting. However, we
noted certain matters involving the internal control over financial reporting and its operation that we
consider to be reportable conditions. Reportable conditions involve matters coming to our attention
relating to significant deficiencies in the design or operation of the internal control over financial
reporting that, in our judgment, could adversely affect the City's ability to initiate, record, process, and
report financial data consistent with the assertions of management in the financial statements. A
reportable condition is described in the accompanying schedule of findings and questioned costs as item
2006-1.
A material weakness is a reportable condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low level the risk that misstatements caused by
error or fraud in amounts that would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal course of performing their
assigned functions. Our consideration of the internal control over financial reporting would not
necessarily .disclose all matters in the internal control that might be reportable conditions and,
accordingly, would not necessarily disclose all reportable conditions that are also considered to be
material weaknesses. However, of the reportable conditions described above, we consider items 2006-1 to
be a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have direct and material effect on the
determination of financial statement amounts. 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.
Closing
This report is intended solely for the information and use of the City Council, management, others within
the organization and federal awarding agencies and pass-through entities and is not intended to be and
should not be used by anyone other than these specified parties.
Houston,Texas
December 29, 2006
IlL
11 Greenway Plaza,Suite 1515 Nullrs0n La1 One Sugar Creek Boulevard,Suite 920
Houston,TX 77046 1 J 1 Sugar Land,Texas 77478
(713)621-1515 CERTIFIED PUBLIC ACCOUNTANTS (281)242-8600
Fax:(713)621-1570 PROFESSIONAL CORPORATION Fax:(281)242-7333
Independent Auditors'Report on Compliance
with the Requirements Applicable to Each Major
Program and On Internal Control Over
Compliance in Accordance with OMB Circular A-133
To the Honorable Mayor and
Members of City Council
City of Pearland,Texas
Compliance
We have audited the compliance of the City of Pearland, Texas (the "City") with the types of compliance
requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133
Compliance Supplement that are applicable to each of its major federal programs for the year ended
September 30, 2006. The City's major federal programs are identified in the summary of auditors' results
section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the
requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is
the responsibility of the City's management. Our responsibility is to express an opinion on the City's
compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and OMB Circular A-133,Audits of
States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133
require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance
with the types of compliance requirements referred to above that could have a direct and material effect
on a major federal program occurred. An audit includes examining, on a test basis, evidence about the
City's compliance with those requirements and performing such other procedures, as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Our audit does not provide a legal determination on the City's compliance with those requirements.
In our opinion, the City of Pearland, Texas complied, in all material respects, with requirements referred
to above that are applicable to each of its major federal programs for the year ended September 30, 2006.
Internal Control Over Compliance
The management of the City is responsible for establishing and maintaining effective internal control over
compliance with the requirements of laws, regulations, contracts and grants applicable to federal
programs. In planning and performing our audit, we considered the City's internal control over
compliance with requirements that could have a direct and material effect on a major federal program in
order to determine our auditing procedures for the purpose of expressing our opinion on compliance and
to test and report on the internal control over compliance in accordance with OMB Circular A-133.
3
To the Honorable Mayor and
Members of City Council
City of Pearland,Texas
Page 2
Our consideration of the internal control over compliance would not necessarily disclose all matters in the
internal control that might be material weaknesses. A material weakness is a reportable condition in
which the design or operation of one or more of the internal control components does not reduce to a
relatively low level the risk that noncompliance with applicable requirements of laws, regulations,
contracts, and grants caused by error or fraud that would be material in relation to a major federal
program being audited may occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. We noted no matters involving the internal control over
compliance and its operation that we consider to be material weaknesses.
Schedule of Expenditures of Federal Awards
We have audited the financial statements of the governmental activities, the business-type activities, the
aggregate discretely presented component units, each major fund, and the aggregate remaining fund
information of the City of Pearland, Texas, (the"City") as of and for the year ended September 30, 2006,
which collectively comprise the City's basic financial statements and have issued our report thereon dated
December 29,2006. Our audit was performed for the purpose of forming opinions on these basic financial
statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of
additional analysis as required by OMB Circular A-133 and is not a required part of the basic financial
statements. This schedule is the responsibility of the City's management. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a
whole.
Closing
This report is intended solely for the information and use of the City Council, management, others within
the organization and federal awarding agencies and pass-through entities and is not intended to be and
should not be used by anyone other than these specified parties.
Houston, Texas
December 29, 2006
4
CITY OF PEARLAND,TEXAS,TEXAS
SCHEDULE OF EXPENDITURE OF FEDERAL AWARDS
September 30,2006
Pass Through
CFDA Grantor Federal Grant
Federal grantor/Pass through grantor/Program title Number Number -Expenditures
U.S.DEPARTMENT OF HOMELAND SECURITY
Passed through Texas Department of Public Safety
Emergency Management Performance Grants 97.042 2006-GE-T6-0068 42,269
Citizen Corps Program 97.073 2005-GE-T5-4025 3,665
Total Passed through Texas Department
of Public Safety 45,934
ENVIRONMENTAL PROTECTION AGENCY
Pass through Texas Water Development Board
Capitalization Grants for State Revolving Funds 919,820
Total Passed trhough Texas Water
Development Board 66.458 3393-02 919,820
Total Environmental Protection Agency 919,820
Total Federal Awards $ 965,754
5
CITY OF PEARLAND, TEXAS
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30,2006
NOTE 1-BASIS OF ACCOUNTING
The City accounts for awards under federal programs in the General and Special Revenue
governmental funds as well as in the Airport enterprise fund.
In the Governmental funds,these programs are accounted for using a current financial resources
measurement focus. With this measurement focus, only current assets and current liabilities
generally are included on the balance sheet. Operating statements of these funds present
increases (i.e. revenues and other financing sources) and decreases (i.e. expenditures and other
financing uses) in net current assets. The modified accrual basis of accounting is used for these
funds. This basis of accounting recognizes revenues in the accounting period in which they
become susceptible to accrual, i.e., both measurable and available, and expenditures in the
accounting period in which the liability is incurred, if measurable, except for certain
compensated absences and claims and judgments, which are recognized when the obligations
are expected to be liquidated with expendable available financial resources.
Federal grants are considered to be earned to the extent of expenditures made under the
provisions of the grant,and, accordingly, when such funds are received, they are recorded as
deferred revenues until earned. Generally, unused balances are returned to the grantor at the
close of specified project periods.
6
CITY OF PEARLAND, TEXAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED SEPTEMBER 30,2006
I. SUMMARY OF AUDITORS' RESULTS
Financial Statements
Type of auditors' report issued: Unqualified
Internal control over financial reporting:
Material weakness(es)identified? 2006-1
Reportable condition(s) identified that are not
considered to be material weaknesses? None noted
Noncompliance material to financial statements
noted? No
Federal Awards
Internal control over major programs:
Material weaknesses) identified? No
Reportable condition(s) identified that are not
considered to be material weaknesses? None reported
Type of auditors' report issued on compliance with
major programs: Unqualified
Any audit findings disclosed that are required to be
reported in accordance with section 510(a)OMB No
Circular A-133?
Identification of major programs
Name of Federal Program or Cluster CFDA Numbers
Capitalization Grants for State Revolving Funds 66.458
1. Dollar Threshold Considered Between Type A
and Type B Federal Programs $300,000
2. Auditee qualified as low-risk auditee? Yes
'7
CITY OF PEARLAND, TEXAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED SEPTEMBER 30,2006
II. FINANCIAL STATEMENT FINDINGS
The audit disclosed no findings to be reported
Material Weakness
2006-1 Finding:
Capital Assets Capital assets are reported in the government-wide and proprietary
fund financial statements. As of September 30, 2006, a complete
listing of the City's capital assets was not available.
Recommendation:
The City should implement procedures to ensure the preparation of
a detailed listing of all capital assets over the capitalization
threshold that includes a description of the capital asset, original
cost, useful lives, depreciation for the current year and accumulated
depreciation.
Corrective Action Plan Responsible Person
Plan of Action
Estimated time of Completion
•
CITY OF PEARLAND, TEXAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED SEPTEMBER 30,2006
III. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
The audit disclosed no findings to be reported
IV. STATUS OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
FINDING STATUS
2005-01 Arbitrage Compliance Resolved.
2005-02 Reconciliation of General Ledger Accounts to the
Subsidiary Ledger—Material Weakness Resolved.
2005-03 Capital Asset Reporting—Material Weakness See current year finding 2006-1
2005-04 Bank Reconciliations—Material Weakness Resolved.
•
CORRECTIVE ACTION PLAN
• FEBRUARY 14, 2006
The City of Pearland, Texas respectfully submits the following corrective action plan for
the year ended September 30, 2006. The City's independent public accounting firm is
Null-Lairson, Certified Public Accountants, located at 11 Greenway Plaza, Suite 1515,
Houston, Texas. The audit period is from October 1, 2005 to September 30, 2006.
The finding from the December 29, 2006 schedule of findings and questioned costs is
discussed below. The finding is numbered consistently with the number assigned in the
schedule of reportable conditions, Page 8.
FINDINGS-RELATED TO INTERNAL CONTROL OVER FINANCIAL •
REPORTING
2006-1 CAPITAL ASSETS—MATERIAL WEAKNESS
Recommendation: The City should implement procedures to ensure the
preparation of a detailed listing of all capital assets over the capitalization
threshold that includes a description of the capital asset, original cost,
useful lives, depreciation for the current year and accumulated
depreciation.
Response and Action Plan: The City of Pearland concurs with the
recommendation. The City has budgeted in its 2006-2007 fiscal year
purchasing software known as Asset Management II and Continuing
Property Records through the.City's financial software provider. This
will allow assets to be added, retired, and depreciation calculated through
an automated system. The detailed listing of capital assets that the City
currently has does not tie to the financial statements by a significant
amount. Since the variance is so significant, information/data will need to
be recreated and entered into the system in order to create the list.
Departments will be sent their capital asset list that we have for review
and refinement. GASB 34 assets such as streets and sidewalks will be
added and useful lives will be determined for deprecation calculations.
Policies and procedures will also need to be written, as information on
capital assets will need to be forwarded from other departments to
maintain the system.
If you have any questions regarding this plan, please call Claire Manthei, Director of
Finance at 281-652-1671.
Sincerely,
Mr. William Eisen
City Manager
City of Pearland, TX
7
' Exhibit"A"
Resolution No.R2007-25
E
p CITY OF PEARLAND, TEXAS
[7 -_ „v.::
7
.,,---0,4,,,,N,
„,„., ,,,,,
''•
,fir ; -„ 4 <'-1,>k.
El ,' A -15 -- '
,,--).
,..
,„ ,, , t,.,..tp.g., . ,, ,,... ,, ,
„.._ ,
, ,,,HilliillAURNIZ%,,, -
7
G � 7 t f
L {� C r
,,.....r.,_,,
[7
7 ANNUAL
FINANCIAL REPORT
7
7 Fiscal Year Ended
September 30, 2006
II
L
Officials Issuing Report
L Bill Eisen Nick Finan and Claire Manthei Rick Overgaard
City Manager Mickiel Hodge Director of Finance Assistant Director of
l Assistant City Finance
Managers
[7
7
p\EFEB
7 2 2001 [)
r CITY OF PEARLAND
CITY SECRETARY'S OFFICE
7
p
CITY OF PEARLAND,TEXAS
ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
Page
i
FINANCIAL SECTION
Independent Auditors' Report 1
Management's Discussion and Analysis 3
Basic Financial Statements
Government-Wide Financial Statements:
Statement of Net Assets - 17
Statement of Activities 18
Fund Financial Statements:
Balance Sheet—Governmental Funds 20
Reconciliation of the Governmental Fund Balance Sheet to the Statement of 21
Net Assets
Statement of Revenues,Expenditures, and Changes in Fund Balances— 22
Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures, and Changes in 23
Fund Balance of Governmental Funds to the Statement of Activities
Statement of Net Assets—Proprietary Fund 24
Statement of Revenues,Expenses and Changes in Fund Net Assets— 25
Proprietary Fund
Statement of Cash Flows—Proprietary Fund 26
Discretely Presented Component Units ,
Combining Statement of Net Assets 28
Combining Statement of Activities 29
Notes to the Financial Statements , , _ -
30
Required Supplementary Information:
General Fund—Schedule of Revenues,Expenditures, and Changes in Fund 59
Balances—Budget and Actual
[11 System Supplementary Information
Notes To Required Supplementary Budget Information 60
Required Pension 61
f
1'
p
TI
CITY OF PEARLAND,TEXAS
ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
TI
Page
FINANCIAL SECTION (continued)
Other Supplementary Information TI
Combining and Individual Fund Statements and Schedules
Combining Balance Sheet-Nonmajor Governmental Funds 66 TI
Combining Statement of Revenues,Expenditures and Changes in Fund 70
Balances-Nonmajor Governmental Funds
Schedules of Revenues, Expenditures,and Changes in Fund Balance- TI
Budget and Actual:
Debt Service Fund 74
Hotel Motel Tax Fund 75
Court Security Fund . 76
City Wide Donations Fund 77
Court Technology Fund 78
Regional Detention Fund 79
Park Donations Fund 80 1
State Police Seizure Fund 81
Federal Police Fund 82
Parks and Recreation Development Fund 83
Sidewalk Fund 84
Community Services Fund 85 1
Grant Fund 86
, Street Assessments Fund 87
Component Unit Fund Information
Balance Sheets-Governmental Funds 90
0-7
Schedules of Revenues,Expenditures and Changes in Fund Balance 91
Long-Term Debt Amortization Schedules
Combining Schedule of Governmental Long-Term Debt 94
Combining Schedule of Enterprise Fund Long-Term Debt 98
Combining Schedule of Revenue Bonds Payable of Pearland Economic 100
Development Corporation
Combining Schedule of Revenue Bonds Payable of Development Authority 101
of Pearland
FINANCIAL SECTION
IlL.
11 Greenway Plaza,Suite 1515 Null•Lai One Sugar Creek Ctr.Blvd.,
rson Suite920
Houston,TX 77046 Pearland,TX 77478
E (713)621-1515 CERTIFIED PUBLIC ACCOUNTANTS - 281.242.8600
Fax:(713)621-1570 PROFESSIONAL CORPORATION Fax:281.242.7333
F
To the Honorable Mayor and Members
of the City Council
City of Pearland, Texas .
[7, We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the aggregate discretely presented component units, each major fund,
and the aggregate remaining fund-information of City of Pearland, Texas, (the "City") as of and
for the year ended September 30, 2006, which collectively comprise the City's basic financial
statements as listed in the table of contents. These financial statements are the responsibility of
City's management. Our responsibility is to express opinions on these financial statements based
on our audit.
L.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, the
aggregate discretely presented component units, each major fund, and the aggregate remaining
fund information of the City of Pearland, Texas, as of September 30, 2006, and the respective
Li changes in financial position and cash flows, where applicable, thereof for the year then ended in
conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated
December 29, 2006 on our consideration of the City's internal control over financial reporting
and on our tests of its compliance with certain provisions or laws, regulations, contracts, and
grants. That report,which has been issued separately from this document, is an integral part of an
audit performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.
7, 1
•
I
J
The Management's Discussion and Analysis on pages 3 through 13, budgetary comparison
information and Required Pension System Supplementary Information on pages 59 through 61
are not required parts of the basic financial statements but are supplementary information
required by accounting principles generally accepted in the United States of America. We have
applied certain limited procedures, which consisted principally of inquiries of management F1
regarding the methods of measurement and presentation of the supplementary information.
However,we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Pearland, Texas' basic financial statements. Combining and
individual nonmajor fund financial statements and schedules are presented for purposes of n
additional analysis and are not a required part of the basic financial statements. This information J
has been subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
•
• 16,167?a,,:$110
Houston, Texas
December 29, 2006
1
r--
2 J
fl
J
CITY OF PEARLAND, TEXAS
I[ MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the City of Pearland, we offer readers of the City's financial statements this
narrative overview and analysis of the financial activities of the City for the fiscal year ended
September 30, 2006.
FINANCIAL HIGHLIGHTS
• The assets of the primary government of the City of Pearland,exceeded its liabilities as of
September 30, 2006, by $105.5 million (net assets). Of this amount, $9.6 million -
(unrestricted net assets) may be used to meet the City's ongoing obligations to citizens
and creditors in accordance with the City's fund designation and fiscal policies.
• The City's total net assets increased by $36.6 million.
• At the close of the current fiscal year, the City of Pearland's governmental funds reported
combined ending fund balances of $72.2 million, an increase of $13.4 million in
comparison with the prior year. Approximately $53.8 million of this ending balance can
be attributed to work in progress for capital projects.
• As of September 30, 2006, the unreserved, undesignated fund balance for the General
Fund was $10.0 million or 28%of total General Fund expenditures.
• The City of Pearland's General Obligation and Certificates of Obligation debt increased'
to $186.6 million, a net increase of$38.1 million over the previous year. The key factor
was the sale of$32.2 million in Permanent Improvement and Refunding Bonds.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City's basic financial
statements. The City's basic financial statements are comprised of three components: (1)
government-wide financial statements, (2)fund financial statements and (3)notes to the financial
statements. This report also contains other supplementary information in addition to the basic
financial statements themselves.
Government-wide Financial Statements - The government-wide• financial statements are
741 to provide readers with a broad overview of the City's finances, in a manner similar to
a.private-sector business:
The Statement of Net Assets presents information on all of the City's assets and liabilities, with
L the difference between the two reported as net assets. Over time,.-increases or decreases in net
assets may serve as a useful indicator of whether the financial position of the City is improving
of deteriorating.
The Statement of Activities presents information showing how the City's net assets changed
during the fiscal year. All changes in net assets 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).
L
3
p
n
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
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 of Pearland
include general government, public safety, public works, community services and parks and
recreation. The business-type activities of the City include water and sewer.
The government-wide financial statements can be found on pages 17 through 19 of this report.
The government-wide financial statements include not only the City of Pearland, itself(known as
the primary government), but also a legally separate Economic Development Corporation, Tax n
Increment Reinvestment Zone (TIRZ) and the Development Authority of Pearland for which the
City of Pearland is financially accountable. Financial information for these component units is
reported separately from the financial information presented for the primary government, itself.
Fund Financial Statements —A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The City,
like other state and local governments, uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements. All funds of the City can be divided into
two categories—governmental funds and proprietary funds.
Governmental Funds — Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government-wide financial statements.
However, unlike the government-wide financial statements, governmental fund financial
statement focus on current sources and uses of spendable resources, as well as on balances of
spendable resources available at the end of the fiscal year. Such information may be useful in
evaluating a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements.
By doing so, readers may better understand the long-term impact of the government's near-term
financing decisions. Both the governmental funds balance sheet and the governmental fund
statements of revenues, expenditures, and changes in fund balance provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
Beginning on page 20 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 and other funds, which
are considered to be major funds. Data from the other 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 of Pearland 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.
4 r
n
CITY OF PEARLAND,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Proprietary Funds—The City maintains one type of proprietary fund. 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.
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 34 of this report, provide separate information for the Water and Sewer Enterprise Fund
since it is considered to be a major fund of the City.
The basic proprietary fund financial statements can be found on pages 24 through 26 of this
report. -
i
Combining Component Unit Financial Statements The City's three discretely presented
component units shown in aggregate on the face of the government-wide financial statements have
individual information for each of the major discretely presented component units presented in the form
of combining statements immediately following the fund financial statements of the primary
government.
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 30 of this
report.
Other Information —In addition to the basic financial statements and accompanying notes, this
[I! 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 59 of this report.
Government-wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government's
financial position. In the case of the City, assets exceeded liabilities by $105.5 million at the
close of the most recent fiscal year.
By far the largest portion of the City's net assets (74 percent) reflects its investment in capital
assets (e.g., land, buildings, machinery, and equipment); less any related debt used to acquire
[41_,
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
L_ themselves cannot be used to liquidate these liabilities.
5
I
CITY OF PEARLAND,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
COMPARATIVE SCHEDULE OF NET ASSETS i
September 30,2006 and 2005 J
Amounts in(000's)
Governmental Activities Business-type Activities Totals "",
2006 2005 2006 2005 2006 2005 1
Current and other assets $ 79,129 $ 65,343 $' 21,256 $ 17,835 $ 100,385 $ 83,178
Capital assets 143,139 92,505 100,944 88,846 244,083 181,351 7
Total Assets 222,268 157,848 122,200 106,681 344,468 264,529 I
Other liabilities 6,072 8,854 3,166 6,662 9,238 15,516
Long-term liabilities
outstanding 174,625 133,263 55,061 46,798 229,686 180,061 i
Total Liabilities 180,697 142,117 58,227 53,460 238,924 195,577 7
Net assets: -1
Invested in capital assets,
nets of related debt 24,569 3,084 53,144 45,642 77,713 48,726 'l
Restricted 8,085 6,862 10,129 7,027 18,214 13,889 j
Unrestricted 8,917 5,785 700 552 9,617 6,337
Total Net Assets $ 41,571 $ 15,731 $ 63,973 $ 53,221 $ 105,544 $ 68,952 r9-
r-,
-
An additional portion of the City's net assets (17 percent) represent resources that are subject to
external restrictions on how they may be used. The remaining balance of unrestricted net assets (9 7
percent)may be used to meet the government's ongoing obligations to citizens and creditors. j
1
•
r-1
J
7
6
7
7
CITY OF PEARLAND, TEXAS
7 MANAGEMENT'S DISCUSSION AND ANALYSIS
FCOMPARATIVE SCHEDULE OF CHANGES IN NET ASSETS
For the Years Ended September 30,2006 and 2005
ws Amounts in(000's) •
Governmental Activities Business-type Activities Totals
2006 2005 2006 2005 2006 2005
Revenues
7 Program revenues:
Charges for services $ 14,094 $ 12,309 $ 13,849 $ 11,220 $ 27,943 $ 23,529
Operating grants and
contributions 1,426 1,155 474 1,900 1,155
I i Capital grants and .
LLL contributions 15,749 1,118 13,434 8,365 29,183 9,483
Property taxes 21,845 19,805 21,845 19,805
7 Sales and use taxes 9,980 8,026 9,980 8,026
Franchise taxes 3,426 3,097 3,426 3,097
Unrestricted investment earnin; 2,991 1,863 682 399 3,673 2,262
7 Other 526 _ 828 526 828
Total Revenues 70,038 48,201 28,439 19,984 98,478 68,185
Expenses .
General government $ 13,914 . 8,714 13,914 8,714
r_l Public safety 12,471 11,857 12,471 11,857
Public works 6,562 12,858 6,562 12,858
Community services 2,895 2,939 2,895 2,939
r
Parks and recreation 2,952 2,952
Interest on long-term debt 6,559 5,115 6,559 5,115
Business-type activities:
Water and sewer 16,533 13,624 16,533 13,624
7Total Expenses 45,352 41,483 16,533 13,624 61,886 55,107
Increase(decrease)in net
assets before transfers .24,686 6,718 11,906 6,360 36,592 13,078
Transfers 1,154 359 (1,154) - (359)
L: Increase in net assets 25,840 7,077 10,752 6,001 36,592 13,078
Net assets-beginning 15,731 8,654 53,221 47,221 68,952 55,875
7 Netassets-ending $ 41,571 $ 15,731 $ 63,973 $ 53,221 $ 105,544 $ 68,952
cl
At the end of the current fiscal year, the City is able to report positive balances in all three
11 categories of net assets, both for the government as a whole, as well as for its separate
governmental and business-type activities.
7
7
7 7,
L
7
7
CITY OF PEARLAND,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
J
The most significant changes in net assets occurred with a net increase in net assets invested in j
capital, assets net of related debt of $29.0 million as a result of assets received due to the
annexation of a municipal utility district and the contribution of capital assets from the City's
discretely presented component units. 1
J
The remaining increase in the government's net assets of approximately $7.6 million from the
occurred in both restricted and unrestricted net assets primarily in governmental activities as
discussed below.
Governmental activities - Governmental activities increased the City's net assets by $25.8
million, thereby accounting for 71 percent of the total growth in the net assets of the City. Key
elements of this increase are as follows:
• Program revenues from operating and capital grants increased by $20.0 million from J
the prior year. This category of revenues reflects contributions from component units of
infrastructure and funds for infrastructure and other projects.
• Other significant changes in revenues can be seen in sales and use taxes. This category
(primarily sales and hotel occupancy taxes) increased due to the strengthening of the
local economy and continued increase in retail establishments within the City.
• Transfer in from business-type activities of$1.2 million for discretionary contributions
to the governmental debt service and contraction activities accounted another portion of
this increase.
Expenses and Program Revenues -Governmental Activities
$25,000
$20,000 0 Expenses
O Program Revenues
o $15,000
o
$10,000 , ,4. 71ti.;:,
r-'
$5,000 3 -
,- "c-, sc.:1 '4`•' 0 •0 ri
co
o4°t�� o��C° sc• r1�o� c,2,& '�°ice
scs
�o�e G, 'e et,co 0N.0.C\
co
mot
•\� 7
J
7
J
s 7
7
J
L
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Revenues by Source-Governmental Activities
Charges for
services
16%- Grants and
Other contributions
4% 19%
Property taxes \ '
25% IS'
ales and use
> taxes
�� 25%
Franchise taxes
11%
Business-type activities - Business-type activities increased the City's net assets by $10.8 million,
accounting for 29 percent of the total growth in the government's net assets. Key elements of this
increase are as follows. -
• Charges for services increased approximately $2.6 million over the prior year primarily
L due to an increase in water usage due to lower than average rainfall levels.
• Capital grants for infrastructure relating to water and sewer facilities (from impact fees
and annexed municipal utility district.assets) amounted to $13.4 million for the year.
Expenses and Program Revenues-Business-type Activities
$30,000 _ I
O Expenses
$25,000 ,', 0 Program Revenues .
$20,000 - F o $15,000
' r
$s,000s
Water and sewer
r9
I
CITY OF PEARLAND,TEXAS rl
MANAGEMENT'S DISCUSSION AND ANALYSIS
Revenues by Source-Business-type Activities
Charges for
services `l
49%
Other
,
2% r-1
td a°.r pp . . i
Grants and
contributions
49%
Increases in business activity expense for the year of approximately$2.9 million due to major repairs
and renovations being completed in the current fiscal year also contributed to the increase.
Transfers out to the governmental activities of$1.2 million off set the increase of net assets before transfers of$11.9 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- 1
term inflows, outflows, and balances of spendable resources. Such information is useful in
assessing the City's financing requirements, in particular, unreserved fund balance may serve as
a useful measure of the City's net resources available for spending at the end of the fiscal year.
The City's governmental funds reflect a combined fund balance of$72.2 million. Of this, $10.0
million is unreserved and available for day-to-day operations of the City; $4.7 million is reserved 'l
for debt service and the balance is reserved or designated for capital projects and other projects.
There was an increase in the combined fund balance of$13.4 million from the prior year. The
increase in fund balance includes a$2.4 million increase in fund balance of the general fund as well
as an increase in the capital projects fund of approximately $9.4 million due to the proceeds of
recent bond issues.
With a current year increase of$2.4 million,the General Fund's fund balance totaled $10.6 million
at year end. fl
10 1
J
7
CITY OF PEARLAND, TEXAS
r7 MANAGEMENT'S DISCUSSION AND ANALYSIS
L '
In the Capital Projects Fund, the City spent $36.9 million on various improvement projects.
Additionally
, the City issued $32.2 million in Permanent Improvement bonds and received
contributions from the General Fund and component units totaling$2.6 million leaving an ending
fund balance of 7 $53.0 million.
Proprietary Funds - As the City's business-type activities contain only one activity (water and
sewer services) the City's proprietary funds provide the same type of information found in the
p government-wide financial statements.
7 GENERAL FUND BUDGETARY HIGHLIGHTS
During the year there was a $1.3 million increase in appropriations between the original and
7final amended budget. The increase in appropriations is attributable to carryover funding from
prior year encumbrances and projects budgeted in the previous year but still in progress.
Budget estimates for revenues and other sources increased by approximately $3.2 million for the
year as well to reflect the increases in revenues (primarily sales tax) to reflect the actual revenues
recognized during the year.
7
I_ 1 CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets - At the end of fiscal year 2006, the City's governmental activities and business- •
type activities had invested $143.1 million and $100.9 million, respectively, .in a variety of capital
assets and infrastructure, as reflected in the following schedule. This represents a net decrease of
7 $7.0 million, or seven percent over the end of last fiscal year for the business-type activities capital
assets and a change of$50.6 million or 55%for the governmental activities capital assets,
Governmental Activities Business-Type Activities Totals
2006 2005 2006 2005 2006 2005
Land $ 3,715 $ 2,717 $ ' 414 $ 368 $ 4,128 $ . 3,085
7 Construction in progress 74,022 45,327 21,083 19,425 95,106 64,752
Infrastructure 44,160 34,583 47,781 57,229 91,941 91,812
Buildings and improvements 17,836 6,418 23,133 22,610 40,969 29,028
Machinery and equipment3,406 3,460 8,532 8,348 11,938 11,808
7 Total Captial Assets $ 143,139 $ 92,505 $ 100,943 $ 107,979 $ 244,082 $ 200,484
7 Construction in progress at year-end represents numerous ongoing projects, the largest of which
relate to street and water and Sewer improvement projects.
.
7
r 11
P;
CITY OF PEARLAND,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Long-Term Debt- At the end of the current fiscal year, the City had total bonds, certificates of fl
obligation, notes, and capital leases outstanding of$227.5 million. Of this amount, $90.3 million
is composed of general obligation bonds, 96.3 million is composed of certificates of obligation and
$40.2 million represents revenue bonds secured solely by specified revenue sources. fl
Governmental Activities Business-Type Activities Totals
2006 2005 2006 2005 2006 2005
General obligation bonds $ 90,305 $ 60,175 $ $ $ 90,305 $ 60,175
Revenue bonds - 40,170 32,480 40,170 32,480
Certificates of obligation 81,275 72,390 15,000 15,880 96,275 88,270
Capital leases payable 309 396 309 396
Compenated absences 3,099 3,315 418 415 3,517 3,730
$ 171,889 $ 136,276 $ 55,588 $ 48,775 $ 227,477 $ 185,051
The City had multiple debt issuances during the year involving general obligation refunding bonds,
and certificates of obligation. The net effect of these issuances and the debt retired during the year n
was an increase in total debt of$42.4 million or 22.9 percent.
Current ratings on debt issues are as follows:
Mnntiv'c
Investors Standard and
Service Poors f1
General obligation bonds Al A+
• Revenue bonds A2 A
In fiscal year 2006, the City received a ratings upgrade from Moody's Investor Service for its water
and sewer revenue bonds, from an A3 to an A2.
fl
All of the City's bond issues have been successful in qualifying for bond insurance resulting in
ratings of "Aaa", "AAA" and "AAA" ratings from Moody's, Standard & Poors and Fitch,
respectively. f,
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
"A2" and "A" from Moody's and Standard & Poors, respectively. The DAP bonds are rated BBB
by Standard and Poors. Their bonds have also qualified for bond insurance. Therefore, the PEDC
and DAP bonds are rated "Aaa" and "AAA"by Moody's and Standard & Poors, respectively.
n
12
f .
CITY OF PEARLAND,TEXAS
rimy MANAGEMENT'S DISCUSSION AND ANALYSIS
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES
A primary factor in the 2007 budget is how the overall economy affects the City of Pearland's
growth. Pearland continues to be one of the fastest growing cities in the Houston area.
Developments, such as, Shadow Creek Ranch, the Lakes at Highland Glen and Southern Trials
have all contributed to this growth. New single family housing starts totaled 2,312 for 2006 and
construction value was $438 million. This continued growth creates the need to expand services
and provide infrastructure.
The Pearland City Council approved a $39.7 million General Fund budget for fiscal year 2006 El 2007. This is a 4.5% increase over the 2005 — 2006 adopted budget. This increase includes 23
full-time employees to provide for base services, keep up with growth, and to serve the
anticipated annexation of Brazoria County MUD#1. The budget incorporates a tax rate reduction
of 3.22%to $0.6527 per$100 of valuation.
In the budgetary process, water and sewer revenues were anticipated to increase 25% through
rate and volume increases.
l ' REQUESTS FOR INFORMATION
The financial report is designed to provide our citizens, customers, investors and creditors with a
L general overview of City's finances. If you have questions about this report or need any additional
financial information, contact Claire Manthei, Director of Finance, at 3519 Liberty Drive, Pearland,
Texas 77581, or call (281) 652-1600. For general information, visit the City's website at
www.cityofpearland.com.
•
L_
0
L
L
13
f �
L
fl
"1
fl
7
(this page intentionally left blank.)
7
J
14 7
BASIC FINANCIAL STATEMENTS
15
L.�
ElII CITY OF PEARLAND, TEXAS
STATEMENT OF NET ASSETS
September 30,2006
-44 Primary Government
Discretely
Presented
Governmental Business-type Component
l Activities Activities Total Units
ASSETS
Cash and Equivalents $ 49,1-82,583 - $ -43,622 $ 49,226,205 $ 6,389,549
Investments 24,024,670 24,024,670 3,448,107
[ Receivables,net of allowance for
uncollectibles 5,837,850 1,808,617 7,646,467 864,825
Inventories 54,908 54,908
7 Prepaid items 28,925 28,925
Restricted cash and investments 19,403,861 19,403,861 13,014,729
Capital Assets
El, Capital assets not subject to depreciation 77,737,014 21,497,128 99,234,142
Capital assets,net of accumulated -
depreciation 65,402,066 79,446,744 144,848,810
L Total Capital Assets 143,139,080 100,943,872 244,082,952
Total Assets 222,268,016 122,199,972 344,467,988 23,717,210
LIABILITIES
Accounts payable and accrued liabilities _ 4,563,958 1,446,352 6,010,310 98,167
Accrued interest 625,110 187,814 812,924 89,265
Unearned revenues 650,530 20,802 671,332
7 Customer deposits 232,450 1,511,380 1,743,830
Long-term liabilities
Due within one year 3,157,943 2,100,030 5,257,973 1,960,000
El Due in more than one year 171,467,499 52,961,000 224,428,499 38,749,728
Total liabilities 180,697,490 58,227,378 238,924,868 40,897,160
7 NET ASSETS
LiInvested in capital assets,net of related -
debt 24,569,259 53,143,735 77,712,994
Restricted for:
L Debt Service 4,063,04.1 352,738 4,415,779 2,174,602
Other projects 4,021,258 9,776,345 13,797,603
Unrestricted 8,916,96E 699,776 9,616,744 (19,354,552)
Total net assets $ 41,570,526 $ 63,972,594 '$ 105,543,120 $ (17,179,950)
See Notes to Financial Statements.
F ,
L
7
71 17
L
7
L
7
CITY OF PEARLAND,TEXAS 1
i
Statement of Activities
For the Year Ended September 30,2006
7
Program Revenue
Operating Capital Grants r
Charges for Grants and and 7
Functions/Programs Expenses Services Contributions Contributions
Primary government
Governmental Activities 7
General government $ 13,913,528 $ $ 1,239,521 $
Public safety 12,471,207 2,627,073 111,239
Public works 6,561,555 4,331,168 15,742,684 7
Community services 2,894,851 6,311,659 55,002
Parks and recreation 2,952,329 824,518 20,674 6,000
Interest on long-term debt 6,558,908 7
Total governmental activities 45,352,378 14,094,418 1,426,436 15,748,684 .'
Business-type activities:
Water and sewer 16,532,722 13,849,201 473,947 13,433,840
Total business-type activities 16,532,722 13,849,201 473,947 13,433,840
Total primary government $ 61,885,100 $ 27,943,619 $ 1,900,383 $ 29,182,524 7
Component Units J
Pearland Economic Development
Corporation $ 8,910,132 $ $ $ 'I
• TIRZ Developments 1,421,796
Development Authority of
Pearland 9,250,386
Total component units $ 19,582,314 $ $ $ -
General revenues: 1
Taxes:
Property taxes
Sales and use taxes
Franchise taxes
Unrestricted investment earnings r--
Miscellaneous
Transfers
Total general revenues and transfers 7
Change in net assets
Net assets-beginning
Net assets-endingri
J
See Notes to Financial Statements.
r—
18 ri
J
7
1
7
I
El Net(Expense)Revenue and Changes in Net Assets
Primary Government
[1, Governmental Business-type Component
Activities Activities Total Units
7 $ (12,674,007) $ $ (12,674,007)
(9,732,895) (9,732,895)
'1 13,512,297 13,512,297
3,471,810 3,471,810
(2,101,137) (2,101,137)
Ei (6,558,908) (6,558,908)
(14,082,840) (14,082,840)
El 11,224,266 11,224,266
11,224,266 11,224,266
�, (14,082,840) 11,224,266 (2,858,574)
L�
[4_1
$ (8,910,132)
(1,421,796)
74' (9,250,386)
(19,582,314)
mil
21,845,231 21,845,231 5,354,319
r..7 9,979,706 9,979,706 4,821,342 .
3,426,352 3,426,352
2,991,139 681,249 3,672,388 739,368
7 526,111 526,111
1,153,720 (1,153,720)
39,922,259 (472,471) 39,449,788 10,915,029
25,839,419 10,751,795 36,591,214 (8,667,285)
15,731,107 53,220,799 68,951,906 (8,512,665)
$ 41,570,526 $ 63,972,594 $ 105,543,120 $ (17,179,950)
.111
7
i
19
7
7
CITY OF PEARLAND,TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30,2006
11
Other Total
Capital Governmental Governmental
General Fund Debt Service Projects Fund Funds Funds
ASSETS
Cash and cash equivalents $ 2,269,889 $ 2,640,419 $ 40,528,127 $ 3,744,148 $ 49,182,583
Investments 6,502,990 2,007,852 15,364,939 148,889 24,024,670
Receivables,net of allowance
for uncollectibles 4,541,115 467,851 659,841 169,043 5,837,850
Inventories 54,908 54,908
Prepaid expenses 28,925 28,925
Total assets $ 13,397,827 $ 5,116,122 $ 56,552,907 $ 4,062,080 $ 79,128,936
7
LIABILTTIES AND FUND BALANCES
Liabilities:
Accounts payable $ 759,615 $ $ 3,051,161 $ 11,617 $ 3,822,393
Accrued expenditures 726,297 29,851 15,267 771,415
Deposits 232,450 232,450
Deferred revenue 1,082,096 427,970 530,000 29,205 2,069,2717
Total liabilities 2,800,458 457,821 3,596,428 40,822 6,895,529
Fund balances:
Reserved for: 1.1
Inventories 54,908 54,908
Encumbrances 552,256 552,2561-1
Prepaid expenses 28,925 28,925
Debt service 4,658,301 4,658,301
Unreserved,reported in ,�
General fund 9,961,280 9,961,280
Special revenue funds 3,215,232 3,215,232
Capital projects funds 52,956,479 806,026 53,762,505
Total fund balances 10,597,369 4,658,301 52,956,479 4,021,258 72,233,407
7
Total liabilities and fund
balances $ 13,397,827 $ 5,116,122 $ 56,552,907 $ 4,062,080 $ 79,128,936
7
See Notes to Financial Statements.
1
1
20
-,
L
CITY OF PEARLAND,TEXAS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
STATEMENT OF NET ASSETS
September 30,2006
Total fund balance,governmental funds $ 72,233,407
Amounts reported for governmental activities in the Statement of Net Assets are different
because: _
Capital assets used in governmental activities are not current financial resources and therefore
are not reported in this fund financial statement,but are reported in the governmental activities
of the Statement of Net Assets. 143,139,080
Certain other long-term assets are not available to pay current period expenditures and
therefore are not reported,in this fund financial statement,but are reported in the governmental
activities of the Statement of Net Assets. 1,418,741
Some liabilities,(such as Capital Lease Contract Payable,Long-term Compensated Absences,
and Bonds Payable),are not due and payable in the current period and are not included in the
fund financial statement,but are included in the governmental activities of the Statement of
Net Assets.
Bonds and capital leases payable ., 171,526,300)
Compensated absences (3,099,142)
Accrued interest not reflected in Governmental funds (595,260)
�*q Net Assets of Governmental Activities in the Statement of Net Assets 41,570,526
See Notes to Financial Statements.
21.
7
1
CITY OF PEARLAND,TEXAS
j
STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS 7
For the Year Ended September 30,2006 J
Other Total
Capital Governmental Governmental 7
General Fund Debt Service Projects Fund Funds Funds i
REVENUES
Property taxes $ 11,413,806 $ 10,736,081 $ $ $ 22,149,887
Sales and use taxes 9,712,118 267,588 9,979,706
Franchise fees 3,426,352 3,426,352
Licenses and permits 4,066,914 4,066,914
Fines and forfeitures 1,934,882 102,708 2,037,590 rl
Charges for services 8,734,090 8,734,090 J
Investment earnings 516,775 142,407 2,235,649 96,308 2,991,139
Intergovernmental 448,502 291,786 6,994,659 117,239 7,852,186 ri
Other 252,704 1,157,710 333,596 1,744,010 i
Total revenues 40,506,143 11,170,274 10,388,018 917,439 62,981,874 -
EXPENDITURES '1
Current:
J
General government 6,284,996 96,248 6,381,244
Public safety 12,685,081 184,516 12,869,597 7Public works 9,727,972 9,727,972 7
Community services 2,739,532 31,256 2,770,788
Parks and recreation 4,308,250 66,548 4,374,798
Debt Service: 7
Principal 3,429,108 3,429,108
Interest and other charges 6,546,227 6,546,227
Bond issuance costs 224,849 224,849 . j
Capital outlay 36,706,096 36,706,096
Intergovernmental 1,683,678 1,683,678
Total Expenditures 35,745,831 11,659,013 36,930,945 378,568 84,714,357
Excess(deficiency)of revenues over 7
expenditures 4,760,312 (488,739) (26,542,927) 538,871 (21,732,483) J
OTHER FINANCING SOURCES
(USES) 1
General obligation debt issued 8,000,000 33,865,000 41,865,000 J
Premium on general obligation debt 4,141 89,403 93,544
7
Payments to refunded bond escrow agent (8,004,139) (8,004,139) j
Transfers in 1,655,653 1,291,909 2,589,500 314,519 5,851,581
Transfers out (4,021,367) (589,828) (86,666) (4,697,861)
1
Total other financing sources and uses (2,365,714) 1,291,911 35,954,075 227,853 35,108,125
Net change in fund balances 2,394,598 803,172 9,411,148 766,724 13,375,642 7
Fund balances-beginning 8,202,771 3,855,129 43,545,331 3,254,534 58,857,765
Fund balances-ending $ 10,597,369 $ 4,658,301 $ 52,956,479 $ 4,021,258 $ 72,233,407
n
See Notes to Financial Statements.
J
22
J
1
1
CITY OF PEARLAND,TEXAS
' RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN -
FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES •
For the Year Ended September 30,2006
Net change in fund balances-total governmental funds: $ 13,375,642
Amounts reported for Governmental Activities in the Statement of Activities are different because:
' Governmental funds report outlays for capital assets as expenditures because such outlays use
current financial resources. In contrast, the Statement of Activities reports only a portion of the
outlay as expense. The outlay is allocated over the assets'estimated useful lives as depreciation
expense for the period.
This is the amount by which capital outlays$45,438,872 exceeded depreciation$2,904,946 in the
current period. 42,533,926
Capital Assets contributed by discretely presented component units that do not represent current
assets and are not reflected in the governmental fund financial statements. 8,100,000
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.
• 246,261
Governmental funds report bond proceeds as current financial resources.In contrast,the Statement
of Activities treats such issuance of debt as a liability. Governmental funds report repayment of
bond principal as an expenditure,In contrast,the Statement of Activities treats such repayments as a
reduction in long-term liabilities.This is the amount by which proceeds exceeded repayments. (38,344,382)
Some expenses reported in the statement of activities do not require the use of current financial
resources and these are not reported as expenditures in governmental funds:
Accrued interest not reflected in Governmental funds (72,028)
Change in net assets of governmental activities $ 25,839,419
I"a
{ See Notes to Financial Statements.
7 23
i_.
CITY OF PEARLAND,TEXAS
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
September 30,2006
Business-type
Activities-
Enterprise Fund ",
Water and Sewer
Fund
ASSETS
Current assets:
Cash and cash equivalents $ 43,622
Accounts Receivable,net of allowance for doubtful accounts 1,808,617
Restricted cash and cash equivalents 17,783,400
Restricted investments 1,620,461
Total current assets 21,256,100
Non-current assets:
Capital Assets:
Land and improvements 413,699
Construction in progress 21,083,429
Infrastructure 72,594,008
Buildings 23,132,786
Machinery and equipment 8,532,461
Less Accumulated depreciation (24,812,511)
Total non-current assets 100,943,872
Total assets 122,199,972
LIABILITIES
Current Liabilities: ^�
Accounts payable and accrued expenses 1,446,352
Accrued interest payable 187,814
Customer deposits 1,511,380
Deferred revenue 20,802
Compensated absences-current portion 60,030
Bonds and certificates of obligation payable-current portion 2,040,000
Total current liabilities 5,266,378 fl
Non-current liabilities:
Compensated absences 358,613
Bonds and certificates of obligation payable 52,602,387 f1
Total non-current liabilities 52,961,000
Total liabilities 58,227,378
NET ASSETS
Invested in capital assets,net of related debt 53,143,735
Restricted for debt service 352,738 r t
i
Restricted for capital projects 9,776,345 j
Unrestricted 699,776
Total net assets $ 63,972,594
See Notes to Financial Statements.
24
CITY OF PEARLAND,TEXAS
STATEMENT OF REVENUES,EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
7; For the Year Ended September 30,2006
Business-type
Activities-
Enterprise Fund
Water and Sewer
Fund
REVENUES
Charges for services $ 13,849,201
OPERATING EXPENSES
Personal services 3,216,442
Supplies and materials 3,479,851
Contractual services 3,008,513
Repairs and maintenance 1,455,889
Other expenses 67,096
Depreciation 3,064,550
rex Total Operating Expenses 14,292,341
Operating income(loss) (443,140)
NON-OPERATING REVENUES(EXPENSES) •
Earnings on investments 681,249
L Operating grants and contributions - 473,947
Interest expense (2,240,380)
!• Total non-operating revenue(expenses) (1,085,185)
Income(loss)before contributions and transfers (1,528,325)
Capital contributions 13,433,840
Transfers in 159,001
Transfers out (1,312,721)
Change in net assets 10,751,795
Total net assets-beginning as restated 53,220,799
Total net assets-ending $ 63,972,594
See Notes to Financial Statements.
25
I
CITY OF PEARLAND,TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended September 30,2006
Business-type
Activities-
Enterprise Funds
Water and Sewer
Fund
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers and users $ 14,584,942
Disbursed for personnel services (3,273,604)
Disbursed for goods and services (8,072,531)
Net cash provided(used)by operating activities 3,238,807
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers from other funds 159,001
Transfers to other funds (1,312,721) 1
Operating grants and contributions 473,947
Net cash provided by(used by)noncapital financing activities (679,773)
j
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from the sale of equipment
Capital grants and:contributions 8,731,013
Proceeds from the sale of bonds 14,166,547
Principal payments on debt (7,035,000)
Issuance costs (596,956) j
Acquisition and construction of capital assets (11,669,778)
Net cash used by capital and related financing activities 3,595,826 CASH FLOWS FROM INVESTING ACTIVITIES y
• Purchase of investments (1,620,461)
Interest received 681,249
Interest paid (2,330,024)
Net cash provided by(used by)investing activities (3,269,236)
Net decrease in cash and equivalents 2,885,624
Cash and equivalents,beginning of year 14,941,398
Cash and equivalents,at end of year $ 17,827,022
Unrestricted cash and equivalents 43,622
Restricted cash and equivalents 17,783,400
$ 17,827,022
See Notes to Financial Statements.
26
1
p
Business-type
Activities-
Enterprise Funds
Water and Sewer
Fund
•
Reconciliation of operating income to net cash provided by
1411 operating activities
Operating income(loss) $ (443,140)
Adjustments to reconcile operating income to net cash provided by
operating activities: -
�.' Depreciation 3,064,550
(Increase)decrease in accounts receivable 463,692
Increase(decrease)in accounts payable (61,182).
Increase(decrease)in salaries payable (57,162)
Increase(decrease)in customer deposits 257,610
Imo, Increase(decrease)in deferred revenue 14,439
Net cash provided by operating activities $ 3,238,807
�I
rui
f
L11
p
L '
II
f I
27
p
J
CITY OF PEARLAND, TEXAS
DISCRETELY PRESENTED COMPONENT UNITS-GOVERNMENTAL ACTIVITIES
COMBINING STATEMENT OF NET ASSETS
September 30,2006
r-1
Pearland
Economic Development
• Development TIRZ Authority of Total Component
Corporation Developments Pearland Units 'j
ASSETS j
Cash and equivalents $ 3,239,475 $ 3,129,862 $ 20,212 $ 6,389,549
Investments 3,448,107 3,448,107
Receivables-less allowance for
uncollectibles 864,825 864,825
Restricted cash • 10,840,127 2,174,602 13,014,729 fl
Total assets 18,392,534 3,129,862 2,194,814 23,717,210 j
LIABILITIES �—y
Accounts payable and accrued expenses 26,768 54,573 16,826 98,167
Accrued interest 89,265 89,265 -I
Non-current liabilities: j
Due within one year 405,000 1,555,000 1,960,000
Due in more than one year 19,742,117 19,007,611 38,749,728
Total liabilities 20,263,150 54,573 20,579,437 40,897,160•
fl
NET ASSETS
Restricted-debt service 2,174,602 2,174,602
Unrestricted (1,870,616) 3,075,289 (20,559,225) (19,354,552)
Total net assets $ (1,870,616) $ 3,075,289 $ (18,384,623) $ (17,179,950)
fl
See Note to Financial Statements.
Fl
Fl
i
ri
r1
I�
J
28 1
J
r--
p
•
I
CITY OF PEARLAND,TEXAS -
DISCRETELY PRESENTED COMPONENT UNITS-GOVERNMENTAL ACTIVITIES
COMBINING STATEMENT OF ACTIVITIES
�+q For the year ended September 30,2006
Net(Expense)and Changes in Net Assets
1 -
Pearland'
Economic Development
Development TIRZ Authority of -
Functions/Programs Component Unit Expenses Corporation Developments Pearland Totals
r
Pearland Economic
Development Corporation $ 8,910,132 $ (8,910,132) $ $ $ (8,910,132)
I ! TIRZ Developments. 1,421,796 (1,421,796) (1,421,796)
Development Authority of
Pearland 9,250,386 (9,250,386) (9,250,386)
�! $ 19,582,314 (8,910,132) (1,421,796) (9,250,386) (19,582,314)
General revenues:
Taxes:
Property taxes 5,354,319 5,354,319
Sales and use tax 4,821,342 4,821,342
Unrestricted investment earnings 582,217 71559 85,592 739,368
Transfers (2,151,892) 2,151,892
Total general revenues 5,403,559 3,273,986 2,237,484 10,915,029
Change in net assets (3,506,573) 1,852,190 (7,012,902) (8,667,285)
Net assets,beginning 1,635,957 1,223,099 (11,371,721) (8,512,665)
Net assets,ending $ (1,870,616) $ 3,075,289. $ (18,384,623) $ (17,179,950)
See Note to Financial Statements.
_
[1
L_I
•
29
E
CITY PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Pearland, Texas, (the "City") was incorporated in December 1959, and adopted a "Home Rule
Charter"February 6, 1971.The Charter,as amended,provides for a Council-Manager form of government and
provides services authorized by its charter. Presently, these services include police 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 volunteer department.The City is governed by an elected mayor
and five-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 �--t
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.Discretely presented component
units, are reported in a separate column in the government-wide statements to emphasize that they
are legally separate from the primary government.Based on these considerations,the City's financial
statements include the following discretely presented component units: the Pearland Economic
Development Corporation (PEDC); the Tax Increment Reinvestment Zone (TIRZ #2); and the
Development Authority of Pearland. 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. Additionally prescribed criteria under
generally accepted accounting principles include: considerations pertaining to organizations for
which the primary government is financially accountable; and considerations pertaining to other fl
organizations for which the nature and significance of their relationship with the primary
government are such that exclusion would cause the reporting entity's financial statements to be
misleading or incomplete. The component units discussed below are included in the City's n
reporting entity because of the significance of their operational or financial relationships with the
City.
P-,
30
r-,
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
A. Financial Reporting Entity(continued)
Discretely Presented Component Units:
Pearland Economic Development Corporation(PEDC)
1 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 existing
businesses to expand. The mechanism to fund the operations of the corporations is through a
sale tax levy at a rate of one-half of one percent(1/2%). The PEDC is fiscally dependent upon
the primary government because, besides appointing the Board, the City Council also must
approve the PEDC's budget and any debt issuances.
Tax Increment Reinvestment Zone(TIRZ#2)
In 1998, the Tax Increment Reinvestment Zone (TIRZ #2) was established for a period of 30
years or until dissolved by the City. The TIRZ#2 provides tax assisted property development
and/or redevelopment in specific geographic areas. iri accordance with applicable state laws.
Besides appointing Board members, the City Council must also approve any debt issuances
done on behalf of the TIRZ.
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.Besides appointing Board members,the City Council must also
approve any debt issuances done on behalf of the TIRZ.
B. Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Assets and the Statement of
Changes in Net Assets) report information about the City as a whole. These statements include all
' activities of the primary government and its component units. For the most part, the effect of
interfund activity has been eliminated from the government-wide statements. Exceptions to this
general rule are charges between the City's business-type and governmental funds. Elimination of
these charges would distort the direct. costs and program revenues reported for the various
functions concerned. Governmental activities, which normally are supported by taxes and
intergovernmental revenues, are reported separately from business-type activities, which rely to a
significant extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function
or segment is offset by program revenues. Direct expenses are those that are clearly identifiable
with a specific function or segment.Program revenues include 1)charges to customers or applicants
who purchase, use or directly benefit from goods, services, or privileges provided by_a given
function or segment and 2)grants and contributions that are restricted to meeting the operational or
capital requirements of a particular function'or segment. Taxes and other items not properly
included among program revenues are reported instead as general revenues.
31
CITY PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS
r`1
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
C.Measurement Focus,Basis of Accounting and Financial Statement Presentation
The government-wide financial statements and all proprietary funds are reported using the economic
resources measurement focus and the accrual basis of accounting. Revenues are recognized when
earned and expenses are recorded when a liability is incurred, regardless of the timing of the related
cash flows. With this measurement focus, all assets and all liabilities associated with the operations
of these activities are included on the statements of net assets. Proprietary fund equity consists of
retained earnings. 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 fmancial 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 4--s
days of the end of the current fiscal period.Revenues susceptible to accrual include property taxes,
sales and use taxes, franchise fees, charges for services and interest on temporary investments.
Other receipts become measurable and available when cash is received by the government and are
recognized as revenue at that time.
Under modified accrual accounting, expenditures are recognized in the accounting period in which
the liability is incurred, if measurable, except for interest on general long-term debt, which is
recognized when due. Since the governmental fund statements are presented on a different
measurement focus and basis of accounting than the government-wide statements' governmental
column, a reconciliation is presented which briefly explains the adjustments necessary to reconcile
fund-based financial statements with the governmental column of the government-wide
presentation.
In the fund financial statements,the accounts of the City are organized on the basis of funds,each of 'l
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. f
Expenditures include general government, administrative services, public works, parks and
recreation,community development,and public safety.
32 fl
fl
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
lV
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
741
C.Measurement Focus,Basis of Accounting and Financial Statement Presentation(continued)
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
l source of revenue for debt service_is local property taxes. The Debt Service Fund is
considered a major fund for reporting purposes.
The Capital Projects Fund is used to account for the expenditures of resources accumulated
from sales tax revenues and the sale of bonds and related interest earnings for capital
improvement projects. The Capital Projects Fund is considered a major fund for reporting
purposes.
The City's Business type activities consist of the following funds:
74,1
The Enterprise Funds are used to account for the operations that provide water and sewer
utility 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
L` continuing basis will be financed or recovered primarily through user charges.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,
1 generally are followed to the extent that those standards do not conflict with or contradict guidance
of the Governmental Accounting Standards Board. Governments also have the option of
following subsequent private-sector guidance for their business-type activities and enterprise funds,
L i subject to this same limitation. All assets, 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.
Operating revenues include charges for services. Operating expenses include costs of materials,
contracts, personnel and depreciation. In accordance with GASB Statement No. 20, the City has
elected to follow GASB statements issued after November 30, 1989, rather than the Financial
Accounting Standards Board,in accounting for enterprise funds.
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,
tservices, 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.
33
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
n
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
C.Measurement Focus,Basis of Accounting and Financial Statement Presentation(continued)
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods
in connection with a proprietary fund's principal ongoing operations. The principal operating fl
revenues of the City's Enterprise Fund are charges to customers for sales and services. Operating
expenses for Enterprise Funds include the cost of sales and services, administrative expenses, and
depreciation on capital assets. All revenue and expenses not meeting this definition are reported as "^
nonoperating revenue and expense. J
D. Encumbrances �-
Encumbrance accounting, under which purchase orders, contracts, and other commitments for the
expenditure of funds are recorded in order to reserve that portion of the applicable appropriation, is
employed in the governmental funds. Open encumbrances are reported as reservations of fund `l
balances since they do not constitute expenditures or liabilities. Encumbrances outstanding at year-
end are appropriately provided for in the subsequent year's budget.
E. Cash and Cash Equivalents
The City's cash and cash equivalents are considered to be cash on hand,demand deposits,and short-
term investments with original maturities of three months or less from the date of acquisition. For
the purpose of the statement of cash flows, the Proprietary Fund Types consider temporary -
investments with maturity of three months or less when purchased to be cash equivalents.
The City pools cash resources of its various funds to facilitate the management of cash. Cash j
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.
J
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 n
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.
F. Investments I
Investments consist of United States (US) Government Agency securities. The City reports all
investments at fair value based on quoted market prices at year-end date.
G. 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 180
days comprise the trade accounts receivable allowance for uncollectibles.
34
•
p
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)
H. Due to and Due from Other Funds
L I 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" or "due from component unit/primary
government" or "due to component unit/primary government" if the transactions are between the
primary government and its component unit. Interfund receivables and payables which are not
expected to be paid within 12 months are classified as loans from/loans to other funds, component
units,or primary government.
I. Inventories and Prepaid Items
•
Inventory,which consists of fuel and auto parts for use in the City's vehicles, is stated at cost(first-
in, first-out method). Expenditures are recognized as the fuel and auto parts are consumed rather
when purchased.
J. Restricted Assets
Certain proceeds of the Enterprise Fund and Economic Development Corporation 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 Development Authority bonds and are reported as restricted assets.
K.Capital Assets
Capital assets which include property, plant, equipment and infrastructure, are reported in the
applicable governmental or business-type activities columns in the government-wide financial
statements. The City defines capital assets as assets with an initial; individual cost of more than
f'{ $1,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost
or estimated historical cost if purchased or constructed. Donated capital assets are recorded at
estimated fair market value at the date of donation. The costs of normal maintenance and repairs
that do not ad to the value of the asset or materially extend assets' lives are not capitalized.
The City has elected to delay implementation of the requirements of GASB Statement No. 34 related
to infrastructure (roads, sidewalks, etc.) assets acquired prior to October 1, 2002. The City has
implemented the general provisions of GASB Statement No.34 and will complete the implementation
of the retroactive provisions for infrastructure no later than September 30,2007.
p
_ •
35
fl
i
j
CITY PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) J
K. Capital Assets(continued)
I
Property, plant, and equipment are depreciated using the straight-line method over the following
useful lives:
Estimated
Asset Description Useful Life
Buildings and improvements 20-45
Machinery and equipment 5-15
Infrastructure 40-50
L. Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused vacation, sick and
holiday pay benefits.
Employees hired prior to October 1, 2005 earn vacation leave at the rate of 15 days per year from 1
to 15 years of service,20 days per year for service of 16 to 19 years, and 25 days per year for service
of 20 years or more. Employees, who are not classified and are hired after October 1, 2005, earn _
vacation at a rate of 10 days per year from 1-6 years of service, 15 days per year for 7-15 years of
service and 20 days for over 16 years of service. Effective October 1,2005,employees are no longer
able to carry over unused vacation from one year to the next with the exception of police department
personnel in classified positions Employees are required to use their vacation in the year it is earned.
Employees who are unable to use their vacation due to departmental scheduling or staffing problems,
may,with the City Manager's approval,receive compensation for half of the remaining balance up to
a maximum of forty(40)hours.
City employees receive 11 paid holidays per year. Employees 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.Employees may be paid or receive compensatory time.The maximum accrual for overtime is
160 hours,except for employees involved in public safety,who can accrue up to 320 hours.
All sick leave benefits are accumulated and paid to employees upon separation from the City.
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.
M. 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 r_,
could differ from those estimates. 1
36
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 2—DEPOSITS(CASH)AND INVESTMENTS
Authorization for Deposits and Investments
The Texas Public Funds Investment Act (PFIA), as prescribed in Chapter 2256 of the Texas
Government Code,regulates deposits and investment transactions of the City.
L 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
144 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
L for bank deposits must have a market value of not less than the amount of the deposits and must
consist of:.(1) obligations of the United States or its agencies and instrumentalities; (2) direct
obligations of the State of Texas or its agencies; (3) other obligations, the principal and interest
on which are unconditionally guaranteed or insured by the State of Texas; and/or (4) obligations
of states, agencies, counties, cities,and other political subdivisions of any state having been rated
as to investment quality by a nationally recognized investment rating firm and having received a
rating of not less than A or its equivalent. City policy requires the collateralization level to be at
least 102% of market value of principal and.accrued interest.
.i 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
L: direct investments to obligations of the U.S. Government or U.S. Government Agencies, fully
collateralized certificates of deposit, banker's acceptances, mutual funds, repurchase agreements
fin and local government investment pools. The maximum maturity allowed is three years from date
I of purchase. The City's investment policy does not allow investments in collateralized mortgage
L . obligations.
Deposit and Investment Amounts
The City's cash and investments are classified as: cash and cash equivalents, investments, and
restricted cash and investments. The cash and cash equivalents include cash on hand, deposits
with financial institutions, and short-term investments, which have maturities at purchase of less
than three months, consist mainly of certificates of deposit. The restricted cash and investments
are assets restricted for specific use. The restricted cash and investments include cash on deposit
with financial institutions. For better management of cash, the City pools the cash, based on the
City's needs, into either bank/sweep accounts, or in longer-term investments in U.S. Government
Securities. However, each fund's balance of cash and investments is maintained in the books of
the City.
The deposit and investment policies for the Pearland Economic Development Corporation, TIRZ
Developments, and Development Authority of Pearland are substantially the same as the City.
PIG
37
ro
CITY PEARLAND,TEXAS �+
NOTES TO FINANCIAL STATEMENTS
NOTE 2—DEPOSITS(CASH)AND INVESTMENTS(continued)
The following schedule shows the City's recorded cash and investments at year-end:
Total Fair Value
Primary
Government Component Units
Cash'deposits $ 68,630,066 $ 19,404,278
FHLMC discount note 11,141,243 F...,
FNMA discount note 12,883,427 3,448,107
$ 92,654,736 $ 22,852,385
r-,
Quoted market prices are the basis of the fair value for US Treasury and Agency securities.The
amount of increase or decrease in the fair value of investments during the current year is included
in the City's investment income as follows: `l
Interest income $ 4,218,159 r'
unrealized gain(loss)on temporary investments 193,596
Investment earnings $ 4,411,755
Investment Risks
F
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
Total Fair Average Maturity fl
Value (days)
Temporary Investments
FHLMC discount note $ 11,141,243 108 FNMA discount note 16,331,534 105
$ 27,472,777
Portfolio weighted average maturity 106
The City measures interest rate risk using the weighted average maturity method for the portfolio.
The City's investment policy specifies a maximum weighted average maturity of 365 days or 12 fl
I
months based on the stated maturity date for each investment in the portfolio.
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
three years or 1,095 days from date of purchase. The settlement date is considered the date of
purchase. r ,
38
1
F
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
L
NOTE 2—DEPOSITS(CASH)AND INVESTMENTS(continued)
Concentration of Credit Risk
The City's investment policy does not address diversification requirements. However, as of
September 30, 2006, the City had investments in U.S. Agency securities that exceeded five
percent of the total investment portfolio at year-end.
Total Fair Percentage of
Investment Type Value Total Portfolio
FHLMC discount note $ 11,141,243 41%
FNMA discount note 16,331,534 59%
Total $27,472,777 100%
Credit Risk
Federal Home Loan Mortgage Corporation Discount Notes and. Federal National Mortgage
Association Discount Notes (FNDN) agency notes were rated AAA by Standard& Poor's, AAA
by Fitch Ratings,and Aaa by Moody's Investors Service.
All credit ratings meet acceptable levels required by guidelines prescribed by both the PFIA and
the City's investment policy. A public fund investment pool must be continuously rated no lower
than AAA or AAAm or no lower than investment grade by at least one nationally recognized
rating service and have a weighted average maturity no greater than 90 days. Investments with
minimum required ratings do not qualify as authorized investments during the period the
investment does not have the minimum rating.
Restricted Assets
The Enterprise Funds have restricted certain cash and investments for customer deposits,reserve and
emergency expenditures, capital improvements, cash restricted for others,and revenue bond debt
service. Because of certain bond covenants, the Enterprise Fund is required to maintain prescribed
amounts of resources that can be used only to service outstanding debt. Some of the proceeds from
L' debt or from funds received from acquisition of Municipal Utility Districts are restricted for use on
capital projects.
L
Primary
Government Component Units
L' Revenue bond debt service 540,552 $ 2,174,602
Customer deposits 1,511,380
Capital improvements 17,351,929 10,840,127
Total $ 19,403,861 $ 13,014,729
L
L
r 39
L
I J
CITY PEARLAND, TEXAS •
NOTES TO FINANCIAL STATEMENTS
NOTE 3-RECEIVABLES J
Receivables at September 30,2006 consist of the following:
Primary Government:
Governmental Funds:
Other Non Major
Capital Projects Governmental
General Fund Debt Service Fund Fund Funds Total
Receivables
Property taxes,including
penalties and interest $ 1,224,251 $ 476,586 $ $ $ 1,700,837
Sales and other taxes 1,727,831 1,727,831
Fines and forfeitures 605,116 80,256 685,372
Interest 38,927 38,927
Other 953,211 659,841 88,787 1,701,839
Allowance for uncollectibles (8,221) (8,735) (16,956)
$ 4,541,115 $ 467,851 $ 659,841 $ 169,043 $ 5,837,850
Proprietary Funds:
Water and Sewer
Fund
Receivables
Customer accounts $ 2,232,550
Interest ' 834
. Fl
Allowance for uncollectibles (448,711)
$ 1,808,617
fl
Component Units:
Pearland
Economic
Development
Corporation
Receivables
Sales and other taxes $ 857,173
Interest 7,652
Total $ 864,825
fl
rl
fl
40
o
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 3—RECEIVABLES (continued)
Governmental funds report deferred revenue in connection with receivables for revenues that are not
considered to be available to liquidate liabilities of the current period. At the end of the current fiscal
year,the various components of deferred revenue reported in the governmental funds were as follows:
Unavailable Unearned
Delinquent property, taxes receivable-general fund $ 402,829 $
Delinquent property taxes receivable-debt service fund 427,970
Municipal fines and forfeitures 587,943
Surety-public improvements-capital projects fund 530,000
Grants and revenues prior to meeting all eligibility requirements - 120,528
Total Deferred Revenue for Governmental Funds $ 1,418,742 $ 650,528
L'
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, 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 collectionof tax levies with the Brazoria County Tax Assessor-Collector.
•
41
F
r fI
CITY PEARLAND,TEXAS r--,
NOTES TO FINANCIAL STATEMENTS
l 1
NOTE 4-CAPITAL ASSETS
A summary of changes in the primary government's capital assets for the year ended September 30,2006, 7
follows:
f
Primary Government J
Balance Balance
1 September 30, Reclassification/ September 30, fl
2005 Increases (Decreases) 2006 i
Governmental Activities:
Capital assets not being depreciated:
Land 1 $ 2,717,453 $ 997,321 $ $ 3,714,774
Construction in progress 45,326,958 28,695,282 74,022,240 i
Total capital assets not being depreciated 48,044,411 29,692,603 77,737,014
Other capital assets: 7
Infrastructures 38,596,399 10,803,793 49,400,192 1
Buildings and improvements 12,901,650 11,774,745 24,676,395
Machinery and equipment 9,282,167 1,267,729 (758,198) 9,791,698
Furniture and fixtures 7
Total other capital assets 60,780,216 23,846,267 (758,198) 83,868,285 f
Less accumulated depreciation for:
Infrastructure' (4,014,681) (1,225,349) (5,240,030)
Buildings and improvements (6,483,279) (356,966) (6,840,245) 7
Machinery and equipment (5,821,517) (1,322,625) 758,198 (6,385,944)
Total accumulated depreciation (16,319,477) (2,904,940) 758,198 (18,466,219)
Other capital assets,net 44,460,739 20,941,327 65,402,066
Totals $ 92,505,150 $ 50,633,930 $ $ 143,139,080
Balance Balance fl
September 30, Reclassification/ September 30,
2005 Increases (Decreases) 2006
Business-type Activities:
Capital assets not being depreciated:
Land and intangibles $ 367,962 $ 45,738 $ 413,699
Construction in progress 19,424,558 2,445,527 (786,656) 21,083,429
Total capital assets not being depreciated 19,792,520 2,491,265 (786,656) 21,497,128
Other capital assets:
Water and sewer system 59,855,918 11,951,434 786,656 72,594,008
Buildings and improvements 22,610,028 522,758 23,132,786
Machinery arid equipment 8,347,893 196,716 (12,148) 8,532,461 `-''I
Total other capital assets 90,813,839 12,670,908 774,508 104,259,255
Less accumulated depreciation (21,760,109) (3,064,550) 12,148 (24,812,511)
Other capital assets,net 69,053,730 9,606,358 786,656 79,446,744 r-,
Totals $ 88,846,250 $ 12,097,623 $ $ 100,943,872
r-,
r-
42
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 4- CAPITAL ASSETS (continued)
Depreciation was charged to programs as follows:
General government $ 713 830
Public safety 541,950
117
Public works 1,504,390
Community services 144,770
Total Governmental Activity $ 2,904,940
L'
Water and sewer $ 3,064,550
Total Business-Type Activity $ 3,064,550
The City has active construction projects as of September 30, 2006. The projects include
various improvements to streets, drainage and facilities as well as and water and sewer
improvements.At year-end, the City's contractual commitments on projects were as follows:
Total In Remaining
Project Description Progress Commitment
Drainage Improvement 22,866,245 2,699,679
Building Improvements 98,610 16,307,390
Street Improvement 51,057,385 102,241,857
Water and sewer.
Improvements 21,083,429 64,029,657
f Totals $ 95,105,669 $ 185,278,583
n
E
43
CITY PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 5-LONG-TERM DEBT
A. General Obligation Bonds and Certificates of Obligation r-,
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, r'
certificates of obligation and assumed obligations are paid through the Debt Service Fund from tax
revenues.
The following is a summary of changes in the City's total governmental long-term liabilities for the
year ended September 30, 2006. In general, the City uses the General and Debt Service funds to
liquidate governmental long-term liabilities.
r-,
Amounts Due -'
Balance Balance Within One
Oct.1,2005 Additions (Reductions) Sept.30,2006 Year �+
Governmental Activities:
Bonds payable:
General obligation bonds $ 60,175,000 $ 32,165,000 $ (2,035,000) $ 90,305,000 $ 2,085,000
Certificates of obligation 72,390,000 9,700,000 (815,000) 81,275,000 490,000
Annexed utility district bonds 8,320,000 (8,320,000)
Deferred amount for issuance premium 1,458,694 93,631 (63,361) 1,488,964
Less:deferred amounts on refunding (789,621) (111,623) 46,686 (854,558)
Less:bond issuance costs (663,459) (371,840) 38,251 (997,048) j
Total bonds payable, 132,570,614 49,795,168 (11,148,424) 171,217,358 2,575,000
Obligations under capital leases 395,659 92,043 (178,760) 308,942 184,880
Compensated absences 3,314,699 (215,557) 3,099,142 398,063
Total Governmental Activities $ 136,280,972 $ 49,887,211 $ (11,542,741) $ 174,625,442 $ 3,157,943
7
i
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. T,
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)
operating transfers from both the General Fund and 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.
44
CITY PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS
[11
' NOTE 5- LONG-TERM DEBT(continued)
A summary of the terms of general obligation bonds and certificates of obligation,as of September 30,2006,
follows:
Interest Debt
Li Series Original Issue Matures Rate(%) Outstanding
General Obligation Bonds
General Obligation Bonds,Series 2001 1,900,000 $ 920,000
Permanent Improvement and Refunding Bonds,Series 2000 10,830,000 2009 4.80-4.90 5,665,000
Permanent Improvement and Refunding Bonds,Series 2003 15,000,000 2028 4.00-6.00 14,540,000
Permanent Improvement and Refunding Bonds,Series 2005 37,015,000 2029 3.25-5.00 37,015,000
Permanent Improvement and Refunding Bonds,Series 2006 32,165,000 2029 4.00-5.00 32,165,000
Total General Obligation.Bonds $ 90,305,000
Certificates of Obligation
Certificates of Obligation,Series 2001 11,650,000 2022 5.00-6.00 $ 10,020,000
Certificates of Obligation,Series 2002 25,000,000 2027 5.10-5.08 22,025,000
1 Certificates of Obligation;Series 2003 _ 25,000,000 2023 3.00-4.50 18,630,000
Certificates of Obligation,Series 2004 21,000,000 2028 4.00-5.25 20,900,000
Certificates of Obligation,Series 2006 9,700,000 2029 3.65-4.68 9,700,000
Total Certificates of Obligation $ 81,275,000
L ' 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, 2006, $17.2 million of previously refunded bonds outstanding were
7 considered defeased.
a
Current Year Refunding of Long-Term Debt
The City issued $8,165,000 of general obligation refunding bonds to provide resources to purchase U.S.
Government State and Local Government Series securities that were placed in an irrevocable trust for the
purpose of generating resources for all future debt service payments of$8,001,623 of general obligation
+ bonds. As a result, the refunded bonds of$7,890,000 are considered to be defeased and the liability has
L' been removed from the governmental activities column of the statement of net assets. The reacquisition
price exceeded the net carrying amount of the old debt by$111,623. This amount is being netted against
the new debt and amortized over the remaining life of the refunded debt, which is shorter than the life of
the new debt issued. This advance refunding was undertaken to increase total debt service payments over
the next 14 years by$ 3,960,438 and resulted in an economic gain of$9,121.
45
CITY PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS
i
NOTE 5- LONG'-TERM DEBT(continued)
Capital Lease Obligations fl
The City has entered into certain capital lease agreements in order to purchase public safety and
management information systems equipment and other construction related equipment. The capital
lease obligations are paid out of the General and Debt Service Funds.
Following is a summary of future lease payments due on this equipment:
Lease
Fiscal Year Obligations
2007 $ 184,880 '1
2008 118,775 i
2009 15,993
Total 319,648
Less interest portion (10,706) J
Obligations under Capital Leases $ 308,942
n
1
•
r
I �
J
fl
I
1
�I J
ss—
46
II �
E
CITY PEARLAND,TEXAS •
7 NOTES TO FINANCIAL STATEMENTS
f_
•
NOTE 5- LONG-TERM DEBT(continued)
The annual requirements to amortize governmental activity general obligation bonds and certificates
t ' of obligation outstanding at September 30,2006 are as follows:
Governmental Activities
flFiscal Year General Obligation Certificates of Obligation
Ending Principal Interest Principal Interest
2007 $ 2,085,000 $ 4,524,657 $ 490,000 $ 3,864,361
ril
2008 2,185,000 4,040,961 540,000 3,771,183
2009 2,855,000 3,924,160 1,560,000 3,724,802
2010 2,195,000 3,815,399 2,790,000 3,611,780
7 2011 2,375,000 3,724,521 3,010,000 3,463,983
. 2012 2,530,000 3,624,636 3,340,000 3,308,771
2013 2,635,000 3,517,108 3,500,000 3,148,327
7 2014 2,750,000- 3,402,561 3,655,000 2,989,991
2015 2,875,000 3,274,824 3,820,000 2,823,418
2016 3,015,000 3,135,033 4,000,000 2,648,723
2017 2,050,000 3,022,305 4,490,000 2,461,173
2018 2,240,000 2,935,330 4,605,000 2,260,313
72019 • 2,520,000. . 2,835,499 4,960,000 2,046,674
2020 2,715,000 2,718,046 5,120,000- 1,814,293 .
2021 2,860,000 2,588,202 5,360,000 1,564,609
2022 3,015,000 . 2,450,797 5,605,000 1,301,499
L ; 2023 4,005,000 - 2,286,212 5,040,000 1,046,474
2024 5,805,000 2,049,662 3,690,000 833,373.
2025 6,115,000 .1,756,950 3,835,000 . 650,456 '
L i 2026 6,435,000 1,448,762 4,100,000 462,622
2027 6,770,000 1,135,256 4,280,000 263,244
2028 8,960,000 763,538 2,635,000 99,825
—1 2029 11,315,000 273,650 850,000 19,125
$ 90,305,000 $ 63,248,069 $ 81,275,000 $ 48,179,019
,__
, ,
7
7
7 47.
7
n
CITY PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 5- LONG-TERM DEBT(continued) i
B. Enterprise Fund Debt `l
The following is a summary of changes in the City's total business-type long-term liabilities for the year
ended September 30,2006.
Amounts Due J
Balance Balance Within One
Oct.1,2005 Additions (Reductions) Sept.30,2006 Year r�
Business-type Activities: j
Bonds payable:
Certificates of obligation $ 15,880,000 $ $ (880,000) $ 15,000,000 $ 915,000
Water and sewer revenue bonds 32,480,000 13,845,000 (6,155,000) 40,170,000 1,125,000
Premium on bond issuance 321,547 321,547 -
Deferred issuance costs (252,204) (596,956) (849,160)
48,107,796 13,569,591 (7,035,000) 54,642,387 2,040,000 fl
Other liabilities:
Compensated absences 415,316 52,623 (49,296) 418,643 ' 60,030
Total Business-type Activities $ 48,523,112 $ 13,622,214 $ (7,084,296) $ 55,061,030 $ 2,100,030
A summary of the terms of certificates of obligation and revenue bonds recorded in the Enterprise Funds as
of September 30,2006,is as follows:
Interest Debt
Series Original Issue Matures Rate(%) Outstanding
Water and Wastewater Fund
Water and Sewer System Revenue Bonds, Series 1996 B 8,870,000 2008 4.20-4.40 $ 1,010,000
Water and Sewer System Adjustable Rate Revenue Bonds,Series
1999(1) 8,000,000 2020 3.75 6,980,000
Water and Sewer System Revenue Bonds,Series 2001 10,000,000 2023 4.37-6.25 9,500,000
Water and Sewer System Revenue Bonds,Series 2003 9,500,000 2025 4.00-6.00 8,835,000
Certificates of Obligation,Series 1998 17,100,000 2018 3.10-3.80 15,000,000
Water and Sewer System Revenue and Refunding Bonds,Series j
2006 13,845,000 2031 3.74-4.82 13,845,000
Total Utility System Fund $ 55,170,000
r1
p�J
' i
48
7
7
L
CITY PEARLAND,.TEXAS
71 NOTES TO FINANCIAL STATEMENTS
L1
tat
L_' NOTE 5-LONG-TERM DEBT(continued)
7 The annual requirements to amortize governmental activity revenue bonds and certificates of
obligation outstanding at September 30,2006 are as follows:
7 Fiscal Year Revenue Bonds Certificates of Obligation
Ending Principal Interest Principal Interest
2007 $ 1,125,000 $ 1,828,614 $ 915,000 $ 521,073
7 2008 1,180,000 1,783,380 945,000 492,006
L I 2009 1,245,000 1,729,919 980,000 461,198
2010 1,305,000 1,669,361 1,015,000 428,271
ri 2011 1,370,000 1,611,111 1,050,000 393,158
2012 1,435,000 1,543,986 . 1,090,000 355,698
2013 1,500,000 1,474,224 1,125,000 ` 316,100
7 2014 1,570,000 1,404,811 1,170,000 274,498
2015 1,640,000 1,337,811 1,210,000 230,760
2016 1,715,000 1,267,474 1,250,000 184,938
fl 2017 1,895,000. 1,193,461 2,090,000 121,790
2018 1,975,000 1,117,341 2,160,000 41,040
2019 2,055,000 1,037,494
7 2020 2,140,000 953,344
2021 2,225,000 864,994
2022 2,335,000 757,081
ril 2023 2,445,000 643,781
L 2024 1,600,000 529,869
2025 1,600,000 461,494
2026 1,150,000 393,119
L
2027 1,205,000 338,494
2028 1,265,000 278,244
("4 2029 1,330,000 214,994
' 2030 1,395,000 146,831
L
2031 1,470,000. 75,338
$ 40,170,000 $ 24,656,569 $ 15,000,000 $ 3,820,528
7
7
7
r . 49
7
r"
,
CITY PEARLAND,TEXAS ``
NOTES TO FINANCIAL STATEMENTS
7
NOTE 5- LONG-TERM DEBT(continued)
C. Component Unit Long-Term Debt
The following is a summary of the long-term debt transactions of the Pearland Economic
Development Corporation and the Development Authority of Pearland for the year ended ,,.1
September,30,2006:
Amounts Due
Balance Balance Within One
Oct.1,2005 Additions (Reductions) Sept.30,2006 Year 1
Pearland Economic Development
Corporation rn
Sales tax revenue bonds $ 10,590,000 $ 10,235,000 $ (345,000) $ 20,480,000 $ 400,000
Deferred amount for issuance premium 155,448 - (7,212) 148,236
Deferred loss on refunding (189,626) - 16,418 (173,208)
Deferred issuance'costs (256,439) (102,808) 13,138 (346,109) 7
Compensated absences 14,540 44,500 (20,842) 38,198 5,000
Development Authority of Pearland
Tax Increment Revenue Bonds 13,995,000 9,775,000 (1,535,000) 22,235,000 1,555,000
Deferred issuance'costs (927,778) (695,027) 32,702 (1,590,103)
Deferred amount for issuance discount (86,013) 3,727 (82,286) J
$ 23,381,145 $ 19,170,652 $ (1,842,069) $ 40,709,728 $ 1,960,000
I
A summary of the terms of the revenue bonds recorded as long-term liabilities in the Pearland '1
Economic Development Corporation and Development Authority of Pearland as of September 30,
2006 are as follows:
Interest Debt 7
Series Original Issue Matures Rate(%) Outstanding J
Pearland Economic Development Corporation
Sales Tax RevenuelBonds,Series 2005 10,590,000 2026 2.30-4.42 $ 10,245,000 rl
Sales Tax Revenue lBonds,Series 2006 10,235,000 2030 3.66-4.75 10,235,000 i
Development Authority of Pearland 7
Tax Increment Revenue Bonds,Series 2005 13,995,000 2028 2.50-5.00 13,180,000 i
Tax Increment Revenue Bonds,Series 2006 9,775,000 2028 3.50-4.75 9,055,000
Total Component iUnit Long-Term Debt $ 42,715,000
7
1
rl
l
J
J
r-1
50
7
17,
L' .
CITY PEARLAND, TEXAS
El , NOTES TO FINANCIAL STATEMENTS •
7
j NOTE 5-LONG-TERM DEBT(continued)
The annual requirements to amortize component unit revenue bonds outstanding at September 30,2006 are
7 as follows:
,
Revenue Bonds
Pearland Economic
Fiscal Year Development Corporation Development Authority of Pearland
f1 Ending Principal Interest Principal Interest
' 2007 $ 400,000 $ 1,003,562 $ 1,555,000 $ 1,038,268
2008 525,000 888,369 635,000 984,893
2009 545,000 870,144 645,000 961,964
l 2010 565,000 851,669 670,000 937,214
L. 2011 585,000 831,506 695,000. 910,277
2012 610,000 . 809,256 725,000 881,262
ri 2013 635,000 784,906 755,000 849,974
2014 660,000 757,406 790,000 816,346 '
2015' 690,000 728,856 825,000 780,289
2016 720,000 698,956 865,000 742,194
2017 760,000 664,756 905,000 702,654
2018 795,000 628,669 945,000 659,841
2019 835,000 590,575 975,000 614,541 '
El 2020 875,000 556,125 1,025,000 567,741
2021 910,000 519,625 1,070,000 518,131
2022 950,000 481,075 1,125,000 466,756
2023 995,000 439,200 1,180,000 411,350
[.1 2024 1,040,000 395,138 1,235,000 353,225
2025 1,090,000 348,538 1,300,000 289,956
2026 1,140,000 299,325 1,365,000 223,351
[1 2027 1,190,000 247,838 1,440,000 152,701
2028 1,255,000 188,338 1,510,000 78,176
2029 1,3 20,000 128,725
2030 1,390,000 66,025
rw
$ 20,480,000 $ 13,778,581 $ 22,235,000 $ 13,941,104
1 F. Legal Compliance '
``
Long-term debt assumed by the City upon dissolution of annexed municipal utility district in fiscal
Fl year 2006 has been recorded as part of the City's long-term debt. A portion of the assumed debt is
related to assets recorded in the Water and Sewer Fund. Even though the debt is'related to assets
recorded in the Water and Sewer Fund, the debt is considered general obligation debt based on
Texas law.The annexed debt was defeased during fiscal year 2006.
E
7
, 51
7
•
CITY PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 6—FUND'EQUITY/NET ASSETS
The City records fund balance reserves on-the fund level to indicate that a portion of the fund balance
is legally restricted for a specific future use or to indicate that a portion of the fund balance is not
available for expenditures
NOTE 7-INTERFUND TRANSACTIONS 7
A summary of interfund transfers,the purpose of which is to cover operational expenses/expenditures, for the
year ended September 30,2006,is as follows:
�-1
Transfers Out Transfers In Amounts Purpose
Transfer for engineering costs and other
Capital Projects Fund General Fund $ 589,828 capital project costs
General Fund Capital Projects Fund 2,589,500 Transfer funds for capital projects costs
General Fund Debt Service Fund 958,347 Debt service payments
Transfer of funds to park and recreation
General Fund Non Major Governmental Funds 314,520 activities
Annual scheduled transfer of funds for water
General Fund Water and Sewer Fund 159,000 and sewer services
Water and Sewer Fund General Fund 979,161 Transfer funds for administrative costs
Water and Sewer Fund Debt Service Fund 333,562 Debt service payments
Non Major Governmental Fund General Fund 86,666 Transfer funds for administrative costs
$ 6,010,584
•
NOTE 8-DEFERRED COMPENSATION PLAN •
The City maintains, for its employees, a tax-deferred compensation plan meeting the requirements of
Internal Revenue Code Section 457.The plan was established in the 1995 fiscal year by City Ordinance,
and Nationwide Retirement Solutions and SRC Retirement Corporation were appointed as plan
administrators. The deferred compensation is not available to employees until termination, retirement,
death, or unforeseen emergency. The plan's trust arrangements are established to protect deferred
compensation amounts of employees under the plan from any other use other than intended under the plan
(eventual payment to employees deferring the- compensation) in accordance with federal tax laws.
Amounts of compensation deferred by employees under plan provisions are disbursed bi-weekly by the
City to a third party administrator. The third party administrator handles all funds in the plan and makes
investment decisions and disburses funds to employees in accordance with plan provisions.
fl
I '
fl
52
J
CITY PEARLAND,TEXAS
rei
NOTES TO FINANCIAL STATEMENTS
fNOTE 9- EMPLOYEE RETIREMENT SYSTEM
Plan Description and Provisions
The City provides pension benefits for all of its full-time employees through a nontraditional, joint
contributory, defined benefit plan in the state-wide Texas Municipal Retirement System ("TMRS");one
of 801 currently administered by TMRS,an agent multiple-employer public employee retirement system.
Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City-
financed monetary credits, with 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 a percent (100%, 150%, or 200%) of the employee's accumulated
contributions. In addition, the City can grant, as often as annually, another type of monetary credit
referred to as an updated service credit which is a theoretical amount which, when added to the
employee's accumulated contributions and the monetary credits for service since the plan began,would be
the total monetary credits and employee contributions accumulated, with interest, if the current
employee contribution rate and City matching percent had always been in existence and if the
employee's salary had always been the average of his salary in the last three years that are one year before
the effective date.At retirement,the benefit is calculated as if the sum of the employee's accumulated
contributions, with interest, and the employer-financed monetary credits, with interest, were used to
purchase an annuity.
fl The plan provisions are adopted by the City Council of the City,within the options available in the state
statutes governing TMRS and within the actuarial constraints also in the statutes. Plan provisions for the
City were as follows:
Deposit Rate: 7%
Matching Ratio(City to Employee): 2 to 1
A member is vested after 5 years
L Members can retire at ages 60 and above with 5 or more years of service or with 20 years of service
regardless of age.
Contributions
Under the state law governing TMRS,the Actuary annually determines the City's contribution rate.This
rate consists of the normal cost contribution rate and the prior service contribution rate, both of which
are calculated to be a level percent of payroll from year to year. The normal cost contribution rate
finances the currently accruing monetary credits due to City matching percent, which are the obligation
of the City as of an employee's retirement date, not at the time the employee's contributions are made.
The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the
obligation of the City to each employee at the time his retirement becomes effective.The prior service
711 contribution rate amortizes the unfunded (over funded).actuarial liability (asset) over the remainder of
the plan's 25-year amortization period. The unit credit actuarial cost method is used for determining
the City contribution rate.Both the employees and the City make contributions monthly. Since the City
needs to know its contribution rate in advance to budget for it, there is a one-year delay between the
actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect.
L '
53
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
ri
NOTE 9- EMPLOYEE RETIREMENT SYSTEM (continued)
The City's total payroll in fiscal year 2006 was $17.1 million and the City's contributions were
based on a payroll of$17.0 million. Contributions made by employees totaled $1.2 million, and the
City made contributions of$1.7 million during the fiscal year ended September 30,2006.
Three year trend information is presented below:
2006 2005 2004
Annual Pension Cost(APC) $ 1,730,700 $ 1,480,301 $ 1,371,452
Percentage of APC Contributed 100% 100% 100%
NPO at the End of Period $ - $ - $ - rl
1
Because the actuary determines contribution rates on an annual basis and the City pays the calculated rate
each month,the City will always have a net pension obligation(NPO)of zero at the beginning and end of
the period,and the annually required contributions(ARC)will always equal contributions made.
A schedule of funding progress for TMRS for the three most recent actuarial valuations may be found
in the required supplementary information section of the City's Annual Financial Report.
All assumptions for the December 31, 2005 valuations are contained in the 2005 TMRS
Comprehensive Annual Financial Report, a copy of which may be obtained by writing to P.O. Box
149153,Austin,Texas 78714-9153. The following is a summary of the actuarial assumptions: J
Actuarial Cost Method Unit Credit
Amortization Method Level Percent of Payroll
Remaining Amortization Period 25 Years-Open Period
Asset Valuation Method Amortized Cost
Actuarial Assumptions:
Investment Rate of Return 7%
Projected Salary Increases None
Includes Inflation At 3.5% 'l
Cost-of-Living Adjustments None
NOTE 10-COMMITMENTS AND CONTINGENCIES
Litigation and Other Contingencies
The City was involved in various lawsuits and arbitration proceedings at September 30,2006.The City
and its legal counsel believe that any amounts,which the City might ultimately be required to pay,will n
not exceed underlying insurance coverage.
fl
l
54
n
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
NOTE 10-COMMITMENTS AND CONTINGENCIES(continued)
Arbitrage Rebate.
In accordance with the provisions of the Internal Revenue Code, sections 103, 103A, and 148, as
amended,a governmental debt issuance must qualify and maintain tax-exempt status by satisfying certain
arbitrage requirements contained in these provisions.As part of the requirements, certain amounts earned
on the non-purpose investment of debt issuance proceeds, in excess of the yield on an issue, earned as
arbitrage, will be required to be paid to the U.S. Treasury. As part of this process, the City annually
determines potential arbitrage liabilities on its debt issues, on component unit debt issues and on debt
L+ issues assumed by,the City from various Municipal Utility Districts. As of September 30, 2006,the City
does not have any arbitrage liabilities.
Reimbursement due to Developers
In 2004, the City, along with the Reinvestment Zone Number Two (the Zone), and the Development
Authority of Pearland (the Authority), component units of the City, entered into an agreement with a
_ developer to reimburse the developer all or a portion of the project costs to implement the Shadow
Creek.Ranch Development TIRZ (TIRZ Plan). As projects implementing the TIRZ Plan are
Fiu completed, the Zone Board may recommend to the City that the Authority reimburse developers on
behalf of the Zone and the City..The Zone Board will forward to the City and the Authority all of the
necessary and required documentation supporting the requested reimbursement and a determination
of the exact amount requested for reimbursement, including a calculation of the amount of interest to
be reimbursed on funds advanced for the projects. In addition all monies available in the Tax
Increment Fund shall be transferred to the escrow agent no less than once per year and no later than
the fifteenth day of each August, subject to the retention by the City of: (1) an amount equal to the
City's administrative costs connected with the Zone and the TIRZ Plan, as provided in the TIRZ plan
! (36%of the City's Tax Increment, but not more than $0.255, in years four through eight, and 64% of
L
the City's Tax Increment, but not more than $0.44, in years nine through 30) shall be retained by the
City; (2) amounts required_to be maintained in the Alvin ISD Suspense Account; (3) an amount
sufficient to pay reasonable current and anticipated administrative and operating costs of the Zone, as
determine by the Zone Board.
NOTE 11 -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
LI Intergovernmental Risk-Pool(TML-1RP),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 year-end September 30,2006,the City believed the amounts paid on
Workers'Compensation would not change significantly from the amounts recorded.
[7, 55
CITY PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS
F
NOTE 12-SUBSEQUENT EVENTS
Surface Water—Interim Water Supply Agreement with Gulf Coast Water Authority fl
On November 6,2006, the City of Pearland entered into an interim water supply agreement with the
Gulf Coast Water Authority. The contract reserves the right for the City of Pearland to purchase up to
14.3 million GPD of the Brazos River surface water at a mutually agreed upon delivery point. The
Authority has entered into a contract with the Chocolate Bayou Water Company to purchase all of the
real and personal property, including water rights. The City of Pearland agrees to pay the Authority
its pro-rate share(40.19%) of the debt($27,805,000 principal amount)that the Authority will issue to `l
purchase these assets. In two years, the City of Pearland can either prepay it's obligation with
respect to the outstanding principal amount of the bonds,through the issuance of City debt or the City
can continue to pay the Authority it's pro-rata share of the annual debt service.
Development Authority of Pearland Issuance Debt
On October 2,'2006, the Development Authority of Pearland approved the issuance of$9,970,000 in
Tax Increment Contract Revenue Bonds, Series 2006. The proceeds of the bonds will be used to pay
eligible project costs pursuant to the Plan. The City and the TIRZ #2 Board have approved total
reimbursements to the Developer of approximately $64.9 million. Pursuant to such reimbursement
approval, the ;Developer has been reimbursed $31.4 million, which includes $9,104,000 from this
issuance and $2.2 million in a cash contribution in November of 2006. The Plan, as amended,
estimates that throughout the life of the TIRZ, the Authority will finance total infrastructure project
costs of approximately$160,750,000
Water/Sewer Rate Increase
The City of Pearland increased water/sewer revenues 25% through a rate increase effective with �I
October 1, 2096 consumption. The rate increase will generate an additional $3.0 million in revenues.
The increase is necessary to fund needed capital improvement projects, mainly the purchase of 10
MGD capacity in the expansion of the City of Houston Southeast Water Purification Plant and to
meet bond coverage requirements. This is the first change in water and sewer rates for at least six
years.
n
Monthly Rates are as follows:
Previous Current
Water—Residential/Commercial Single Unit
Base—2000 gallons $10.89 $11.98
Volume per 1000—over 2,000 gallons $2.02 $2.73
Water—Residential/Commercial Multi-Unit
Base—2000 gallons
$9.90 $10.89
Volume per 1000—over 2,000 gallons $1.82 $2.71
Sewer
Base—2000 gallons $11.39 $12.53
Volume per 1000—over 2,000 gallons $1.46 $2.06 r'
56 1
J
L.�
REQUIRED SUPPLEMENTARY INFORMATION
L,
r
I 57
r
J
{
7
7
i 1
7
(This page intentionally left blank)
1
58
E `
7 CITY OF PEARLAND, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN
FUND BALANCES-BUDGET AND ACTUAL
For the year ended September 30,2006
�_ Variance with
Final Budget-
rBudgeted Amounts Positive
L Original Final Actual (Negative)
REVENUES
r Property taxes $ 11,154,650 $ 11,099,556 $ 11,413,806 $ 3.14,250
L Sales and use taxes 8,056,000 9,829,660 9,712,118 (117,542)
Franchise fees 3,130,500 3,291,065 3,426,352 135,287
rig Licenses and permits 3,673,570 3,848,491 4,066,914 218,423
Fees and forfeitures 1,935,625 1,725,228 1,934,882 209,654
Charges for services 7,702,721 . 8,505,393 8,734,090 228,697
Investment earnings _ 290,000 290,000 . 420,000 516,775 96,775
rug Intergovernmental 123,000 490,829 . 448,502 (42,327)
Other - 369,500 475,726 252,704 (223,022)
Total Revenues 36,435,566 39,685,948 40,506,143 820,195
r
E EXPENDITURES
Current:
7 General government 6,761,935 6,519,885 6,284,996 234,889
Public safety 12,382,510 12,817,577 12,685,081 132,496
Public works 9,806,160 10,469,657 . 9,727,972 741,685
Community services 2,936,322 2,874,080 2,739,532 134,548
rag
i Parks and recreation 4,126,361 4,664,037 4,308,250 355,787
Total Expenditures 36,013,288 37,345,236 35,745,831 1,599,405
Excess(deficiency)of revenues over
7 expenditures 422,278 2,340,712 4,760,312 2,419,600
OTHER FINANCING SOURCES(USES)
Transfers in 1,575,323 1,634,681 1,655,653 20,972
Transfers out (1,997,601) (4,024,567) -(4,021,367) 3,200
Total other fmancing sources and
7 uses (422,278) (2,389,886) (2,365,714) 24,172
Net change in fund balances - (49,174) 2,394,598 2,443,772
Fund balances,beginningof year 8,202,771 7,702,771 8,202,771 500,000
7 Fund balances at year end $ 8,202,771 $ 7,653,597 $ 10,597,369 $ 2,943,772
7
L
7
L 59
7
CITY OF PEARLAND,TEXAS
NOTES TO REQUIRED SUPPLEMENTARY BUDGET INFORMATION
Year ended September 30,2006
BUDGETARY COMPLIANCE
The City of Pearland has complied with all material budget requirements for the year ended -j
September 30, 2006.
Annual appropriated budgets are adopted for the General, Special Revenue and Debt Service Funds,
using the same basis of accounting as for financial reporting. All annual appropriations lapse at
fiscal year end. Project length budgets are adopted for the Capital Project Funds. The City, for
management control, approves a financial plan for the Enterprise Fund. City Council approves the
annual budget for the Pearland Economic Development Corporation, which is included in the
City's financial reporting entity.
Expenditures may not legally exceed budgeted appropriations at the fund level (i.e. General Fund, fl
Debt Service Fund, etc.). Expenditure requests, which would require an increase in total budgeted
appropriations, must be approved by City Council through a formal budget amendment. At any
time in the fiscal year, the Council may make emergency appropriations to meet a pressing need
for public expenditure in order to protect the public health, safety, or welfare. The Council has the
power to transfer any unencumbered funds allocated by the budget from-one activity, function, or
department, to another activity, function, or department, to re-estimate revenues and expenditures, 'l
and to amend the budget.
Because City Council adopts the budget at the fund level, management has the authority to transfer `l
available funds allocated by the budget from one function/department or activity to another function J
or activity within the same department. In cooperation with the directors and department heads of
the City, the Budget Manager, the Director of Finance and the City Manager prepare an annual -�
budget for the General Fund, Special Revenue Funds and Debt Service Fund for the ensuing
fiscal year, in a form and style as deemed desirable by the City Manager. The City Manager shall
submit to the Council, for its review, consideration, and revision, both a letter describing the
proposed new budget, as well as a balanced budget for the forthcoming fiscal year, between 60
(sixty) and 90 (ninety) days prior to the beginning of the fiscal year. The budget, as adopted, must
set forth the appropriations for services, functions, and activities of the various City departments
and agencies, and shall meet all fund requirements provided by law and required by bond
covenants. Capital projects are budgeted on a project-length basis. J
fl
Amounts reported in the accompanying financial statements represent the amended budgeted
amount plus all supplemental appropriations. J
r`1
60
L_
ill
TEXAS MUNICIPAL RETIREMENT SYSTEM(UNAUDITED)
Schedule of Funding Progress
1181 Unfunded
Actuarial
Actuarial Actuarial Accrued Annual (UAAL)as a
Valuation Date Actuarial Value Accrued Percentage Liability Covered Percentage of
December 31, of Assets Liabilities Funded (UAAL) Payroll Covered Payroll
7 2006 $ 24,661,930 $ 29,638,024 83% 4,976,094 $ 15,233,614 33%
2005 21,971,144 26,517,882 83% 4,546,738 13,703,115 33%
2004 18,772,272 23,190,084 81% 4,417,812 12,731,012 35%
!! Schedule of Annual Pension Costs
Annual
r
Fiscal Pension Percentage
Year Cost Contributed
2006 $ 1,730,700 100%
2005 1,480,301 100%
P. 2004 1,371,452 100%
I
7 The City's annual covered payroll and annual pension cost are actuarially valued on a calendar
L year basis. Because the City makes all of the annually required contributions, no net pension
obligation exists. The information presented below was determined as part of the actuarial
r valuations as of December 31, 2005.
L
Actuarial Cost Method Unit Credit
[7 Amortization Method Level Percent of Payroll
Remaining Amortization Period 25 Years-Open Period
Asset Valuation Method Amortized Cost
[7 Actuarial Assumptions:
Investment Rate of Return 7%
Projected Salary Increases None
11 Includes Inflation At 3.5%
LCost-of-Living Adjustments None
I .
IL
7
rug
r 61
[.
r
L
Forl
(this page intentionally left blank)
1.1
,F,
r-,
62
r--
If
t •
"!
t �
•
j
L d _
COMBINING AND INDIVIDUAL FUND
STATEMENTS AND SCHEDULES
63
r
fl
UY
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
To account for the proceeds of specific revenue sources that are legally restricted to expenditures
for specific purposes.
Hotel/Motel Tax-A fund created to account for hotel/motel occupancy tax revenue.
JTCourt Security-A fund created to account for the receipt and expenditure of revenues from
court fines for court security.
City Wide Donation—A fund created to account for miscellaneous donations for all city
departments except parks.
Court TechnologyThis fund is used to account for the receipt and expenditure of revenues
117
— P P
from court fines for court technology.
Regional Detention Fund—A fund created to account for the regional detention development.
Park Donation—A fund used to account for park special event donations and the development
of parks. This fund also includes funds from the tree trust donations.
State Police-Seizure Fund—A fund created to account for state seizure funds which are used
solely for law enforcement purposes.
Federal Police Fund—A fund created to account for federal seizure funds and can only be used
to support activities that result in further seizures.
Park and Recreation Development—A fund created to account for the development of parks.
Sidewalk Fund-A fund created to account for resources designated for sidewalks.
raq Community Services—To account for expenditures related to community services.
Grants Fund—To account for revenues and expenditures associated with federal, state, and local
grants.
Street Assessments-A fund created to account for resources for street assessments.
n
n
65
rl
CITY OF PEARLAND, TEXAS
BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
September 30,2006
fl
Hotel Motel City Wide
Tax Court Security Donations Court Technology
ASSETS
Cash and cash equivalents $ 790,629 $ 108,697 $ 55,566 $ 196,818
r-,
Investments
Receivables(net of allowance for
uncollectibles) 73,051 2,864 3,521
Total assets $ 863,680 $ 111,561 $ 55,566 $ 200,339 f
LIABILITIES AND FUND BALANCES 1
Liabilities:
Accounts payable $ $ $ 9,804 $
Deferred revenue 2,894 3,521
Total liabilities 2,894 9,804 3,521
Fund balances:
Unreserved,reported in
Special revenue funds 863,680 108,667 45,762 196,818
Capital projects funds
Total fund balances 863,680 108,667 45,762 196,818
863 680 $ 111 561 $ 55,566 $ 200,339
Total liabilities and fund balances $
� I
r
I �
66
n
L'
L Parks and
Regional State Police- Recreation
Detention Park Donations Seizure Fund Federal Police Development
$ 107,400 $ 264,035 $ 120,058 $. 27,295 $ 1,129,687
n
L
$ 107,400 $ 264,035 $ 120,058 $ 27,295 $ 1,129,687
L -
$ $ - $ $ $
107,400 264,035 120,058 27,295 1,129,687
107,400 264,035 120,058 27,295 1,129,687
$ 107,400 $ 264,035 $ 120,058 $ 27,295 $ 1,129,687
67
r
CITY OF PEARLAND, TEXAS
BALANCE SHEET fl
NONMAJOR GOVERNMENTAL FUNDS
September 30,2006
rl
Community r-�
Sidewalk Services Grant Fund Street Assessments
ASSETS
Cash and cash equivalents $ 151,060 $ $ 113,796 $ 679,107
Investments 148,889
Receivables(net of allowance for
uncollectibles) 88,787 820
Total assets $ 151,060 $ $ 202,583 $ 828,816
LIABILITIES AND FUND BALANCES j
Liabilities:
Accounts payable $ $ $ 1,813 $ .,
Deferred revenue 22,790
Total liabilities 1,813 22,790
n
Fund balances:
Unreserved,reported in
Special revenue funds 151,060 200,770
Capital projects funds 806,026
Total fund balances 151,060 200,770 806,026
Total liabilities and fund balances $ 151,060 $ $ 202,583 $ 828,816 fl
n
5i
68 J
1
fl
Totals
$ 3,744,148
148,889
169,043
n $ 4,062,080
[1.)
$ 11,617
29,205 .
40,822 `
E • • .
3,215,232 -
806,026
4,021,258
$ 4,062,080
[17
ri
L.
L_
69
L
r1
I / i
CITY OF PEARLAND, TEXAS
n
STATEMENT OF,REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL
FUNDS
GOVERNMENTAL FUNDS
For the Year Ended September 30,2006
City Wide Court
Hotel Motel Tax Court Security Donations Technology
REVENUES
Sales and use taxes $ 267,588 $ $ $ •
Fines and forfeitures 46,856 55,852
Investment earnings 22,403 2,969 1,170 5,194
Intergovernmental
Other 54,502
Total revenues 289,991' 49,825 55,672 61,046
EXPENDITURES
Current: j
J
General government 96,248
Public safety
Community services 1,716 16,185 3,814
Parks and recreation
Total Expenditures 96,248 1,716 16,185 3,814 r,
Excess(deficiency)of revenues
over expenditures' 193,743 48,109 39,487 57,232
OTHER FINANCING SOURCES
(USES)
Transfers in r
Transfers out (31,873)
Net change in fund balances 193,743 16,236 39,487 57,232
Fund balances-beginning 669,937 92,431 6,275 139,586
Fund balances-ending $ 863,680 $ 108,667 $ 45,762 $ 196,818
'1
n
70
J
p
p
n
L'a
•
fj
Parks and
Regional State Police- Recreation
Detention Park Donations Seizure Fund Federal Police Development
$ $ $ $ $
n2,923 7,197 3,204 747 25,370
6,000
{11, 2,348 20,674 38,273 178,632
L ' 5,271 • 27,871 41,477 - 747 210,002
10,500
7,409 59,139
7,409 -10,500 59,139
5,271 20,462 30,977 747 150,863
235,731
5;271 20,462 - 30,977 747 386,594
102,129 243,573 89,081 26,548 743,093
L $ 107,400 $ 264,035 $ 120,058 $ 27,295 $ 1,129,687
n '
p
a
71
L
ri
I
CITY OF PEARLAND, TEXAS
STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL
FUNDS
GOVERNMENTAL FUNDS
For the Year Ended September 30,2006 j
Community Street r 3
Sidewalk Services Grant Fund Assessments
REVENUES '
Sales and use taxes $ $ $ $
Fines and forfeitures
Investment earnings 3,619 1,940 5,728 13,844
Intergovernmental 111,239
Other 35,226 3,941
Total revenues 38,845 5,881 116,967 13,844
EXPENDITURES
Current:
General government
Public safety I 48,846 125,170 P t
Community services 9,541 j
Parks and recreation
Total Expenditures 48,846 134,711
Excess (deficiency)of revenues
over expenditures 38,845 (42,965) (17,744) 13,844
n
OTHER FINANCING SOURCES
(USES)
Transfers in 35,100 43,688
Transfers out (54,793) J'
Net change in fund balances 38,845 (62,658) 25,944 13,844
Fund balances-beginning 112,215 62,658 174,826 792,182
Fund balances-ending $ 151,060 $ $ 200,770 $ 806,026
I fl
fl
f
n
72
r
t '
II
Totals
L
$ 267,588
102,708
96,308
117,239
333,596
917,439
96,248
184,516
31,256
66,548
378,568 V
538,871
p
314,519
71,
L (86,666)
766,724
3,254,534
$ 4,021,258 •
'
p
p
73
p
j
ri
CITY OF PEARLAND,TEXAS
DEBT SERVICE FUND
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006 `l
with comparative actual totals for the year ended September 30,2005
2006 .'
Variance
Positive/
Final Budget Actual (Negative) 2005
REVENUES fl
Taxes:
Property taxes $ 10,728,697 $ 10,736,081 $ 7,384 $ 10,095,935
Investment earnings 84,948 142,407 57,459 57,687 'F
Intergovernmental 990,723 291,786 (698,937)
Total Revenues 11,804,368 11,170,274 (634,094) 10,153,622
EXPENDITURES
Debt Service:
Principal 4,107,055 3,429,108 677,947 3,534,534
Interest 6,546,929 6,546,227 702 5,027,376
Intergovernmental 1,683,678 1,683,678 1,083,896
Total Expenditures 12,337,662 11,659,013 678,649 9,645,806
l
Revenues over(under)expenditures (533,294) (488,739) 44,555 507,816
n
OTHER FINANCING SOURCES/
(USES)
Proceeds from long-term debt 8,004,141 8,004,141
Payments to refunding escrow agent (8,004,141) (8,004,139) 2
Transfers from other funds 1,291,909 1,291,909 339,561
Total other financing sources(uses) 1,291,909 1,291,911 2 339,561
Net change in fund balance 758,615 803,172 44,557 847,377
'1
Fund balances,beginning of year 3,855,129 3,855,129 3,007,752
Fund balances at year end $ 4,613,744 $ 4,658,301 $ 44,557 $ 3,855,129
n
n
74
f1
CITY OF PEARLAND,TEXAS,
SPECIAL REVENUE FUND-HOTEL/MOTEL TAX
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006
flwith comparative actual totals for the year ended September30,2005
2006
Variance
Positive/
Budget Actual (Negative) 2005
REVENUES
Hotels occupancy tax $ 251,500 $ 267,588 $ 16,088 $ 185,396
Investment Income 16,000 22,403 6,403 7,759
Total Revenues 267,500 289,991 22,491 193,155
[ EXPENDITURES
Current:
General government 157,500 96,248 61,252 80,313
Total Expenditures 157,500 96,248 61,252 80,313
L Net change in fund balance 110,000 193,743 83,743 112,842
Fund balances,beginning of year 669,937 669,937 557,095
Fund balances at year end $ 779,937 $ 863,680 $ 83,743 $ 669,937
7
L
r°
r !
r+i
75
ri
P1{
CITY OF PEARLAND,TEXAS, ,.
SPECIAL REVENUE FUND-COURT SECURITY
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006 '"1
with comparative actual totals for the year ended September 30,2005
2006
Variance fl
Positive/ J
Budget Actual (Negative) 2005
71
REVENUES
Fines and forfeitures $ 42,700 $ 46,856 $ 4,156 $ 39,988
Investment earnings 2,500 2,969 469 1,137
Total Revenues 45,200 49,825 4,625 41,125
EXPENDITURES
Current: 1
Community services 545 1,716 (1,171) 3,266
Total Expenditures 545 1,716 (1,171) 3,266
Revenues over(under)expenditures 44,655 48,109 3,454 37,859
Other Financing Sources(Uses)
Transfers(out) (31,873) (31,873) (10,363)
Net change in fund balance 12,782 16,236 3,454 27,496
Fund balances,beginning of year 92,431 92,431 64,935
Fund balances at year end $ 105,213 $ 108,667 $ 3,454 $ 92,431 T
r
76
rs
E
n
CITY OF PEARLAND,TEXAS,
SPECIAL REVENUE FUND-CITY WIDE DONATIONS
F SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006
with comparative actual totals for the year ended September 30,2005
2006
Variance
Positive/
Budget Actual (Negative) 2005
REVENUES
Investment earnings $ 500 $ 1,170 $ 670 245
Other income 48,330 54,502 6,172 12,610
Total Revenues 48,830 55,672 6,842 12,855
L
EXPENDITURES
Current:
Community services 4,683 16,185 (11,502) 8,968
Total Expenditures •4,683 - 16,185 (11,502) 8,968
Net change in fund balance 44,147 39,487 (4,660) 3,887
Fund balances,beginning of year 6,275 6,275 2,388
Fund balances at year end $ .50,422 $ 45,762 $ (4,660) $ 6,275
L
E
7
i
n
L
F,
1," 77
r
r^
I '
fl
CITY OF PEARLAND,TEXAS,
SPECIAL REVENUE FUND-COURT TECHNOLOGY
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006
with comparative actual totals for the year ended September 30,2005
2006
Variance f
Positive/
Budget Actual (Negative) 2005
REVENUES
Fines and forfeits 1 $ 51,000 $ 55,852 $ 4,852 $ 51,586
Investment earnings 3,408 5,194 1,786 1,934 r,
Total Revenues 54,408 61,046 6,638 53,520
EXPENDITURES
Current:
Community services 2,307 3,814 (1,507) 3,004
Total Expenditures 2,307 3,814 (1,507) 3,004
Net change in fund balance 52,101 57,232 5,131 50,516
Fund balances,beginning of year 139,586 139,586 89,070
Fund balances at year end $ 191,687 $ 196,818 $ 5,131 $ 139,586
fl
fl
r
78
I I
n
L!
CITY OF PEARLAND,TEXAS,
SPECIAL REVENUE FUND-REGIONAL DETENTION
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006
with comparative actual totals for the year ended September 30,2005
2006
Variance
Positive/
Budget Actual (Negative) 2005
REVENUES
Investment earnings $ 1,600 $ 2,923 $ 1,323 1,211
Other income 2,348 2,348 49,258
Total Revenues 3,948 5,271 1,323 50,469
Net change in fund balance 3,948 5,271 1,323 50,469
Fund balances,beginning of year 102,129 102,129 51,660
Fund balances at year end $ 106,077 $ 107,400 $ 1,323 $ 102,129
n
L
L
L
r
7 79
L
CITY OF PEARLAND,TEXAS,
SPECIAL REVENUE FUND-PARK DONATIONS
SCHEDULE OF REVENUES,EXPENDITURES AND J
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006
with comparative actual totals for the year ended September 30,2005
J
2006
Variance f1
Positive/ j
Budget Actual (Negative) 2005
REVENUES
Investment earnings $ 3,850 $ 7,197 $ 3,347 $ 3,155
Other 22,322 20,674 (1,648) 15,018
Total Revenues 26,172 27,871 1,699 18,173
EXPENDITURES r f
Current:
Parks and recreation 8,000 7,409 591 16,971
Total Expenditures 8,000 7,409 591 16,971 �I
Net change in fund balance 18,172 20,462 2,290 1,202
fl
Fund balances,beginning of year 243,573 243,573 242,371
Fund balances at year end $ 261,745 $ 264,035 $ 2,290 $ 243,573 r f
r,
I r,
r-
80
n
E
CITY OF PEARLAND,TEXAS,
SPECIAL REVENUE FUND-STATE POLICE-SEIZURE FUND
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006
with comparative actual totals for the year ended September 30,2005
L
2006
Variance
Positive/
Budget Actual (Negative) 2005
REVENUES
Investment earnings $ 2,492 $ 3,204 $ 712 $ 1,307
Other 30,077 38,273 8,196 25,542
Total Revenues 32,569 41,477 8,908 26,849
EXPENDITURES
Current:
Public safety 10,500 10,500 17,661
Total Expenditures 10,500 10,500 17,661
Net change in fund balance 22,069 30,977 8,908 9,188
Fund balances,beginning of year 89,081 89,081 79,893
Fund balances at year end $ 111,150 $ 120,058 $ 8,908 $ 89,081
1-7
L
L
L
L
81
L_
r
CITY OF.PEARLAND,TEXAS,
SPECIAL REVENUE FUND-FEDERAL POLICE fl
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006
with comparative actual totals for the year ended September 30,2005
2006
Variance °l
Positive/
Budget Actual (Negative) 2005
REVENUES
Investment earnings $ 400 $ 747 $ 347 $ 344
Total Revenues 400 747 347 344
Net change in fund balance 400 747 347 344
Fund balances,beginning of year 26,548 26,548 26,204
Fund balances at year end $ 26,948 $ 27,295 $ 347 $ 26,548 f,
r-,
n
r-
_ _ r
r-
82
k`-
7
L,
7
CITY OF PEARLAND,TEXAS,
7 SPECIAL REVENUE FUND-PARK AND RECREATION DEVELOPMENT
L' SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006
7 with comparative actual totals for the year ended September 30,2005
2006
L' _ Variance
Positive/
Budget Actual (Negative) 2005
El REVENUES
Investment earnings $ .17,188 $ . 25,370 $ 8,182 $ 8,346
Intergovernmental 6,000 6,000
Other 153,930 178,632 24,702 185,998
tj Total Revenues 177,118 210,002 32,884 194,344
7 EXPENDITURES -
Current:
Parks and recreation 726,018 59,139 666,879
p Total Expenditures 726,018 59,139 666,879
L'
Revenues over(under)expenditures (548,900) 150,863 699,763 194,344
flOther Financing Sources(Uses)
Transfers from other funds 195,731 235,731 .40,000
E Total other financing sources(uses) 195,731 235,731 40,000
Net char a in fund balance
g (353,169) 386,594 740,000 194,344
ril
Fund balances,beginning of year 743,093 743,093 548,749
Fund balances at year end $ 389,924 $ 1,129,687 $ 739,763 $ 743,093
n
7 - ,. .,
f
L.
r
f 83
7
n
CITY OF PEARLAND,TEXAS,
SPECIAL REVENUE FUND-SIDEWALK fl
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006 r�
with comparative actual totals for the year ended September 30,2005
2006
Variance fl
Positive/
Budget Actual (Negative) 2005
REVENUES
Investment earnings $ 1,795 $ 3,619 $ 1,824 $ 1,924
Other 25,110 35,226 10,116 36,950 .i
Total Revenues 26,905 38,845 11,940 38,874
Revenues over(under)expenditures 26,905 38,845 11,940 38,874
Other Financing Sources(Uses)
Transfers(to)other funds (180,000)
Total other financing sources(uses) (180,000)
Net change in fund balance 26,905 38,845 11,940 (141,126) 'l
Fund balances,beginning of year 112,215 112,215 253,341
n
Fund balances at year end $ 139,120 $ 151,060 $ 11,940 $ 112,215
n
1
r--q
n
84
•
l
CITY OF PEARLAND,TEXAS, .
7 SPECIAL REVENUE FUND-COMMUNITY SERVICES
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006
[7: with comparative actual totals for the year ended September 30,2005
2006
7 - Variance
Positive/
Budget Actual (Negative) 2005
4 REVENUES
`` Investment earnings $ 2,281 $ 1,940 $ (341) $ 797
Other_ 3,904 3,941 37 3,806
7 Total Revenues 6,185 5,881 (304) 4,603
EXPENDITURES
r Current:
Public safety 44,585 48,846 (4,261)
Total Expenditures 44,585 48,846 (4,261) 28,790
7 Revenues over(under)expenditures (38,400) (42,965) (4,565) (24,187)
7 OTHER FINANCING SOURCES/
L , (USES)
Transfers from other funds 35,100 35,100 32,000
Transfers(to)other funds (59,358) (54,793) 4,565
Total other financing sources(uses) (24,258) (19,693) 4,565 • 32,000
Net change in fund balance (62,658) (62,658) 7,813
i i Fund balances,beginning of year 62,658 62,658 54,845
Fund balances at year end $ $ $ $ 62,658
7
,
L:
r •
7 85
El
•
ri
•
CITY OF PEARLAND,TEXAS,
SPECIAL REVENUE FUND-GRANT FUND
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006 r
with comparative actual totals for the year ended September 30,2005
2006
Variance fl
Positive/
Budget Actual (Negative) 2005 .
r-,
REVENUES
Investment earnings $ 3,385 $ 5,731 $ 2,346 $ 866
Intergovernmental 140,572 111,239 (29,333) 398,388 1-1
Total Revenues 143,957 116,970 (26,987) 399,254
EXPENDITURES
Current:
General government 1,260
Public safety 144,045 125,173 18,872 261,551
Community services 11,139 9,541 • 1,598 fl
Capital outlay 91,694
Total Expenditures 155,184 134,714 20,470 354,505
Revenues over(under)expenditures (11,227) (17,744) (6,517) 44,749
OTHER FINANCING SOURCES/
(USES)
•
Transfers from other funds 6,000 43,688 37,688 50,000
Total other financing sources(uses) 6,000 43,688 37,688 50,000
Net change in fund balance (5,227) 25,944 31,171 94,749
Fund balances,beginning of year 174,826 174,826 80,077
Fund balances at year end $ 169,599 $ 200,770 $ 31,171 $ 174,826
r-,
86
r-
E_
CITY OF PEARLAND,TEXAS,
SPECIAL REVENUE FUND-STREET ASSESSMENTS
SCHEDULE OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2006
with comparative actual totals for the year ended September 30,2005
2006
Variance
Positive/
Budget Actual (Negative) 2005
REVENUES
Investment earnings $ 7,468 $ 13,844 $ 6,376 $ 26,009
Other •
198,928
Total Revenues 7,468 13,844 6,376 224,937
Net change in fund balance 7,468 13,844 6,376 224,937
Fund balances,beginning of year 792,270 792,182 567,245
Fund balances at year end $ 799,738 $ 806,026 $ 6,376 $ 792,182
L!
•
� I
L
87
L •
7
(This page intentionally left blank.)
7
88
L
p
L °
p
• DISCRETELY PRESENTED COMPONENT UNITS
` FUND BASED FINANCIAL STATEMENTS
7•
p
p
f
p
fl
89
L
ri
CITY OF PEARLAND,TEXAS,TEXAS
DISCRETELY PRESENTED COMPONENT UNITS
BALANCE SHEETS-GOVERNMENTAL FUNDS 1
September 30,2006
Pearland
Economic Tax Increment Development
Development Reinvestment Authority of Total Component
Corporation Zone#2 Pearland Units
ASSETS
Cash and equivalents $ 3,239,475 $ 3,129,862 $ 20,212 $ 6,389,549
Investments 3,448,107 3,448,107
Receivables-less allowance for
uncollectibles 864,825 864,825
Restricted cash 10,840,127 2,174,602 13,014,729
Total assets 18,392,534 3,129,862 2,194,814 23,717,210 r,
LIABILITIES
Accounts payable and accrued expenses 33,549 54,573 16,826 104,948
Total liabilities 33,549 54,573 16,826 104,948 11
FUND BALANCE
Reserved for construction 10,840,127 10,840,127
Reserved for debt service 2,174,602 2,174,602
Unreserved 7,518,858 3,075,289 3,386 10,597,533
Total fund balance 18,358,985 3,075,289 2,177,988 23,612,262
Total Liabilities and Fund Balance $ 18,392,534 $ 3,129,862 $ 2,194,814 $ 23,717,210
r1
Reconciliation from Fund balance to Net Assets
Fund Balance $ 18,358,985 $ 3,075,289 $ 2,177,988 $ 23,612,262
Less revenue bonds payable (20,108,919) (20,562,611) (40,671,530)
Less other long-term liabilities (38,198) (38,198)
Less interest payable (82,484) (82,484)
Net Assets $ (1,870,616) $ 3,075,289 $ (18,384,623) $ (17,179,950)
n
n
J
r-i
n
90
ri
r
L
7
CITY OF PEARLAND,TEXAS
7 DISCRETELY PRESENTED COMPONENT UNITS
STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS
For the Year Ended September 30,2006
L
Pearland
Economic Development Total
E. Development TIRZ Authority of Component
Corporation Developments Pearland Units
REVENUES
Taxes:
7 Property taxes $ $ 5,354,319 $ $ 5,354,319
Sales and use taxes 4,821,342 4,821,342
Intergovernmental
Investment earnings 582,218 71,559 85,592 739,369
7 Total revenues 5,403,560 5,425,878 85,592 10,915,030
EXPENDITURES
7 Current:
General government 48,619 48,619
Economic development 1,148,585 1,421,796 8,100,000 10,670,381
Debt Service
Principal 345,000 1,535,000 1,880,000
L Interest 421,400 1,064,986 1,486,386
Bond issuance cost 102,808 781,040 883,848
7 Intergovernmental-City 7,211,662 352
11,529,9977,212,014
Total Expenditures 9,229,455 1,421,796 22,181,248
Revenues over(under)expenditures (3,825,895) 4,004,082 (11,444,405) (11,266,218)
7 OTHER FINANCING SOURCES/
(USES)
Transfers from other component units 2,151,892 2,151,892
l
Transfers(to)other component units (2,151,892) (2,151,892)
Issuance of Revenue bonds 10,235,000 9,775,000 20,010,000
Total other financing sources(uses) 10,235,000 (2,151,892) 11,926,892 20,010,000
Changes in fund balance 6,409,105 1,852,190 482,487 8,743,782
Fund balances,beginning as restated 11,949,880 1,223,099 1,695,501 14,848,892
Fund balances, ending $ 18,358,985 $ 3,075,289 $ 2,177,988 $ 23,592,674
7
Reconciliation from changes in fund
''
balance to changes in net assets
7 Change in Fund Balance $ 6,409,105 $ 1,852,190 $ 482,487 $ 8,743,782
Add Principal payments 345,000 1,535,000 1,880,000
Bond Issuance costs 96,881 744,611 841,492
Add changes in interest payable (82,484) (82,484)
{7
Add changes in other long-term liabilities (10,275,075) (9,775,000) (20,050,075)
Changes in Net Assets $ (3,506,573) $ 1,852,190 $ (7,012,902) $ (8,667,285)
7
7 91
7
L
E
E
f
r
n
LONG-TERM DEBT AMORTIZATION SCHEDULES
n
93
E
r
r-7
CITY OF PEARLAND,TEXAS
COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT
BY MATURITY DATE
September 30,2006 r
Permanent Improvement Refunding Bonds Series 2000 G.O.Series 2001(TIRZ Obligation) F"-,
Fiscal Year
Ending Principal Interest . Total Principal Interest Total
2007 $ 1,800,000 230,700 $ 2,030,700 $ 235,000 $ 31,298 $ 266,298 r
2008 1,885,000 142,260 2,027,260 250,000 21,840 271,840
2009 1,980,000 48,510 2,028,510 260,000 11,895 271,895
2010 175,000 3,413 178,413
2011
2012 1
2013
2014
2015
2016 r-1
2017
2018
2019
2020
2021 h
2022
2023
2024
"`1
2025
2026 I
2027
2028
2029 fl
$ 5,665,000 $ 421,470 $ 6,086,470 $ 920,000 $ 68,445 $ 988,445
J
Certificates of Obligation,Series 2001 Certificates of Obligation,Series 2006 7
Fiscal Year J
Ending Principal Interest Total Principal Interest Total
2007 $ - $ 477,823 $ 477,823 $ - $ 534,360 $ 534,360 rn
2008 - 477,823 477,823 25,000 457,257 482,257
2009 115,000 474,373 589,373 25,000 455,726 480,726
2010 560,000 456,923 1,016,923 50,000 453,429 503,429
2011 575,000 431,423 1,006,423 125,000 448,069 573,069 ,7
2012 600,000 407,173 1,007,173 315,000 434,594 749,594
2013 630,000 380,641 1,010,641 335,000 414,688 749,688
2014 655,000 352,123 1,007,123 355,000 393,557 748,557
2015 700,000 321,198 1,021,198 370,000 371,354 741,354
2016 730,000 287,673 1,017,673 395,000 349,654 744,654 7
2017 790,000 251,375 1,041,375 405,000 330,932 735,932 i
2018 835,000 211,958 1,046,958 405,000 314,074 719,074
2019 880,000 169,500 1,049,500 505,000 294,838 799,838
2020 930,000 124,250 1,054,250 470,000 274,001 744,001 7
2021 980,000 76,500 1,056,500 500,000 253,146 753,146 1
2022 1,040,000 26,000 1,066,000 525,000 230,912 755,912
2023 555,000 207,218 762,218
2024 585,000 181,991 766,991 "7
2025 605,000 155,363 760,363
2026 730,000 125,325 855,325
2027 765,000 91,688 856,688
2028 805,000 56,363 861,363
2029 850,000 19,125 869,125
$10,020,000 $ 4,926,752 $ 14,946,752 $. 9,700,000 $ 6,313,301 $ 16,013,301
94
J
ri
i
7
L-
7
L Page l Of 2
7
L_
Permanent Improvement&Refund Bonds,Series
Permmanent Improvement Bonds,Series 2003 2005
7 .
Fiscal Year
Ending Principal Interest Total Principal Interest Total
2007 $ - $ 664,504 $ 664,504 $ - 1,680,164 $ 1,680,164
7 2008 664,504 664,504 1,680,164 1,680,164
2009 140,000 660,304 800,304 425,000 1,673,258 2,098,258
2010 335,000 646,054 981,054 1,635,000 1,637,739 3,272,739
2011 - 350,000 625,504 975,504 1,705,000 1,578,223 3,283,223
2012 370,000 603,904 973,904 1,775,000 1,514,039 3,289,039
2013 390,000 581,104 971,104 1,845,000 1,445,011 3,290,011
LLL 2014 410,000 557,104 967,104 1,930,000 1,370,664 3,300,664
2015 435,000 535,016 970,016 2,010,000 1,281,814 3,291,814
2016 455,000 516,129 971,129 2,115,000 1,178,689 3,293,689
j 2017 725,000 492,529 1,217,529 865,000 1,108,514 1,973,514
2018 765,000 462,729 1,227,729 995,000 1,071,314 2,066,314
2019 805,000 430,826 1,235,826 380,000 1,043,624 1,423,624
2020 845,000 396,266 1,241,266 385,000 1,027,893 1,412,893
7 2021 885,000 359,283 1,244,283 395,000 1,011,658 1,406,658
L 2022 935,000 320,153 1,255,153 405,000 994,756 1,399,756
2023 980,000 278,613 1,258,613 875,000 967,338 1,842,338
2024 1,030,000 234,000 1,264,000 2,625,000 882,900 3,507,900
I'm 2025 1,085,000 186,413 1,271,413 2,760,000 748,275 3,508,275
LI 2026 1,140,000 136,350 1,276,350 2,900,000 606,775 3,506,775
2027 1,200,000 83,700 1,283,700 3,045,000 465,763 3,510,763
2028 1,260,000 28,350 1,288,350 4,010,000 297,000 4,307,000
2029 3,935,000 98,375 4,033,375
$ 14,540,000 $ 9,463,335 $ 24,003,335 $ 37,015,000 $ 25,363,946 $ 62,378,946
7 Fiscal Year Certificates of Obligation,Series 2003 Certificates of Obligation,Series 2004
Ending Principal Interest Total Principal Interest Total
2007 $ 390,000 $ 744,520 $ 1,134,520 $ 100,000 $ 960,959 $ 1,060,959
ri 2008 415,000 732,445 1,147,445 100,000 956,959 1,056,959
2009 435,000 719,695 1,154,695 290,000 949,159 1,239,159
2010 1,110,000 685,420 1,795,420 340,000 936,559 1,276,559
2011 1,175,000 631,233 1,806,233 365,000 922,459 1,287,459
7 2012 1,235,000 580,095 1,815,095 380,000 907,559 1,287,559
2013 1,295,000 531,114 1,826,114 385,000 892,259 1,277,259
2014 1,035,000 488,203 1,523,203 710,000 870,359 1,580,359
•
2015 1,090,000 449,408 1,539,408 710,000 841,959 1,551,959
[7 2016 1,145,000 407,488 1,552,488 730,000 813,159 1,543,159
2017 1,210,000 361,533 1,571,533 1,030,000 777,959 1,807,959
2018 1,180,000 313,733 1,493,733 1,070,000 735,424 1,805,424
2019 1,240,000 265,333 1,505,333 1,160,000 689,129 1,849,129
7 2020 1,310,000 213,023 1,523,023 1,175,000 635,394 1,810,394
2021 1,380,000 156,188 1,536,188 1,195,000 574,650 1,769,650
2022 1,455,000 95,944 1,550,944 1,210,000 511,519 1,721,519
2023 1,530,000 32,513 1,562,513 1,510,000 440,119 1,950,119
2024 1,580,000 359,006 1,939,006
7 2025 1,625,000 280,969 1,905,969
2026 1,675,000 205,672 1,880,672
2027 1,730,000 126,931 1,856,931
2028 1,830,000 43,463 1,873,463
ril 2029
L
$ 18,630,000 $ 7,407,883 $ 26,037,883 $ 20,900,000 $ 14,431,621 $ 35,331,621
144 95
I
7
[7
7 CITY OF PEARLAND,TEXAS
COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT Page 2 of 2
BYMATURITYDATE
[4.1 September 30,2006
Permanent Improvement&Refund Bonds,Series
2006 Total All Series
4 '
Fiscal Year
Ending Principal Interest Total Principal Interest Total
2007 $ 50,000 $ 1,917,992 $ 1,967,992 $ 2,575,000 $ 8,389,018 $ 10,964,018
7 2008 50,000 1,532,194 1,582,194 2,725,000 7,812,144 10,537,144
2009 50;000 1,530,194 1,580,194 4,415,000 7,648,962 12,063,962
2010 50,000 1,528,194 1,578,194 4,985,000 7,427,179 12,412,179
2011 320,000 1,520,794 1,840,794 5,385,000 7,188,504 12,573,504
2012 385,000 1,506,694 1,891,694 5,870,000 6,933,407 12,803,407
2013 400,000 1,490,994 1,890,994 6,135,000 6,665,435 12,800,435
2014 410,000 1,474,794 1,884,794 6,405,000 6,392,552 12,797,552
2015 430,000 1,457,994 1,887,994 6,695,000 6,098,242 12,793,242
7 2016 445,000 1,440,216 1,885,216 7,015,000 5,783,756 12,798,756
2017 460,000 1,421,263 1,881,263 6,540,000 5,483,478 12,023,478
2018 480,000 1,401,288 1,881,288 6,845,000 5,195,643 12,040,643
2019 1,335,000 1,361,050 2,696,050 7,480,000 4,882,173 12,362,173
2020 1,485,000 1,293,888 2,778,888 7,835,000 4,532,339 12,367,339
7 2021 1;580,000 1,217,263 2,797,263 8,220,000 4,152,811 12,372,811
2022 1,675,000 1,135,888 2,810,888 8,620,000 3,752,296 12,372,296
2023 2,150,000 1,040,263 3,190,263 9,045,000 3,332,686 12,377,686
2024 2,150,000 932,763 3,082,763 9,495,000 2,883,035 12,378,035
7 2025 2,270,000 822,263 3,092,263 - 9,950,000 2,407,406 12,357,406
Li 2026 2,395,000 705,638 3,100,638 10,535,000 1,911,384 12,446,384
2027 2,525,000 585,794 3,110,794 11,050,000 1,398,500 12,448,500
2028 3,690,000 438,188 4,128,188 11,595,000 863,363 12,458,363
7 2029 7,380,000 175,275 7,555,275 12,165,000 292,775 12,457,775
L $ 32,165,000 $ 27,930,877 $ 60,095,877 $ 171,580,000 $ 111,427,088 $ 283,007,088
fiiq Certificates of Obligation,Series 2002
p -
L-I Fiscal Year
Ending Principal- Interest Total
7 2007 $ - $ 1,146,700 $ 1,146,700
2008 1,146,700 1,146,700
[._; 2009 695,000 1,125,850 1,820,850
2010 730,000 1,079,450 1,809,450 -
2011 770,000 1,030,800 1,800,800
74 2012 810,000 979,350 1,789,350
2013 855,000 929,625 1,784,625
2014. , 900,000 885,750 1,785,750
2015 950,000. 839,500 1,789,500
7 2016 1,000,000 790,750 1,790,750
2017 1,055,000 739,375 1,794,375
2018 1,115,000 685,125 1,800,125
2019 1,175,000 627,875 1,802,875
7 2020 1,235,000 567,625 1,802,625
2021 1,305,000 504,125 1,809,125
2022 1,375,000 437,125 1,812,125
2023 1,445,000 . . 366,625 1,811,625
7 2024 1,525,000 292,375 1,817,375
2025 1,605,000 214,125 1,819,125
L 2026 1,695,000 131,625 1,826,625
2027 1,785,000 44,625 1,829,625
2028
7 2029
L.
$ 22,025,000 $ 14,565,100 $ 36,590,100
97 7
L
7
J
7
CITY OF PEARLAND,TEXAS i
COMBINING SCHEDULE OF ENTERPRISE FUND LONG-TERM DEBT
BY MATURITY DATE r
September 30,2006
Water&Sewer System Revenue Bonds,Series Water&Sewer System Adjustable Rate Revenue fl
1996B Bonds,Series 1999
Fiscal Year
Ending Principal Interest Total Principal Interest Total 7
2007 $ 495,000 $ 43,945 $ 538,945 $ 195,000 $ 263,495 $ 458,495
2008 515,000 22,660 537,660 205,000 261,218 466,218
2009 215,000 253,320 468,320
2010 220,000 238,688 458,688
2011 230,000 230,436 460,436
2012 240,000 221,811 461,811
2013 250,000 212,813 462,813
2014 260,000 203,438 463,438
2015 270,000 193,688 463,688
2016 290,000 183,375 473,375
2017 1,080,000 172,688 1,252,688 7
2018 1,125,000 132,188 1,257,188 i
2019 1,175,000 90,000 1,265,000
2020 1,225,000 45,938 1,270,938
2021 $ 1,010,000 $ 66,605 $ 1,076,605 $ 6,980,000 $ 2,703,095 $ 9,683,095
Water&Sewer System Revenue Bonds,Series 2001 Water&Sewer System Revenue Bonds,Series 2003 P`
Fiscal Year
Ending Principal Interest Total Principal Interest Total
2007 190,000 $ 480,005 $ 670,005 $ 245,000 $ 383,513 $ 628,513 r'1
2008 200,000 468,130 668,130 260,000 373,717 633,717 ,'
2009 210,000 455,630 665,630 270,000 363,313 633,313
2010 230,000 442,505 672,505 285,000 352,513 637,513 r-,
2011 240,000 428,130 668,130 300,000 341,113 641,113
2012 255,000 413,130 668,130 315,000 323,113 638,113
2013 270,000 397,830 667,830 330,000 304,213 634,213
2014 290,000 386,018 676,018 340,000 285,238 625,238 r
2015 300,000 372,968 672,968 355,000 271,638 626,638
2016 320,000 359,093 679,093 365,000 257,438 622,438
2017 340,000 343,893 683,893 375,000 242,838 617,838 r,
2018 365,000 327,573 692,573 385,000 227,838 612,838
2019 390,000 309,688 699,688 390,000 212,438 602,438
2020 420,000 290,188 710,188 395,000 196,350 591,350
2021 1,730,000 269,188 1,999,188 395,000 179,563 574,563 1'°',
2022 1,825,000 182,688 2,007,688 410,000 162,775 572,775
2023 1,925,000 91,438 2,016,438 420,000 145,350 565,350
2024 1,500,000 127,500 1,627,500
2025 1,500,000 63,750 1,563,750 7
$ 9,500,000 $ 6,018,090 $ 15,518,090 $ 8,835,000 $ 4,814,204 $ 13,649,204
7
98
1
7
L
E
L ,
17 Water and Sewer System Revenue and Refunding Bonds,Series
2006 Certificates of Obligation,1998
L
Fiscal Year '
Ending Principal Interest Total Principal Interest Total
7 2007 $ -- $ 657,656 $ 657,656 $ 915,000 $ 521,073 $ 1,436,073
2008 657,656 657,656 945,000 492,006 1,437,006
2009 550,000 657,656 1,207,656 980,000 461,198 1,441,198
7 2010 570,000 635,656 1,205,656 1,015,000 428,271 1,443,271
2011 600,000 611,431 1,211,431 1,050,000 393,158 1,443,158
2012 625,000 585,931 1,210,931 1,090,000 355,698 1,445,698
2013 650,000 559,369 1,209,369 1,125,000 316,100 1,441,100
Eli 2014 680,000 530,119 1,210,119 1,170,000 274,498 1,444,498
2015 710,000 499,519 1,209,519 1,210,000 230,760 1,440,760
2016 745,000 467,569 1,212,569 1,250,000 184,938 1,434,938
2017 100,000 434,044 534,044 2,090,000 121,790 2,211,790
i 2018 100,000 429,744 529,744 2,160,000 41,040 2,201,040
L' 2019 100,000 425,369 525,369
2020 100,000 420,869 , 520,869
rill
2021 100,000 416,244 516,244
L ' 2022 100,000 411,619 511,619
- 2023 100,000 406,994 506,994
2024 100,000 402,369 502,369
2025 100,000 397,744 497,744
L' 2026 1,150,000 393,119 1,543,119
2027 1,205,000 338,494 1,543,494
-
2028 1,265,000 278,244 1,543,244
2029 1,330,000 214,994 1,544,994
n 2030 1,395,000 146,831 1,541,831
2031 1,470,000 75,338 1,545,338
$ 13,845,000 $ 11,054,575 $.24,899,575 $ 15,000,000 $ 3,820,528 $ 18,820,528
L'
Eli .
L
7 •
7
7
LH
7 99
•
1
7
PEARLAND ECONCOMIC DEVELOPMENT CORPORATION
COMBINING SCHEDULE OF REVENUE BONDS PAYABLE
BY MATURITY DATE •
September 30,2006
i
Ti
Sales Tax Revenue Bonds,Series 2005 Sales Tax Revenue Bonds,Series 2006
ri
Fiscal Year
Ending Principal Interest Total Principal Interest Total
2007 350,000 412,275 $ 762,275 50,000 591,287 641,287
2008 360,000 402,650 762,650 165,000 485,719 650,719
2009 375,000 391,850 766,850 170,000 478,294 648,294
2010 385,000 380,600 765,600 180,000 471,069 651,069
2011 400,000 368,088 768,088 185,000 463,419 648,419 7
2012 410,000 355,088 765,088 • 200,000 454,169 654,169
2013 425,000 340,738 765,738 210,000 444,169 654,169
2014 445,000 323,738 768,738 215,000 433,669 648,669
2015 460,000 305,938 765,938 230,000 422,919 652,919 7
2016 480,000 287,538 767,538 240,000 411,419 651,419 i
2017 505,000 263,538 768,538 255,000 401,219 656,219
2018 530,000 238,288 768,288 265,000 390,381 655,381
2019 555,000 211,788 766,788 280,000 378,788 658,788
2020 575,000 189,588 764,588 300,000 366,538 666,538.
2021 600,000 166,588 766,588 310,000 353,038 663,038
2022 625,000 141,988 766,988 325,000 339,088 664,088 7
2023 650,000 116,363 766,363 345,000 322,838 667,838
2024 675,000 89,550 764,550 365,000 305,588 670,588 J
2025 705,000 61,200 766,200 385,000 287,338 672,338
2026 735,000 31,238 766,238 405,000 268,088 673,088 n
- 2027 l 1,190,000 247,838 1,437,838 1
2028 1,255,000 188,338 1,443,338
2029 1,320,000 128,725 1,448,725
2030 1,390,000 66,025 1,456,025 ■-1
$ 10,245,000 $ 5,078,625 $ 15,323,625 $ 10,235,000 $ 8,699,956 $ 18,934,956
7
•
"t
J
I
100 j
1
r •
L
7 DEVELOPMENT AUTHORITY OF PEARLAND
COMBINING SCHEDULE OF REVENUE BONDS PAYABLE
BY MATURITY DATE
'September 30,2006
7
Tax Increment Revenue Bonds,Series 2006 Tax Increment Revenue Bonds,Series 2005
rill Fiscal Year
Ending Principal Interest Total Principal Interest Total
`' 2007 715,000 395,898 1,110,898 . 840,000 642,370 1,482,370
2008 275,000 370,873 645,873 360,000 614,020 974,020
P. 2009 270,000 360,904 630,904 375,000 601,060 976,060
I2010 - 280,000 350,779 630,779 390,000 586,435 976,435
2011 290,000 339,929 629,929 405,000 570,348 975,348
2012 300,000 328,329 628,329 425,000 552,933 977,933
2013 315,000 315,954 630,954 440,000 534,020 974,020
L ' 2014 330,000 302,566 632,566 460,000 513,780 973,780
2015 340,000 288,129 628,129 • 485,000 492,160 977,160
ri. 2016 360,000 272,829 632,829 505,000 469,365 • 974,365
2017 375,000 257,529 632,529 530,000 445,125 975,125
2018 390,000 241,216 631,216 555,000 418,625 973,625
2019 390,000 223,666 613,666 585,000 390,875 975,875
2020 410,000 206,116 616,116 615,000 361,625 976,625
L. 2021 425,000 187,256 612,256 645,000 330,875 975,875
2022 450,000 168,131 618,131 675,000 298,625 973,625
2023 470,000 147,319 617,319 710,000 264,031 974,031
7
2024 485,000 125,581 610,581 750,000 227,644 977,644
2025 510,000 103,150 • 613,150 790,000 ' • 186,806 . 976,806
2026 530,000 '79,563 609,563 835,000 143,788 978,788
2027 560,000 54,388 614,388 880,000 98,313 978,313
7 2028 585,000 27,788 612,788 925,000 50,388 975,388
$ 9,055,000 $ 5,147,893 $ 14,202,893 $ 13,180,000 $ 8,793,211 $ 21,973,211
E
L
7
7 •
. .
f .
L_1 . .
. .
7
7 . .
101
L
r
7
1.7
•
(this page intentionally left blank)
p-
102