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Exhibit "A"
Resolution No. R2008-027
Bill Eisen
City Manager
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
Fiscal Year Ended
September 30, 2007
Officials Issuing Report
Nick Finan and
Mickiel Hodge
Assistant City
Managers
Claire Manthei
Director of Finance
Rick Overgaard
Assistant Director of
Finance
FILE COPY
CITY SECRETARY'S OFFICE
DO NOT REMOVE
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
Paue
INTRODUCTORY SECTION
Letter of Transmittal
Principal Officials ix
Organization Chart xi
GFOA Certificate of Achievement xii
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 Net
Assets 21
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds 22
Reconciliation of the Statement of Revenues Expenditures, and Changes in Fund
Balance of Governmental Funds to the Statement of Activities 23
Statement of Net Assets — Proprietary Funds 24
Statement of Revenues, Expenses and Changes in Fund Net Assets — Proprietary
Funds 25
Statement of Cash Flows — Proprietary Funds 26
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 Balances Budget and Actual 65
Notes To Required Supplementary Budget Information 66
Required Pension System Supplementary Information 67
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS '
FINANCIAL SECTION (continued)
Other Supplementary Information
Combining and Individual Fund Statements and Schedules
Combining Balance Sheet - Nonmajor Governmental Funds 72
Combining Statement of Revenues, Expenditures and Changes in Fund Balances —
Npnmajor Governmental Funds 74
Schedules of Revenues, Expenditures, and Changes in Fund Balance — Budget and
Actu,l:
Debt Service Fund 76
Hotel Motel Tax Fund 77
Court Security Fund 78
City Wide Donations Fund 79
Court Technology Fund 80
Regional Detention Fund 81
Park Donations Fund 82
Pohce Seizure Fund 83
Paiks and Recreation Development Fund 84
Sidewalk Fund 85
Grant Fund 86
Street Assessments Fund 87
Discretely Presented Component Unit Fund Based Financial Statements
Balance Sheets — Governmental Funds 90
Schedules of Revenues, Expenditures and Changes in Fund Balance Governmental Funds 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
Development Corporation 100
Combining Schedule of Revenue Bonds Payable of Development Authority of
Pearland 101
CITY OF PEARLAND, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
UNAUDITED STATISTICAL SECTION
Net Assets by Component 1 105
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
Direct and Overlapping Property Tax Rates 114
Property Tax Levies and Collections 116
Principal Property Taxpayers 117
Taxable Sales by Category 118
Outstanding Debt by Type 120
Ratios of General Bonded Debt to Assessed Value and Net Bonded Debt per Capita 122
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)
February 5, 2008
To the Honorable Mayor, Members
Of City Council, and Citizens of the
City of Pearland, Texas
The Comprehensive Annual Financial Report (CAFR) of the City of Pearland, Texas (the "City") for the
fiscal year ended September 30, 2007, is hereby submitted as mandated by both local and state statutes.
These ordinances and statutes require that the City issue an annual report on its financial position and
activity, and that an independent firm of certified public accountants audit this report.
Management assumes full responsibility for the completeness and reliability of the information contained
in this report, based upon a comprehensive framework of internal control that it has established for this
purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to
provide reasonable, rather than absolute, assurance that the financial statements are free of any material
misstatements.
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, 2007. 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 84,500
residents estimated as of June 2007
1
To the Honorable Mayor, Members
Of City Council, and Citizens of the
City of Pearland, Texas
Page 2
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 teims 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 In addition the City provides planning for future land use, traffic control
building, code, and health inspections, and plans for new infrastructure and rehabilitation of infrastructure
to meet the needs of the citizens today as well as tomorrow.
Activities of the general, debt service, water and sewer, solid waste, capital project funds, and special
revenue funds such as hotel/motel tax are included in the City's annual appropriated budget. Capital
project funds are budgeted for project length. The legal level of control for each budget is at the fund
level which is to say that total expenditures for each fund should not exceed total budgeted expenditures
for that fund. The City Manager is authorized to transfer budgeted amounts within and among
departments. The City Council must approve any budget amendment that increases appropriations by
fund. The City amends the budget at the end of each fiscal year to reflect current year projections for
revenues and expenditures/expenses.
As an independent political subdivision of the State of Texas, the City is considered a primary
government. Pursuant to standards established by the Governmental Accounting Standards Board
(GASB), the City also reports for all funds for which the City, as the primary government, is financially
accountable. As such, this report includes financial activities of three component units as follows: The
Pearland Economic Development Corporation was created by the City in 1995 under the Texas
Development Corporation Act of 1979 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.
ECONOMIC CONDITIONS
Local Economy
Located minutes away from Downtown Houston, Texas, the nation's second largest seaport, the world-
renowned Texas Medical Center and NASA -Johnson Space Center, Pearland is 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.
ii
To the Honorable Mayor, Members
Of City Council, and Citizens of the
City of Pearland, Texas '
Page 3
The total construction value of all building permits issued during calendar year 2007 totaled over $650
million. New single-family housing permits totaled 1,589 with a construction value of $310 million.
The number of permits declined by 483 from 2006; however Pearland continues to grow at a respectable
pace, faring better than the rest of the nation. While the bubble has burst in other states, Houston has
become the largest housing market in the United States, according to the U.S. Census Bureau.
Residential permitting activity is anticipated to remain around 1,600-2,000 permits a year for a few more
years as the development of a 3,300 acre master planned community, Shadow Creek Ranch, continues as
well as smaller residential developments throughout the City. 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
parks, 300 acres of recreational lakes 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 2007, the City had 77 commercial permits with a value
of $264 million, up from 66 permits with a value of $173 million in 2006.
A proposed Water Lights Development is in the planning stages. The Water Lights Development is on a
57 7 acre site, located on the west side of State Highway 288. It is a $700 million -plus; 1 9 million square
foot next generation planned mixed -use lifestyle development. Plans for the conceptual development will
include residential condos, brownstones, luxury, apartments, office buildings, retail boutiques, a fresh
market, restaurants, two luxury hotels, a conference facility, a water wall and a grand -canal waterway.
The conceptual master plan for the Development includes 390,000 square feet of office, 93,000 square
feet of retail, and 125,000 square feet of restaurants, 500 room keys and 1,340 residential units. The
master plan will focus on extensive waterfront which will cater to all types of recreational commercial,
entertainment, tourism, and residential needs in a pedestrian oriented, urban environment that will be seen
as the area's next major economic district.
Shadow Creek Ranch Town Center, which opened in 2007, will be a 600,000 square foot open-air
pedestrian regional shopping center The center, which features the Memorial Hermann complex, also
includes the largest HEB on the Gulf Coast Academy Sports, Hobby Lobby, Ashley Furniture and will
provide for other shopping and dining opportunities.
Pearland Town Center, a 800,000 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. The development also includes a Courtyard by Marriott Hotel
and residential lofts.
Construction will commence in early 2008 on an 80,000 square foot class "A" office building in Shadow
Creek Ranch. The land and development cost for the building is approximately $15 million. There is
space on the property to construct a second office building of 80,000 to 100,000 square feet The building
is expected to have approximately 350 workers.
The City currently has four hotels with a total capacity of 225 rooms running at a 78.5% occupancy rate.
In 2007, two more hotels were permitted. The Courtyard by Marriott with 110 rooms and Hilton Garden
Inn with 137 rooms. With the addition of these hotels, the City of Pearland will have a total of 472 rooms
available. The City attracts several events through -out the year, such as Battle of Bands softball,
basketball soccer and volleyball tournaments etc. which requires overnight stays. 1 hese additional
rooms will bring overnight stays to the City versus in adjoining Houston.
iii
To the Honorable Mayor, Members
Of City Council and Citizens of the
City of Pearland, Texas
Page 4
Sales tax continues to increase for Pearland as continued growth and development occur. Sales tax
receipts for fiscal year 2007 totaling $16 million was an increase of 10% over fiscal year 2006. For the
first two quarters of 2007, 61% 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 and as the above
retail developments open it is expected that sales tax will continue to increase by double digits.
The City's Economic Development Corporation has facilitated bringing in numerous development
projects. Major projects in fiscal year 2007 include Texas Honing, Picasso Health, Hale Mills, and The
National Realty Group representing $16 million in new capital investment. There will be 156,200 square
feet of new facilities created, 190 new jobs created, and 110 existing jobs will be retained.
Long -Term Financial Planning
The City adopts a one-year budget including a five-year capital improvement program (CIP). Even
though a one-year budget is adopted the budget implements strategies, both financial and operational to
meet existing challenges and to plan for the future.
The City's Five -Year CIP for fiscal year 2008 through fiscal year 2012 totals $265 million and
implements the $162 million bond program approved by the voters in May 2007. Projects include
Drainage ($34M), Streets ($97M), Facilities ($28M), Parks ($38M), Water ($33M), and Wastewater
($35M). All projects in the CIP have identified funding sources or potential funding sources Funding
for these projects comes from the issuance of debt through Certificates of Obligation, General Obligation
Bonds, and Revenue Bonds, as well as impact fees cash and contributions from the State, County, and
other sources.
The Debt Service Fund forecast shows a need to increase the Debt Service component of the tax rate by
twelve cents by tax year 2010 from the 2006 tax rate to implement the Five -Year CIP and to pursue the
extension of Cullen without state pass -through financing. This can be achieved through a reallocation of
the General Fund tax rate to the Debt Service Fund tax rate due to increasing sales tax revenues and
administrative fees from TIRZ #2, thereby minimizing any tax rate increase that may be necessary.
The Water/Wastewater Utility Fund shows a need for revenue increases over the next several years to
meet current and future obligations The City has contracted with HDR Engineering to conduct a rate
analysis and develop a rate model for the City. The rate analysis will be built around the fiscal year 2008
budget and Five -Year CIP and a rate structure will be recommended that will enable the City to achieve
the revenue increases needed. Increases are projected to be needed to support operations, annual debt
service, and funding for a $68 million five-year CIP, including acquiring an additional 10MGD in surface
water. With the implementation of rate increases and varying strategies, the City's utility system can
continue to be self-supporting and financially sound.
Relevant Financial Policies/Guidelines
Financial Policies guide the development and implementation of the budget and are a framework for
fiscal decision making and that ensure financial resources are available to meet the current and future
needs of the City.
iv
To the Honorable Mayor, Members
Of City Council, and Citizens of the
City of Pearland, Texas
Page 5
Some of the most relevant policies are:
• Recurring revenues fund recurring expenditures/expenses.
• Non -recurring funds fund non -recurring expenditures/expenses.
• General Fund Operating Reserves should be a minimum of two months of operations.
• Water and Wastewater Operating Reserves shall strive to be maintained at 25% of operations.
• Budget revenues on a conservative basis.
• Fund existing services at current service levels.
• Enterprise Funds must be self-supporting.
• Leveiage City dollars by seeking outside funding sources.
• Maintain stable property tax rates.
Major Initiatives
The City of Pearland continues to experience dramatic growth and new opportunities. The City :Council,
staff and community shame 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. Some of the major
initiatives are as follows:
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 six new police
officers each year to keep pace with growth. Community policing remains a focus, with crime prevention,
victim assistance, and youth intervention programs further reinforcing the City's small-town feel.
In 2005, the City 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 developed a plan to begin combined volunteem-paid personnel operations in October
2007. A Director of Fire Semvices was hired in 2007 to lead the Department and eighteen (18) full-time
personnel were hired in September 2007 to man fire stations during the day. Use of volunteers continue
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. The voter
approved bond referendum also included 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
The City and The University of Houston negotiated a joint partnership to bring higher education to
Pearland. The first building is targeted to open for junior, senior, and master classes mid to late 2009.
Neighboring Junior Colleges would feed into the education system. The 30 000 square foot facility will
be located at McHard Road and Pearland Parkway on approximately 40 acres of land. It is anticipated that
approximately 10,000 square feet of the facility will be for the use and benefit of the City and the
Pearland Economic Development Corpoiation as office space and a conference center. As the
University's need for space increase, these 10,000 square feet will be turned over to the University.
v
To the Honorable Mayor, Members
Of City Council and Citizens of the
City of Pearland, Texas
Page 6
Growth Management
Through Strategic Partnership Agreements (SPA's), 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. Through SPA's Brazoria County MUD #4 full purpose annexation
date is December 31, 2012 and Brazoria County MUD #6 full purpose annexation date is December 31,
2015. The City is currently working with Brazoria Counties MUD #2 and MUD #3 on SPA's and dates
for full purpose annexation. Population in the City's ETJ is currently estimated at 34,700.
Infrastructure Planning
With continued residential and commercial growth and to plan for the future, the need to build new
infrastructure and maintain existing infrastructure is a, priority and will be implemented through an
aggressive capital improvement program. The voters approved a $162 million bond package in May of
2007 The bonds authorized are: $84.2M for 'streets, $35.3M for drainage, $2.9M for a fire station,
$20.0M for a Recreation Center, $16.2M for a Natatorium, and $3.4M for a library.
The projects included in the bond ieferendum will be implemented over a 7-year time period.
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. Major
Park projects include a recreation and natatorium facility in partnership with the school district and
Pearland Economic Development Corporation. The facility will include a 50-meter indoor pool for
competitive swimming and an indoor recreation center Also included are a soccer complex,
improvements to Independence and Centennial Parks, phase I development of the Shadow Creek Ranch
Park, and a 7,000 square foot Nature Center. 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.
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 The
$84 million transportation bond program (passed in 2007) will construct major projects over the next
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. H-GAC has developed the
2008-2011 Transportation Improvement Program (TIP), which is the implementation plan for the
Regional Transportation Plan. This effort involves allocating about $150 million plus dollars for the
region. The City is also working with TXDOT to develop a viable corridor for a toll road that would run
adjacent to SH35 from Alvin to I-45, just south of downtown Houston. Various alignments have been
presented to City Council and a public meeting was held in March of 2007. TXDOT has finalized the
Major Investment Study and is working to bring a consultant on board to start the environmental
documents.
vi
To the Honorable Mayor, Members
Of City Council, and Citizens of the
City of Pearland, Texas '
Page 8
The project 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 is working to secure a temporary site and City staff
is exploring options for federal capital funds for the construction of a permanent facility The site would
be located along the Hwy. 288 corridor to provide a commuter service to the Texas Medical Center area
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.
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 36 million gallons per day (MGD) of surface water, which are approximately
two-thirds of the City's total water needs
Building upon major surface water purchases since 2003, the City has access to 6.1 MGD in surface
water. The City is also participating in the expansion of the City of Houston Southeast Water Purification
Plant that will provide the City an additional 10 million gallons 'per day. Construction for the expansion
is expected to begin in 2008. The City's share of the expansion totals $26.8 million and an additional $29
million is needed for distribution of the water. A number of years ago, the City entered into an agreement
with the Gulf Coast Water Authority (GCWA) that reserves I OMGD of surface water that can be
purchased from GCWA. In 2006 the City participated in the Gulf Coast Water Authority purchase of the
Chocolate Bayou Water Company. This participation will make an additional 10 million gallons per day
of water available to the City.
Pearland Regional Airport
The City of Pearland has declared its non -binding intent to purchase the .Pearland Regional Airport, a
reliever airport to Houston Hobby, which consists of 329 acres. The current owners of the Airport have
approached the City regarding purchase of the Airport as it is the owner's intent to sell the airport by the
end of calendar year 2008. Because the Anport has received more than $12 million in Federal Aviation
Administration grants to make improvements to the Airport, the airport must continue to operate as an
airport for 20 years from the date that last federal funds were received, which were in 2007. The City of
Pearland has determined that the purchase of the Airport by the City can provide the following benefits:
a) A public entity would be in control of the airport, which would be more responsive to concerns of the
residents b) The Airport is in a favorable financial position, so users of the Airport would be responsible
for bearing all costs associated with the Airport c) The assets of the Airport would include land needed
for the future extension of Pearland Parkway and; d) The Airport would be utilized as a tool for economic
development. The non -binding intent to purchase is contingent upon the Federal Aviation Administration
grant for acquisition of the Airport, among other requirements. The City has the opportunity to withdraw
from the transaction if certain contingencies are not met, or if any information comes to light that makes
the purchase of the airport undesirable.
viii
To the Honorable Mayor, Members
Of City Council, and Citizens of the
City of Pearland, Texas
Page 8
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, 2006. This was the 30th
consecutive year that the City has received this prestigious award.
In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable
and efficiently organized comprehensive annual financial report. This report must satisfy both generally
accepted principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement Program's
requirements, and we are submitting it to GFOA to determine its eligibility for another certificate.,
In addition, the City 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 Mayo' 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,,
Bill Eisen City Manager
P iek."Overgaai•d, Assistant Direetor.of Finance
00 n \eYtan*.�
•
Claire".Matithei, Director. ofFinance
viii
CITY OF PEARLAND, TEXAS
PRINCIPAL OFFICIALS
Elected Officials
Tom Reid
Woody Owens
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
Narciso Lira
Kola Olayiwola
Jon Branson
Jack Colbath
DeDe Williams
Lata Krishnarao
Trent Epperson
Position
Mayor
Council
Council
Council
Council
Council
Member
Member
Member
Member
Member
at Large
at Large
at Large
at Large
at Large
- Position One
- Position Two
- Position Three, Mayor Pro-Tem
- Position Four
- Position Five
Position
City Manager
City Attorney
Municipal Court Judge
Position
Assistant City Manager
Assistant City Manager
Director of Finance
Executive Director PEDC
Fire Marshall 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 Paiks and Recreation
Director of Fire Services
Head Librarian
Director of Planning
Projects Director
ix
Term
Expires
May
2008
2010
2009
2008
2009
2010
(This page intentionally left blank)
x
CITY OF PEARLAND, TEXAS
ORGANIZATION CHART
CITIZENS OF
PEARLAND
1
MAYOR AND
CITY COUNCIL
MUNICIPAL JUDGES
CITY ATTORNEY
ASSISTANT CITY
MANAGER
BOARDS &
COMMISSIONS
CITY MANAGER
PUBLIC WORKS
ENGINEERING
PROJECT
MANAGEMENT
PARKS & RECREATION
POLICE
FIRE
ASSISTANT CITY
MANAGER
COMMUNITY
DEVELOPMENT
MUNICIPAL COURT
ANIMAL CONTROL
PLANNING
PUBLIC AFFAIRS
FIRE MARSHAL
EMERGENCY
MGMT
EMERGENCY MEDICAL
CITY SECRETARY
HUMAN RESOURCES
FINANCE
INFORMATION
TECHNOLOGY
UTILITY BILLING
& COLLECTIONS
ACCOUNTING
BUDGET
PURCHASING
Certificate of
Achievement
for Excellence. •
in. Financial
Reporting.
Presented to
City of Pearland
Texas 1
For its Comprehensive. Annual
Financial Report
for the Fiscal Year Ended
September.30; 2606
A.Certiftcate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance .Officers
Association of ihe.United States and Canada to
government units and public employee retirement.
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
Standardsin government accounting
and financial reporting.
....c., c.Cox
President
Executive Director
xii
FINANCIAL SECTION
(This page intentionally left blank)
11 Greenway Plaza, Suite 1515
Houston TX 77046
(713)621-1515
Fax: (713) 621-1570
GAG
Null A Lairson
CERTIFIED PUBLIC ACCOUNTANTS
PROFESSIONAL CORPORATION;
2277 Plaza Drive, Suite 260
Sugar Land, Texas 77479
281.242.8600
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 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, 2007, 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 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, 2007, 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
The Management's Discussion and Analysis on pages 3 through 13, budgetary comparison inforration
and Required Pension System Supplementary Information on pages 65 through 67 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.
1
To the Honorable Mayor and Members of
the City Council
City of Pearland, Texas
Page 2
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.
Houston, Texas ,
February 4, 2008
2
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, 2007.
FINANCIAL HIGHLIGHTS ,
• The assets of the primary government of the City of Pearland exceeded its liabilities as of
September 30, 2007, by $575.1 million (net assets). Of this amount, $13.4 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 $14.6 million.
• At the close of the current fiscal year the City of Pearland's governmental funds reported
combined ending fund balances of $121.3 million, an increase of $49.0 million in comparison
with the priori year. Approximately $96.5 million of this, ending balance can be attributed to work
in progress for capital projects.
• As of September 30, 2007 the unreserved, undesignated fund balance for the General Fund was
$12.9 mill:on or 37% of total General Fund expenditures.
• The City of Pearland's General Obligation and Certificates of Obligation debt increased to $231.0
million, a net increase of $59 5 million, over the previous year The key factor was the sale of
$92.9 million in Permanent Improvement and Refunding Bonds, and Certificates of Obligation.
Defeased bonds totaled $36.5 million. '
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 or 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).
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, sewer, and solid waste.
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.
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 and Solid Waste
Fund.
4
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
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 24 of this report,
provide separate information for the Water and Sewer and I Solid Waste Enterprise Funds since it is
considered to be a major fund of the City.
The basic proprietary fund financial statements can be found on pages 24 through 27 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.
i
Notes to the Financial Statements — The notes provide, additional information that is essential to a full
understanding of'tlie 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 65
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 $575.1 million at the close of the most
recent fiscal year.
By far the largest portion of the City's net assets (92 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
W'NIPARATIVE SCHEDULE E OF NET ASSEIS
September 30, 2007 and 2006
Annrorts in (000's)
Golernmental Acthities
2007 2006
Business -type Activities
2007 2006
O rent and other assets $ 127,591 $ 79,129 $
Capital assets 535,206 520,673
Total Assets 662,797 599,802
Other liabilities 5,917 6,072
Long-term liabilities
outstanding 234,419 174,625
Total liabilities
Net assets:
Invested in capital assets,
nets of related debt
Restricted
Unrestricted
Total Net Assets
240,336 180,697
400,522 402,103
10,130 8,085
11,809 8,917
64,870 $
185,242
250,112
4,666
21,153
178,448
199,601
3,063
92,771 55,061
97,437 58,124
126,119
24,258
1,638
$ 422,461 $419,105 $
130,648
10,129
700
152,675 $
141,477
Thais
2007 2006
$ 192,461 $
720,448
912,909
10,583
327,190
337,773
527,301
34,388
13,447
$ 575,136
100,282
699,121
799,403
9,135
229,686
238,821
532,751
18,214
9,617
$ 569,582
An additional portion of the City's net assets (six percent) represent resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets (two percent) may be
used to meet the government's ongoing obligations to citizens and creditors.
6
COMPARATIVE SCHEDULE OF CHANGES IN NET ASSETS
For the Years Ended September 30, 2007 and 2006
Amounts in (000's)
Revenues
Program revenues:
Charges for services
Operating grants and
contributions
Capital grants and
contributions
Property taxes
Sales and use taxes
Franchise taxes
Investment earnings
Other
Governmental Activities
2007 2006
$ 9,623 $ 14,094
2,314 1,426
8,690
24,823
11,025
3,760
4,942
1,331
Total Revenues 66,508
Expenses
General government
Public safety
Public works
Community services
Parks and recreation
Interest on long-term debt
Water and sewer
Solid waste management
Total Expenses
Increase (decrease) in net
assets before transfers
Transfers
Increase in net assets
Net assets - beginning
Net assets - ending
8,452
14,655
24,041
3,112
4,882
9,070
64,212
2,296
1,060
3,356
419,105
$ 422,461
15,749
21,845
9,980
3,426
2,991
740
70,251
8,498
12,564
26,914
2,903
4,131
6,559
61,569
8,682
1,154
9,836
409,269
$419,105
Business -type Activities
2007 2006
$ 22,971
349
12,657
2,575
38,552
21,076
5,218
26,294
12,258
(1,060)
11,198
141,477
$ 152,675
Totals
2007
$ 13,849 $ 32,594
474 2,663
13,434 21,347
24,823
11,025
3,760
681 7,517
1,331
28,438 105,060
20,531
20,531
7,907
(1,154)
8,452
14,655
24,041
3,112
4,882
9,070
21,076
5,218
90,506
14,554
6,753 14,554
134,724 560,582
$ 141,477 $ 575,136
2006
$ 27,943
1,900
29,183
21,845
9,980
3,426
3,672
740
98,689
8,498
12,564
26,914
2,903
4,131
6,559
20,531
82,100
16,589
16,589
543,993
$ 560,582
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 change in net assets occurred with a net increase in restricted assets of $16.2 million
due to water and sewer impact fees that are restricted to the payment of capital projects funded by those
fees.
The remaining decrease in the government's net assets of approximately $1.6 million primarily occurred
in capital assets, net of related debt due to the defeasance of bonds.
Governmental activities - Governmental activities increased the City's net assets by $3.4 million,
thereby accounting for 23 percent of the total growth in the net assets of the City. Key elements of this
increase are as follows:
•
•
•
Significant changes in revenues can be seen in sales and use taxes. This category (primarily
sales and hotel occupancy taxes) increased due to the continued growth in retail establishments
within the City and the City becoming a regional shopping destination.
Transfer in from business -type activities of $1.1 million for discretionary contributions to the
governmental debt service and contraction activities accounted another portion of this increase.
Property Taxes also increased significantly due to an increase in taxable value of $832 million
from annexed property, new construction, and revaluation.
$30,000
$25,000
$20,000
c $15,000
•E $10,000
$ 5,000
$-
Expenses and Program Revenues - Governmental Activities
n
Expenses
tl Program Revenues
et �� 0 5 •\GQ'' e Sew
• cis( �' 66
o4Cie %0* asi .\ic hC ele
a\").9 AV) IS* # A AO
iNe. 19%
Cr Go ,4,`a� NJ
%
we
8
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Revenues by Source - Governmental Activities
Charges for
services
14%
Property taxes
37% Franchise taxes
6%
Grants and
contributions
17%
Sales and use taxes
17%
Business -type activities - Business -type activities increased the City's net assets by $11.2 million,
accounting for 77 percent of the total growth in the government's net assets. Key elements of this increase
are as follows.
• Charges for services, excluding Solid Waste, increased approximately $3.9 million over the
prior year primarily due to an increase in water and sewer rates effective October 1, 2006.
• Capital grants for infrastructure relating to water and sewer facilities (from impact fees and
annexed municipal utility district assets) amounted to $12.7 million for the year.
30,000 -
25,000
20,000
E 15,000 -
C
10,000
Expenses and Program Revenues - Business -type Activities
❑ Expenses
® Program Revenues
5,000
0 n
Water and sewer
9
Solid waste management
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
Revenues by Source - Business -type Activities
Charges for
services
59%
Grants and
contributions
34%
Increases in business activity expense for the year of approximately $5.8 million is due to setting solid waste
operations as an Enterprise Fund. Prior to 2007, solid waste operations were accounted for in the General Fund.
Transfers out to the governmental activities of $1.1 million offset the increase of net assets before transfers of
$12.3 million.
FINANCIAL ANALYSIS OF THE CITY'S FUNDS
As noted earlier, fund accounting is used to demonstrate and ensure compliance with finance -related legal
requirements.
Governmental Funds - The focus of the City's governmental funds is to provide information of near -term
inflows, outflows, and balances of spendable resources. Such information is useful in assessing the
City's financing requirements, in particular, 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 $121.3 million. Of this, $12.9 million is
unreserved and available for day-to-day operations of the City; $6.6 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 $49.0 million from the prior year. The increase in
fund balance includes a $3.0 million increase in fund balance of the general fund, an increase of $1.9 million
in the debt service fund balance, as well as, an increase in the capital projects fund of approximately $43.6
million due to the proceeds of recent bond issues.
With a current year increase of $3.0 million, the General Fund's fund balance totaled $13.6 million at year
end.
10
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
In the Capital Projects Fund, the City spent $28.3 million on various improvement projects. Additionally,
the City issued $31 8 million in Permanent Improvement Bonds and Certificates of Obligation and
received contributions from the General Fund and component units totaling $1.3 million leaving an
ending fund balance of $96.5 million.
Proprietary Funds - The City's business -type activities contain two activities (water and sewer, and solid
waste) The City's proprietary funds provide the same type of information found to the government -wide
financial statements.
GENERAL FUND BUDGETARY HIGHLIGHTS
During the year there was a $123,637 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, as well as amending the budget to reflect projections during the 2007-2008
budget process.
Budget estimates for revenues and other sources increased by $802,375 for the year as well to reflect the
mcieases in revenues as projected during the 2007-2008 budget process.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets - At the end of fiscal year 2007, the City's governmental activities and business -type
activities had invested $535.2 milhon and $185 2 million, respectively, in a variety of capital assets and
infrastructure as reflected in the following schedule. This represents a net increase of $6.8 million, or four
percent over the end of last fiscal year for the business -type activities capital assets and a change of $14.5
million or three percent for the governmental activities capital assets
Governmental Activities
Business -Type Activities Totals
2007 2006 2007 2006 2007 2006
Land $ 27,642 $ 25,834 $ 1,105 $ 1,044 $ 28,747 $ 26,879
Construction in progress 62,886 74,022 11,054 21,083 73,940 95,106
Infrastructure 429,513 405,938 170,526 153,940 600,039 559,879
Buildings and improvements 12,588 12,712 1,599 1,664 14,187 14,376
Machinery and equipment 2,577 2,166 958 717 3,535 2,883
Total Capital Assets $ 535,206 $ 520,673 $ 185,242 $ 178,448 $ 720,449 $ 699,121
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 $326.1 million Of this amount $164.8 million is
composed of general obligation bonds, $80.1 million is composed of certificates of obligation and $79.2
million represents revenue bonds secured solely by specified revenue sources.
General obligation bonds
Revenue bonds
Certificates of obligation
Capital leases payable
Compensated absences
Governmental Activities
2007
$ 164,810
66,220
1,538
3,193
$ 232,568
2006
$112,330
Business -Type Activities Totals
2007 2006
79,180
59,250 13,915
309
3,099 391
$ 171,889 $ 93,486 $ 55,589
2007
$ 164,810
40,170 79,180
15,000 80,135
1,538
419 3,584
2006
$ 112,330
40,170
74,250
309
3,518
$ 326,054 $
227,478
The City had multiple debt issuances during the year involving general obligation refunding bonds,
certificates of obligation, and revenue bonds. The riet effect,of these issuances and the debt retired during the
year was an increase in total debt of $98.6 million or 43.3 percent.
Current ratings on debt issues are as follows:
Moody's
Investors
Service
Standard and
Poors
General obligation bonds Al
Revenue bonds A2
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"
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.
12
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES
A primary factor in the 2008 budget is how the overall economy affects the City of Pearland's growth.
Pearland continues to be one of the fastest glowing cities in the Houston area. Developments, such as,
Shadow Creek Ranch, the Lakes at Highland Glen and Southern Trails have all contributed to this growth.
New single family housing starts however, have slowed from the record pace of the past three years, but
are still piojected to be 1,800 units in 2008. Commercial development is well underway with the opening
of a 136,000 square feet Bass Pro Shop in November 2007 and another 1.4 million square feet planned
within two retail centers. This continued growth creates the need to expand services and provide
infrastructure.
The Pearland City Council approved a $45.5 million General Fund budget for fiscal year 2007 — 2008.
This is a 14.6% increase over the 2006 — 2007 adopted budget. This increase includes 43 full-time
employees to provide for base services, keep up with growth and to serve the annexation of Brazoria
County MUD #1. The budget incorporates a tax rate of $0.6526 per $100 of valuation, which is
approximately the same as last year.
In the budgetary process, water and sewer revenues were anticipated to increase 4% 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
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14
BASIC FINANCIAL STATEMENTS
15
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16
CITY OF PEARLAND, TEXAS
STATEMENT OF NET ASSETS
September 30, 2007
ASSETS
Cash and equivalents
Investments
Receivables, net of allowance for
uncollectibles
Internal Balances
Inventones
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:
Capital projects
Debt service
Community development projects
Unrestricted
Total Net Assets
See Notes to Financial Statements.
Governmental
Activities
Primary Government
Business -type
Activities
$ 115,979,159 $
5,937,000
4,880,199
447,086
63,087
284,358
90,528,363
444,678,023
535,206,386
662,797,275
4,306,043
1,067,210
104,096
439,391
3,648,431
230,770,872
240,336,043
400,522,157
5,583,141
4,546,449
11,809,485 1,637,529
$ 422,461,232 $ 152,675,083
1,167,149
2 901,723
(447,086)
61,247,994
12,158,722
173,083,567
185,242,289
250,112,069
2,544,660
355,083
1,766,397
2,068,914
90,701,932
97,436,986
126,779,160
23,892,985
365,409
Total
$ 117,146,308
5,937,000
7,781,922
63,087
284,358
61,247,994
102,687,085
617,761,590
720,448,675
912,909,344
6,850,703
1,422,293
104,096
2,205,788
5,717,345
321,472,804
337,773,029
527,301,317
23,892,985
5,948,550
4,546,449
13,447,014
$ 575,136,315
Discretely
Presented
Component
Units
$ 14,273,438
975,641
10,000
, 817,359
16,076,438
39,700
181,759
1,515,000
46,533,201
48,269,660
706,183
(32,899,405)
$ (32,193,222)
17
CITY OF PEARLAND, TEXAS
STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2007
Functions/Programs
Primary Government
Governmental Activities
General government
Public safety
Public works
Community services 1
Parks and recreation
Interest on long-term debt
Total Governmental Activities
Business -type activities:
Water and sewer
Solid waste management
Total business -type activities
Total Primary Government
Component Units
Pearland Economic
Development Corporation
Tax Increment Reinvestment
Zone #2
Development Authority of
Pearland
Total Component Units
See Notes to Financial Statements.
Expenses
$ 8,452,391
14,655,464
24,041,105
3,1'11,668
4,881,587
9,070,348
64,212,563
21,075,895
5,217,693
26,293,588
$ 90,506,151
Program Revenue
Charges for
Services
2,788,241
194,637
5,822,261
818,307
9,623,446
17,753,958
5,217,520
22,971,478
$ 32,594,924
$ 14,796,366 $
1,830,405
13,073,405
Operating
Grants and
Contributions
Capital Grants
and
Contributions
1,658,931 $
153,931
456,000 8,689,910
34,392
10,862
2,314,116
348,983
348,983
$ 2,663,099
8,689,910
12,657,223
12,657,223
21,347,133
30,470 $
$ 29,700,176 $ $
30,470 $
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
$ (6,793,460)
(11,713,292)
(14,700,558)
2,744,985
(4,052,418)
(9,070,348)
(43,585,091)
(43,585,091)
24,822,513
11,024,660
3,760,186
4,942,902
1,331,348
1,060,065
46,941,674
3,356,583
419,104,649
$ 422,461,232
Business -type
Activities
9,684 269
(173)
9,684,096
9,684,096
2,574,133
(1,060,065)
1,514,068
11,198,164
141,476,919
$ 152,675,083
Total
$ (6,793,460)
(11,713,292)
(14,700,558)
2,744,985
(4,052,418)
(9,070,348)
(43,585,091)
9,684 269
(173)
9,684,096
(33,900,995)
24,822,513
11,024,660
3,760,186
7,517,035
1,331,348
48,455,742
14,554,747
560,581,568
$ 575,136,315
Component
Units
$.(14,765,896)
(1,830,405)
(13,073,405)
(29,669,706)
8,189,969
5,326,104
1,140,361
14,656,434
(15,013,272)
(17,179,950)
$ (32,193,222)
CITY OF PEARLAND, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2007
ASSETS
Cash and cash equivalents
Investments
Receivables, net of allowance
for uncollectibles
Due from other funds
Inventories
Prepaid items
Total Assets
General Fund
$ 10,951,097
989,500
Debt Service
$ 6,558,952
4,014,000 642,316
675,145
63,087
60,545
$ 16,753,374 $ 7,201,268
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Accrued expenditures
Deposits
Due to other funds
Deferred revenue
Total Liabilities
Fund balances:
Reserved for:
Inventories
Encumbrances
Prepaid items
Debt service
Unreserved, reported in
General fund
Special revenue funds
Capital projects funds
Total fund balances
Total Liabilities and Fund
Balances
Capital
Projects Fund
$ 93,913,386
4,947,500
112,488
$ 98,973,374
$ 980,355 $ 5,329 $ 2,431,569
691,009 98,354
439,391
1,006,428 545,588
3,117,183 649,271
63,087
580,833
60,545
12,931,726
13,636,191
6,551,997
6,551,997
$ 16,753,374 $
See Notes to Financial Statements.
7,201,268
2,431,569
96,541,805
96,541,805
$ 98,973,374
Other
Governmental
Funds
$ 4,448,335
111,395
13,754
$ 4,573,484
$ 3,557
18,000
5,478
27,035
4,546,449
4,546,449
$ 4,573,484
Total
Governmental
Funds
$115,871,770
5,937,000
4,880,199
675,145
63,087
74,299
$127,501,500
$ 3,420,810
789,363
439,391
18,000
1,557,494
6,225,058
63,087
580,833
60,545
6,551,997
12,931,726
4,546,449
96,541,805
121,276,442
$127,501,500
20
CITY OF PEARLAND, TEXAS
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE
STATEMENT OF NET ASSETS
September 30, 2007
Total fund balance, governmental funds $ 121,276,442
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 (property taxes receivable and adjudicated court fines
receivable) 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, 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
Compensated absences
Accrued interest governmental activity debt
Estibmated arbitrage rebate liability
The assets and liabilities of certain internal service funds are not included in the fund
financial statement, but are included in the governmental activities of the Statement of Net
Assets.
535,206,386
1,453,398
(231,226,034)
(3,193,269)
(968,856)
(194,224)
107,389
Net Assets of Governmental Activities in the Statement of Net Assets $ 422,461,232
See Notes to Financial Statements.
CITY OF PEARLAND, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND
GOVERNMENTAL FUNDS
For the Year Ended September 30, 2007
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
Proceeds from capital leases
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
$ 11,303,552
10,744,198
3,760,186
4,029,879
1,946,785
5,250,400
702,206
230,347
587,872
38,555,425
6,137,146
14,431,318
6,277,508
3,083,190
4,903,842
34,833,004
3,722,421
1,876,702
(2,560,301)
(683,599)
3,038,822
10,597,369
$ 13,636,191
Debt Service
$ 13,221,832
474,685
1,578,344
15,274,861
3,227,659
9,222,973
2,169,287
14,619,919
654,942
40,694,986
(40,694,986)
1,238,754
1,238,754
1,893,696
4,658,301
$ 6,551,997
22
Capital
Projects Fund
3,549,680
12,494,146
1,012,608
17,056,434
974,138
28,290,427
29,264,565
(12,208,131)
52,025,014
1,838,781
1,568,116
1,272,429
(910,885)
55,793,455
43,585,324
52,956,481
Other
Governmental
Funds
280,462
101,030
211,424
160,575
214,172
967,663
156,346
166,423
18,975
4,035
240,057
585,836
381,827
208,000
(64,634)
143,366
$ 96,541,805 $
525,193
4,021,256
4,546,449
Total
Governmental
Funds
$ 24,525,384
11,024,660
3,760,186
4,029,879
2,047,815
5,250,400
4,937,995
14,463,412
1,814,652
11,854,383
6,293,492
14,597,741
6,277,508
3,102,165
4,907,877
3,227,659
9,222,973
974,138
28,530,484
2,169,287
79,303,324
(7,448,941)
92,720,000
1,838,781
(40,694,986)
1,568,116
4,595,885
(3,535,820)
56,491,976
49,043,035
72,233,407
$121,276,442
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, 2007
Net change in fund balances - total governmental funds:
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 $30,184,669 exceeded depreciation $19,550,812 in the
current period.
Capital assets net of related debt acquired as a result of Municipal Utility District annexation
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.
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 -tern liabilities. This is the amount by which proceeds exceeded repayments.
Governmental funds report bond issuance costs as expenditures. In contrast, the government wide
financial statements amortized such a cost over the life of the bonds.
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
Amortization of bond issuance costs
Other long -tern liabilities
Internal service funds are used by management to charge the costs of certain activities, such as
fleet maintenance and information technology, to individual funds. The net revenue (expense) of
certain internal service funds is reported with governmental activities.
Change in net assets of governmental activities
See Notes to Financial Statements.
$ 49,043,035 '
10,633,857
(5,384,865)
34,656
(51,395,427)
974,139
(467,722)
5,745
(194,224)
107,389
$ 3,356,583
CITY OF PEARLAND, TEXAS
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
September 30, 2007
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowance for doubtful
accounts
Prepaid items
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
Due to other funds
Customer deposits
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
Unrestricted
Total Net Assets
See Notes to Financial Statements.
Business -type Activities - Enterprise Funds
Water and Sewer'
Fund
Solid Waste
Fund
1,167,149 $
2,005,491
56,595,241
4,652,753
64,420,634
1,105,202
11,053,520
223,677,462
2,418,830
2,258,188 ,
(55,270,913)
185,242,289
249,662,923
2,095,457
355,083
1,766,397
63,914
2,005,000
6,285,851
327,457
90,374,475
90,701,932
96,987,783
126,779,160
365,409
23,892,985
1,637,586
896,232
896,232
896,232
449,203
447,086
896,289
896,289
(57)
$ 152,675,140 $
24
(57)
Total
$ 1,167,149
2,901,723
56,595,241
4,652,753
65,316,866
1,105,202
11,053,520
223,677,462
2,418,830
2,258,188
(55,270,913)
185,242,289
250,559,155
2,544,660
355,083
447,086
1,766,397
63,914
2,005,000
7,182,140
327,457
90,374,475
90,701,932
97,884,072
126,779,160
365,409
23,892,985
1,637,529
$ 152,675,083
Governmental
Activities -
Internal
Service Fund
$ 107,848
210,059
317,907
317,907
459
210,059
210,518
210,518
107,389
$ 107,389
CITY OF PEARLAND, TEXAS
STATEMENT OF REVENUES, EXPENSES AND
PROPRIETARY FUNDS
For the Year Ended September 30, 2007
CHANGES IN FUND NET ASSETS
Business -type Activities - Enterprise Funds
Water and Sewer Solid Waste
Fund Fund Total
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
Gain (loss) on disposal of capital assets
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.
Governmental
Activities -
Internal
Service Fund
17,753,958 $ 5,217,520 $ 22,971,478 $ 834,852
3,314,108
4,101,747
3,164,192
1,270,334
301,055
5,491,328
17,642,764
1111,194
2,574,017.
348,983
(2,407)
(3,430,723)
(510,130)
(398,936)
12,657,223
164,500
(1,224,566)
11,198,221
141,476,919
3,314,108
4,101,747
5,217,693 8,381,885
1,270,334
301,055
5,491,328
5,217,693
(173)
22,860,457
111,021
116 2,574,133
348,983
(2,407)
(3,430,723)
116 (510,014)
(57) (398,993)
12,657,223
164,500
(1,224,566)
(57) 11,198,164
141,476,919
$ 152,675,140 $ (57) $152,675,083
732,370
732,370
102,482
4,907
4,907
107,389
107,389
$ 107,389
25
CITY OF PEARLAND, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended September 30, 2007
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
Business -type Activities - Enterprise Funds
Water and Sewer
Fund Solid Waste Fund Total
17,791,299
(3,341,380)
(8,085,227)
6,364,692
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
164,500
(1,224,566)
348,983
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
Net cash provided by (used by) investing activities
(711,083)
7,439,629
40,065,686
(2,210,000)
51,397
(7,070,228)
38,276,484
(3,032,292)
2,574,017
(3,433,454)
(3,891,729)
Net increase in cash and equivalents
Cash and equivalents, beginning of year
Cash and equivalents, at end of year $
Governmental
Activities -
internal
Service Fund
$ 4,321,288 $22,112,587 $
(3,341,380)
(4,768,490) (12,853,717)
(447,202) 5,917,490
447,086 611,586
(1,224,566)
348,983
447,086 (263,997)
7,439,629
40,065,686
(2,210,000)
51,397
(7,070,228)
38,276,484
(3,032,292)
116 2,574,133
(3,433,454)
116 (3,891,613)
40,038,364
17,724,026
57,762,390 $
Unrestricted cash and equivalents $
Restricted cash and equivalents
See Notes to Financial Statements.
1,167,149 $
56,595,241
57,762,390 $
40,038,364
17,724,026
$ 57,762,390
$ 1,167,149
56,595,241
$ 57,762,390
834,852
(941,970)
(107,118)
210,059
210,059
4,907
4,907
107,848
$ 107,848
$ 107,848
$ 107,848
26
Business -type Activities - Enterprise Funds
Water and Sewer
Fund Solid Waste Fund Total
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 inventory
(Increase) decrease in prepaid expenses
Increase (decrease) in accounts payable
Increase (decrease) in salaries payable
Increase (decrease) in customer deposits
Increase (decrease) in unearned revenue
Net cash provided by operating activities $
111,194 $
5,491,328
(196,874)
752,101
(27,272)
255,017
(20,802)
6,364,692
Summary of non -cash transactions
Value of annexed utility district infrastructure contributed
to Water and Sewer Fund $
(173) $ 111,021
5,491,328
(896,232) (1,093,106)
449,203 1,201,304
(27,272)
Governmental
Activities -
internal
Service Funds
$ 102,482
(210,059)
459
(20,802)
$ (447,202) $ 5,917,490 $ (107,118)
5,217,594 $
$ 5,217,594
27
CITY OF PEARLAND, TEXAS
DISCRETELY PRESENTED COMPONENT UNITS- GOVERNMENTAL ACTIVITIES
COMBINING STA TEM/3WT OF NET ASSETS
September 30, 2007
ASSETS
Cash and equivalents
Receivables -less allowance for
uncollectibles
Prepaid items
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
NET ASSETS
Restricted -debt service
Unrestricted
Pearland
Economic
Development
Corporation,
Tax Increment
Reinvestment
Zone #2
8,370,959 $ 5,841,804
975,641
10,000
9,356,600
9,288
70,583
525,000
19,259,724
19,864,595
(10,507,995)
Total Net Assets $
See Notes to Financial Statements.
5;841,804
20,879
20,879
Development
Authority of
Pearland
Total Component
Units
60,675 $ 14,273,438
817,359
878,034
9,533
111,176
990,000
27,273,477
28,384,186
975,641
10,000
817,359
16,076,438
39,700
181,759
1,515,000
46,533,201
48,269,660
706,183 706,183
5,820,925 (28,212,335) (32,899,405)
(10,507,995) $
5,820,925 $ (27,506,152) $ (32,193,222)
CITY OF PEARLAND, TEXAS
DISCRETELY PRESENTED COMPONENT UNITS- GOVERNMENTAL ACTIVITIES
COMBINING STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2007
Functions/Programs
Component Unit
Pearland Economic
Program
Revenues
Operating
Grants and
Expenses Contributions
Development Corporation $ 14,796,366
Tax Increment
Reinvestment Zone #2 1,830,405
Development Authority of
Pearland 13,073,405
$ 29,700,176
$ 30,470
$ 30,470
General revenues:
Taxes:
Property taxes
Sales and use tax
Unrestricted investment earnings
Transfers between component units
Total general revenues
Change in net assets
Net assets, beginning
Net assets, ending
See Notes to Financial Statements.
Net (Expense) and Changes in Net Assets
Pearland
Economic
Development
Corporation
Tax Increment
Reinvestment
Zone #2
Development
Authority of
Pearland
Totals
$ (14,765,896)
(1,830,405)
$ (14,765,896)
(1,830,405)
(13,073,405)i (13,073,405)
$ (14,765,896) $ (1,830,405) $ (13,073,405) $ (29,669,706)
5,326,104
802,413
6,128,517
(8,637,379)
(1,870,616)
$ (10,507,995)
$ 8,189,969 $
242,416
(3,856,344)
4,576,041
2,745,636
3,075,289
$ 5,820,925
95,532
3,856,344
3,951,876
(9,121,529)
(18,384,623)
$ (27,506,152)
$ 8,189,969
5,326,104
1,140,361
14,656,434
(15,013,272)
(17,179,950)
$ (32,193,222)
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
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 governihent. 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 area 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 are 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
Year Ended September 30, 2007
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
sales tdx 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
appiove the PEDC's budget and any debt issuances. ,
Tax Increment Reinvestment Zone (TIRZ #2)
In 1998, the Tax Increment Reinvestineiit 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 Development Authority.
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 1 evenues. 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) giants 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
Year Ended September 30, 2007
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
i 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 govermnental 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 pioperty 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
Year Ended September 30, 2007
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 as well as solid waste collection services to the public. The services are
financed and operated in a manner similar to private business enterprises where the intent of
the governing body is that the costs (expenses including depreciation) of providing goods or
services to the general public on a continuing basis will be financed or recovered primarily
through user charges.
Additionally the city maintains an Internal Service Fund used to account for the
financing of goods or services provided by one department or agency to other
departments or agencies of the City on a cost -reimbursement basis. Services provided by
the Internal Service Funds include property and liability insurance coverage and
employee health benefits. The Internal Service Fund is included in governmental
activities for government -wide reporting purposes.
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 Govermnents 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 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.
33
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(continued)
Amounts reported as program revenues include: 1) charges to customers or applicants for goods,
services, or privileges provided 2) operating grants and contributions, and 3) capital grants and
contributions including special assessments. Internally dedicated resources are reported as general
revenues rather than as program revenue. Likewise, general revenue includes all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods
in connection, with a proprietary fund's principal ongoing operations. The principal operating
revenues, of the City's Enterprise 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 cunent 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.
34
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
G. Receivables
All receivables are i eported 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.
H. Due to and Due from Other Funds
Interfund receivables and payables arise from interfund transactions andare 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 Water and Sewer Enterprise Fund revenue bonds and certain resources set
aside for their repayment are classified as restricted assets on the balance sheet because their use is
limited by applicable bond covenants. Certain resources are also set aside for repayment of
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
$5,000 and an estimated useful life of three years or more Such assets are recorded at historical
cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at
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.
Property, plant, and equipment are depreciated using the straight-line method over the following
useful lives:
Asset Description
Buildings and improvements
Machinery and equipment
Infrastructure
Estimated
Useful Life
10-45
3-15
10-50
35
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 required to work on a City observed
holiday may be paid or may elect to receive compensatory time off for the holiday. Overtime is
earned at one and one-half times the regular rate of pay. 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 not to
exceed 720 hours. 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 dui ing the reporting period. Actual results
could differ fiom those estimates.
36
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 2 — DEP Y SITS (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 an 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 acciued 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
Year Ended September 30, 2007
NOTE 2 — DEPOSITS (CASH) AND INVESTMENTS (continued)
The following schedule shows the City's recorded cash and investments at year-end:
Total Fair Value
Cash deposits
Temporary Investments
FHLMC discount note
Primary Component
Government Units
$175,425,802 $ 15,090,797
8,905,500
$ 184,331,302 $ 15,090,797
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 $ 8,522,932
unrealized gain (loss) on temporary investments 129,557
Investment earnings $ 8,652,489.
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:
Weighted
Total Fair Average
Value Maturity (days)
Temporary Investments
FHLMC discount note $ 8,905,500 85
$ 8,905,500
Portfolio weighted average maturity 85
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 547.5 days or
18 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
Year Ended September 30, 2007
NOTE 2 — DEPOSITS (CASH) AND INVESTMENTS (continued)
Concentration of Credit Risk
With the exception of U.S. Treasury Securities and interest bearing checking accounts that are
fully collateralized, no more than 75 percent of the City's total investment portfolio will be
invested in a single security type. As of September 30, 2007 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 Percentage of
Value Total Portfolio
FHLMC discount note $ 8,905,500 100%
Total $ 8,905,500
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
emeigency 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 and operating reserves
Capital improvements
Total
39
Primary
Government
Component
Units
$ 720,492 $ 817,359
1,765,647
58,761,855
$ 61,247,994 $ 817,359
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 3 - RECEIVABLES
Receivables at September 30, 2007 consist of the following:
Primary Government:
Governmental Funds:
Other Non Major
Capital Projects Governmental
General Fund Debt Service Fund Fund Funds
Total
Receivable$
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
Allowance for
uncollectibles
Component Units:
691 /996 $
2,638,826
338,031
30,141
328,846
655,425 $
(13,840) (13,109)
112,488
$ 4,014,000 $ 642,316 $ 112,488 $
$ 1,347,421
2,638,826
338,031
1,117 31,258
110,278 551,612
(26,949)
111,395 $ 4,880,199
Water and
Sewer Fund Solid Waste Fund
Total
$ 2,605,857 $
2,806
15,660
(618,832)
896,232 $ 3,502,089
2,806
15,660
(618,832)
$ 2,005,491 $
896,232 $ 2,901,723
Receivables
Sales and other taxes
Interest
Total
40
Pearland
Economic
Development.
Corporation
$ 967,390
8,251
$ 975,641
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
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 $ 582,340 $
Delinquent property taxes receivable - debt service fund 545,588
Municipal fines and forfeitures 325,470
Grants and revenues prior to meeting all eligibility requirements 104,096
Total Deferred Revenue for Governmental Funds $ 1,453,398 $ 104,096
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 an41 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
Year Ended September 30, 2007
NOTE 4 - CAPITAL ASSETS
A summary of changes in the primary goverment's capital assets for the year ended September 30, 2007,
follows:
Primary Government
Balance
September 30,
2006
Reclassification/
Increases (Decreases)
Balance
September 30,
2007
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
Total other capital assets
Less accumulated depreciation for:
Infrastructure
Buildings and improvements
Machinery and equipment
Total accumulated depreciation
Other capital assets, net
Totals
$ 25,834,203 $
74,022,240
99,856,443
1,808,001 $
27,394,509
29,202,510
(38,530,590)
(38,530,590)
27,642,204
62,886,159
90,528,363
518,264,465
20,823,319
7,364,198
546,451,982
3,285,298
637,554
1,858,183
5,781,035
38,530,590
(328,002)
38,202,588
560,080,353
21,460,873
8,894,379
590,435,605
(112,326,077)
(8,111,426)
(5,197,719)
(125,635,222)
420,816,760
$ 520,673,203 $
(18,240,883)
(761,408)
(1,442,733)
(20,445,024)
(14,663,989)
14,538,521
322,664
322,664
38,525,252
$ (5,338) $
(130,566,960)
(8,872,834)
(6,317,788)
(145,757,582)
444,678,023
535,206,386
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 for:
Water and sewer system
Buildings and improvements
Machinery and equipment
Total accumulated depreciation
Other capital assets, net
Totals
Balance
September 30,
2006
Increases
Balance
Reclassification/ September 30,
(Decreases) 2007
$ 1,044,339 $
21,083,429
22,127,768
60,863 $
6,315,737
6,376,600
(16,345,646)
(16,345,646)
1,105,202
11,053,520
12,158,722
199,483,466
2,398,799
1,833,846
203,716,111
(45,543,352)
(735,021)
(1,117,305)
(47,395,678)
156,320,433
$ 178,448,201 $
7,848,350
20,031
511,966
8,380,347
(7,608,276)
(84,508)
(267,668)
(7,960,452)
419,895
6,796,495 $
16,345,646
(87,624)
16,258,022
85,217
85,217
16,343,239
(2,407) $
223,677,462
2,418,830
2,258,188
228,354,480
(53,151,628)
(819,529)
(1,299,756)
(55,270,913)
173,083,567
185,242,289
42
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 4 - CAPITAL ASSETS (continued)
Depreciation was charged to programs as follows:
General government
Public safety
Public works
Community services
Parks and recreation
Total Governmental Activity
$ 220,999
1,063,974
17,619,886
92,270
553,680
$ 19,550,809
Water and sewer $ 5,491,328
Total Business -Type Activity $ 5,491,328
•
The City has active construction projects as of September 30, 2007. 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
43
Total In
Progress
$ 16,051,901
2,765,935
44,068,322
11,053,521
$ 73,939,679
Remaining
Commitment
$ 7,539,965
17,767,065
75,829,661
65,068,155
$ 166,204,846
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
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, 2007 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
Deferred amount for issuance premium
Less: deferred amounts on refunding
Less: bond issuance costs
Total bonds payable
Obligations under capital leases
Compensated absences
Total Governmental Activities
Balance
September 30,
2006
Additions
(Reductions)
Balance
September 30,
2007
Amounts Due
Within One
Year
$ 112,330,000
59,250,000
1,488,964
(854,558)
(997,048)
171,217,358
$ 79,175,000
23,250,000
1,782,360
(2,137,354)
(1,166,747)
100,903,259
$ (26,695,000) $
(16,280,000)
(176,064)
55,336
663,572
(42,432,156)
164,810,000 $
66,220,000
3,095,260
(2,936,576)
(1,500,223)
229,688,461
2,660,000
240,000
2,900,000
308,942
3,099,142
$ 174,625,442
1,568,116
1,754,200
$ 104,225,575
(339,485)
(1,660,073)
$ (44,431,714) $
1,537,573
3,193,269
234,419,303 $
350,368
398,063
3,648,431
Long -tern 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 govermnental funds.
Interest on long-term debt is not accrued in governmental funds, but rathei 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.
44
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 5 - LONG-TERM DEBT (continued)
A summary of the terms of general obligation bonds and certificates of obligation, as of September 30, 2007,
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,
Permanent Improvement and Refunding Bonds,
Permanent Improvement and Refunding Bonds,
Annexed Municipal Utility District Bonds
BC MUD 1 Series 1998
BC MUD 1 Series 2001
BC MUD 1 Series 2007
Total General Obligation Bonds
Certificates of Obligation
Certificates of Obligation, Series 2001
Certificates of Obligation, Series 2003
Certificates of Obligation, Series 2004
Certificates of Obligation, Series 2006
Certificates of Obligation Series 2007
Total Certificates of Obligation
Prior Year Refunding
Series 2000
Series 2002
Series 2003
Series 2005
Series 2006
Series 2007
1,900,000
10,830,000
25,000,000
15,000,000
37,015,000
32,165,000
69,640,000
2,700,000
4,940,000
1,940,000
11,650,000
25,000,000
21,000,000
9,700,000
23,250,000
2010
2009
2027
2028
2029
2029
2032
2018
2018,
2030
2022
2023
2028
2029
2032
3.90
4.80-4.90
5.10-5.08
4.00-6.00
3.25-5.00
4.00-5.00
4.00-5.00
4.50-6.50
4.00-5.00
3.75-4.35
5.00-6.00
3.00-4.50
4.00-5.25
3.65-4.68
3.25-5.25
$ 685,000
3,865,000
3,005,000
13,695,000
37,015,000
321115,000
69,640,000
90,000
2,760,000
1,940,000
$ 164,810,000
$ 1,250,000
17,990,000
14,030,000
9,700,000
23,250,000
$ 66,220,000
In prior years, the City defeased certain general obligation and other bonds by placing the proceeds of the
new bonds in an irrevocable trust to provide for all future debt service payments on the refunded bonds.
Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's
financial statements. At September 30, 2007 approximately $37.6 million of previously refunded bonds
outstanding were considered defeased.
45
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 5 - LONG-TERM DEBT (continued)
Current Year Refunding of Long -Term Debt
The City issued $69,640,000 of combination 'general obligation refunding and permanent
improvement 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 $40.2 million of general obligation bonds. The balance ($29.7
million) was deposited into the City s Capital projects fund for future construction projects As a
result, the refunded bonds ($36.5 million at fiscal year end) 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 $2.1 million This
amount is being netted against the new debt and amortized over the remaining life of the new debt,
which is shorter than the life of the refunded debt. This advance refunding was undertaken to decrease
total debt service payments through fiscal year 2024 by $54.4 million and resulted in an economic
gain of $28.9 million.
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
2008 $ 409,134
2009 308,734
2010 114,486
2011 114,486
2012 114,486
2013 114,486
2014 114,486
2015 114,486
2016 114,486
2017 114,486
2018 114,486
2019 114,486
Total 1,862,728
Less interest portion (325,155)
Obligations under Capital Leases $ 1,537,573
46
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 5 - LONG-TERM DEBT (continued)
The annual requirements to amortize governmental activity general obligation bonds and certificates
of obligation outstanding at September 30, 2007 are as follows:
Fiscal Year
2008
2009
2010
2011 '
2012
2013
2014
2015
2016
20171
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Governmental Activities
General Obligation
Certificates of Obligation
Principal
$ 2,660,000
4,050,000
3,195,000
3,495,000
4,480,000
4,845,000
5,135,000
5,425,000
5,670,000
4,840,000
4,650,000
6,435,000
7,995,000
8,350,000
8,725,000
9,120,000
11,150,000
10,070,000
10,410,000
10,915,000
11,395,000
13,840,000
2,755,000
2,620,000
2,585,000
$ 164,810,000
Interest
$ 8,426,307 $
7,463,854
7,286,488
7,133,268
6,952,493
.6,749,053
6,545,7.62
6,303,120
6,026,713
5,779,421
5,559,695
5,299,915
4,966,536
4,594,930
4,206,016
3,798,495
3,327,038
2,827,930
2,346,582'
1,848,140
1,320,990
714,120
315,928
185,012
61,394
$ 110,039,200 $
Principal
240,000
915,000
2,160,000
2,390,000
2,130,000
2,265,000
2,400,000
2,520,000
2,670,000
3,095,000
3,660,000
3,965,000
2,895,000
3,050,000
3,210,000
3,380,000
1,945,000
3,660,000
3,905,000
4,075,000
4,295,000
2,595,000
1,540,000
1,600,000
1,660,000
66,220,000
Interest
$ 2,907,598
2,885,317
2,814,820
2,709,111
2,608,911
2,512,911
2,412,530
2,306,070
2,193,963
2,071,772
1,926,386
1,758,248
1,603,650
1,465,977
1,320,500
1,167,092
1,039,660
903,232
720,985
543,556
372,114
236,081
163,575
104,550
35,275
$ 38,783,884
47
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 5 - LONG-TERM DEBT (continued)
B. Enterprise Fund Debt
The following is a sununary of changes in the City's total business -type long-term liabilities for the year
ended September 30, 2007.
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
September 30,
2006
$ 15,000,000 $
40,170,000
321,547
(849,160)
54,642,387
Additions
40,135,000
1,088
(240,402)
39,895,686
(Reductions)
$ (1,085,000) $
(1,125,000)
(19,167)
70,569
(2,158,598)
Balance
September 30,
2007
Amounts Due
Within One
Year
13,915,000 $
79,180,000
303,468
(1,018,993)
92,379,475
775,000
1,230,000
2,005,000
418,643
$ 55,061,030 $
248,357
40,144,043
(221,085)
$ (2,379,683) $
391,371
92,770,846 $
63,914
2,068,914
A summary of the terms of certificates of obligation and revenue bonds recorded in the Enterprise Funds as
of September 30, 2007, is as follows:
Series
Original Issue Matures
Interest Debt
Rate (%) Outstanding
Water and Wastewater Fund
Water and Sewer System Revenue Bonds, Series 1996 B
Water and Sewer System Adjustable Rate Revenue Bonds,
Series 1999
Water and Sewer System Revenue Bonds, Series 2001
Water and Sewer System Revenue Bonds, Series 2003
Water and Sewer System Revenue and Refunding Bonds, Series
2006
Water and Sewer System Revenue and Refunding Bonds, Series
2007
Certificates of Obligation, Series 1998
Total Utility System Fund
8,870,000 2008
8,000,000
10,000,000
9,500,000
2020
2023
2025
13,845,000 2031
40,135,000
17,100,000
4.20-4.40 $
3.75-4.41
4.37-6.25
4.00-6.00
3.74-4.82
515,000
6,785,000
9,310,000
8,590,000
13,845,000
2031 3.50-5.50 40,135,000
2018 3.10-3.80 13,915,000
$ 93,095,000
48
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 5 - LONG-TERM DEBT (continued)
The annual requirements to amortize governmental activity revenue bonds and certificates of
obligation outstanding at September 30, 2007 are as follows:
Fiscal Year
Business -Type Activities
Revenue Bonds
Principal Interest
Certificates of Obligation
Principal Interest
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
$ 1,230,000
1,445,000
2,065,000
2,160,000
2,265,000
2,380,000
2,490,000
2,600,000
2,730,000
2,845,000
2,970,000
3,100,000
3,235,000
3,380,000
3,545,000
3,720,000
3,895,000
4,080,000
4,270,000
4,485,000
4,705,000
4,945,000
5,190,000
5,450,000
$ 79,180,000
$ 3,667,602 $
3,611,978
3,539,695
3,438,918
3,327,585
3,211,381
3,092,742
2,974,284
2,849,948
2,719,462
2,587,527
2,449,259
2,306,353
2,15 9,194
1,993,531
1,819,731
1,642,069
1,458,944
1,266,569
1,055,944
831,694
613,644
418,956
214,638
$ 53,251,648
775,000 $
980,000
1,015,000
1,050,000
1,090,000
1,1.25,000
1,170,000
1,210,000
1,250,000
2,090,000
2,160,000
$ 13,915,000 $
489,329
461,198
428,271
393,158.
355,698
316,100
274,498
230,760
184,938
121,790
41,040
3,296,780
•
49
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 5 - LONGTERM DEBT (continued)
C. Component Unit Long -Term Debt
The following is a summary of the long-terih debt transactions of the Pearland Economic
Development Corporation and the Development Authority of Pearland for the year ended
September 30, 2007:
Pearland Economic Development
Corporation
Sales tax revenue bonds
Deferred amount for issuance premium
Deferred logs on refunding
Deferred issuance costs
Compensated absences
Development Authority of Pearland
Tax Increment Revenue Bonds
Deferred issuance costs
Deferred amount for issuance discount
Balance
September 30,
2006 Additions
(Reductions)
Balance
September 30,
2007
Amounts Due
Within One
Year
20,480,000 $
148,236
(173,208)
(346,109)
38,198
22,235,000
(1,590,103)
(82',286)
$ 40,709,728 $
19,500
$ (400,000) $
(12,034)
14,061
26,755
(10,675)
9,970,000
(806,604)
(93,866)
9,089,030 $
(1,555,000)
173,575
12,761
(1,750,557) $
20,080,000 $ 525,000
136,202
(159,147)
(319,354)
47,023
30,650,000 990,000
(2,223,132)
(163,391)
48,048,201 $ 1,515,000
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
2007 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 2004
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 $ 9,895,000
2030 3.66-4.75 10,185,000
13,995,000 2028
9,775,000 2028
9,970,000 2028
2.50-5.50
3.50-4,75
4.00-4.40
12,340,000
8,340,000
9,970,000
$ 50,730,000
50
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 5 - LONG-TERM DEBT (continued)
The annual requirements to amortize component unit revenue bonds outstanding at September 30, 2007 are
as follows:
Fiscal Year
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 Corp°, ation
Principal Interest
$ 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
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
$ 20,080,000 $ 12,775,019
F. - Legal Compliance
Development Authority of Pearland
Principal Interest
$ 990,000 $ 1,399 289
980,000 1,362 152
1,015,000 1,324 002
1,060,000 1,283 263
1,100,000 1,239 648
1,150,000 1,193 363
1,195,000 1,143 917
1,250,000 1,091 675
1,305,000 1,036 581
1,360,000 979 442
1,425,000 918 427
1,435,000 853 928
1,505,000 788 727
1,570,000 719 437
1,645,000 647 062
1,720,000 569 556
1,805,000 488,211
1,890,000 400,432
1,985,000. 308,162
2,080,000 210,232
2,185,000 107,707
$ 30,650,000 $ 18,065,213
Long-term debt assumed by the City upon dissolution of annexed municipal utility district in fiscal
year 2007 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.
51
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 6 - INTERFUND TRANSACTIONS
A summary of rnterfund transfers, the purpose of which is to cover operational expenses/expenditures, for the
year ended September 30 2007, is as follows:
Transfers Out
Transfers In
Amounts
Purpose
General Fund
General Fund
General Fund
General Fund
Capital Projects Fund
Capital Projects Fund
Non Major Governmental
Fund
Non Major Governmental
Fund
Water and Sewer Fund
Water and Sewer Fund
Capital Projects Fund
Debt Service Fund
Non Major Governmental
Funds
Water and Sewer Fund
Debt Service Fund
General Fund
Capital Projects Fund
General Fund
Debt Service Fund
General Fund
1,241,454 Transfer funds for capital projects costs
946,347 Debt service payments
Transfer of funds to park and recreation
208,000 activities
Annual scheduled transfer of funds for water
164,500 and sewer services
19,672 Debt service payments
Transfer for engineering costs and other capital
891,213 project costs
30,975 Transfer funds for capital projects costs
33,659 Transfer funds for administrative costs
272,735 Debt service payments
951,830 Transfer funds for administrative costs
4,760,385
A summary of interfund receivables and payables at September 30, 2007 follows:
Receivable Fund
Payable Fund
Amount Purpose
General Fund
General Fund
General Fund
Non Major Governmental
Funds $
Internal Service Fund
Solid Waste Fund
18,000
210,059
447,086
675,145
Short-term loan to fund operations
Short-term loan to fund operations
Short-term loan to fund operations
52
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 7 — FUN Et 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
At year end, the City had negative equity accounts in the Solid Waste Enterprise fund. The fund is expected
to achieve positive equity levels through future charges for services.
The Pearland Economic Development Corporation and the Development Authority of Pearland, discretely
presented component units of the City, had negative net asset balances at year end of approximately $10 5
and $27.5 million respectively. These deficit balances are caused by these entities issuing bonds for
economic development related construction projects and, in accordance with state law, transferring the
capital assets to the primary government while retaining the related debt. As noted in Note 5, the debt is
expected to be retired with future dedicated sales tax revenues.
In accordance with the provisions of the Governmental Accounting Standards Board's Statement number
34, the City has presented the retroactive capitalization of infrastructure capital assets as of October 1, 2006.
The effects of this presentation in the government wide financial statements are as follows:
Governmental
Activities
Business -Type
Activities
Beginning net assets as
originally reported $ 41,570,526 $
Result of retroactively
reporting infrastucture
assets
Beginning net assets as
restated
63,972,594
377,534,123 77,504,326
$ 419,104,649 $ 141,476,920
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.
53
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
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-employei 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 ca edits 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
conti ibutions, 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.
54
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 9 - EMPLOYEE RETIREMENT SYSTEM (continued)
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 cunently 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.
The City's total payroll in fiscal year 2007 was $19.4 million and the City's contributions were
based on a payroll of $18.7 million. Contributions made by employees totaled $1.3 million, and the
City made contributions of $1.9 million during the fiscal year ended September 30 2007.
Three year trend information is presented below:
2007 2006 2005
Annual Pension Cost (APC) $ 1 907,416 $ 1 730,700 $ 1 480,301
Percentage of APC Contributed 100% 100% 100%
NPO at the End of Period $ - $ - $
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.
55
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 9 - EMPLOYEE RETIREMENT SYSTEM (continued)
All assumptions for the December 31, 2006 valuations arecontained in the 2006 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
7%
None
3.5%
None
In order to provide a reasonable retirement benefit at a reasonable cost to employers and to provide
better long range rate forecasts TMRS will be changing its actual funding method from Unit Credit to
Projected Unit Credit and from a 25 year ' open' period to a 25-30 year "closed" period.
For cities that have adopted annually repeating annuity increases (COLA's) that change in method
will result in increased contribution rates, which will provide advanced funding and positive
improvement in the pension funding rates. The TMRS Board adopted an eight -year phase -in period
for new iates to enable cities to slowly increase contributions. New sates will be reflected for the year
beginning January 1, 2009.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Litigation and Other Contingencies
The City was involved in various lawsuits and arbitration proceedings at September 30, 2007. 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.
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, 2007, the City
estimates arbitrage liability at approximately $194,224 for its general obligation debt and $14,940 for its
water/sewer revenue bonds.
56
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 10 - COMMITMENTS AND CONTINGENCIES (continued)
Reimbursement due to Developers
Shadow Creek Town Center
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'»ine 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
determined by the Zone Board.
On November 13, 2006, the City of Pearland, Pearland Economic Development Corporation (PEDC)
and Shadow Creek Retail. LP entered into an agreement whereby the developer would build and
construct a mixed use commercial development located at the northwest corner of State Highway 288
and Broadway, also known as FM518.
The Developer will provide for the construction of segments of Broadway Street, Business Center
Drive, Memorial Hermann Drive as well as landscaping, underground utilities, pipeline relocation
and other associated costs. The source of funds for reimbursement of the public infrastructure is both
the TIRZ #2 and City and PEDC sales tax revenue generated from the project The total funded from
TIRZ #2 is $11 749,618 and out of TIRZ improvements to be funded from sales tax is $2,001,391.
Once completion and tenant occupancy of at least 318,000 square feet is achieved for a period of
three consecutive months, then the City and PEDC shall remit, monthly, thirty-three percent of sales
tax received by the City and PEDC to the Developer until paid in full plus interest at eight percent per
annum for the first two years following completion of the widening of Broadway and interest at five
percent per annum for the subsequent two years.
57
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 10 - COMMITMENTS AND CONTINGENCIES (continued)
Reimbursement due to Developers (continued)
Pearland Town Center
On January 31, 2007, the City of Pearland and the Pearland Town Center Limited Partnership and
CBL & Associates Management, Inc. entered into an agreement whereby the developer would build
and construct a 700,000 square feet retail and commercial development, including public
infrastructure to serve the project and then convey the public infrastructure to the City. In
consideration of the development which will bring additional sales tax revenue to the City and
additional jobs, the City will reimburse the Developer solely for the costs associated with the public
infiastructure from city sales tax revenues. The cost of the infrastructure subject to reimbursement is
$2,710,362. The City will make monthly reimbursement payments to the Developer from 50% of the
sales tax generated within the project Reimbursement is to begin one hundred days after ithe City
receives notice from the Developer, and the City subsequently verifies that 75% of the square footage
or 525,000 square feet have been open for business for at least thirty consecutive days. The City shall
pay the Developer the entire Reimbuisement Amount, including interest within three years of the
completion date. Construction of the project began in fiscal year 2007; project was not complete as
of September 30, 2007 and no sales tax collected or reimbursed.
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 Authoiity
its pro -late share (40.19%) of the debt ($27,805,000 principal amount) that the Authority will issue to
put chase 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.
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
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 covei age, 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, 2007 the City believed the amounts paid on
Workers' Compensation would not change significantly from the amounts recorded.
58
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 12 - SUBSEQUENT EVENTS
Debt Issuance
Subsequent to year end, the following debt issuance actions occurred:
Development Authority of Pearland
On September 24, 2007 the Development Authority of Pearland approved the issuance of
$15,950,000 for Tax Increment Revenue Bonds, Series 2007. 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 $48,339,700, including $14,598,700 from this issuance
The Developer has also commenced on approximately $68 8 million of additional improvements
(beyond that which has been previously reimbursed or that will be reimbursed from the bonds)
pursuant to letter financing agreements. The Plan, as amended, estimates that throughout the life of
the TIRZ, the Authority will finance total infrastructure project costs of approximately $169.0
million. Delivery of the bonds, were on October 25, 2007, the 2007-2008 fiscal year.
General Obligation Debt
The City of Pearland sold $22,835,000 in General Obligation Debt on December 17, 2007, it's first
installment against the $162 million unlimited tax bonds approved at an election held on May 12
2007, leaving $139,180,000 authorized but unissued. Proceeds fiom the bonds will be used for
construction and improvements to City streets, construction and improvements to the City drainage
system, construction of a new fire station, construction and improvements to City parks; and to pay
for the cost of issuance.
Certificates of Obligation
Concurrently with the issuance of bonds the City sold $9,000,000 in Certificates of Obligation for the
design and construction to extend Broadway from Kirby to CR48. It is anticipated that the City will
get reimbursed $8,000,000 from TIRZ #2 around 2012/2013 as this project was included in the TIRZ
financing plan
59
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 12 - SUBSEQUENT EVENTS (continued)
Pearland Regional Airport
On January 14, 2008, the City of Pearland approved Resolution R2008-10, declaring its non -binding
intent to purchase the Pearland Regional Airport, which is a reliever airport to Houston Hobby and is
approximately 329 acres. The current owners of the Airport have approached the City regarding purchase
of the Airport as it is the owner's intent to sale the airport by the end of calendar year 2008. Because the
Airport has received more than $12 million in Federal Aviation Administration grants to make
improvements to the Airport, the airport must continue to operate as an airport for 20 years from the date
that last federal funds were received, which were in 2007. The City of Pearland has determined that the
purchase of the Airport by the City can provide the following benefits a) A public entity would be in
control of the airport, which would be more responsive to concerns of the residents: b) The Airport is in a
favorable financial, position, so users of the Airport would be responsible for bearing all costs associated
with the Airport; c) The assets of the Airport would include land needed for the future extension of
Pearland Parkway and; d) The Airport would be utilized as a tool for economic aevelopment. The non-
binding intent to purchase is contingent upon the Federal Aviation Administration grant for acquisition of
the Airport amongst other requirements. The City has the opportunity to withdraw from the transaction if
certain contingencies are not met, or if any information comes to light that makes the purchase of the
airport undesirable. '
City of Houston Southeast Water Purification Plant Expansion (SEWPP)
On July 9, 2007, the City of Pearland entered into a watersupply contract with the Gulf Coast Water
Authority (GCWA) to participate in the City of Houston's 80 MGD expansion of its Southeast Water
Purification Plant. At that time, the City of Pearland's participation in the expansion was estimated to be
$17.0 million based upon a total project budget of $103,000,000. The City of Pearland sold water/sewer
revenue bonds in fiscal year 2007 to fund the anticipated cost of the project. On November 29 2007, the
City of Houston opened bids for the plant expansion, the lowest bid being $168,276,100, thereby
increasing the City of Pearland's participation from $17.0 million to $26 8 million. The additional $9.8
million needed will be funded by water/sewer revenue bonds in fiscal year 2008. The City of Pearland
had already budgeted and appropriated $17.4 million in water/sewer revenues bonds for certain projects
Due to the delay of two projects the City of Pearland can fund the additional monies needed for the
SEWPP within the funds budgeted.
60
CITY PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS
Year Ended September 30, 2007
NOTE 12 - SUBSEQUENT EVENTS (continued)
Rate Increases
Water and Sewer
The City of Pearland increased water/sewer revenues by 4% through a rate increase effective with
October 1, 2007 consumption. The rate increase will generate an additional $700,000 in revenues and is
necessary to meet bond coverage requirements to maintain an operating reserve, and to cover the cost of
operating expenses such as surface water and electricity.
Monthly Rates are as follows:
Sewer:
Base
Volume
Water:
Residential/Business Single Unit
Base
Volume
Multi -Unit
Base
Volume
Solid Waste
Current
$12.53
$ 2.06
Current
$11.98
$ 2.73
$10.89
$ 2.71
New
$12.53
$ 2.24
New
$11.98
$ 2.93
$10.89
$ 2.93
•
The City of Pearland's current solid waste contract was awarded October 1, 2006 and expires September
2011. The contract allows for an annual CPI adjustment plus a five percent increase of the base rate for
contract years 2007 and 2008. The City passes 100% of the cost of the contract to its customers,
residential and commercial. Effective October 1, 2007, the monthly residential solid waste fee increased
from $12.97 to $13.65, a 5.2% increase The contract also allows for calendar quarterly fuel adjustments,
either up or down, based on the price of diesel fuel. The City has received notice of a 2% increase in the
base rate based on the price of diesel fuel as of December 31, 2007. The increase in the rates will become
effective February 1, 2008.
61
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62
REQUIRED SUPPLEMENTARY INFORMATION
63
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64
CITY OF PEARLAND, TEXAS
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES - BUDGET AND ACTUAL
For the year ended September 30, 2007
REVENUES
Property taxes
Sales and use taxes
Franchise fees
Licenses and permits
Fees and forfeitures
Charges for services
Investment earnings
Intergovernmental
Other
Total Revenues
EXPENDITURES
Current
General government
Public safety
Public works
Community services
Parks and recreation
Total Expenditures
Excess (deficiency) of revenues over
expenditures
Budgeted Amounts
Original Final
$ 11,218,774
10,774,611
3,651,017
4,122,346
1,839,100
4,599,175
470,000
131,500
325,290
37,131,813
7,664,319
14,502,056
6,218,539
3,772,663
5,437,069
37,594,646
(462,833)
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total other financing sources and
uses (341,579)
Net change in fund balances (804,412)
Fund balances, beginningof year 10,597,369
Fund balances at year end $ 9,792,957
1,724,954
(2,066,533)
65
$ 11,341,511
10,480,641
3,785,023
3,989,217
1,936,438
4,952,857
650,000
400,141
398,360
37,934,188
6,570,810
14,727,596
6,935,221
3,765,358
5,719,298
37,718,283
215,905
1,787,756
(2,666,450)
(878,694)
(662,789)
10,597,369
$ 9,934,580
Variance with
Final Budget -
Positive
Actual (Negative)
$ 11,303,552 $
10,744,198
3,760,186
4,029,879
1,946,785
5,250,400
702,206
230,347
587,872
38,555,425
6,137,146
14,431,318
6,277,508
3,083,190
4,903,842
34,833,004
3,722,421
1,876,702
(2,560,301)
(683,599)
3,038,822
10,597,369
$ 13,636,191
(37,959)
263,557
(24,837)
40,662
' 10,347
297,543
52,206
(169,794)
189,512
621,237
433,664
296,278
657,713
682,168
815,456
2,885,279
3,506,516
88,946
106,149
195,095
3,701,611
$ 3,701,611
CITY OF PEARLAND, TEXAS
NOTES TO REQUIRED SUPPLEMENTARY BUDGET INFORMATION
Year Ended September 30, 2007
BUDGETARY COMPLIANCE
The City of Pearland has complied with all material budget requirements for the year ended September
30, 2007.
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 (Le. General Fund, Debt
Service Fund, etc ). Expenditure requests, which would require an increase in total budgeted appropriations
must be approved by City Council through a formal budget amendment. At any time in the fiscal year, the
Council may make emergency appropriations to meet a pressing need for public expenditure in order to
protect the public health, safety, or welfare The Council has the power to transfer any unencumbered funds
allocated by the budget from one activity function, or department to another activity, function, or
department, to re -estimate revenues and expenditures, and to amend the budget.
Because City Council adopts the budget at the fund level, management has the authority to transfer available
funds allocated by the budget from one function/department or activity to another function or activity within
the same department In cooperation with the directors and department heads of the City, the Budget
Officer, the Director of Finance and the City Manager prepare an annual budget for the General Fund,
Special Revenue Funds and Debt Service Fund for the ensuing fiscal year in a form and style as deemed
desirable by the City Manager. The City Manager shall submit, to the Council, for its review consideration,
and revision both a letter describing the proposed new budget as well as a balanced budget for the
forthcoming fiscal year, between 60 (sixty) and 90 (ninety) days prior to the beginning of the fiscal year.
The budget, as adopted, must set forth the appropriations for services, functions, and activities of the
various City departments and agencies, and shall meet all fund requirements provided by law and required
by bond covenants Capital projects are budgeted on a project -length basis.
Amounts reported in the accompanying financial statements represent the amended budgeted amount plus all
supplemental appropriations.
66
CITY OF PEARLAND, TEXAS
REQUIRED PENSION SYSTEMSUPPLEMENTARY INFORMATION
September 30, 2007
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%
67
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68
COMBINING AND INDIVIDUAL FUND
STATEMENTS AND SCHEDULES
69
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70
CITY OF PEARLAND, TEXAS
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 Fund - A fund created to account for hotel/motel occupancy tax revenue.
Court Security Fund- A fund created to account for the receipt and expenditure of revenues from court
fines for court security.
City Wide Donation Fund- A fund created to account for miscellaneous donations for all city
departments except parks.
Court Technology Fund - This fund is used to account for the receipt and expenditure of revenues from
court fines for court technology.
Regional Detention Fund - A fund created to account for the regional detention development.
Park Donation Fund - A fund used to account for park special event donations and the development of
parks. This fund also includes funds from tree trust donations.
Police Seizure Fund - A fund created to account for state and federal seizure funds which are used solely
for law enforcement purposes
Park and Recreation Development Fund - A fund created to account for the development of parks.
Sidewalk Fund - A fund created to account for resources designated for sidewalks.
Grant Fund - A fund created to account for revenues and expenditures associated with federal, state, and
local grants.
Street Assessments Fund - A fund created to account for resources for street assessments.
71
CITY OF PEARLAND, TEXAS
BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
September 30, 2007
ASSETS
Cash and cash equivalents
Investments
Receivables (net of allowance
for uncollectibles)
Prepaids items
Total Assets
Hotel Motel
Tax
Court
Security
City Wide Court
Donations Technology
$ 961,842, $ 126,553 $ 47,252 $ 258,931
75,337
13,754
$1,050,933
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $
Due to other funds
Deferred revenue
Total Liabilities
2,463
3,015
Regional
Detention
$ 112,857
$ 129,016 $ 47,252 $ 261,946 $ 112,857
132
2,463
2,595
Fund balances:
Unreserved, reported in
Special revenue funds 1,050,933 126,421
Total fund balances 1,050,933 126,421
Total Liabilities and Fund
Balances
3,015
3,015
47,252 258,931
47,252 258,931
112,857
112,857
$1,050,933 $ 129,016 $ 47,252 $ 261,946 $ 112,857
72
Park
Donations
$ 278,902
$ _ 278,902
278,902
278,902
Police
Seizure
$ 206,208
$ 20'6,208
206,208
206,208
Parks and
Recreation
Development Sidewalk
$ 1,373,907 1 $ 152,724
$ 1,373,907 $ 152,724
1,373,907 152,724
1,373,907 152,724
Grant Fund
$ 58,572.
29,463
$ 88,035
3,425
18,000
21,425
66,610
66,610
Street
Assessments
Totals
$ 870,587 $4,448,335
1,117 111,395
13,754
$ 871,704 $ 4,573,484
$ 3,557
18,000
5,478
27,035
871,704 4,546,449
871,704 4,546,449
$ 278,902 $ 206,208 $1,373,907 $ 152,724 $ 88,035 $ 871,704 $4,573,484
73
CITY OF PEARLAND, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30, 2007
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
Capital outlay
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
$ 280,462 $
45,138
46,079
5,995
325,600 52,074
138,346
138,346
187,254
187,254
660
City Wide Court
Donations Technology
2,611
54,951
11,406
19,392
22,003 66,357
12,188
25
8,300
660 20,513
51,414
(33,659)
17,755
863,679 108,666
$1,050,933 $ 126,421
74
4,244
4,244
1,490 62,113
1,490 62,113
45,762 196,818
$ 47,252 $ 258,931
Regional
Detention
5,457
5,457
5,457
5,457
107,400
$ 112,857
Park
Donations
14,615
Police
Seizure
9,478
35,262 56,422
49,877
4,035
4,035
Parks and
Recreation
Development
61,738
Street
Sidewalk Grant Fund Assessments
8,008 4,090
160,575
65,650 14,656
65,900 127,388
793
6,252
7,045
45,842 58,855
(30,975)
14,867
264,035
$ 278,902
91,168
91,168
36,220
208,000
58,855 244,220
147,353 1,129,687
$ 206,208 $ 1,373,907
22,664 164,665
18,000
153,442
14,046
21,000 ' 113,337
21,000 298,825
1,664 (134,160)
1,664 (134,160)
151,060 200,770.
$ 152,724 $ 66,610
Totals
$ 280,462
101,030
42,888 211,424
160,575
22,790 214,172
65,678 967,663
156,346
166,423
18,975
4,035
240,057
585,836
65,678 381,827
208,000
(64,634)
65,678 525,193
806,026 4,021,256
$ 871,704 $ 4,546,449
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, 2007
with comparative actual totals for the year ended September 30, 2006
REVENUES
Taxes
Property taxes
Investment earnings
Intergovernmental
EXPENDITURES
Debt Service:
Principal
Interest
Intergovernmental
Total Revenues
Total Expenditures
Revenues over (under) expenditures
OTHER FINANCING SOURCES /
(USES)
Proceeds from long-term debt
Premium on general obligation debt
Payments to refunding escrow agent
Transfers from other funds
2007
Final Budget
$ 13,271,966
450,000
1,323,679
15,045,645
3,227,659
9,317,659
2,169,287
14,714,605
331,040
40,864,986
Actual
Variance
Positive /
(Negative)
$ 13,221,832 $
474,685
1,578,344
15,274,861
3,227,659
9,222,973
2,169,287
14,619,919
654,942
40,694,986
(40,864,986) (40,694,986)
1,234,024 1,238,754
Total other financing sources (uses) 1,234,024
Net change in fund balance
Fund balances, beginning of year
1,565,064
4,658,301
1,238,754
1,893,696
4,658,301
Fund balances at year end $ 6,223,365 $ 6,551,997
(50,134)
24,685
254,665
229,216
94,686
94,686
323,902
(170,000)
170,000
4,730
4,730
328,632
2006
$ 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
$ 328,632 $ 4,658,301
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, 2007
with comparative actual totals for the year ended September 30, 2006
REVENUES
Hotels occupancy tax
Investment earnings
Total Revenues
2007
Final Budget Actual
$ 290,000
45,000
335,000
EXPENDITURES
Current:
General government 143,346
Total Expenditures 143,346
Net change in fund balance 191,654
Fund balances, beginning of year 863,679
$ 280,462
45,138
325,600
138,346
138,346
187,254
863,679
Fund balances at year end $ 1,055,333 $ 1,050,933
77
Variance
Positive /
(Negative)
2006
$ (9,538) $ 267,588
138 22,403
(9,400) 289,991
5,000
5,000
(4,400)
96,248
96,248
193,743
669,936
$ (4,400) $ 863,679
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, 2007
with comparative actual totals for the year ended September 30, 2006
2007
Final Budget
Actual
REVENUES
Fines and forfeitures $ ' 47,300 $
Investment earnings 5,900
Total Revenues 53,200
EXPENDITURES
Current:
Community services
Total Expenditures
1,210
1,210
Revenues over (under) expenditures 51,990
Other Financing Sources (Uses)
Transfers (out) (33,659)
Net change in fund balance 18,331
Fund balances, beginning of year 108,666
Fund balances at year end $ 126,997
46,079
5,995
52,074
660
660
51,414
(33,659)
17,755
108,666
$ 126,421
Variance
Positive /
(Negative)
2006
(1,221) $ 46,856
95 2,969
(1,126) 49,825
550
550
(576)
(576)
1,716
1,716
48,109
(31,873)
16,236
92,430
$ (576) $ 108,666
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, 2007
with comparative actual totals for the year ended September 30, 2006
REVENUES
Investment earnings,
Other income
Total Revenues
EXPENDITURES
Current:
Public safety
Community services
Capital outlay
2007
Final Budget Actual
2,500 $
19,840
22,340
12,244
8,300
Total Expenditures 20,544
Net change in fund balance
1,796
Fund balances, beginning of year 45,762
, 2,611
19,392
22,003
1 12,188
25
8,300
20,513
1,490
45,762
Fund balances at year end $ 47,558 $
Variance
Positive /
(Negative)
2006
$ 111 $ 1,170
(448) 54,502
(337)
56
(25)
31
(306)
55,672
1,258
3,430
11,497
16,185
39,487
6,275
47,252 $ (306) $ 45,762
79
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, 2007
with comparative actual totals for the year ended September 30, 2006
2007
Variance
Positive /
Final Budget Actual (Negative) 2006
REVENUES
Fines and forfeitures $ 56,000 $ 54,951 $ (1,049) $ 55,852
Investment earnings 11,000 11,406 406 5,194
Total Revenues 67,000 66,357 (643) 61,046
EXPENDITURES
Current:
Community services 3,977 4,244 (267) 3,814
Total Expenditures 3,977 4,244 (267) 3,814
Net change in fund balance 63,023 62,113 (910) 57,232
Fund balances, beginning of year 196,818 196,818 139,586
Fund balances at year end $ 259,841 $ 258,931 $ (910) $ 196,818
80
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, 2007
with comparative actual totals for the year ended September 30, 2006
2007
Variance
Positive /
Final Budget Actual (Negative)
2006
REVENUES
Investment earnings $ 5,200 $ 5,457 $ 257 $ 2,923
Other income 5,000 i 2,348
Total Revenues 10,200 5,457 (4,743) 1 5,271
Net change in fund balance 10,200 5,457 (4,743) 5,271
Fund balances, beginning of year 107,400 107,400 102,129
Fund balances at year end $ 117,600 $ 112,857 $ (4,743) $ 107,400
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, 2007
with comparative actual totals for the year ended September 30, 2006
2007
Variance
Positive /
Final Budget Actual (Negative) 2006
REVENUES
Investment earnings, $ ' 13,700 $ 14,615 $ 915 $ 7,197
Other 45,400 35,262 (10,138) 20,674
Total Revenues 59,100 49,877 (9,223) 27,871
EXPENDITURES
Current:
Parks and recreation 14,300 , 4,035 10,265 7,409
Total Expenditures 14,300 '4,035 10,265 7,409
Revenues over expenditures
44,800 45,842
OTHER FINANCING SOURCES /
(USES)
Transfers (to) other funds (30,975) (30,975)
1,042 20,462
Changes in fund balance 13,825 14,867 1,042 20,462
Fund balances, beginning of year 264,035 264,035
243,573
Fund balances at year end $ 277,860 $ 278,902 $ 1,042 $ 264,035
82
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND - POLICE SEIZURE
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2007
with comparative actual totals for the year ended September 30, 2006
REVENUES
Investment earnings
Other
Total Revenues
2007
Final Budget Actual
8,325 $
65,000
73,325
EXPENDITURES
Current:
Public safety
Capital outlay
Total Expenditures
Net change in fund balance
Fund balances, beginning of year
Fund balances at year end $
10,793
34,908
45,701
27,624
147,353
9,478 $
56,422
65,900
793
6,252
7,045
58,855
147,353
174,977 $ 206,208
Variance
Positive /
(Negative)
2006
1,153 $
(8,578)
(7,425)
10,000
28,656
38,656
31,231
$ 31,231
3,951
38,273
42,224
10,500
10,500
31,724
115,629
$ 147,353
83
CITY OF PEARLAND, TEXAS
SPECIAL REVENUE FUND - PARKS AND RECREATION DEVELOPMENT
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
For the Year Ended September 30, 2007
with comparative actual totals for the year ended September 30, 2006
2007
Final Budget Actual
REVENUES
Investment earnings $ 52,000 $ 61,738
Intergovernmental
Other 116,980 65,650
Total Revenues 168,980 • 127,388
EXPENDITURES
Capital outlay 893,679
Revenues over (under) expenditures
(724,699)
Other Financing Sources (Uses)
Transfers from other funds 208,000
Net change in fund balance (516,699)
Fund balances, beginning of year 1,129,687
Fund balances at year end $ 612,988
91,168
36,220
208,000
244,220
1,129,687
$ 1,373,907
Variance
Positive /
(Negative)
$ 9,738
(51,330)
(41,592)
802,511
760,919
760,919
2006
$ 25,369
6,000
178,632
210,001
59,139
150,862
235,731
386,593
743,094
$ 760,919 $ 1,129,687
84
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, 2007
with comparative actual totals for the year ended September 30, 2006
REVENUES
Investment earnings
Other
EXPENDITURES
Capital outlay
Net change in fund balance
2007
Final Budget Actual
$ 7,800
15,000
Total Revenues 22,800
Fund balances, beginning of year
8,008
'14,656
22,664
25,000 21,000
(2,200) 1,664
151,060 151,060
Fund balances at year end $ 148,860
$ 152,724
Variance
Positive /
(Negative)
2006
$ 208 $
(344)
(136)
4,000
3,864
$ 3,864
3,619
35,226
38,845
38,845
112,215
$ 151,060
85
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, 2007
with comparative actual totals for the year ended September 30, 2006
REVENUES
Investment earnings
Intergovernmental
Total Revenues
2007
Final Budget Actual
$ 5,400
535,156
540,556
EXPENDITURES
Current:
General government 15,885
Public safety 184,391
Community service 13,880
Capital outlay 151,661
Total Expenditures 365,817
Revenues over (under) expenditures
OTHER FINANCING SOURCES /
(USES)
Transfers from other funds
Transfers (to) other funds
174,739
(305,000)
Net change in fund balance (130,261)
Fund balances, beginning of year 200,770
Fund balances at year end $
4,090
160,575
164,665
18,000
153,442
14,046
113,337
298,825
(134,160)
(134,160)
200,770
70,509 $
66,610
Variance
Positive /
(Negative)
$ (1,310)
(374,581)
(375,891)
(2,115)
30 949
(166)
38,324
66,992
(308,899)
305,000
(3,899)
$ (3,899)
2006
5,731
111,239
116,970
106,468
9,542
18,705
134,715
(17,745)
43,689
25,944
174,826
200,770
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, 2007
with comparative actual totals for the year ended September 30, 2006
REVENUES
Investment earnings
Other
2007
Final Budget Actual
41,500 $
Total Revenues 41,500
Net change in fund balance 41,500
Fund balances, beginning of year
42,888
22,790
65,678
65,678
806,026 806,026
Fund balances at year end $ 847,526 $ 871,704
87
Variance
Positive /
(Negative)
$ 1,388
22,790
24,178
24,178
$ 24,178
2006
13,844
13,844
13,844
792,182
806,026
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DISCRETELY PRESENTED COMPONENT UNITS
FUND BASED FINANCIAL STATEMENTS
89
CITY OF PEARLAND, TEXAS, TEXAS
DISCRETELY PRESENTED COMPONENT UNITS
BALANCE SHEETS - GOVERNMENTAL FUNDS
September 30, 2007
Pearland
Economic
Development
Corporation
Tax Increment
Reinvestment
Zone #2
ASSETS
Cash and equivalents $ 8,370,959 $
Receivables -less allowance for
uncollectibles 975,641
Prepaid items 10,000
Restricted cash
Total Assets 9,356,600
LIABILITIES
Accounts payable and accrued expenses 9,288
Total Liabilities
FUND BALANCE
Reserved for debt service
Unreserved
9,288
Total Fund Balance
Total Liabilities and Fund Balance $
Development
Authority of
Pearland
Total Component
Units
5,841,804 $ 60,675 $
5,841,804
20,879
20,879
9,347,312
9,347,312
9,356,600 $
Reconciliation from Fund balance to Net Assets
Fund Balance
Less revenue bonds payable
Less other long-term liabilities
Less interest payable
Net Assets
9,347,312
(19,737,701)
(47,023)
(70,583)
(10,507,995)
817,359
878,034
9,533
9,533
14,273,438
975,641
10,000
817,359
16,076,438
39,700
39,700
817,359
5,820,925 51,142
5,820,925 868,501
5,841,804 $ 878,034 $
817,359
15,219,379
16,036,738
16,076,438
$ 5,820,925 $ 868,501 $ 16,036,738
(28,263,477) (48,001,178)
(47,023)
(111,176) (181,759)
$ 5,820,925 $ (27,506,152) $ (32,193,222)
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, 2007
REVENUES
Taxes:
Property taxes ,
Sales and use taxes
Intergovernmental
Investment earnings
Total Revenues
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)
Transfers from other component units
Transfers (to) other component units
Issuance of Revenue bonds
Total other financing sources (uses)
Changes in fund balance
Fund balances, beginning
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
Less issuance of revenue bonds
Changes in Net Assets
Pearland
Economic
Development
Corporation
5,326,104
30,470
802,413
6,158,987
1,242,496
400,000
997,781
12,530,383
15,170,660
(9,011,673)
Tax Increment
Reinvestment
Zone #2
Development
Authority of
Pearland
$ 8,189,969 $
242,416
8,432,385
1,830,405
1,830,405
16,601,980
(3,856,344)
(9,011,673)
18,358,985
9,347,312
(3,856,344)
2,745,636
3,075,289
5,820,925
$ (9,011,673) $ 2,745,636
400,000
18,682
(44,388)
$ (8,637,379) $ 2,745,636
95,532
95,532
69,699
11,318,000
1,555,000
1,388,194
900,470
15,231,363
(15,135,831)
3,856,344
9,970,000
13,826,344
(1,309,487)
2,177,988
$ 868,501
$ (1,309,487)
1,555,000
714,134
(111,176)
(9,970,000)
$ (9,121,529)
Total
Component
Units
$ 8,189,969
5,326,104
30,470
1,140,361
14,686,904
69,699
14,390,901
1,955,000
2,385,975
900,470
12,530,383
32,232,428
(17,545,524)
3,856,344
(3,856,344)
9,970,000
9,970,000
(7,575,524)
23,612,262
$ 16,036,738
$ (7,575,524)
1,955,000
714,134
(92,494)
(44,388)
(9,970,000)
$ (15,013,272)
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92
LONG-TERM DEBT AMORTIZATION SCHEDULES
93
CITY OF PEARLAND, TEXAS
COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT
BY MATURITY DATE
September 30, 2007
Permanent Improvement Refunding Bonds Series 2000
Fiscal Year Principal
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
$ 1,885,000
1,980,000
$ 3,865,000
Interest
G.O. Series 2001 (TIRZ Obligation2
Total Principal
142,260 $ 2,027,260 $ 250,000
48,510 ,2,028,510 260,000
175,000
$ 190,770
4,055,770
Certificates of Obligation, Series 2001
Fiscal Year Principal
2008 $
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
115,000
560,000
575,000
$ 1,250,000
Interest
Total
$ 57,900 $
54,450
37,000
11,500
$ 160,850
57,900
169,450
597,000
586,500
1,410,850
Interest
$ 21,840
11,895
3,413
$ 685,000
$ 37,148
Total
$ 271,840
271,895
178,413
$ 722,148
Permmanent Improvement Bonds, Series 2002
Principal
695,000
730,000
770,000
810,000
$ 3,005,000
Interest
$ 195,700
174,850
128,450
79,800
28,350
$ 607,150
Total
$ 195,700
869,850
858,450
849,800
838,350
$ 3,612,150
94
Fiscal Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Fiscal Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Permmanent l nprovement Bonds, Series 2003
Principal
140,000
335,000
350,000
370,000
390,000
455,000
1125,000
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
$ 13,695,000
Interest
$ 620,329
616,129
601,879
581,329
559,728
536,929
525,229
525,228
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
$ 8,492,118
Certificates of Obligation, Series 2003
Principal
$ 165,000 $
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
Interest
728,695
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
$ 17,990,000 $ 6,659,613
Total
$ 620,329
756,129
936,879
931,329
929,728
926,929
525,229
525,228
971,129
1,217,529
1,227,729
1,235,826
11,241,266
1,244,283 ,
1,255,153
1,258,613
1,264,000
1,271,413
1,276,350
1,283,700
1,288,350
$ 22,187,118
Total
$ 893,695
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
$ 24,649,613
Page 1 Of 2
Permanent Improvement & Refund Bonds, Series
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
2005
Interest
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
Total
1,680,164
2,098,258
3,272,139
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
$ 37,015,000 $ 23,683,782 $ 60,698,782
Certificates of Obligation, Series 2004
Principal
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
1,625,000
1,675,000
1,730,000
1,830,000
Interest
$ 607,721 $
601,921
589,321
575,221
560,322
545,021
523,121
494,721
465,922
430,721
388,186
341,891
317,532
317,531
317,531
317,531
317,532
280,969
205,672
126,931
43,463
$ 14,030,000 $ 8,368,781
Total
607,721
891,921
929,321
940,221
940,322
930,021
1,233,121
1,204,721
1,195,922
1,460,721
1,458,186
1,501,891
317,532
317,531
317,531
317,531
317,532
1,905,969
1,880,672
1,856,931
1,873,463
$ 22,398,781
95
CITY OF PEARLAND, TEXAS
COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT
BY MATURITY DATE
September 30, 2007
Fiscal Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Fiscal Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
BCMUD #1 Series 1998
Principal
$ 45,000
45,000
90,000
Principal
Interest
$ 4,095
2,070
Total
49,095
47,070
$ 6,165 $
96,165
BCMUD #1 Series 2007
15,000
55,000
60,000
65,000
70,000
75,000
75,000
80,000
85,000
90,000
95,000
100,000
110,000
115,000
120,000
130,000
135,000
145,000
155,000
165,000
Interest
$ 80,528 $
80,527
80,528
80,527
79,927
77,865
75,585
73,082
70,353
67,428
64,428
61,228
57,827
54,228
50,333
46,232
41,612
36,782
31,622
26,033
20,227
13,920
7,178
$ 1,940,000 $ 1,278,000
Total
80,528
80,527
80,528
95,527
134,927
137,865
140,585
143,082
145,353
142,428
144,428
146,228
147,827
149,228
150,333
156,232
156,612
156,782
161,622
161,033
165,227
168,920
172,178
$ 3,218,000
96
BCMUD #1 Series 2001
Principal
$ 430,000
455,000
230,000
185,000
200,000
210,000
220,000
230,000
235,000
255,000
110,000
$ 2,760,000
Interest
$ 125,620
107,560
88,223
78,332
70,193
61,192
51,428
40,977
29,765
18,250
5,500
$ 677,040
Total
$ 555,620
562,560
318,223
263,332
270,193
271,192
271,428
270,977
264,765
273,250
115,5001
$ 3,437,040
Fiscal Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Fiscal Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Permanent Improvement & Refund Bonds, Series 2006
Principal
$ 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
Interest
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
$ 32,115,000 $ 26,012,884
Total
$ 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
Page 2 of 2
Permanent Improvement & Refund Bonds, Series
2007
Principal
40,000
150,000
885,000
1,940,000
2,510,000
2,685,000
2,345,000
2,460,000
2,220,000
3,830,000
5,190,000
5,395,0(10
5,610,000
5,005,000
5,230,000
3,835,000
3,845,000
4,010,000
2,290,000
2,370,000
2,590,000
2,620,000
2,585,000
$ 58,127,884 $ 69,640,000 $
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
Interest
$ 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
$ 9,700,000 $ 6,313,301
Total
$ 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
97
Interest
4,023,578 $
3,218,862
3,218,063
3,214,263
3,193,562
3,137,063
3,048,062
2,924,025
2,791,562
2,671,438
2,554,437
2,403,188
2,190,662
1,952,500
1,704,887
1,466,050
1,235,763
1,034,197
866,197
686,850
537,225
426,550
308,750
185,012
61,394
49,054,140 $
Total
4,023,578
3,218,862
3,258,063
3,364,263
4,078,562
5,077,063
5,558,062
5,609,025
5,136,562
5,131,438
4,774;437
6,2331,188
7,380,662
7,347,500
7,314,887
6,471,050
6,465,763
4,869,197
4,711,197
4,696,850
2,827,225
2,796,550
2,898,750
2,805,012
2,646,394
118,694,140
Certificates of Obligation, Series 2007
Principal
$ 50,000
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
1,005,000
1,060,000
1,115,000
1,170,000
1,230,000
1,295,000
1,360,000
1,430,000
1,500,000
1,580,000
1,660,000
1,745,000
1,540,000
1,600,000
1,660,000
$ 23,250,000
Interest
1,056,025 $
1,053,525
1,049,650
1,043,088
1,033,900
1,022,088
1,007,650
990,588
970,900
948,587
910,394
856,187
799,094
739,112
676,113
609,831
540,137
466,900
389,988
324,937
272,288
216,956
163,575
104,550
35,275
17,281,338 $
Total
1,106,025
1,103,525
1,149,650
1,193,088
1,233,900
1,272,088
1,307,650
1,340,588
1,370,900
1,398,587
1,915,394
1,916,187
1,914,094
1,909,112
1,906, 113
1,904,831
1,900,137
1,896,900
1,889,988
1,904,937
1,932,288
1,961,956
1,703,575
1,704,550
1,695,275
40,531,338
CITY OF PEARLAND, TEXAS
COMBINING SCHEDULE OF ENTERPRISE FUND LONG-TERM DEBT
BY MATURITY DATE
September 30, 2007
Fiscal Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Fiscal Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Certificates of Oblivation, 1998
Principal
$ 775,000
980,000
1,015,000
1,050,000
1,090,000
1,125,000
1,170,000
1,210,000
1,250,000
2,690,000
2,160,000
$ 13,915,000
Interest
$ 489,329
461,198
428,271
393,158
355,698
316,100
274,498
230,760
184,938
121,790
41,040
$ 3,296,778
Total
$ 1,264;329
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
2,201,049
$ 17,211,778
Water & Sewer System Revenue Bonds, Series
2001
Principal
$ 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
$ 9,310,000
Interest
$ 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
$ 5,538,085
Total
$ 668,130
665,63Q
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
$ 14,848,085
98
Water & Sewer System Revenue Bonds, Series
1996B
Principal
$ 515,000
$ 515,000
Interest
$ 22,660
$ 22,660
Total
$ 537,660
$ 537,660
Water & Sewer System Revenue Bonds, Series
2003
Principal
$ 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
$ 8,590,000
Interest
$ 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
$ 4,430,692
Total
$ 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
$ 13,020,692
Fiscal Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Fiscal Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Water & Sewer System Adjustable Rate Revenue
Bonds, Series 1999
Principal
$ 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
Interest
$ 282,377 $
275,067
259,709
250,732
241,349
231,557
221,356
210,748
199,512
187,901
143,836
97,953
49,997
$ 6,785,000 $ 2,652,094
Total
487,377
490,067
479,709
480,732
481,349
481,557
481,356
480,748
489,512
1,267,901
1,268,836
1,272,953
1,274,997
$ 9,437,094
Water and Sewer Ss stem Revenue and Refundine
Bonds, Series 2006
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
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
$ 10,396,919 $
Total
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
24,241,919
Water and Sewer System Revenue and Refundine
Bonds, Series 2007
Principal
$ 50,000
200,000
760,000
790,000
830,000
880,000
920,000
965,000
1,010,000
950,000
995,000
1,045,000
1,095,000
1,155,000
1,210,000
1,275,000
2,295,000
2,480,000
3,120,000
3,280,000
3,440,000
3,615,000
3,795,000
3,980,000
$ 40,135,000
99
Interest
$ 1,863,063
1,860,313
1,849,313
1,807,513
1,764,063
1,718,413
1,670,013
1,619,413
1,566,338
1,510,788
1,458,538
1,403,813
1,348,950
1,294,200
1,236,450
1,175,950
1,112,200
997,450
873,450
717,450
553,450
398,650
272,125
139,300
$ 30,211,200
Total
$ 1,913,063
2,060,313
2,609,313
2,597,513
2,594,063
2,598,413
2,590,013
2,584,413
2,576,338
2,460,788
2,453,538
2,448,813
2,443,950
2,449,200
2,446,450
2,450,950
3,407,200
3,477,450
3,993,450
3,997,450
3,993,450
4,013,650
4,067,125
4,119,300
$ $ 70,346,200
PEARLAND ECONCOMIC DEVELOPMENT CORPORATION
COMBINING SCHEDULE OF REVENUE BONDS PAYABLE
BY MATURITY DATE
September 30, 2007
Fiscal Year
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
$ 360,000
375,000
385,000
400,000
410,000
425,g00
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
$ 9,895,000
Interest
$ 402,650
391,850
380,600
368,088
355,088
346,738
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
Total
$ 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
$ 4,666,350 $ 14,561,350
Sales Tax Revenue Bonds, Series 2006
Principal
$ 165,000 $
170,000
180,000
185,000
200,000
210,00Q
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
$ 10,185,000 $
•
Interest
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
8,108,669 $
Total
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
18,293,669
DEVELOPMENT AUTHORITY OF PEARLAND
COMBINING SCHEDULE OF REVENUE BONDS PAYABLE
BY MATURITY DATE
September 30, 2007
Fiscal Year
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
Fiscal Year
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 2004
Principal
$ 360,000
375,000
390,000
405,000
425,000
440,000
460,OOP
485,000
505,000
530,000
555,000
585,000
615,000
645,000
675,d00
710,000
750,000
790,000
835,000
880,000
925,000
$ 12,340,000
Interest
$ 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
$ 8,150,841 $
Total
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
20,490,841 $
Tax Increment Revenue Bonds, Series 2006
Principal
$ 355,000
335,000
345,000
365,000
375,000
395,000
405,000
425,000
440,000
455,000
480,000
460,000
480,000
500,000
520,000
540,000
570,000
590,000
620,000
640,000
675,000
$ 9,970,000
Interest
$ 414,396
400,188
386,788
372,986
358,386
343,389
327,571
311,386
294,387
276,788
258,586
239,387
220,986
201,306
180,306
158,206
134,986
110,476
84,811
57,531
, 29,531
$ 5,162,377
Total
$ 769,396
735,188
731,788
737,986
733,386
738,389
732,571
736,386
734,387
731,788
738,586
699,387
700,986
701,306
700,306
698,206
704,986
700,476
704,811
697,531
704,531
$ 15,132,377
Tax Increment Revenue Bonds, Series 2005
Principal
275,000
270,000
280,000
290,000
300,000
315,000
330,000
340,000
360,000
375,000
39b,000
390,000
410,000
425,000
450,000
470,000
485,000
510,000
530,000
560,000
585,000
8,340,000,
Interest
$ 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
$ 4,751,995
Total
$ 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
$ 13,091,995
101
(This page intentionally left blank.)
102
UNAUDITED STATISTICAL SECTION
This part of the City of Pearland, Texas' comprehensive annual financial report presents detailed
information as a context for understanding what the information in the financial statements, note
disclosures, and required supplementary information says about the government's overall financial
health.
Contents Page
Financial Trends 105
These schedules contain trend information to help the reader understand how the
government's financial performance and well-being have changed over time.
Revenue Capacity 111
These schedules contain information to help the reader assess the government's most
significant local revenue sources, the property tax and sales tac.
Debt Capacity 120
These schedules present information to help the reader assess the affordability of the
government's current levels of outstanding debt and the government's ability to issue
additional debt in the future.
Demographic and Economic Information 125
These schedules offer demogi aphic and economic indicators to help the reader understand
the environment within which the government's financial activities take place.
Operating Information 127
These schedules contain service and infrastructure data to help the reader understand how
the information in the government's financial report relates to the services the government
provides and the activities it performs.
Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive
annual financial reports for the relevant year.
(This page intentionally left blank.)
104
CITY OF PEARLAND, TEXAS
NET ASSETS BY COMPONENT
Last Five Fiscal Years*
Amounts in (000's)
(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
2003
$418,713
4,151
3,210
$ 426,074
$107,472
25,749 ,
$133,221
$ 526,185
4,151
28,959
2004
$ 405,052
6,391
6,746
$418,189
$113,736
18,986
$132,722
$ 518,788
6,391
25,732
Total primary government net assets $ 559,295 $ 550,911
2005
$396,619.
6,862
5,785
$ 409,266
$127,144
7,027
552
$134,723
$ 523,763
13,889
6,337
$ 543,989
2006
$ 402,103
8,085
8,917
$419,105
$130,648
10,129
700
$141,477
$ 532,751
18,214
9,617
$ 560,582
*GASB 34 was implemented in fiscal 2003, therefore 10 years of data is unavailable.
In Fiscal Year 2007, the City implemented the retroactive reporting of infrastructure in
accordance with GASB 34. Prior year presentations have been adjusted to reflect the
retroactive reporting.
105
2007
$ 400,522
10,130
11,809
$ 422,461
$126,779
24,258
1,638
$152,675
$ 527,301
34,388
13,447
$575,136
CITY OF PEARLAND, TEXAS
CHANGES IN NET ASSETS
Last Fiver Fiscal Years*
Amounts in (000's)
(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
Solid waste management
Total business -type activities:
Total primary government expenses
Program Revenue
Governmental activities
Charges for services:
General government
Public safety
Public works
Community services
Parks and recreation
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
Water and sewer
Solid waste management
Operating grants and contributions
Water and sewer
Capital grants and contributions
Water and sewer
Total business -type activities program revenues
Total primary government program revenues
2003 2004
$ 6,275
9,645
25,729
2,874
4,559
49,082
13,643
13,643
$ 62,725
$ 161
1,998
5,547
866
5
370
12
324
14
1,618
586
11,501
8,809
9,882
18,691
$ 30,192
106
$ 7,314
10,525
25,913
2,700
5,549
52,001
19,265
19,265
$ 71,266
$ 506
2,975
6,864
696
839
17
1,319
756
13,971
11,893
47
6,933
18,873
$ 32,844
2005
$ 8,714
11,857
28,858
2,939
2006
$ 8,498
12,564
26,914
2,903
4,131
5,115 6,559
57,483 61,569
17,624 20,531
17,624 20,531
$ 75,107 $ 82,100
$ 185 $
3,640
7,221
1,263
2
673
479
2,627
4,331
6,312
825
1,240
111
55
21
800
312
6 15,743
6
14,582 31,271
11,219 13,849
474
8,365 13,434
19,585 27,757
$ 34,167 $ 59,028
2007
$ 8,452
14,655
24,041
3,113
4,882
9,070
64,213
21,076
5,218
26,294
$ 90,507
2,788
195
5,822
818
1,659
154
456
34
11
8,690
20,627
17,754
5,218
349
12,657
35,978
$ 56,605
Net (Expense)/Revenue
Governmental activities
Business -type activities
Total primary government net expense
2003
2004
'2005
$ (37,581) $ (38,030) $ (42,901)
5,048 (392) 1,961
$ (32,533) $ (38,422) $ (40,940)
General Revenues and Other Changes in Net Assets
Governmental activities:
Taxes:
Property taxes
Sales and use taxes t
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
$ 15,120
6,008
2,533
171
741
728
$ 25,302
$ 196
(728)
(532)
$ 24,770
$ 17,907'
' 6,933
2,883
1,115
782
524
$ 30,145
$ 417
(524)
(107)
$' 30,038
$ 19,805
8,026
3,097
1,863
828
359
$ 33,978
$ 399
(359)
40
$ 34,018
2006
2007
$ (30,298) $ (43,586)
7,226 _ 9,684
$ (23,072) $ (33,902)
$ 21,845
9,980
3,426
2,991
740
1,154
$ 40,136
$ 682
(1,154)
(472)
$ 39,664
$ (12,279) $ (7,885) $ (8,923) $ 9,838
4,516 (499) 2,001 6,754
$ (7,763) $ (8 384) $ (6,922) $ 16,592
*GASB 34 was implemented in fiscal 2003, therefore 10 years of data is unavailable.
$ 24,823
11,025
3,760
4,943
1,331
1,060
$ 46,942
$ 2,574
(1,060)
1,514
$ 48,456
$ 3,356
11,198
$ 14,554
In Fiscal Year 2007, the City implemented the retroactive reporting of infrastructure in accordance
with GASB 34. Prior year presentations have been adjusted to reflect the retroactive reporting of
depreciation expenses.
CITY OF PEARLAND, TEXAS
FUND BALANCES OF GOVERNMENTAL FUNDS
Last ten Fiscal Years
Amounts in (000's)
(Modified Accrual Basis ofAccounling)
1998 1999 2000 2001
General fund
Reserved $ 256 $ 155 $ 295 $ 472
Unreserved 3,213 4,302 4,911 6,092
Total General Fund $ 3,469 $ 4,457 $ 5,205 $ 6,564
All other governmental funds
Reserved for debt service $ 274 $ 208 $ 681 $ 1,545
Unreserved, reported in:
Special revenue funds 145 291 603 861
Capital projects funds 8,422 5,038 5,114 3,654
Total other. Governmental Funds $ 8,841 $ 5,537 $ 6,399 $ 6,059
108
2002 2003 2004 2005 2006 2007
$ 286 $ 52 $ 70 $ 71 $ 636 $ 704
4,739 5,310 8,216 8,132 9,961 12,932
$ 5,025 $ 5,362 $ 8,286 $ 8,203 $ 10,597 $ 13,636
$ 2,230 $ 2,130 $ 3,008 $ 3,855 $ 4,658 $ , 6,552
877 1,724 2,849 2,462 3,215 4,546
28,494 41,255 46,580 44,338 53,763 96,542
$ 31,600 $ 45,109 $ 52,436 $ 50,655 $ 61,636 $ 107,640
109
CITY OF PEARLAND, TEXAS
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
Amounts in (000's)
(Modified Accrual Basis of Accounting)
Revenues
Property taxes
Sales and use taxes
Franchise fees
Licenses and permits
Fines and forfeitures
Charges for services
Investment earnings
Intergovernmental
Other
Total Revenues
Expenditures
General government
Public safety
Public works
Community services
Parks and recreation
Debt service:
Principal
Interest and other charges
Capital outlay
Intergovernmental
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
1998
7,256
2,973
1,704
616
577
1,801
9151
346
1,180
17,366
2,834
5,027
4,926
1,588
1,280
1,993
4,141
21,789
(4,423)
951
(128)
595
1,418
1999
$ 8,193
3,484
1,944
956
676
2,960
490
1,499
20,202
3,690
5,698
5,138
1,599
1,440
1,770
4,511
23,846
(3,644)
1,368
(464)
425
1,329
$ (3,004) $ (2,315)
18.5%
16.6%
2000
2001
9,272 $
3,745
2,023
1,470
732
3,062
319
2,084
22,707
3,972
5,952
5,635
1,782
1,605
1,459
1,680
22,085
622
1,686
(923)
10,895
152
(10,822)
987
1,609
15.0%
10,833
4,863
2,304
1,897
857
3,203
334
1,961
26,251
4,235
6,692
5,975
2,662
1,680
1,596
4,517
27,357
(1,106)
1,023
(128)
895
(211)
14.3%
2002
2003
$ 12,858 $
5,103
2,454
2,257
845
3,652
649
9,001
1,584
38,403
16,225
8,303
7,604
2,932
1,920
2,374
12,239
51,598
(13,195)
4,382
(3,752)
38,550
(1,900)
37,280
$ 24,085
10.9%
2004
15,120 $
6,008
2,533
2,682
1,422
3,982
171
2,398
1,133
35,451
5,852
9,650
8,770
2,827
2,040
4,469
23,568
57,176
(21,725)
1 534
(806)
34,653
35,381
17,891
6,933
2,883
3,441
1,608,
5,260
1,115
3,040
1,076
43,247
6,221
10,142
8,709
2,904
3,000
5,665
18,058
54,699
(11,452)
1,431
(907)
184
21,000
94
21,803
13,655 $
19.4%
2005'
2006
19,745 $
8,026
3,097
3,864
1,935
6,139
1;863
2,382
11,i72
48,223
6,750
11,081
10,450
2,747.
3,535
5,555
28,661
1,084
69,862
(21,639)
4,870
(4,510)
37,015
271
(15,926)
21,719
10,350 $
23.6%
80
22.1%
2007
22,150 $
9,980
3,426
4,067
2,038
8,734
2,991
7,852
1,744
62,982
6,381
12,870
9,728
3,787
3,358
3,429
6,771
36,706
1,684
84,714
(21,732)
5,852
(4,698)
41,959
(8,004)
35,108
24,525
11,025
3,760
4,030
2,048
5,250
4,938
14,463
1,815
71,854
6,293
14,598
6,278
3,102
4,908
3,228
10,197
28,530
2,169
79,303
(7,449)
4,596
(3,536)
94,559
1,568
(40,695)
56,492
13,376 $
22.0%
49,043
27.3%
CITY OF PEARLAND, TEXAS
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE
OF TAXABLE PROPERTY
Last Two Fiscal Years
Fiscal
Year
2006
2007
Notes:
Tax
Year
2005
Real Property
Residential
$ 2,664,192,960
2006 3,368,820,420
Commercial
$ 1,009,432,370
1,177,351,983
Less Tax Exempt
Personal Property Real Property
$ 310,036 660 $ 269,648,350
378,469 355 306,851,500
Information not presented was not available at time of publication.
Agricultural Property and Productivity Loss in Commercial
Assessed valuation for fiscal year 2007 does not include Brazoria County Mud #1 valuation of
$241,248,630 that was annexed into the City on December 31, 2006.
Assessed value based on certified roll.
•
Less Other
Exemptions and
Abatements
$ 133,137,398
204,366,148
112
Total Taxable
Assessed Value
3,580,876,242
4,413,424,110
Total Direct
Tax Rate
$ 0.6744
0.6527
Estimated Actual
Taxable Value
$ 3,580,876,242
4,413,424,110
Assessed Value
as a Percent of
Actual Taxable
Value
100%
100%
CITY OF PEARLAND, TEXAS
DIRECT AND OVERLAPPING PROPERTY TAX RATES
Last Ten Fiscal Years
(rate per $100 of assessed value)
Fiscal
Year
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
City Direct Rates
M&O
Rate
$ 0.440
0.440
0.440
0.435
0.430
0.406
0.346
0.339
0.345
0.299
I & S Total
Rate Direct
$10.255 $ 0.695
0.255 0.695
0.255 0.695
0.260 0.695
'0.256 0.686
0.280 0.686
0.350 0.696
0.356 0.695
0.329 0.674
0:354 0.653
Pearland
Independent
School
District
$ 1.777
1.862
1.650
1.820
1.837
1'.837
1.809
1.792
1.792
1, 662
Overlapping
Source: Brazoria County and Harris County Appraisal District.
Alvin
Comm
College
$ 0.197
0.239
0.239
0.239
0.241
, 0.255
0.255
0.241
0.238
0.220 '
Brazoria
County
$ 0.358
0.358
0.400
0.400
0.420
0.420
0.420
0.422
0.408
0.382
Fort
Bend
County
$ 0.588
0.585
0.590
0.575
0.538
0.513
0.499
0.500
0.517
0.517
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
Harns
County
$ 0.417
0.370
0.350
0.384
0.360
0.360
0.388
0.400
0.400
0.402
Port of
Houston
Authority
$ 0.021
0.020
0.018
0.018
0.020
0.020
0.020
0.017
0.015
0.013
Rates a
Harris
County
Flood
Control
$ 0.080
0.031
0.062
0.048
0.050
0.050
0.042
0.033
0.033
0.032
Harris
County
Hospital MUD
District No 17
$0.124 $
0.147
0.203
0.190
0.190
0.190
0.190
0.190
0.192
0.192
0.750
0.750
0.750
0.750
0.750
0.750
0.750
0.750
MUD MUD MUD
No 18 No 19 No 26
$ $ $
0.650
0.650
0.650
0.650
0.650
0.650
0.640
0.610
0.800
0.800
0.800
0.800
0.800
0.800
0.800
0.780
0.850
0.850
0.850
0.850
0.770
115
CITY OF PEARLAND, TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Fiscal
Year
Ended
Sept 30,
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Taxes Levied
for the
Fiscal Year
$ 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
28,770,925
Collected within the
Fiscal Year of the Levy
Percentage
Amount of Levy
$ 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
28,235,276
Source: Brazoria County Tax Office
Taxes levied based on adjusted tax roll.
Collections
in Subsequent
Years
98.50% $
98.10%
98.35%
97.66%
96.79%
98.02%
98.03%
98.08%
97.84%
98.14%
116
Total Collections to Date
Percentage
Amount of Levy
93,923 $
140,081
120;882
. 229,624
377,622
255,311
295,456
340,618
400,837
7,051,076
8,132,385
9,143,424
10,839,278
12,854,905
14,830,608
17,929,442
20,917,430
24,090,868
28,235,276
99.8%
99.8%
99.7%
99.8%
99.7%
99.7%
99.7%
99.7%
99.5%
98.1%
CITY OF PEARLAND, TEXAS
PRINCIPAL PROPERTY TAX PAYERS
Current Year And Nine Years Ago
Taxpaver
Weatherford U.S., Inc.
Wal-Mart
Centerpomt Energy
Shadow Creek Ranch Dev Co
Pearland Investments Ltd
Waterford SCR LP
Pearland Lifestyle Center
Turbocare, Inc
HCA Healthcare
HD Development Properties, LP
Aggreka, Inc.
Houston Lighting & Power
Southwestern Bell Telephone
Whispering Winds
Continental 34 Ltd
K-Mart
Pearland Remington Ltd
Western Atlas Logging Service
Total
2007
Taxable
Assessed
Value
Percentage
of Total City
Taxable
Assessed
Rank Value
$ 33,607,360 1
25,434,850 2
23,001,660 3
21,996,4701 4
19,248,280 5
19,088,150 6
15,234,520 T
15,159,150 8
14,882,164 9
13,485,360 10
$ 201,137,964
Source: Brazoria County Appraisal District
0.76%
0.58%
0.52%
0.50%
0.44%
0.43%
0.35%
0.34%
' 0.34%
0.31%
4.56%
1998
Taxable
Assessed
Value
Rank
$ 30,743,040
8,331,800
11,519,700
9,133,850
8,749,670
6,288,020
6,093,140
6,087,890
5,140,100
4,531,700
$ 96,618,910
1
5
2
3
4
6
7
8
9
10
Percentage
of Total City
Taxable
Assessed
Value
3.01 %
0.82%
1.13%
0.89%
0.86%
0.62%
0.60%
0.60%
0.50%
0.44%
9.46%
117
CITY OF PEARLAND, TEXAS
TAXABLE SALES BY CATEGORY
Last Ten Calendar Years
(in thousands of dollars)
Agriculture, Forestry, Fishing
Mining, Quarrying, Oil and Gas
Utilities
Manufacturing
Wholesale Trade
Retail Trade
Transportation, Communications, Utilities
Information
Finance Insurance
Real Estate/Rental/Leasing
Professional/Scientific/Technical
Management of Companies/Enterprises
Admin/Support/Waste Mgmt/Remediation
Educational Services
Health Care/Social Assistance
Arts, Entertainment & Recreation
Accommodations & Food Services
Construction
Other Services (Except Public Admin)
Other
Total
City direct sales tax rate b
Calendar Year
1998
1999
1,537 $ 1,495
450 299
9,369
12,403
149,747
1,958
1,777
19,680
46,738
243,659
8,464
10,873
180,126
1,955
1,646
23,170
43,177
$ 271,205
2000
$ 1,732
434
12,018
9,062
218,485
1,929
2,161
20,124
52,158
$ 318,103
2001
2002
$ 1,783 $ 6
1,222 2,308
15,648
13,269
253,792
2,083
2,940
16,902
61,834
$ 369,473 $
24,365
13,248
240,099
50
2,294
3,095
14,900
2,421
7,760
133
17
3,990
43,421
18,204
13,304
7,978
397,592
1.00%
1.00%
1.00%
Source: State Comptroller's Office.
a 2007 taxable sales thru 2nd quarter of 2007.
b The City direct sales tax rate includes the City only and not the Pearland Economic
Development Corp. (4B).
c Categories changed in 2007. Re -categorized data only available back to 2002.
1.00%
1.00%
118
2003 2004 2005 2006 2007a
$ 13 $ 199 $ 283 $ 453 $ 220
2,123 3,738 2,985 4,365 2,296
7
27,491 36,756 40,847 46,247 24,632
11,234 14,526 24,070 37,265 16,441
277,229 305,150 371,817 464,816 240,885
43 43 55 86 96
2,851 3,565 6,388 8,553 4,692
3,403 3,505 1,811 1,722 579
14,243 16,434 18,629 33,329 22,134
2,743 3,442 3,538 3,889 2,000
2,399 2,278
10,515 12,101 13,625 8,038 4,144
195 122 207 110 25
14 9 72 56 26
4,048 4,704 4,787 5,208 3,529
54,331 65,719 80,185 94,878 53,334
14,156 13,288 13,221 18,491 7,565
14,495 15,222 16,921 20,811 10,295
5,494 548 13 2
$ 444,621 $ 501,471 $ 601,732 $ 748,324 $ 392,893
1.00% 1.00% 1.00% 1.00% 1.00%
119
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
1998 $
1999
2000
2001
2002
2003
2004
2005
2006
2007
16,155
15,105
13,760,
12,610
13,335
26,880
25,345
60,175
90,305
164,810
Certificates
of Obligation
Bonds
Capital
Lease
Obligations
$ 17,915 $
17,525
16,210
15,680
51,585
70,650
90,185
72,390
81,275
66,220
750
826
381
75
184
396
309
1,538
Business -Type Activities
Revenue
Bonds
$ 9,400
, 9,045
16,675
16,140
25,570
34,485
33,505
32,480
40,170
79,180
Certificates
of Obligation
Bonds
Capital
Lease
Obligations
$ 17,100 $ 121
17,100 62
17,050
17,000
16,925
16,835
16,735
15,880
15,000
13,915
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
* Information not avaialble.
Total
Primary.
Government
$ 61,441
59,663
64,076
61,505
107,415
148,850
165,954
181,321
227,059
325,663
Percentage
of Personal
Income
6.2%
5.8%
9.5%
10.6%
10.3%
9.3%
11.1%
12.4%
Per
Capita
$ 1,661
1,72$
1,643
1,519
2,492
3,167
3,073
2,895
2,862
3,854
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
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
General
Obligation
Bonds
Less Debt
Service
Funds
$ 51,170 $
49,730
47,020
45,290
81,845
114,365
132,265
148,445
186,580
244,945
274
208
681
1,545
2,230
2,130
3,008
3,855
4,658
6,552
Net
Bonded
Debt
$ 50,896
49,522
46,339
43,745
79,615
112,235
129,257
144,590
181,922
238,393
Ratio of Net
Bonded Debt
to Assessed
Value
5.8%
4.9%
3.9%
3.3%
5.1%
6.0%
6.3%
6.2%
5.1%
5.4%
Percentage
of Personal
Per
Income a Capita a
*
*
4.5%
4.1%
7.0%
8.0%
8.0%
7.4%
8.9%
9.1%
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.
$ 1,376
1,434
1,188
1,080
1,847
2,388
2,394
2,308
2,293
2,821
CITY OF PEARLAND, TEXAS
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
September 30, 2007
(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. 23
Brazoria County MUD No. 26
Brazoria County MUD No. 28
Brazoria-Fort Bend County MUD No. 1
Fort Bend County
Harris County
Harris County Flood Control District
Pearland ISD
Port of Houston Authority
Total Overlapping Debt
City Direct Debt
Total Direct and Overlapping Debt
Population
'er Capita Debt -Direct and Overlapping Debt
Gross
Debt a
19,065
51,745
29,010
29,87,0
39,980
11,330
,' 55,150
5,045
29,000
375,765
2,145,546
111,930
313,923
343,965
232,568
Sources: Individual jurisdictions and/or Texas Municipal Reports.
* Debt amounts are as of September 30, 2007.
Overlapping
Percentage
Amount
5.22% $
23.73%
100.00%
97.35%
100.00%
100.00%
100.00%
100.00%
100.00%
0.27%
0.02%
0.02%
.93.85%
0.02%
100%
995
12,279
29,010
29,078
39,980
11,330
55,150
5,045
29,000
1,015
429
22
294,616
69
508,019
232,568
740,587
84,500
8,764
CITY OF PEARLAND, TEXAS
PLEDGED REVENUE COVERAGE
Amounts in (000's)
Last Ten Fiscal Years
Fiscal
Year
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Water & Sewer Revenue Bonds
Gross
Revenues
Less:
Operating
Expenses
$ 5,992 $
7,187
8,745
8,727
9,037
9,023
12,357
11,619
15,004
20,677
Net
Revenue
Available for
Debt Service
3,370 $
3,464
3,899
4,947
5,244
6,282
10,877
8,607
11,228
12,151
Debt Service
Principal
2,622 $
3,723
4,846
3,780
3,793
2,741
1,480
3,012
3,776
8,526
Interest
345 $
370
535
570
575
980
1,025
1,075
1,125
1,125
438 $
409
785
760
1,159
1,635
1,504
1,459
1,829
2,915
Total Coverage
783
779
1,320
1,330
1,734
2,615
2,529
2,534
2,954
4,040
3.35
4.78
3.67
2.84
2.19
1.05
0.59
1.19
1.28
2.11
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. Operating expenses
do not include interest depreciation, or amortization expenses.
124
CITY OF PEARLAND, TEXAS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Fiscal
Year
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Population
(A)
37,000
34,535
39,000
40,500
43,103
47,000
54,000
62,634
79,322
84,500
Personal
Income (in
$000's)
*
*
$ 1,025,934
1,065,393
1,133,868
1,400,741
1,609,362
1,951,801
2,050,394
2,631,837
Per Capita
Personal
Income (B)
*
*
$ 26,306
26,306
26,306
29,803
29,803
31,162
25,849
31,146
(A) Estimated
(B) Pearland Economic Development Corporation
(C) Pearland Independent School District
(D) Bureau of Labor Statistics
* Information not presented is not avaialble.
Median
Age (B)
*
*
34.0
34.0
34.0
35.1
35.1
35.5
33.4
34.9
Education
level in
Years of
Schooling
14.1
14.1
14.3
14.3
14.3
14.3
14.3
14.3
14.3
14.3
School
Enrollment
(C)
9,200
9,500
9,700
10,224
11,700
12,103
13,401
14,236
16,179
17,083
Unemployment
Rate (1))
3.7%
4.1 %
3.8%
3.6%
4.3%
14.7%
4.5%
4.6% .
3.6%
3.6%
CITY OF PEARLAND, TEXAS
PRINCIPAL EMPLOYERS
Current Year and Two Years Ago
Employer
Pearland ISD
Wal-Mart
City of Pearland
TurboCare
Kemlon
Home Depot
Weatherford
Profax
Packaging Service Co.
Super Target
Randall's
Tele-flow
Lowes
Total
2005
Percentage
of Total City
Employees Rank Employment
1,820 1
800 2
429 3
175 7
185 6
250 4
115
150 8
250 5
140 9
132 10
4,446
Source: Pearland Economic Development Corp.
7.26%
3.19%
1.71%
0.70%
0.74%
1.00%
0.46%
0.60%
1.00%
0.56%
0.53%
17,73%
126
2007
Percentage
of Total City
Employees Rank Employment
2,090 1
800 2
447 3
360 4
325 5
225 6
191 7
175 8
155 9
150 10
4,918
7.89%
3.02%
1.69%
1.36%
1.23%
0.85%
0.72%
0.66%
0.59%
0.57%
0.00%
18.57%
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
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Function/Program
Governmental Activities
General Government 28 31 32 34 37 45 41 42 49 51
Public Safety 83 102 113 113 132 132 160 170 184 205
Public Works 25 26 29 30 32 41 42 43 44 47
Community Services 22 25 21 22 26 34 37 41 47 50
Parks and Recreation 1 61 59 47 47 50 52 55 58 52 59
Business Type Activities
Water & Sewer 45 47 4749 51 56 62 62 76 78
Component Unit
Economic Development 4 4 4 4 4 4 4 4 4 4
Total
Source: City Budget
268 294 293 299 332 364 401 420 456 494
CITY OF PEARLAND, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM,
Last Five 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
3,085
226
22,438
984
95
360
2,808
295
370
220
30 496
4,809
555
1,069
366
11
120
1,307
1,188
4,290
4,048
4,778
1,815
303,930
790
1,725
21,181
2007
3,475
194
22,279
1,026
97
449
3 074
269
486
354
32,747
5,053
544
980
371
21
96
2,333
1,202
5,372
4,983
4,686
1,889
318,587
583
1,404
19,961
PARKS AND RECREATION
All Parks and recreation
ROW maintained - acres
Trees maintained - acres
Acres of' city property mowed
Total number of parkwork orders received
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 trials
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
On 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
2003
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
*In fire hydrant maintenance and inspections is contracted out.
During FY06, the contractor's services were disrupted by a storm.
2004
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
2005
N/A
3 450
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
2006
478
3 450
167
227
175
20
19
1,189
6,723
2,898
4,600
36,724
2,739
14,889
2 682
1,952
22 185
N/A
99*
251
129
2,044
967
2007
385
4 280
439
361
175
25
25
1,222
7,988
3,068
6,099
31,004
3,962
13,769
3,055
2,305
20,481
3,596
537
330
108
1,597
1,121
211,956 234,875 285,930
192,014 248,848 293,833
1,398
1,668
2,305
129
CITY OF PEARLAND, TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM,
Last Five Fiscal Years
Function/Program
PUBLIC SAFETY
Police
Fire
EMS
Fiscal Year
2003 2004 2005 2006 2007
Police stations 1 1 1 1 1
Police vehicles 89 100 109 112 117
Fire stations, 4 4, 4 4 4
Fire vehicles 14 15 15 16 16
EMS Stations 3 3 3 3 3
EMS Ambulances 5 5 5 5 5
PUBLIC WORKS
Other public works
Streets (miles)e 202 232 248 578 758
Streetlights 1 3,425 3,425 3,494 3,563 5,294
Traffic signals 43 43 47 48 57
PARKS AND RECREATION
Parks and recreation
Developed acreage 124 124 124 175 175
Pools N/A 1 1 1 1
Outdoor basketball courts N/A N/A N/A 10 10
Soccer fields N/A N/A N/A 12 12
Activity buildings 2 2 3 3 3
Baseball/Softball Fields 4 4 4 4 4
WATER AND SEWER
Water Production
Water wells 8 8 9 9 10
Pumping stations 2 2 2 2 2
Ground storage tanks 10 10 13 15 15
Elevated towers 4 4 4 5 5
Wastewater
Treatment Plants 4 4 4 4 5
Lift Stations 74 74 78 74 78
Distribution and Collection
Water mains (miles) 240 250 296 361 395
Sanitary sewers (miles) 230 240 279 321 353
Sources: Various city departments.
Note: No capital asset indicators are available for the general government and community services functions.
Inside city limits. Prior to FY07, street miles were measured visually.
130
Exhibit "A"
Resolution No. R2008-027
11 Greenway Plaza, Suite 1515
Houston, TX 77046
(713) 621-1515
Fax: (713) 621-1570
AYL
Null £ Lairson
CERTIFIED; P.UF3LIC ACCOUNTANTS
PROFESSIONAL CORPQR TION
2277 Plaza Drive, Suite 260
Sugar Land, Texas, 77479
(281) 242-8600
Fax: (281) 242-7337
Independent A uditors' Report on Internal Control over Financial Reporting
and Other Matters Based on an Audit of Financial Statements
To the Honorable Mayor,
Members of City ,Council and Audit Committee
City of Pearland, Texas
Pearland, Texas ,
We have audited the financial statements of the governmental activities, the business -type
activities, each major fund, and the aggregate remaining fund information of City of Pearland,
Texas (the "City") as of and for the year ended September 30, 2007, which collectively comprise
the City's basic financial statements and have issued our report thereon dated February 4, 2008.
We conducted our ,audit in accordance with auditing standards generally accepted in the United
States of America.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the City's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose
described in the preceding paragraph and would not necessarily .identify all deficiencies in
internal control over financial reporting that might be significant deficiencies or material
weaknesses. However, as discussed below, we identified a certain deficiency in internal control
over financial reporting that we consider to be a significant deficiency.
A control deficiency exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent or detect
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination
of control deficiencies, that adversely affects the entity's ability to initiate, authorize, record,
process, or report financial data reliably in accordance with generally accepted accounting
principles such that there is more than a remote likelihood that a misstatement of the City's
financial statements that is more than inconsequential will not be prevented or detected by the
City's internal control. We consider finding 07-01 to be a significant deficiency.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements
will not be prevented or detected by the City's internal control.
FILE COPY
CITY SECRETARY'S OFFICE
DC! NOT REMOVE
To the Honorable Mayor
Members of City Council and Audit Committee
City of Pearland, Texas
Pearland, Texas
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and would not necessarily identify all deficiencies
in internal control that might be significant deficiencies and accordingly, would not necessarily
disclose all significant deficiencies that are also considered to be material weaknesses. However,
we do not believe the significant deficiency described above is a material weakness.
Other Matters
The administration's response to the finding identified in our audit is described in the
accompanying schedule of findings and responses We did not audit the response and,
accordingly, we express no opinion on it.
Closing
This report is intended solely for the information and use of the City Council, Audit Committee,
management, others within the organization and is not intended to be, and should not be used by
anyone other than these specified parties.
‘,167014.
Houstdn, Texas
February 4, 2008
CITY OF PEARLAND
INTERNAL CONTROL REPORT
FOR THE YEAR ENDED SEPTEMBER 30, 2007
CONDITION 07-01 — PAYROLL FUNCTIONS
As a result of a discussion related to understanding the payroll process we have the following
concerns'
• The payroll (staff) accountant is adding employees' payroll deductions and certification pay rates
to the City's payroll system.
The payroll accountant is setting up employees' direct deposit information and payroll
deductions. For deductions the payroll accountant is initiating the transaction, determining the
amount due and is also preparing the supporting documentation. After the payroll's accounts
payable checks are processed they are returned to the payroll accountant in order to attach
remittance advices and to distribute (mail) the checks.
• The payroll direct deposit file used to notify the bank of an employee's pay check amount is a
text file. This text file can be adjusted prior to transferring the information to the bank. These
payroll registers are not currently reviewed by another individual.
REASON IMPROVEMENT NEEDED:
• A proper separation of duties is required to restrict one person from processing a payroll
transaction in the system fiom beginning to the end.
CAUSE OF CONDITION:
• The City s current payroll processing system is designed so that:
The payroll accountant has access and is entering deduction and (certification) pay
information into the payroll system.
Direct deposit information is controlled by the payroll accountant who is charged with
process the city's payroll. Payroll's accounts payable checks are initiated and returned to
the payroll accountant. These processes are controlled by one individual.
EFFECT OF CONDITION:
• Errors and omission may not be detected in a timely manner as one person is processing the
transaction from beginning to end.
• Unauthorized adjustments could be made to the direct deposit file and not be detected in a timely
manner.
CITY OF PEARLAND
INTERNAL CONTROL REPORT
FOR THE YEAR ENDED SEPTEMBER 30, 2007
RECOMMENDATIONS:
• All deductions, pay rate information and direct deposit information be entered by Human
Resources department. No ability to enter or change pay amounts and direct deposit information
should be under the responsibility of the payroll accountant.
• Payroll accounts payable checks should not be returned to the payroll accountant for distribution.
Accounts payable department should attach the remittance advice to the check and handle the
mailing of the check.
• Review and confirmation of direct deposit payroll information sent to bank. Review possibility
of locking the content of the file.
• Review and approve each payroll register.
CITY'S RESPONSE
• Finance and Human Resources both agree with the recommendation of separating duties
regarding payroll Human Resources is scheduled to have software training in April, which will
be a good time for this transition. Human Resources will then enter any deductions, pay rate
information, and direct deposit information, which would affect an employees pay. Finance
would then review these changes via and audit listing against the employee status changes for any
errors prior to generating payroll checks.
• Accounts Payable will begin mailing the checks and remittance advice to the vendor, instead of
the Payroll Technician. The remittance advice will be .given to Accounts Payable prior to checks
being mailed.
• Currently, the direct deposit and check totals from the payroll register are verified against the
ACH confirmation from the bank, and the check edit report, to insure the amounts are correct It
is possible to alter the direct deposit file sent to the' bank because it is a text file Finance and IT
will look into a solution to prevent any changes from being made to. the file.
• The totals from the payroll register are currently being reviewed and signed off by Finance, and a
detailed audit listing is being reviewed and signed off by Human Resources. As an additional
safety measure to prevent any errors, Finance will begin reviewing the entire payroll register prior
to checks being generated.
CITY OF PEARLAND
INTERNAL CONTROL REPORT
FOR THE YEAR ENDED SEPTEMBER 30, 2007
STATUS OF PRIOR YEAR FINDING
FINDING 2006-1 CAPITAL ASSET RECORDKEEPING (MATERIAL WEAKNESS)
•
Finding:
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.
STATUS
Complete - as of September 30, 2007, City personnel have completed a detailed listing of capital assets.
I