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R2009-028 - 2009-02-23RESOLUTION NO. R2009-28 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, ACCEPTING THE CITY S COMPREHENSIVE ANNUAL FINANCIAL REPORT AS PREPARED BY THE ACCOUNTING FIRM OF NULL-LAIRSON. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That certain comprehensive annual financial report as prepared by Null-Lairson, a copy of which is attached hereto as Exhibit "A" and made a part hereof for all purposes, is hereby authorized and approved. Section 2. That the City Council accepts the City s comprehensive annual financial report. PASSED, APPROVED and ADOPTED this the 23~d day of February, A.D., 2009. REID MAYOR ATTEST: .N '+. Q~QEAR~py Y NG I G, M =~_ Y S RETAR ~"'~~ APPROVED AS TO FORM: ~a.~.._- DARRIN M. COKER CITY ATTORNEY Exhibit "A" Resolution No. R2009-28 /.•L CERuT1ilED P BL1C AC~COI~NTANTS Independent Auditors' Report 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, 2008, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of City's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, as of September 30, 2008, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 12, 2009 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions or laws, regulations, contracts, and grants agreements and other matters. The purpose of that report is to describe the scope of our testing of internal over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report, which has been issued separately from this document, is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. The Management's Discussion and Analysis on pages 5 through 14, budgetary comparison information and Required Pension System Supplementary information on pages 63 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. To the Honorable Mayor and Members of the City Council City of Pearland, Texas Page 2 Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. Combining and individual nonmajor fund and component unit fund financial statements as well as long-term debt amortization and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. This information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The Introductory Section and Statistical Section listed in the foregoing table of contents are presented for the purpose of additional analysis and are not a required part of the basic financial statements of the City. Such additional information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and accordingly, we express no opinion on them. ~~~a:,~.,ac Houston, Texas February 12, 2009 2 Exhibit "A" Resolution No. R2009-28 CITY OF PEARLAND, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended September 34, 2008 Officials Issuing Report Bill Eisen Mickiel Hodge Claire Bogard Rick Overgaard City Manager Assistant City Director of Finance Assistant Director of Manager Finance r CITY OF PEARLAND,TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Page Introductory Section Letter of Transmittal Principal Officials ix Organization Chart x GFOA Certificate of Achievement xi Financial Section Independent Auditors'Report 1 Management's Discussion and Analysis 5 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 Balance Sheet of Governmental Funds 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-Discretely Presented Component Units- Governmental Activities 28 Combining Statement of Activities-Discretely Presented Component Units- Governmental 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 63 Notes To Required Supplementary Budget Information 64 Required Pension System Supplementary Information 65 CITY OF PEARLAND,TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS(Continued) Financial Section(Continued) Page Other Supplementary Information: T] Combining and Individual Fund Statements and Schedules Combining Balance Sheet-Nonmajor Governmental Funds 72 Combining Statement of Revenues,Expenditures,and Changes in Fund Balances- Nonmajor Governmental Funds 74 Schedules of Revenues,Expenditures,and Changes in Fund Balance- Budget and Actual: 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 Police Seizure Fund 83 Parks and Recreation Development Fund 84 Sidewalk Fund 85 Grant Fund 86 Street Assessments Fund 87 Management District 1 Fund 88 fl Discretely Presented Component Units 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 Activity Long-Term Debt 94 Combining Schedule of Enterprise Fund Long-Term Debt 100 Combining Schedule of General Long-Term Debt of Pearland Economic Development Corporation 102 Combining Schedule of General Long-Term Debt of Development Authority of Pearland 103 Ti Ti CITY OF PEARLAND,TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS(Continued) Statistical Section (Unaudited) Page Net Assets by Component 109 Changes in Net Assets 110 Fund Balances of Governmental Funds 112 Changes in Fund Balances of Governmental Funds 114 Assessed Value and Estimated Actual Value of Taxable Property 116 Direct and Overlapping Property Tax Rates 118 Property Tax Levies and Collections 120 Principal Property Taxpayers 121 Taxable Sales by Category 122 Outstanding Debt by Type 124 Ratios of General Bonded Debt to Assessed Value and Net Bonded Debt per Capita 126 Direct and Overlapping Governmental Activities Debt 127 Pledged Revenue Coverage 128 Demographic and Economic Statistics 129 Principal Employers 130 Full-time Equivalent City Government Employees by Function/Program 131 Operating Indicators by Function/Program 132 L Capital Asset Statistics by Function/Program 134 r 7 r 11 r P P P P P P P P R Introductory Section P P P P P P P P ��j; 4 , . aae� latjA ANIza Y A s r-: February 12,2009 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, 2008, 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 30,2008. 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 7 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 89,000 L residents estimated as of June 2008. The City of Pearland is a home-rule City operating under a Council-Manager form of government. . i To the Honorable Mayor,Members Of City Council,and Citizens of the City of Pearland,Texas Page 2 Policy-making and legislative authority are vested in a governing council (Council) consisting of the mayor and five other members. The Mayor and all Council members are elected at large. The Mayor is allowed to vote only in case of a tie vote. The Mayor and each Council member hold office for a period of three years and until his/her successor is elected and qualified. Council members shall be limited to two full consecutive terms of office and there is no limitation on the office of Mayor. The City Manager is appointed by Council and is responsible for implementation of Council policy, execution of the laws, and all day-to-day operations of the City. A full range of municipal services is provided by the City of Pearland including public safety(police, fire, and emergency medical services); solid waste; water and wastewater utilities; public improvements; repair and maintenance of infrastructure; recreational and community activities; and general administrative services. 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 infrastructure1 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 a portion of tax increments produced in the Zone to the Tax Increment Fund. The Development Authority of Pearland was created in 2004 to provide financing for the development of 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 j 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. j i ii U r 1i9 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 2008 totaled over$372.8 million, a 41% reduction in value. New single-family housing permits totaled 1,240 with a construction value of$254 million. The number of permits declined by 345 from 2007;however Pearland continues to grow at a respectable pace, faring better than the rest of the nation. Residential permitting activity is anticipated to decline slightly in 2009 due to lower consumer confidence, slower job growth, and the uncertain outlook by the fall of oil and natural gas prices. The Houston area continues to show some resilience; while home sales in the Houston region have declined, there has only been slight erosion, 1.6%, in the average home price. For calendar year 2008, the City had 52 commercial permits with a value of$100 million, down from the 77 permits with a value of$264 million in 2007. Permits in 2007 included two large retail developments: Shadow Creek Ranch Town Center and Pearland Town Center. While the Houston region's economic growth has remained robust, growth is decelerating somewhat, with the only uncertainty of how deep the effect will be from the collapse of energy prices and the global recession. Through October 2008, the Houston area employment grew by 52,300 jobs, a 2% rate of growth. The Houston metro unemployment rate was 5.4% in October 2008 in comparison to the national unemployment rate of 6.5%. Core industries continue to demonstrate strong fundamentals. Energy demand, manufacturing output, and trade volume all remain sturdy despite a national economic slowdown. Houston's medical sector, which Pearland is in close proximity to the Texas Medical Center, continues its expansion with new clinics, research facilities, and jobs. Despite a slower pace of growth, the Houston area will still be among the nation's top performers. Shadow Creek Ranch Town Center opened in 2008, with 600,000 square feet of 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 provides for other shopping and dining opportunities. Pearland Town Center, an 800,000 square foot mixed-use center, also opened in 2008 with major anchor stores of Macy's, Dillard's, Barnes & Noble, and Sports Authority. The development also includes a Courtyard by Marriott Hotel and residential lofts. A proposed Water Lights Development is in the planning stages. The Water Lights Development is on a 40 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 hotel 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. Construction commenced 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. The building is anticipated to be complete in the summer of 2009. 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's Economic Development Corporation has contracted with Angelou Economics for a strategic plan and target market study to develop a proactive identification and marketing plan for bringing the "best prospect"companies to Pearland. I To the Honorable Mayor,Members I Of City Council,and Citizens of the City of Pearland,Texas Page 4 Sales tax continues to increase for Pearland mainly due to the opening of two retail developments. Sales tax receipts for fiscal year 2008 totaling $18.2 million was an increase of 13.7% over fiscal year 2007. For the first two quarters of 2008, 63% of taxable sales are retail trade according to the State of Texas Comptroller information. Pearland is becoming a regional shopping destination with the opening of the above retail developments and it is expected that sales tax will continue to increase by double digits in fiscal year 2009. 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 2009 through fiscal year 2013 totals $245 million and continues to implement the $162 million bond program approved by the voters in May 2007. Projects include Drainage ($30M), Streets ($53M), Facilities ($36M), Parks ($38M), Water ($47M), and Wastewater ($41M). All projects in the CIP have identified funding sources or potential funding sources. Funding 1 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. r� The Debt Service Fund forecast shows a need to increase the Debt Service component of the tax rate by )I twelve cents by tax year 2013 from the 2006 tax rate to implement the Five-Year CIP. This is consistent with the financial modeling that the City undertook when analyzing the Debt Service tax implications of implementing the $162 million bond referendum. In 2008,the City completed a Water/Sewer Cost of Service/Rate Study for years 2009—2013. The study, built around the Five-Year CIP, operating budget, and future needs, show a need for revenue increases over the next several years to meet current and future obligations. Increases are necessary to support operations, annual debt service, and funding for an $87 million five-year CIP, including acquiring an additional 10MGD in surface water. With the implementation of rate increases the City's utility.system continues to be self-supporting and financially sound. The City is currently undertaking a review of all of the services provided, who the service benefits, what are the benefits,and service levels to ensure the City's resources are used efficiently and effectively. 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. 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. I • Leverage City dollars by seeking outside funding sources. • Maintain stable property tax rates. iv To the Honorable Mayor,Members Of City Council,and Citizens of the City of Pearland,Texas Page 5 Major Initiatives The City of Pearland continues to experience dramatic growth and new opportunities. The City Council, staff, and community share a vision that combines progress and innovation with prudent controls to shape Pearland's future even as it becomes one of the largest suburbs in the Houston area. 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 new police officers each year to keep pace with growth. The City added ten officers in 2008 and has budgeted for an additional seven in 2009. Community policing remains a focus, with crime prevention, victim assistance, and youth intervention programs further reinforcing the City's small-town feel. The City is also in the process of constructing a 79,800 square foot public safety facility totaling approximately $22.8 million. The facility includes a police station including a jail, a state of the art Emergency Operations Center, court facilities, fire marshal's office and an annex for utility bill paying and a county annex. The voter approved bond referendum also included$2.9 million for 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. Design of the station is underway. r41, Educational Enrichment The City and The University of Houston negotiated a joint partnership to bring higher education to Pearland. The first building of a satellite campus is targeted to open for junior, senior, and master classes summer of 2010. 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 Corporation 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. A construction contract was awarded in January 2009 totaling$11.1 million in conjunction with approval of an operating-lease agreement. 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 City's Five-Year CIP 2009 — 2013 totals $245 million. Projects include Drainage ($30M), Streets ($53M), Facilities ($36M), Parks ($38M), Water ($47M), and Wastewater($41M). p ti v I To the Honorable Mayor,Members Of City Council,and Citizens of the City of Pearland,Texas Page 6 Major thoroughfare projects include the 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 expansion of the D.L. Smith1 detention pond by approximately 150 acre-feet, an additional 200 acre-feet of stormwater 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 funding of a Park and 1 Ride type facility, the construction of a Public Works annex on the west-side of town, and an 11,500 square feet expansion and renovation to the Tom Reid Library. Water projects include a 30 inch water transmission line to provide 10 million gallons per day of surface water to the City, and the design of a 20 million gallon per day surface water plant. Wastewater projects include the replacement of Southdown wastewater treatment plant, expansion of the John Hargrove Environmental Center wastewater treatment plant and major rehabilitation projects. In order to design and construct these projects the City implemented a Project Delivery Model for consistency, efficiency, and effectiveness in completing projects. Benefits of the model include value engineering,visible timelines for completion, communications with stakeholders, cost and quality control1 measures,contingency management,and completion of projects within budget and on-time. 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 1 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. TXDOT has finalized the Major Investment Study and is working to bring a consultant on board to start the environmental documents. 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 park and ride site and City staff is exploring options for federal capital funds for the construction of a permanent facility. The site would be located near 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. I vi 1 To the Honorable Mayor,Members Of City Council, and Citizens of the City of Pearland,Texas Page 7 f-' 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 r'? 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 began in 2008. The City's share of the expansion totals $26.8 million and an additional $27 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 10MGD 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 and $7.7 million is due on March 1, 2009 for the City's pro-rata share of the purchase. 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. 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 may 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. 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, 2007. This was the 31st 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. p C vii 7 To the Honorable Mayor,Members Of City Council, and Citizens of the City of Pearland,Texas Page 8 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 Mayor and members of the City Council-for their support in planning and cOndneting the finandial 6perations of the-City in a responsible Manner. Respectfully submitted, t( , f- , # . Aicti,, Ellait._ Bill Eisen,City Manager Claire Bogard,Director of Finance A i Rick Overgaard,Assistant Director of Finance 7 I 7 I t.... I 7 I 71 I viii 7 7 7 CITY OF PEARLAND,TEXAS PRINCIPAL OFFICIALS C Term Expires Elected Officials Position May 7 Tom Reid Mayor 2011 Woody Owens Council Member at Large-Position One 2010 7! Helen Beckman Council Member at Large-Position Two 2009 Steve Saboe Council Member at Large-Position Three,Mayor Pro-Tern 2011 Felicia Kyle Council Member at Large-Position Four 2009 Kevin Cole Council Member at Large-Position Five 2010 7 Appointed Officials Position 7 Bill Eisen City Manager Darrin Coker City Attorney Letitia Farnie Municipal Court Judge 7 City Management Position Mickiel Hodge Assistant City Manager 7 Claire Bogard Director of Finance Fred Welch Executive Director PEDC Jeff Sundseth Director of Emergency Medical Services Young Lorfing City Secretary + Danny Cameron Director of Public Works Mary Hickling Director of Human Resources 7 Chris Doyle Police Chief Narciso Lira City Engineer Kola Olayiwola Director of Inspections Jon Branson Director of Parks and Recreation 7 Jack Colbath Director of Fire Services DeDe Williams Head Librarian Lata Krishnarao Director of Planning 7 Trent Epperson Projects Director 7 I 7 7 7 ix 1 CITY OF PEARLAND,TEXAS ORGANIZATION CHART CITIZENS OF I PEARLAND MAYOR AND CITY COUNCIL MUNICIPAL JUDGES BOARDS& COMMISSIONS CITY ATTORNEY CITY MANAGER ASSISTANT CITY ASSISTANT CITY MANAGER MANAGER PUBLIC WORKS COMMUNITY DEVELOPMENT ENGINEERING MUNICIPAL COURT PROJECT ANIMAL CONTROL MANAGEMENT PLANNING PARKS&RECREATION - S PUBLIC AFFAIRS POLICE FINANCE FIRE FIRE MARSHAL EMERGENCY INFORMATION ACCOUNTING MANAGEMENT TECHNOLOGY EMERGENCY MEDICAL BUDGET UTILITY BILLING &COLLECTIONS CITY SECRETARY PURCHASING HUMAN RESOURCES I 1 I r Certificate of Achievement for Excellence in Financial Reporting Presented to City of Pearland Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30,2007 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports(CAFRs)achieve the highest standards in government accounting and financial reporting. `11P t President *fir 7 Executive Director P P r xi t_ r i, r r r Financial Section F F p p p p p ityL u EDP CA WT s Independent Auditors'Report 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, 2008, which collectively comprise the City's:basic: financial statements:as listed in the table of contents. These financial statements: are the responsibility of .City's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in.Government Auditing Standards, issued by the Comptroller General of the United States.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control.over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,but notfor the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the ✓� amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall fmancial 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, as of September 30,2008,and the respective changes in financial position and cash flows,where applicable,thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 12,. 2009 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions or laws, regulations, contracts, and grants agreements: and other matters. The purpose of that report is to describe the scope of our testing of internal over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance.That report,which has been issued separately from this document, is an integral part of an audit performed in accordance with Government Auditing Standards. and should be read in conjunction with this report in considering the results of our audit. The Management's Discussion and Analysis on pages 5 through 14, budgetary comparison information and Required Pension System Supplementary information on pages 63 through 65 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. 1 t'. To the Honorable Mayor and Members of the City Council City of Pearland,Texas Page 2 Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic fmancial statements.:Combining and individual nonmajor fund and component unit fund fmancial statements as well:as long-term debt amortization and schedules are presented for 7 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 financialal statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. 7 The Introductory Section and Statistical Section listed in the foregoing table of contents are presented for the purpose of additional analysis and are not a required part of the basic financial statements of the City. Such additional information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and accordingly,we express no opinion on them. AgA tdia744.,:soli r c• Houston,Texas February 12,2009 7 I 7 7 2 I r r r r r p Management's Discussion and Analysis t. p p 3 p CITY OF PEARLAND, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued) 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 30,2008. FINANCIAL HIGHLIGHTS • The assets of the primary government of the City of Pearland exceeded its liabilities as of September 30, 2008, by $589.9 million (net assets). Of this amount, $14.3 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$14.8 million. • At the close of the current fiscal year, the City of Pearland's governmental funds reported combined ending fund balances of$136.1 million, an increase of$14.8 million in comparison with the prior year. Approximately $110.7 million of this ending balance can be attributed to work in progress for capital projects. • As of September 30, 2008, the unreserved, undesignated fund balance for the General Fund was $8.6 million or 19.6%of total General Fund expenditures. • The City of Pearland's General Obligation and Certificates of Obligation debt increased to$260.0 million, a net increase of$29.0 million over the previous year. The key factor was the sale of $31.8 million in Permanent Improvement, and Certificates of Obligation. Annual payments totaled$2.9 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). 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. 5 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued) The government-wide financial statements can be found on pages 19 through 21 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. 781 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 fmancial 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 22 of this report, information is presented separately in the Governmental Fund I 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. 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 26 of this report, provide separate information for the Water and Sewer and 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 26 through 29 of this report. 6 1 I 7 CITY OF PEARLAND,TEXAS 7 MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued) 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. f ' Notes to the Financial Statements - The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found beginning on page 32 of this report. 7 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 7 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 69 of this report. 7 Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial 7 position. In the case of the City, assets exceeded liabilities by $589.9 million at the close of the most recent fiscal year. By far the largest portion of the City's net assets (93 percent)reflects its investment in capital assets (e.g., 7 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 7 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. 7 COMPARATIVE SCHEDULE OF NET ASSETS September 30,2008 and 2007 Amounts in(000's) Governmental Activities Business-type Activities Totals 2008 2007 2008 2007 2008 2007 7 Assets Current and other assets $ 150,834 $ 127,591 $ 62,200 $ 64,870 $ 213,034 $ 192,461 Capital assets 559,258 535,206 210,390 185,242 769,648 720,448 7 Total Assets 710,092 662,797 272,590 250,112 982,682 912,909 Liabilities Other liabilities 10,133 5,917 7,593 4,666 17,726 10,583 7 Long-term liabilities outstanding 268,190 234,419 106,818 92,771 375,008 327,190 (� Total Liabilities 278,323 240,336 114,411 97,437 392,734 337,773 Net assets 7 Invested in capital assets,net of related debt 410,002 400,522 138,679 126,779 548,681 527,301 Restricted 10,863 10,130 16,094 24,258 26,957 34,388 117 Unrestricted 10,904 11,809 3,406 1,638 14,310 13,447 Total Net Assets $ 431,769 $ 422,461 $ 158,179 $ 152,675 $ 589,948 $ 575,136 An additional portion of the City's net assets (five percent) represent resources that are subject to external 7 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. OP ' 7 71 41 CITY OF PEARLAND,TEXAS 7 MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued) COMPARATIVE SCHEDULE OF CHANGES IN NET ASSETS For the Years Ended September 30,2008 and 20077 Amounts in(000's) Governmental Activities Business-type Activities Totals 2008 2007 2008 2007 2008 2007 Revenues 71 Program revenues: Charges for services $ 9,128 $ 9,623 $ 27,562 $ 22,971 $ 36,690 $ 32,594 7 Operating grants and contributions 4,307 2,314 315 385 4,622 2,699 • Capital grants and contributions 263 8,690 5,869 12,621 6,132 21,311 Property taxes 29,492 24,823 29,492 24,8237 Sales and use taxes 12,581 11,025 12,581 11,025 Franchise taxes 4,427 3,760 4,427 3,760 Investment earnings 4,571 4,942 1,670 2,574 6,241 7,516 Other 8,290 1,331 12 8,302 1,3317 Total Revenues 73,059 66,508 35,428 38,551 108,487 105,059 Expenses General government 11,161 8,452 11,161 8,452 Public safety 17,674 14,655 17,674 14,655 Public works 16,287 24,041 16,287 24,041 Community services 3,336 3,112 3,336 3,112 Parks and recreation 4,357 4,882 4,357 4,882 7 Interest on long-term debt 12,266 9,070 12,266 9,070 Water and sewer 22,570 25,076 22,570 25,076 Solid waste management 6,024 5,218 6,024 5,218 Total Expenses 65,081 64,212 28,594 30,294 93,675 94,506 7 Increase(decrease)in net assets before transfers 7,978 2,296 6,834 8,257 14,812 10,553 Transfers 1,330 1,060 (1,330) (1,060) Increase in net assets 9,308 3,356 5,504 7,197 14,812 10,553 Net assets-beginning 422,461 419,105 152,675 145,478 575,136 564,583 Net assets-ending $ 431,769 $ 422,461 $ 158,179 $ 152,675 $ 589,948 $ 575,136 At the end of the current fiscal year, the City is able to report positive balances in all three categories of 7 net assets,both for the government as a whole, as well as for its separate governmental and business-type activities. The most significant change in net assets occurred with a net increase in capital assets,net of related debt, 7 of$21.4 million due to completion of capital projects. 7 7 7 8 1 1 17 CITY OF PEARLAND,TEXAS 7 MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued) dry Governmental activities - Governmental activities increased the City's net assets by $9.3 million, thereby accounting for 63 percent of the total growth in the net assets of the City. Key elements of this t increase are as follows: � • Sales and use tax revenues increased by $1.6 million, mainly due to the opening of two retail L'. developments, Shadow Creek Ranch Town Center and Pearland Town Center. • Miscellaneous Revenue increased significantly, mainly due to a Brazoria County contribution 7of$2.9 million towards SH288 Frontage Road Expansion project. • Property Taxes also increased significantly, $4.7 million; due to an increase in taxable value:of. $981 million from annexed property,new construction, and revaluation. Expenses and Program Revenues -Governmental Activities 7 $20,000 $18,000 $16,000 — 7 ,,,, $14,000 — Expenses c $12,000 ■Program Revenues © $'10,000 — $8,000$4,000 — "" $6,000 7 _ u .„ ,___. ---- $2,000 — 17 o.94;),.3., a" vGS roy 4� �Sy� �GSy ei0 w �� 4Sro 4S .). �4ai �04¢0 7 04e ,,,, 43 � 4- Px t� ti4 7 7 7 7 17 7 9 7 7 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued) Revenues by Source -Governmental Activities Grants and7 forservices . contributions Charges6% 13% Sales and use taxes i \. .. 17% °` lts f Other ;. ;r 18% '•Lk, s_ =.-- 'Franchise taxes 6% mil Property taxes 40% 7 Business-type activities Business-type activities increased the City's net assets by$5.5 million, accounting 7 for 37 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$3.8 million over the7 prior year primarily due to an increase in water and sewer rates and volume. • Earnings increased by$1.0 million due to investment in bond proceeds. • An increase was seen in Water.and Sewer expenses of$1.5 million. Expenses and Program Revenues -Business-type Activities $30,000 $25,000 ❑Expenses I $20 000. . . _ •Program Revenues o $15,000 0 C $10,000 .. $5,000 Water and sewer Solid waste management 7 7 7 to 7 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued) Revenues by Source-Governmental Activities Grants and Charges forservices . contributions. - a 13% 6/° Sales and use taxes 17% Other / 18% �_ a Franc a hise taxes Property taxes 40%° Business-type activities-Business-type activities increased the City's net assets by$5.5 million,accounting for 37 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 $3.8 million over the prior year primarily due to an increase in water and sewer rates and:volume. • Earnings increased by$1.0 million due to investment in bond proceeds.. . • An increase was seen in Water.and Sewer expenses of$1.5.million. Expenses and Program Revenues -Business-type Activities $30,000 $25,000 • DExpenses $20;000. 'Program Revenues ©I $15000 .. $10,000 $5,000 A Waterand sewer Solid waste management 10 . i31 CITY OF PEARLAND,TEXAS 1.7 MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued) Revenues by Source -Business-type Activities Other 5% r• Grants and Charges for contributions -services 17% ! 78% r Transfers out to the governmental activities of$1.3 million offset the increase of net assets before transfers of $6.8 million. FINANCIAL ANALYSIS OF THE CITY'S FUNDS As noted earlier, fund accounting is used to demonstrate and ensure compliance with finance-related legal P g 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$136.1 million. Of this, $8.6 million is unreserved and available for day-to-day operations of the City; $6.8 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$14.8 million from the prior year. The increase in fund balance includes an increase in the capital projects fund balance of approximately$14.2 million due to the proceeds of recent bond issues, an increase of $0.3 million in the debt service fund balance, and a decrease of$0.1 million in the general fund. 7 With a current year decrease of$0.1 million,the General Fund's fund balance totaled $13.5 million at year r end. 11 I CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued) In the Capital Projects Fund, the City spent$26.9 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 $2.2 million leaving an 71 ending fund balance of$110.7 million. Proprietary Funds - The City's business-type activities contain two activities (water and sewer, and solid 7 waste) The City's proprietary funds provide the same type of information found in the government-wide fmancial statements. 7 GENERAL FUND BUDGETARY HIGHLIGHTS During the year there was a $6.4 million increase in appropriations between the original and final amended budget. The increase in appropriations is attributable to carryover funding from prior year encumbrances and projects, hurricane IKE, as well as, amending the budget to reflect projections during the 2008-2009 budget process. 7 Budget estimates for revenues and other sources increased by$2.9 million for the year as well to reflect the increases in revenues as projected during the 2008-2009 budget process and for FEMA and insurance 7 reimbursements related to Hurricane Ike. CAPITAL ASSETS AND DEBT ADMINISTRATION 7 Capital Assets - At the end of fiscalyear 2008, the City's governmental activities and business-type P h' activities had invested $559.3 million and $210.4 million, respectively, in a variety of capital assets and infrastructure, as reflected in the following schedule. This represents a net increase of$25.1 million, or 14 7 percent over the end of last fiscal year for the business-type activities capital assets and a change of$24.1 million or 4 percent for the governmental activities capital assets. Governmental Activities Business-Type Activities Totals 7 2008 2007 2008 2007 2008 2007 Land $ 27,646 $ 27,642 $ 3,610 $ 1,105 $ 31,255 $ 28,7477 Construction in progress 60,756 62,886 32,585 11,054 93,340 73,940 Infrastructure 450,728 429,513 171,421 170,526 622,149 600,039 Buildings and improvements 15,771 12,588 1,609 1,599 17,380 14,187 Machinery and equipment 4,357 2,577 1,166 958 5,522 3,535 7 Total Capital Assets $ 559,258 $ 535,206 $ 210,390 $ 185,242 $ 769,648 $ 720,449 7 Construction in progress at year-end represents numerous ongoing projects, the largest of which relate to street and water and sewer improvement projects. Additional information on the City's capital assets can be found in Note 4 to the financial statements. '.j 7 7 12 7 7 7 CITY OF PEARLAND, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued) Long-Term Debt - At the end of the current fiscal year, the City had total bonds, certificates of 7 obligation, notes, and capital leases outstanding of $371.9 million. Of this amount, $185.0 million is LL composed of general obligation bonds, $88.1 million is composed of certificates of obligation and $92.9 million represents revenue bonds secured solely by specified revenue sources. 7 Governmental Activities Business-Type Activities Totals 2008 2007 2008 _ 2007 2008 2007 General obligation bonds $ 184,985 $ 164,810 $ $ $ 184,985 $ 164,810 7 Revenue bonds 92,900 79,180 92,900 79,180 Certificates of obligation 74,980 66,220 13,140 13,915 88,120 80,135 Capital leases payable 1,187 1,538 1,187 1,538 7 Compensated absences 3,898 3,193 494 391 4,392 3,584 Post employment benefit liability 291 55 346 $ 265,341 $ 235,761 $ 106,589 $ 93,486 $ 371,930 $ 329,247 7 The City had multiple debt issuances during the year involving general obligation refunding bonds, certificates of obligation,and revenue bonds.The net effect of these issuances was an increase in total debt of 7 $42.7 million or 13.0 percent. E Current ratings on debt issues are as follows: Moody's Investors Standard 7 _ Service and Poors Fitch General obligation bonds Al A+ Revenue bonds A2 AA- A+ 7 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.In January 2009, Standard and Poor's upgraded the City's water 7 and sewer bonds from A to AA-and Fitch ratings were A+. 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. 7 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" 7 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. Additional information on the City's long- 7 term debt can be found in Note 5 to the financial statements. I 7 7 7 13 7 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued) ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES A primary factor in the 2009 budget is how the projected condition of the City of Pearland's economy affects the City's revenue stream. New home construction dropped to 1,240 in 2008, down from the record pace of recent years. However,_compared to most of the.nation, home construction is expected.to • . remain strong with just slightly less than the home starts in 2008.. Commercial construction will continue in 2008-2009,though at a reduced pace,with the completion of Pearland and:Shadow Creek Ranch Town Centers.The opening of significant retail developments in 2008 will produce significant increases in sales 7 tax revenue during the 2008-2009 fiscal year Current year sales tax revenue exceeded the prior year's revenue by approximately 13 percent, and due to full-year operations,next year's increase is projected to be 15.9 percent. The City's population is projected to increase by 4,500 next year resulting in a 5.2 percent population growth. The Pearland City Council approved a $49.4 million.General Fund budget:for fiscal year 2008.- 2009.. This is a 14%increase over the 2007-2008 adopted budget. This increase includes 16 full-time employees to provide for basic services, and to keep up with growth, especially along the Hwy 288 corridor. The budget incorporates a tax rate of$0.6526 per$100 of valuation,which is the same as last year. The Water and Sewer fund incorporates a 13% revenue increase to fund operations, debt service, and bond coverage requirements. 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 Bogard, Director of Finance, at 3519 Liberty Drive,Pearland Texas 77581, or call (281).652- 1600.For general information;visit the City's website atwww.cityofpearland.com. . . , . • • 7. 14 r r r r r r r r r Basic Financial Statements r r r r r P r 15 P 7 7 CITY OF PEARLAND,TEXAS STATEMENT OF NET ASSETS September 30,2008 Primary Government 7 Discretely Presented Governmental Business-type Component 7 Activities Activities Total Units Assets Cash and equivalents $ 116,747,813 $ 316,492 $ 117,064,305 $ 14,629,523 L Investments 20,866,400 1,975,300 22,841,700 3,965,250 Receivables,net of allowance for uncollectibles 8,704,016 3,784,250 12,488,266 1,210,339 Inventories 87,334 87,334 7 Prepaid items 107,225 205 107,430 13,570 Restricted cash and investments 28,776,201 28,776,201 808,210 Deferred charges 4,321,509 1,074,228 5,395,737 3,517,162 7 Contractual rights to water supply,net of accumulated amortization 26,272,820 26,272,820 Capital assets 7 Capital assets not subject to depreciation 88,401,582 36,194,183 124,595,765 Capital assets,net of accumulated depreciation 470,855,971 174,196,007 645,051,978 7 Total Capital Assets 559,257,553 210,390,190 769,647,743 Total Assets 710,091,850 272,589,686 982,681,536 24,144,054 Liabilities 7 Accounts payable and accrued liabilities 8,612,487 5,293,198 13,905,685 137,512 Accrued interest 959,627 382,484 1,342,111 234,500 4111f Unearned revenues 125,860 125,860 Customer deposits 434,505 1,916,834 2,351,339 Long-term liabilities Due within one year 6,052,873 2,650,908 8,703,781 2,035,000 7 Due in more than one year 262,137,059 104,166,952 366,304,011 62,863,618 Total Liabilities 278,322,411 114,410,376 392,732,787 65,270,630 el{ Net Assets Invested in capital assets,net of related debt 410,002,124 13 8,679,031 548,681,155 Restricted for: 7 Debt service 5,875,561 311,637 6,187,198 643,418 Community development projects 4,988,114 15,782,227 20,770,341 Unrestricted 10,903,640 3,406,415 14,310,055 (41,769,994) 7 Total Net Assets $ 431,769,439 $ 158,179,310 $ 589,948,749 $ (41,126,576) See Notes to Financial Statements. 7 r 17 7 CITY OF PEARLAND,TEXAS STATEMENT OF ACTIVITIES 7 For the Year Ended September 30,2008 Program Revenue 1 Operating Capital Grants Charges for Grants and and 7 Functions/Programs Expenses Services Contributions Contributions Primary Government Governmental Activities: �q General government $ 11,160,690 $ $ 3,951,040 $ ]J Public safety 17,674,472 2,959,070 181,778 Public works 16,287,117 102,756 3,746 262,863 Community services 3,336,204 5,129,727 88,0727 Parks and recreation 4,356,520 936,203 82,128 Interest on long-term debt 12,266,464 Total Governmental Activities 65,081,467 9,127,756 4,306,764 262,863 1 Business-type activities: Water and sewer 22,569,530 21,524,118 315,244 5,868,628 Solid waste management 6,023,817 6,038,171 Total Business-Type Activities 28,593,347 27,562,289 315,244 5,868,628 Total Primary Government $ 93,674,814 $36,690,045 $ 4,622,008 $ 6,131,491 Component Units 7 Pearland Economic Development Corporation 3,242,116 546,515 Tax Increment Reinvestment Zone#2 3,840,047 7 Development Authority of Pearland 19,435,701 Total Component Units $ 26,517,864 $ $ 546,515 $ 7 General Revenues: Taxes: Property taxes7 Sales and use taxes Franchise taxes Unrestricted investment earnings 1l Miscellaneous J Transfers Total General Revenues and Transfers "' Change in net assets J Net assets-beginning Net assets-ending See Notes to Financial Statements. {i 7 7 18 7 7 7 C 7 Net(Expense)Revenue and Changes in Net Assets Primary Government 7 Governmental Business-type Component Activities Activities Total Units El $ (7,209,650) $ $ (7,209,650) (14,533,624) (14,533,624) C (15,917,752)1,881,595 (15,917,752) 1,881,595 (3,338,189) (3,338,189) (12,266,464) (12,266,464) 71 (51,384,084) (51,384,084) C 5,138,460 5,138,460 14,354 14,354 5,152,814 5,152,814 C (51,384,084) 5,152,814 (46,231,270) 7 $ (2,695,601) (3,840,047) (19,435,701) 7 (25,971,349) 7 , 29,492,184 29,492,184 10,257,193 12,580,817 12,580,817 6,049,035 4,426,856 4,426,856 7 4,572,276 1,669,297 6,241,573 535,753 8,289,791 12,490 8,302,281 196,013 1,330,374 (1,330,374) 7 60,692,298 351,413 61,043,711 17,037,994 9,308,214 5,504,227 14,812,441 (8,933,355) 422,461,225 152,675,083 575,136,308 (32,193,221) 7 $ 431,769,439 $ 158,179,310 $ 589,948,749 $ (41,126,576) 111. C19 7 7 CITY OF PEARLAND,TEXAS 7 BALANCE SHEET GOVERNMENTAL FUNDS September 30,2008 Other Total '-] Capital Governmental Governmental General Fund Debt Service Projects Fund Funds Funds 7 Assets Cash and cash equivalents $ 6,021,041 $ 4,749,757 $ 101,633,690 $ 4,343,325 $ 116,747,813 Investments 5,951,700 1,960,000 12,954,700 20,866,400 Receivables,net of allowance7 for uncollectibles 6,935,235 871,107 170,802 726,372 8,703,516 Due from other funds 273,443 273,443 Inventories 87,334 87,334 7 Prepaid items 93,471 13,754 107,225 Total Assets $ 19,362,224 $ 7,580,864 $ 114,759,192 $ 5,083,451 $ 146,785,731 1 Liabilities and Fund Balances Liabilities: Accounts payable $ 3,043,748 $ $ 3,818,998 $ 41,055 $ 6,903,8011 Accrued expenditures 1,199,445 1,199,445 Deposits 434,505 434,505 Due to other funds 225,115 48,328 273,443 Deferred revenue 1,158,295 745,676 5,954 1,909,925 7 Total Liabilities 5,835,993 745,676 4,044,113 95,337 10,721,119 Fund balances: Reserved for: Inventories 87,334 87,334 Encumbrances 4,698,543 4,698,543 °�`� Prepaid items 93,471 93,471 J Debt service 6,835,188 6,835,188 Unreserved,reported in: General fund 8,646,883 8,646,883 Special revenue funds 4,988,114 4,988,114 J Capital projects funds 110,715,079 110,715,079 Total fund balances 13,526,231 6,835,188 110,715,079 4,988,114 136,064,612 Total Liabilities and Fund Balances $ 19,362,224 $ 7,580,864 $ 114,759,192 $ 5,083,451 $ 146,785,731 See Notes to Financial Statements. 7 7 7 20 1 7 CITY OF PEARLAND,TEXAS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS September 30,2008 Total fund balance,governmental funds $ 136,064,612 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 fmancial statement,but are reported in the governmental activities of the Statement of Net Assets. 559,257,553 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. 1,784,065 Some liabilities are not due and payable in the current period and are not included in the fund pY financial statement,but are included in the governmental activities of the Statement of Net Assets. Bonds and capital leases payable (259,970,508) Compensated absences (3 897 915) Accrued interest governmental activity debt (959,627) Estimated arbitrage rebate liability (218,458) Estimated post employment benefit liability (290,783) 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. 500 Net Assets of Governmental Activities in the Statement of Net Assets $ 431,769,439 See Notes to Financial Statements. 21 7 CITY OF PEARLAND,TEXAS STATEMENT OF REVENUES,EXPENDITURES AND7 CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended September 30,2008 7 Other Total Capital Governmental Governmental General Fund Debt Service Projects Fund Funds Funds 7 Revenues Property taxes $ 11,259,460 $ 17,940,551 $ $ $ 29,200,011 Sales and use taxes 12,234,799 346,018 12,580,817 1 Franchise fees 4,426,856 4,426,856 Licenses and permits 2,991,549 2,991,549 Fines and forfeitures 1,986,530 98,975 2,085,505 Charges for services 7,511,637 7,511,637 Investment earnings 515,464 403,780 3,511,372 138,732 4,569,348 Intergovernmental 2,624,517 1,629 261,234 843,991 3,731,371 Other 470,940 4,804,924 361,791 5,637,655 Total Revenues 44,021,752 18,345,960 8,577,530 1,789,507 72,734,749 Expenditures Current: General government 7,172,415 215,823 7,388,238 Public safety 19,305,021 298,703 19,603,724 Public works 7,535,792 7,535,792 "�{ Community services 3,402,437 23,274 3,425,711 J{ Parks and recreation 6,557,427 47,402 6,604,829 Debt Service: Principal 3,159,611 3,159,611 7 Interest and other charges 12,230,657 12,230,657 Bond issuance costs 151,460 151,460 Capital outlay 26,891,370 886,796 27,778,166 Intergovernmental 51,392 2,886,987 495,123 3,433,502 Total Expenditures 44,024,484 18,277,255 27,537,953 1,471,998 91,311,690 Excess(deficiency)of revenues over expenditures (2,732) 68,705 (18,960,423) 317,509 (18,576,941) Other Financing Sources(Uses) General obligation debt issued 31,835,000 31,835,000 Premium on general obligation debt 199,742 199,742 7 Transfers in 2,093,238 214,486 2,192,009 412,643 4,912,376 Transfers out (2,200,461) (1,093,055) (288,486) (3,582,002) Total Other Financing Sources(Uses) (107,223) 214,486 33,133,696 124,157 33,365,116 11 Net change in fund balances (109,955) 283,191 14,173,273 441,666 14,788,175 J Fund balances-beginning 13,636,186 6,551,997 96,541,806 4,546,448 121,276,437 Fund balances-ending $ 13,526,231 $ 6,835,188 $ 110,715,079 $ 4,988,114 $ 136,064,612 See Notes to Financial Statements. 1 1 1 22 7 7 CITY OF PEARLAND,TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF @�9 ACTIVITIES For the Year Ended September 30,2008 Net change in fund balances-total governmental funds: $ 14,788,175 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 of$40,125,979 exceeded depreciation of$16,074,811 in the current period. 24,051,168 ' 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. 330,667 Governmental funds report bond proceeds as current financial resources.In contrast,the Statement of Activities treats such issuance of debt as a liability. Governmental funds report repayment of bond principal as an expenditure,In contrast,the Statement of Activities treats such repayments as a reduction in long-term liabilities.This is the amount by which proceeds exceeded repayments. (28,784,350) 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. 151,459 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 9,229 Amortization of bond issuance costs (111,583) Other long-term liabilities (24,233) Post employement benefit liability (995,429) Internal service funds are used bymanagementcharge to char a the costs of certain activities,such as property and liability insurance coverage and employee health benefits,to individual funds. The net revenue(expense)of certain internal service funds is reported with governmental activities. (106,889) Change in net assets of governmental activities $ 9,308,214 See Notes to Financial Statements. 23 Ti CITY OF PEARLAND,TEXAS STATEMENT OF NET ASSETS1 PROPRIETARY FUNDS September 30,2008 Governmental7 Business-type Activities-Enterprise Funds Activities- Water and Sewer Solid Waste Internal Fund Fund Total Service Fund Assets1 Current assets: Cash and cash equivalents $ 158,366 $ 158,126 $ 316,492 $ 521 Investments 1,975,300 1,975,300 7 Accounts receivable,net of allowance for doubtful accounts 2,831,964 952,286 3,784,250 500 Prepaid items 205 205 Restricted cash and cash equivalents 19,602,702 19,602,702 Restricted investments 9,173,499 9,173,499 Total current assets 33,742,036 1,110,412 34,852,448 1,021 Non-current assets: Deferred charges 1,074,228 1,074,228 Contractual rights to water supply 26,809,000 26,809,000 1 Less Accumulated amortization (536,180) (536,180) Capital assets: Land and improvements 3,609,542 3,609,5427 Construction in progress 32,584,641 32,584,641 Infrastructure 229,735,098 229,735,098 Buildings 2,491,830 2,491,830 Machinery and equipment 2,502,742 2,502,7427 Less Accumulated depreciation (60,533,663) (60,533,663) Total non-current assets 237,737,238 237,737,238 Total Assets 271,479,274 1,110,412 272,589,686 1,021 Liabilities Current liabilities: Accounts payable and accrued expenses 4,198,348 1,094,850 5,293,198 521 7 Accrued interest payable 382,484 382,484 Customer deposits 1,916,834 1,916,834 Compensated absences-current portion 75,908 75,908 Bonds and certificates of obligation payable-current portion 2,575,000 2,575,000 1 Total current liabilities 9,148,574 1,094,850 10,243,424 521 Non-current liabilities: Compensated absences 417,678 417,678 Bonds and certificates of obligation payable 103,749,274 103,749,274 Total non-current liabilities 104,166,952 104,166,952 Total Liabilities 113,315,526 1,094,850 114,410,376 521 7 Net Assets J Invested in capital assets,net of related debt 138,679,031 138,679,031 Restricted for debt service 311,637 311,637 r�q Restricted for capital projects 15,782,227 15,782,227 f Unrestricted 3,390,853 15,562 3,406,415 500 i Total Net Assets $ 158,163,748 $ 15,562 $ 158,179,310 $ 500 S See Notes to Financial Statements. ' 7 24 1 7 r 7 CITY OF PEARLAND,TEXAS STATEMENT OF REVENUES,EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Year Ended September 30,2008 l Governmental Business-type Activities-Enterprise Funds Activities- 7 Water and Sewer Solid Waste Internal Service Fund Fund Total Fund Revenues Charges for services $ 21,524,118 $ 6,038,171 $ 27,562,289 $ 788,044 7 Operating Expenses Personal services 3,657,941 3,657,941 Supplies and materials 4,294,118 4,294,118 7 Contractual services 1,656,871 6,023,817 7,680,688 897,861 Repairs and maintenance 1,940,057 1,940,057 Other expenses 1,188,365 1,188,365 Depreciation 5,312,300 5,312,300 7 Total Operating Expenses 18,049,652 6,023,817 24,073,469 897,861 Operating income(loss) 3,474,466 14,354 3,488,820 (109,817) Non-Operating Revenues(Expenses) 7 Earnings on investments 1,668,033 1,264 1,669,297 2,928 Operating grants and contributions 315,244 315,244 Gain(loss)on disposal of capital assets 12,490 12,490 7 Interest expense (4,519,877) (4,519,877) Total Non-Operating Revenues(Expenses) (2,524,110) 1,264 (2,522,846) 2,928 Income(loss)before contributions and transfers 950,356 15,618 965,974 (106,889) 7 Capital contributions 5,868,628 5,868,628 Transfers out (1,330,374) (1,330,374) Change in net assets 5,488,610 15,618 5,504,228 (106,889) 7 Total net assets-beginning 152,675,138 (56) 152,675,082 107,389 Total net assets-ending $ 158,163,748 $ 15,562 $158,179,310 $ 500 7 See Notes to Financial Statements. 7 7 7 Er f c C25 7 I CITY OF PEARLAND,TEXAS Page 1 of STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended September 30,2008 Governmental Business-type Activities-Enterprise Funds Activities- Water and Sewer Solid Waste Internal Fund Fund Total Service Fund Cash Flows from Operating Activities Receipts from customers and users $ 20,848,082 $ 5,982,118 $ 26,830,200 $ 787,544 Disbursed for personnel services (3,555,726) (3,555,726) 7 Disbursed for goods and services (6,976,725) (5,378,170) (12,354,895) (687,740) Net cash provided(used)by operating activities 10,315,631 603,948 10,919,579 99,804 Cash Flows from Noncapital Financing Activities Transfers from funds (210,059) Transfers to other funds (1,330,374) (447,086) (1,777,460) Operating grants and contributions 315,244 315,244 Net cash provided by(used by)noncapital financing 7 activities (1,015,130) (447,086) (1,462,216) (210,059) Cash Flows from Capital and Related Financing Activities Proceeds from the sale of equipment 12,490 12,490 Capital grants and contributions 5,868,628 5,868,628 Proceeds from the sale of bonds 14,982,364 14,982,364 Principal payments on debt (2,005,000) (2,005,000) Issuance costs (136,276) (136,276) Acquisition and construction of capital assets (56,676,139) (56,676,139) Net cash used by capital and related financing activities (37,953,933) (37,953,933) 7 Cash Flows from Investing Activities Purchase of investments (6,496,046) (6,496,046) 7 Interest received 1,668,033 1,264 1,669,297 2,928 Interest paid (4,519,877) (4,519,877) Net cash provided by(used by)investing activities (9,347,890) 1,264 (9,346,626). 2,928 • Net increase(decrease)in cash and equivalents (38,001,322) 158,126 (37,843,196) (107,327) Cash and equivalents,beginning of year 57,762,390 57,762,390 107,848 Cash and equivalents,at end of year $ 19,761,068 $ 158,126 $ 19,919,194 $ 521 1 Unrestricted cash and equivalents $ 158,366 $ 158,126 $ 316,492 $ 521 Restricted cash and equivalents 19,602,702 19,602,702 $ 19,761,068 $ 158,126 $ 19,919,194 $ 521 1 7 7 26 7 I r CITY OF PEARLAND,TEXAS Page 2 of 2 STATEMENT OF CASH FLOWS 7PROPRIETARY FUNDS For the Year Ended September 30,2008 C Governmental Business-type Activities-Enterprise Funds Activities- Water and Sewer Solid Waste Internal Fund Fund Total Service Funds i 7_ Reconciliation of operating income to net cash provided by operating activities Operating income(loss) $ 3,474,466 $ 14,354 $ 3,488,820 $ (109,817) Adjustments to reconcile operating income to net cash provided by 7 operating activities: Depreciation 5,312,300 5,312,300 (Increase)decrease in accounts receivable (826,473) (56,054) (882,527) (500) (Increase)decrease in prepaid expenses (205) (205) 210,059 7, Increase(decrease)in accounts payable 2,102,891 645,647 2,748,538 62 Increase(decrease)in salaries payable 102,215 102,215 Increase(decrease)in customer deposits 150,437 Net Cash Provided by Operating Activities $ 10,315,631 $ 603,947 $ 10,919,578 $ 99,804 7 7 7 7 7 7 7 7 p 7 7 27 7 I CITY OF PEARLAND,TEXAS COMBINING STATEMENT OF NET ASSETS7 DISCRETELY PRESENTED COMPONENT UNITS-GOVERNMENTAL ACTIVITIES September 30,2008 Pearland Economic Tax Increment Development Total 1 Development Reinvestment Authority of Component 3 Corporation Zone#2 Pearland Units Assets Cash and cash equivalents $ 7,609,897 $ 6,461,524 $ 558,102 $ 14,629,523 Investments 3,965,250 3,965,250 Receivables-less allowance for uncollectibles 1,084,866 125,473 1,210,3391 Prepaid items 13,570 13,570 Restricted cash 808,210 808,210 Deferred charges 428,263 3,088,899 3,517,162 Total Assets 13,101,846 6,586,997 4,455,211 24,144,054 Liabilities Accounts payable and accrued expenses 116,414 19,321 1,777 137,512 Accrued interest 69,708 164,792 234,500 1 Non-current liabilities: Due within one year 545,000 1,490,000 2,035,000 Due in more than one year 19,192,973 43,670,645 62,863,618 Total Liabilities 19,924,095 19,321 45,327,214 65,270,630 Net Assets Restricted-debt service 643,418 643,418 Unrestricted (6,822,249) 6,567,676 (41,515,421) (41,769,994) Total Net Assets $ (6,822,249) $ 6,567,676 $ (40,872,003) $ (41,126,576) See Notes to Financial Statements. 1 7 7 I 1 I 28 1 7 C 7 CITY OF PEARLAND,TEXAS COMBINING STATEMENT OF ACTIVITIES DISCRETELY PRESENTED COMPONENT UNITS-GOVERNMENTAL ACTIVITIES For the Year Ended September 30,2008 7 Program Revenues Net(Expense)and Changes in Net Assets Pearland ri Operating Economic Tax Increment Development Grants and Development Reinvestment Authority of Functions/Programs Expenses Contributions Corporation Zone#2 Pearland Totals Component Units: 7 Pearland Economic Development Corporation $ 3,242,116 $ 546,515 $ (2,695,601) $ $ $ (2,695,601) Tax Increment Reinvestment Zone#2 3,840,047 (3,840,047) (3,840,047) 7 Development Authority of Pearland 19,435,701 (19,435,701) (19,435,701) $ 26,517,864 $ 546,515 $ (2,695,601) $ (3,840,047) $ (19,435,701) $ (25,971,349) 7 General Revenues: Taxes: Property taxes $ $ 10,257,193 $ $ 10,257,193 7 Sales and use tax 6,049,035 6,049,035 Unrestricted investment earnings 332,311 178,597 24,845 535,753 Miscellaneous 196,013 196,013 Transfers between component units (5,848,991) 5,848,991 Total General Revenues and n Transfers 6,381,346 4,586,799 6,069,849 17,037,994 Change in net assets 3,685,745 746,752 (13,365,852) (8,933,355) Net assets,beginning (10,507,994) 5,820,924 (27,506,151) (32,193,221) 7 Net assets,ending $ (6,822,249) $ 6,567,676 $ (40,872,003) $ (41,126,576) See Notes to Financial Statements. 7 r 7 7 7 7 7 7 29 7 I CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS Note 1 -Summary Significant Accounting Policies 1 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 combination full-time/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. 1 A. Financial Reporting Entity The City is an independent political subdivision of the State of Texas governed by an elected council and a mayor and is considered a primary government. As required by accounting principles generally accepted in the United States of America, these financial statements have been prepared based on considerations regarding the potential for inclusion of component units, which are other entities or organizations that are financially accountable to the City.Discretely presented component units, are reported in a separate column in the government-wide statements to emphasize that they are legally separate from the primary government. Based on these considerations, the City's financial statements include the following discretely presented component units: the Pearland Economic Development Corporation (PEDC); the Tax Increment Reinvestment Zone (TIRZ#2); and the Development Authority of Pearland. No other entities have been included in the City's reporting entity. Additionally, as the City is considered a primary government for financial reporting purposes,its activities are not considered a part of any other governmental or other type of reporting entity. Considerations regarding the potential for inclusion of other entities, organizations, or functions in the City's financial reporting entity are based on criteria prescribed by generally accepted accounting principles. These same criteria are evaluated in considering whether the City is a part of any other governmental or other type of reporting entity. The overriding elements associated with prescribed criteria considered in determining that the City's financial reporting entity status is that of a primary government are: that it has a separately elected Governing body; it is legally separate; and it is fiscally independent of other state and local governments. Additionally prescribed criteria under generally accepted accounting principles include: considerations pertaining to organizations for which the primary government is financially accountable; and considerations pertaining to other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The component units discussed below are included in1 the City's reporting entity because of the significance of their operational or financial relationships with the City.The component units do not issue separate financial statements. 1 30 1 p CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 1 -Summary Significant Accounting Policies(Continued) A. Financial Reporting Entity(Continued) g 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 corporation is through a sales tax levy at a rate of one-half of one percent (1/2%). The PEDC is fiscally dependent upon the primary government because, besides appointing the Board,the City Council also must approve the PEDC's budget and any debt issuances. Tax Increment Reinvestment Zone(TIRZ#2) In 1998, the Tax Increment Reinvestment Zone (TIRZ#2)was established for a period of 30 years or until dissolved by the City. The TIRZ #2 provides tax assisted property development and/or redevelopment in specific geographic areas in accordance with applicable state laws. Besides appointing Board members, the City Council must also approve any debt issuances done on behalf of the TIRZ. A major land owner within the City of Pearland sits on the Board of Directors for the TIRZ#2. 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 71! 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 rrn, primary government and its component units. For the most part, the effect of interfund activity has been eliminated from the government-wide statements. Exceptions to this general rule are charges between the City's business-type and governmental funds. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities,which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues.Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase,use or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants cand 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. p r 31 P 7 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 1 -Summary Significant Accounting Policies(Continued) C. Measurement Focus,Basis of Accounting and Financial Statement Presentation The government-wide financial statements and all proprietary funds are reported using the economic resources measurement focus and the accrual basis of accounting.Revenues are recognized when earned and expenses are recorded when a liability is incurred,regardless of the timing of the related cash flows.With this measurement focus, all assets and all liabilities associated with the operations of these activities are included on the statements of net assets. Proprietary fund equity consists of retained earnings. Proprietary fund-type operating statements present increases (i.e., revenues) and decreases (i.e., expenses) in net total assets.Furniture and equipment capitalized in the Proprietary Fund Types are valued at cost. The governmental fund fmancial statements are presented on a current financial resources measurement focus and modified accrual basis of accounting. This is the manner in which these funds are normally budgeted. Revenues are recognized as soon as they are both measurable and available. Measurable means that the amount of the transaction can be determined and available means collectible within the current period or soon enough thereafter to pay liabilities of the current period.For this purpose,the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Revenues susceptible to accrual include property taxes, sales and use taxes, franchise fees, charges for services and interest on temporary investments. Other receipts become measurable and available when cash is received by the government and are recognized as revenue at that time. Under modified accrual accounting, expenditures are recognized in the accounting period in which the liability is incurred, if measurable, except for interest on general long-term debt, which is recognized when due. Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government-wide statements' governmental column, a reconciliation is presented which briefly explains the adjustments necessary to reconcile fund-based financial statements with the governmental column of the government-wide presentation. In the fund financial statements,the accounts of the City are organized on the basis of funds,each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses,as appropriate.Following is a description of the various funds: Governmental funds are those funds through which most governmental functions are typically financed. The City reports the following major governmental funds: 1 The General Fund is used to account for all financial transactions not properly includable in other funds. The principal sources of revenues include local property taxes, sales and franchise taxes, licenses and permits, fines and forfeitures, and charges for services. Expenditures include general government, administrative services,public works,parks and recreation,community development,and public safety. 1 32 1 1 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 1 -Summary 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. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. All assets, �.q liabilities, equities, revenues, expenses and transfers relating to the government's business activities are f 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. r 33 1 CITY OF PEARLAND, TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 1 -Summary 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. 1 D. Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the 1 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 1 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 a1 particular fund is readily identifiable. The balance in the pooled cash accounts is available to meet current operating requirements. Cash in excess of current requirements is invested in various interest-bearing accounts and securities and disclosed as part of the City's investments. I 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. 1 34 1 1 n CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 1 -Summary Significant Accounting Policies(Continued) G. Receivables All receivables are reported at their gross value and,where appropriate,are reduced by the estimated portion that is expected to be uncollectible. Trade accounts receivable in excess of 120 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 and are recorded by all funds affected in the period in which the transactions are executed. These receivables and payables are classified as "due from other funds" or "due to other funds" or "due from component unit/primary government" or "due to component unit/primary government" if the transactions are between the primary government and its component unit. Interfund receivables and payables which are not expected to be paid within 12 months are classified as loans from/loans to other funds,component units,or primary government. I. Inventories and Prepaid Items Inventory,which consists of fuel and auto parts for use in the City's vehicles, is stated at cost(first-in,first- out method).Expenditures are recognized as the fuel and auto parts are consumed rather when purchased. J. Restricted Assets Certain proceeds of the 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 add to the value of the asset or materially extend assets' lives are not capitalized. Property,plant,and equipment are depreciated using the straight-line method over the following useful lives: Asset Years Buildings and improvements 10-45 Machinery and equipment 3-15 Infrastructure 10-50 r 35 1 CITY OF PEARLAND, TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 1 -Summary Significant Accounting Policies(Continued) 1 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 16 and over 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 staffmg 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 for non-exempt employees. Employees may be paid or receive compensatory time. The maximum accrual for overtime is 60 hours,except for employees involved in public safety,who can accrue up to 120 hours. All sick leave benefits are accumulated and paid to employees upon separation from the City not to exceed 720 hours for employees hired prior to July 24,2006 and 360 hours for employees hired after. Vacation,sick and holiday pay benefits are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example,as a result of employee resignations and retirements. 1 M. Estimates The preparation of financial statements,in conformity with generally accepted accounting principles,requires I management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenditures during the reporting period.Actual results could differ from those estimates. 1 I I 36 1 I CITY OF PEARLAND, TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 2-Deposits(Cash) and Investments Authorization for Deposits and Investments The Texas Public Funds Investment Act (PFIA), as prescribed in Chapter 2256 of the Texas Government Code,regulates deposits and investment transactions of the City. In accordance with applicable statutes, the City has a depository contract with an area bank(depository) providing for interest rates to be earned on deposited funds and for banking charges the City incurs for banking services received. The City may place funds with the depository in interest and non-interest bearing accounts. State law provides that collateral pledged as security for bank deposits must have a market value of not less than the amount of the deposits and must consist of: (1)obligations of the United States or its agencies and instrumentalities; (2) direct obligations of the State of Texas or its agencies; (3) other obligations, the principal and interest on which are unconditionally guaranteed or insured by the State of Texas; and/or (4) obligations of states, agencies, counties, cities, and other political subdivisions of any state having been rated as to investment quality by a nationally recognized investment rating firm and having received a rating of not less than A or its equivalent. City policy requires the collateralization level to be at least 102%of market value of principal and accrued interest. The Council has adopted a written investment policy regarding the investment of City funds as required by the Public Funds Investment Act (Chapter 2256, Texas Government Code). The investments of the City are in compliance with the City's investment policy. The City's investment policy is more restrictive than the PFIA requires. It is the City's policy to restrict its direct investments to obligations of the U.S. Government or U.S. Government Agencies, fully collateralized certificates of deposit, banker's acceptances, mutual funds, repurchase agreements and local government investment pools. The maximum maturity allowed is three years from date of purchase. The City's investment policy does not allow investments in collateralized mortgage obligations. Deposit and Investment Amounts The City's cash and investments are classified as: cash and cash equivalents, investments, and restricted cash and investments. The cash and cash equivalents include cash on hand, deposits with financial institutions, and short-term investments, which have maturities at purchase of less than three months, consisting mainly of certificates of deposit. The restricted cash and investments are assets restricted for specific use. The restricted cash and investments include cash on deposit with financial institutions. For better management of cash, the City pools the cash, based on the City's needs, into either bank/sweep accounts, or in longer-term investments in U.S. Government Securities. However, each fund's balance of cash and investments is maintained in the books of the City. 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. r 37 7 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) ri Note 2-Deposits(Cash) and Investments(Continued) The following schedule shows the City's recorded cash and investments at year-end: ) Total Fair Value Primary Component Government Units Cash deposits $ 138,397,156 $ 15,437,733 7 Temporary Investments FHLB discount note 1,992,500 996,250 FHLMC discount note 14,413,450 1,989,000 7 FNMA discount note 13,879,100 980,000 $ 168,682,206 $ 19,402,983 7 Quoted market prices are the basis of the fair value for U.S. 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: Primary Component Government Units Interest income $ 6,244,940 $ 535,261 Unrealized gain(loss)on temporary investments (3,367) 492 Investment earnings $ 6,241,573 $ 535,753 Investment Risks 1 Interest Rate Risk 7 At year-end, the City had the following investments subject to interest rate risk disclosure, under U.S. generally accepted accounting principles: 7 Primary Government Component Units Weighted Weighted7 Average Average Total Fair Value Maturity(days) Total Fair Value Maturity(days) Temporary Investments FHLB discount note $ 1,992,500 247 $ 996,250 247 7 FHLMC discount note 14,413,450 87 1,989,000 80 FNMA discount note 13,879,100 157 980,000 241 $ 30,285,050 $ 3,965,250 7 Portfolio weighted average maturity 130 162 The City's investment policy specifies a maximum weighted average maturity of 547.5 days or 18 months 7 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. I 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 1 7 r 7 CITY OF PEARLAND, TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) 7 Note 2-Deposits(Cash)and Investments(Continued) Concentration of Credit Risk 7 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, 2008, the City had investments in U.S. Agency securities that 7 exceeded five percent of the total investment portfolio at year-end. Primary Government Component Units Percentage of Percentage of 7 Investment Type Total Fair Value Total Portfolio Total Fair Value Total Portfolio FHLB discount note $ 1,992,500 6% $ 996,250 25% FHLMC discount note 14,413,450 48% 1,989,000 50% 7 FNMA discount note 13,879,100 46% 980,000 25% Total $ 30,285,050 100% $ 3,965,250 100% 7 Credit Risk 7 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. 7 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 7 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 r, The Enterprise Funds have restricted certain cash and investments for customer deposits, reserve and emergency expenditures, capital improvements, cash restricted for others, and revenue bond debt service. 7 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. 7 Primary Component Government Units 7 Revenue bond debt service $ 694,121 $ 808,210 Customer deposits and operating reserves 1,916,084 Capital improvements 26,165,996 7 Total $ 28,776,201 $ 808,210 7 7 39 7 7 CITY OF PEARLAND, TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 3-Receivables Receivables at September 30,2008 consist of the following: Primary Government: 71 Governmental Funds: Other Non 7 Major Debt Service Capital Governmental General Fund Fund Projects Fund Funds Total Receivables Property taxes,including penalties and interest $ 787,256 $ 892,585 $ $ $ 1,679,841 7 Sales and other taxes 3,065,482 3,065,482 Fines and forfeitures 377,047 377,047 Interest 13,264 36,086 54 49,404 Other 2,711,087 134,716 726,318 3,572,121 Allowance for uncollectibles (18,901) (21,478) (40,379) $ 6,935,235 $ 871,107 $ 170,802 $ 726,372 $ 8,703,5167 Proprietary Funds: Water and 7 Sewer Fund Solid Waste Fund Total Receivables - Customer accounts $ 2,563,319 $ 952,286 $ 3,515,605 Interest 1,862 1,862 Other 920,627 920,627 Allowance for uncollectibles (653,844) (653,844) $ 2,831,964 $ 952,286 $ 3,784,250 "flr Component Units: Pearland Tax Increment 7 Economic Reinvestment Development Development Zone Authority of Corporation Developments Pearland Total Receivables Sales and other taxes $ 1,071,079 $ $ $ 1,071,079 Interest 13,787 13,787 Other 125,473 125,473 Total , $ 1,084,866 $ 125,473 $ $ 1,210,339 40 7 7 75.! CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) 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 $ 674,425 $ Delinquent property taxes receivable-debt service fund 745,676 Municipal fines and forfeitures 363,964 Grants and revenues prior to meeting all eligibility requirements 125,860 Total Deferred Revenue for Governmental Funds $ 1,784,065 $ 125,860 r Property Taxes Property taxes are levied by October 1 in conformity with Subtitle E, Texas Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in q� which imposed. On January 1 of each year, a tax lien attaches to property to secure the payment of all taxes, It penalties, and interest ultimately imposed. The Central Appraisal District ("CAD") of Brazoria County, Harris County, and Fort Bend County, Texas, establishes appraised values. Taxes are levied by the City Council based on the appraised values and operating needs of the City. The City contracts billing and collection of tax levies with the Brazoria County Tax Assessor-Collector. r r r r 41 7 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) 7 i Note 4-Capital Assets 7 A summary of changes in the primary government's capital assets for the year ended September 30, 2008, follows: Primary Government 7 Balance Balance September 30, Reclassification/ September 30, 2007 Increases (Decreases) 2008 1 Governmental Activities Capital assets not being depreciated: Land $ 27,642,204 $ 3,656 $ $ 27,645,860 1 Construction in progress 62,886,159 7,445,628 (9,576,065) 60,755,722 Total capital assets not being depreciated 90,528,363 7,449,284 (9,576,065) 88,401,582 Other capital assets: Infrastructure 560,080,353 26,720,877 9,576,065 596,377,2957 Buildings and improvements 21,460,873 3,971,668 (92,642) 25,339,899 Machinery and equipment 8,894,379 1,984,149 (712,647) 10,165,881 Total other capital assets 590,435,605 32,676,694 8,770,776 631,883,075 7 Less accumulated depreciation for: Infrastructure (130,566,960) (15,082,199) (145,649,158) Buildings and improvements (8,872,834) (788,387) 92,642 (9,568,580) Machinery and equipment (6,317,788) (204,225) 712,647 (5,809,366) 7 Total accumulated depreciation (145,757,582) (16,074,811) 805,289 (161,027,104) Other capital assets,net 444,678,023 16,601,883 9,576,065 470,855,971 Totals $ 535,206,386 $ 24,051,167 $ $ 559,257,553 7 Balance Balance September 30, Reclassification/ September 30, 7 2007 Increases , (Decreases) 2008 Business-type Activities Capital assets not being depreciated: Land and intangibles $ 1,105,202 $ 2,504,340 $ $ 3,609,542 1 Construction in progress 11,053,520 21,531,121 32,584,641 Total capital assets not being depreciated _ 12,158,722 24,035,461 36,194,183 Other capital assets: Water and sewer system 223,677,462 6,057,636 229,735,098 Buildings and improvements 2,418,830 73,000 2,491,830 Machinery and equipment 2,258,188 294,105 (49,551) 2,502,742 7 Total other capital assets 228,354,480 6,424,741 (49,551) 234,729,670 Less accumulated depreciation for: Water and sewer system (53,151,628) (5,170,077) (58,321,705) Buildings and improvements (819,529) (63,162) (882,691) 7 Machinery and equipment (1,299,756) (79,062) 49,551 (1,329,267) Total accumulated depreciation (55,270,913) (5,312,301) 49,551 (60,533,663) Other capital assets,net 173,083,567 1,112,440 174,196,007 Totals $ 185,242,289 $ 25,147,901 $ $ 210,390,190 7 42 7 7 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 4-Capital Assets(Continued) Depreciation was charged to programs as follows: General government $ 66,119 Public safety 488,354 Public works 14,444,884 Community services 10,943 Parks and recreation 1,064,511 Total Governmental Activity $ 16,074,811 Water and sewer $ 5,312,301 Total Business-Type Activity $ 5,312,301 The City has active construction projects as of September 30, 2008. 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: Remaining Project Description Total In Progress Commitment Drainage Improvement $ 15,824,878 $ 315,150 Building Improvements 1,717,207 19,603,285 Street Improvement 41,011,212 14,834,762 Park Improvements 2,202,424 1,096,603 Water and Sewer Improvements 32,584,642 8,710,615 Totals $ 93,340,363 $ 44,560,415 r r r r r 43 E i'irj CITY OF PEARLAND,TEXAS r-1 NOTES TO FINANCIAL STATEMENTS(Continued) Note 5-Long-Term Debt r,-1 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 7 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 7 proprietary revenues. The general long-term bonds, certificates of obligation and assumed obligations are paid through the Debt Service Fund from tax revenues. 7 The following is a summary of changes in the City's total governmental long-term liabilities for the year ended September 30, 2008. In general, the City uses the General and Debt Service funds to liquidate governmental long-term liabilities. Balance Balance September 30, September 30, Amounts Due 2007 Additions (Reductions) 2008 Within One Year 7 Governmental Activities j Bonds payable: General obligation bonds S 164,810,000 S 22,835,000 S (2,660,000) $ 184,985,000 S 4,220,000 Certificates of obligation 66,220,000 9,000,000 (240,000) 74,980,000 995,000 Deferred amount for issuance premium 3,095,260 199,742 (246,284) 3,048,718 7 Total bonds payable 234,125,260 32,034,742 (3,146,284) 263,013,718 5,215,000 Obligations under capital leases 1,537,573 (350,392) 1,187,181 261,925 7 Compensated absences 3,193,269 2,510,056 (1,805,410) 3,897,915 575,948 Post employement benefit liability 290,783 290,783 Total Governmental Activities S 238,856,102 S 34,835,581 $ (5,302,086) S 268,389,597 $ 6,052,873 Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period, and accordingly, are not reported as fund liabilities in the governmental funds. Interest on long- term debt is not accrued in governmental funds,but rather is recognized as an expenditure when due. 7 The full amount estimated to be required for debt service on general obligation debt is provided by(1)the debt service portion of the tax levy; (2)interest earned in the Debt Service Fund; and(3)operating transfers from 7 the Water and Sewer Enterprise Fund. Transfers from the Enterprise Funds are approved at the discretion of City Council and are not intended to service a specific bond series. 1 7 7 7 44 7 1 7 CITY OF PEARLAND,TEXAS 7 NOTES TO FINANCIAL STATEMENTS(Continued) Note 5-Long-Term Debt(Continued) A. General Obligation Bonds and Certificates of Obligation(Continued) 7 A summary of the terms of general obligation bonds and certificates of obligation,as of September 30,2008, follows: CSeries Original Issue Matures Interest Rate(%) Debt Outstanding General Obligation Bonds General Obligation Bonds,Series 2001 $ 1,900,000 2010 3.90 $ 435,000 7 Permanent Improvement and Refunding Bonds,Series 2000 10,830,000 2009 4.80 4.90 1,980,000 Permanent Improvement,Series 2002 25,000,000 2027 5.10-5.08 3,005,000 Permanent Improvement,Series 2003 15,000,000 2028 4.00-6.00 13,695,000 Permanent Improvement and Refunding Bonds,Series 2005 37,015,000 2029 3.25-5.00 37,015,000 r Permanent Improvement and Refunding Bonds,Series 2006 32,165,000 2029 4.00-5.00 32,065,000 Permanent Improvement and Refunding Bonds,Series 2007 69,640,000 2032 4.00-5.00 69,640,000 Permanent Improvement,Series 2008 22,835,000 2032 4.50-5.50 22,835,000 Annexed Municipal Utility District Bonds ran BC MUD 1 Series 1998 2,700,000 2018 4.50-6.50 45,000 BC MUD 1 Series 2001 4,940,000 2018 4.00-5.00 2,330,000 BC MUD 1 Series 2007 1,940,000 2030 3.75-4.35 1,940,000 Total General Obligation Bonds $ 184,985,000 7 Certificates of Obligation Certificates of Obligation,Series 2001 11,650,000 2022 5.00-6.00 $ 1,250,000 7 Certificates of Obligation,Series 2003 25,000,000 2023 3.00-4.50 17,825,000 Certificates of Obligation,Series 2004 21,000,000 2028 4.00-5.25 14,030,000 Certificates of Obligation,Series 2006 9,700,000 2029 3.65-4.68 9,675,000 Certificates of Obligation,Series 2007 23,250,000 2032 3.25-5.25 23,200,000 Certificates of Obligation,Series 2008 9,000,000 4.00-5.00 9,000,000 Total Certificates of Obligation $ 74,980,000 t_ 7 Prior Year Refunding In prior years, the City defeased certain general obligation and other bonds by placing the proceeds of the 7 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, 2008, approximately $35.8 million of previously refunded bonds outstanding were considered defeased. 7 7 7 7 45 7 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 5-Long-Term Debt(Continued) r A. General Obligation Bonds and Certificates of Obligation(Continued) Capital Lease Obligations r j The City has entered into certain capital lease agreements in order to purchase public safety and management JJ information systems equipment and other construction related equipment. The capital lease obligations are paid out of the General and Debt Service Funds.The historical purchase price of the capital assets under lease is$1,646,381. Following is a summary of future lease payments due on this equipment: r� Fiscal Year Obligations 2009 $ 308,734 2010 114,486 2011 114,486 2012 114,486 2013 114,486 2014 114,486 11 2015 114,486 2016 114,486 2017 114,486 2018 114,486 2019 114,486 Total 1,453,594 Less interest portion (266,413) Obligations under Capital Leases $ 1,187,181 1 1 J 1 46 1 I C 7 CITY OF PEARLAND, TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 5-Long-Term Debt(Continued) 7 A. General Obligation Bonds and Certificates of (Continued) Obligation g ( ) C The annual requirements to amortize governmental activity general obligation bonds and certificates of obligation outstanding at September 30,2008 are as follows: 7 Governmental Activities General Obligation Certificates of Obligation Fiscal Year Principal Interest Principal Interest 7 2009 $ 4,220,000 $ 8,562,880 $ 995,000 $ 3,306,585 2010 3,435,000 8,377,313 2,270,000 3,232,289 7 2011 3,700,000 8,214,168 2,485,000 3,122,539 2012 4,770,000 8,021,018 2,260,000 3,018,061 2013 5,080,000 7,804,453 2,370,000 2,917,589 7 2014 5,470,000 7,586,912 2,555,000 2,812,171 2015 5,735,000 7,328,145 2,665,000 2,699,898 2016 5,995,000 7,035,863 2,820,000 2,581,982 7 2017 5,180,000 6,771,946 3,255,000 2,453,591 2018 5,010,000 6,534,720 3,825,000 2,301,705 2019 6,840,000 6,255,815 4,150,000 2,126,567 7 2020 8,420,000 5,901,154 3,090,000 1,964,369 2021 8,795,000 5,506,712 3,255,000 1,818,567 2022 9,195,000 5,093,779 3,425,000 1,664,293 7 2023 9,610,000 4,660,445 3,605,000 1,501,480 2024 11,665,000 4,161,350 2,185,000 1,363,960 2025 10,615,000 3,633,092 3,910,000 1,216,782 C 2026 11,035,000 3,119,569 4,195,000 4,380,000 1,022,510 2027 11,575,000 2,585,790 830,931 2028 12,090,000 2,021,378 4,615,000 643,864 7 2029 14,570,000 1,378,970 2,930,000 491,456 2030 7,285,000 859,597 2,875,000 377,200 2031 7,325,000 515,121 3,275,000 242,925 7 2032 7,370,000 172,047 3,590,000 83,525 $ 184,985,000 $ 122,102,234 $ 74,980,000 $ 43,794,838 7 7 7 7 47 7 7 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 5-Long-Term Debt(Continued) 7 B. Enterprise Fund Debt The following is a summary of changes in the City's total business-type long-term liabilities for the year 7 ended September 30,2008. Balance Balance September 30, September 30, Amounts Due7 2007 Additions (Reductions) 2008 Within One Year Business-type Activities Bonds payable: Certificates of obligation $ 13,915,000 S S (775,000) S 13,140,000 S 980,000 7 Water and sewer revenue bonds 79,180,000 14,950,000 (1,230,000) 92,900,000 1,595,000 Premium on bond issuance 303,468 (19,194) 284,274 93,398,468 14,950,000 (2,024,194) 106,324,274 2,575,000 Other liabilities: Post employment benefits 55,388 55,388 7 Compensated absences 391,371 363,390 (261,175) 493,586 75,908 Total Business-type Activities $ 93,789,839 S 15,368,778 S (2,285,369) $ 106,873,248 $ 2,650,908 1 A summary of the terms of certificates of obligation and revenue bonds recorded in the Enterprise Funds as of September 30,2008,is as follows: 7 Series Original Issue Matures Interest Rate(%) Debt Outstanding Water and Wastewater Fund Water and Sewer System Adjustable Rate Revenue Bonds,Series 1999 $ 8,000,000 2020 3.75-4.41 $ 6,580,000 Water and Sewer System Revenue Bonds,Series 2001 10,000,000 2023 4.37-6.25 9,110,000 sS Water and Sewer System Revenue Bonds,Series 2003 9,500,000 2025 4.00-6.00 8,330,000 Water and Sewer System Revenue and Refunding Bonds,Series 2006 13,845,000 2031 3.74-4.82 13,845,000 Water and Sewer System Revenue and Refunding Bonds,Series 2007 40,135,000 2031 3.50-5.50 40,085,000 7 Water and Sewer System Revenue Bonds,Series 2008 14,950,000 2034 4.125-5.00 14,950,000 Certificates of Obligation,Series 1998. 17,100,000 2018 3.10-3.80 13,140,000 Total Utility System Fund $ 106,040,000 7 7 7 7 I 48 7 1 c C CITY OF PEARLAND, TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) 7 Note 5-Long-Term Debt(Continued) B. Enterprise Fund Debt(Continued) 7 The annual requirements to amortize governmental activity revenue bonds and certificates of obligation outstanding at September 30,2008 are as follows: 7 Business-Type Activities Revenue Bonds Certificates of Obligation Fiscal Year Principal Interest Principal Interest 7 2009 $ 1,595,000 $ 4,297,331 $ 980,000 $ 461,198 2010 2,255,000 4,228,122 1,015,000 428,271 rl 2011 2,365,000 4,120,896 1,050,000 393,158 L 2012 2,490,000 4,002,612 1,090,000 355,698 2013 2,615,000 3,878,795 1,125,000 316,100 7 2014 2,745,000 3,752,208 1,170,000 274,498 2015 2,875,000 3,621,950 1,210,000 230,760 2016 3,020,000 3,484,901 1,250,000 184,938 7 2017 3,160,000 3,341,002 2,090,000 121,790 2018 3,310,000 3,193,543 2,160,000 41,040 2019 3,470,000 3,038,562 7 2020 3,630,000 2,877,543 2021 3,800,000 2,711,084 2022 3,985,000 2,526,521 7 2023 4,180,000 4,385,000 2,334,571 2024 2,137,589 2025 4,590,000 1,933,394 7 2026 4,810,000 1,715,519 2027 5,045,000 1,477,894 2028 5,300,000 1,225,644 7 2029 5,545,000 977,844 2030 5,770,000 753,156 2031 6,010,000 519,838 7 2032 1,890,000 277,200 2033 1,980,000 182,700 2034 2,080,000 93,600 7 $ 92,900,000 $ 62,704,017 $ 13,140,000 $ 2,807,449 7 7 49 7 • 7 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) 7 Note 5-Long-Term Debt(Continued) 7 C. Component Unit Long-Term Debt The following is a summary of the long-term debt transactions of the Pearland Economic Development Corporation and the Development Authority of Pearland for the year ended September 30,2008: 1 Balance Balance 7 September 30, September 30, Amounts Due 2007 Additions (Reductions) 2008 Within One Year Pearland Economic Development Corporation 7 Sales tax revenue bonds $ 20,080,000 $ $ (525,000) $ 19,555,000 $ 545,000 Deferred amount for issuance premium 136,202 (11,753) 124,449 Compensated absences 47,023 11,501 58,524 7 Development Authority of Pearland Tax Increment Revenue Bonds 30,650,000 15,950,000 (1,105,000) 45,495,000 1,490,000 Deferred amount for issuance discount (163,391) (196,013) 25,049 (334,355) $ 50,749,834 $ 15,765,488 $ (1,616,704) $ 64,898,618 $ 2,035,000 1 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 30,2008 are as follows: Series Original Issue Matures Interest Rate(%) Debt Outstanding Pearland Economic Development Corporation Sales Tax Revenue Bonds,Series 2005 $ 10,590,000 2026 2.30-4.42 S 9,535,000 Sales Tax Revenue Bonds,Series 2006 10,235,000 2030 3.66-4.75 10,020,0007 Development Authority of Pearland Tax Increment Revenue Bonds,Series 2004 13,995,000 2028 2.50-5.50 11,980,000 7 Tax Increment Revenue Bonds,Series 2005 9,775,000 2028 3.50-4.75 8,065,000 Tax Increment Revenue Bonds,Series 2006 9,970,000 2028 4.00-4.40 9,615,000 Tax Increment Revenue Bonds,Series 2007 15,950,000 2029 3.70-4.75 15,835,000 Total Component Unit Long-Term Debt $ 65,050,000 1 7 7 1 7 � 1 50 J 7 n 7 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 5-Long-Term Debt(Continued) 7 C. Component Unit Long-Term Debt(Continued) 7 The annual requirements to amortize component unit revenue bonds outstanding at September 30, 2008 are as follows: 7 Revenue Bonds Pearland Economic Development Development Authority of Corporation Pearland 7 Fiscal Year Principal Interest Principal Interest 2009 $ 545,000 $ 870,144 $ 1,490,000 $ 2,057,059 7 2010 565,000 851,669 1,465,000 1,998,509 2011 585,000 831,506 1,520,000 1,939,772 2012 610,000 809,256 1,585,000 1,877,757 7 2013 635,000 784,906 1,650,000 1,812,069 2014 660,000 757,406 1,715,000 1,744,141 2015 690,000 728,856 1,790,000 1,672,384 7 2016 720,000 698,956 1,865,000 1,596,770 2017 760,000 664,756 1,945,000 1,517,231 2018 795,000 628,669 2,030,000 1,432,816 7 2019 835,000 590,575 2,115,000 1,343,361 2020 875,000 556,125 2,125,000 1,249,260 2021 910,000 519,625 2,220,000 1,152,845 71: 2022 950,000 481,075 2,325,000 1,051,221 2023 995,000 439,200 2,430,000 943,114 2024 1,040,000 395,138 2,545,000 829,819 7 2025 1,090,000 348,538 2,665,000 708,740 2026 1,140,000 299,325 2,795,000 581,595 2027 1,190,000 247,838 2,930,000 445,595 7 2028 1,255,000 188,338 3,070,000 302,695 2029 1,320,000 128,725 3,220,000 152,950 2030 1,390,000 66,025 7 $ 19,555,000 $ 11,886,650 $ 45,495,000 $ 26,409,696 7 D. Legal Compliance 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 7 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. 7 L' 51 7 7 CITY OF PEARLAND,TEXAS 71 NOTES TO FINANCIAL STATEMENTS(Continued) Note 6-Interfund Transactions A summary of interfund transfers,the purpose of which is to cover operational expenses/expenditures,for the year ended September 30,2008,is as follows: Transfers Out Transfers In Amounts Purpose 7 General Fund Capital Projects Fund $ 1,834,745 Transfer of funds for capital projects costs Non-Major Transfer of funds to Management District 1 for General Fund Governmental Fund 201,216 sales tax rebate. Capital Projects Fund General Fund 881,628 Transfer of funds for capital projects costs Non-Major Transfer of funds for capital projects costs for Capital Projects Fund Governmental Fund 211,427 Centennial Park 7 Non-Major Governmental Fund Capital Projects Fund 100,000 Transfer of funds for capital projects costs Non-Major Governmental7 Fund General Fund 42,262 Transfer of funds for administrative costs Water and Sewer Fund Capital Projects Fund 257,264 Transfer of funds for capital projects costs Water and Sewer Fund Debt Service Fund 214,486 Transfer of funds for debt service payments 1 Water and Sewer Fund General Fund 1,333,848 Transfer of funds for administrative costs $ 5,076,876 71 A summary of interfund receivables and payables at September 30,2008 follows: 1 Receivable Fund Payable Fund Amount Purpose Non Major General Fund Governmental Fund $ 1,045 Short-term loan to fund operations 7 Non Major General Fund Governmental Fund 47,283 Short-term loan to fund operations General Fund Capital Projects Fund 225,115 Short-term loan to fund operations $ 273,443 Note 7-Fund Equity/Net Asses 71 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 7 expenditures The Pearland Economic Development Corporation and the Development Authority of Pearland, discretely7 presented component units of the City, had negative net asset balances at year end of approximately $6.8 and $40.8 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 7 expected to be retired with future dedicated sales tax revenues. 7 52 1 7 n CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) 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. Note 9 -Employee Retirement System L' 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 827 currently administered by TMRS,an agent multiple-employer public employee retirement system. Benefits depend upon the sum of the employee's contributions to the plan,with interest,and the City-financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest,prior to establishment of the plan. Monetary credits for service since the plan began are a percent (100%, 150%, or 200%) of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated, with interest, if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is l calculated as if the sum of the employee's accumulated contributions, with interest, and the employer- financed monetary credits,with interest,were used to purchase an annuity. The plan provisions are adopted by the City Council of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes.Plan provisions for the City were as follows: Deposit Rate(Employee) 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. 53 L_ I CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) 1 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 currently accruing monetary credits due to City matching percent,which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost 1 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 2008 was $23.7 million and the City's contributions were based on a payroll of $19.4 million. Contributions made by employees totaled $1.6 million, and the City made 1 contributions of$2.3 million during the fiscal year ended September 30,2008. Three year trend information is presented below: 2008 2007 2006 Annual Pension Cost(APC) $ 2,331,353 $ 1,907,416 $ 1,730,700 Percentage of APC Contributed 100% 100% 100% Because the actuary determines contribution rates on an annual basis and the City pays the calculated rate each month,the City will always have a net pension obligation(NPO)of zero at the beginning and end of the period,and the annually required contributions(ARC)will always equal contributions made. A schedule of funding progress for TMRS for the three most recent actuarial valuations may be found in the required supplementary information section of the City's Annual Financial Report. 1 j I I I 54 1 I CITY OF PEARLAND, TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 9-Employee Retirement System (Continued) All assumptions for the December 31, 2007 valuations are contained in the 2007 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 Projected Unit Credit Amortization Method Level Percent of Payroll Remaining Amortization Period 25 Years-Open Period Asset Valuation Method Fund value Actuarial Assumptions: Investment Rate of Return 4.25% Projected Salary Increases None Includes Inflation At 3.00% Cost-of-Living Adjustments 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 rates to enable cities to slowly increase contributions. New rates will be reflected for the year beginning January 1,2009. Note 10-Other Post Employment Benefits In addition to pension benefits, the City provides access to medical and dental coverage through its selected insurance carrier, to retirees and/or retiree dependents. To qualify for retiree's medical or dental insurance, the retiree must have a minimum of ten years of continuous service with the City and be at least sixty years of age, or with 20 years of continuous service at any age. The City provides the coverage on a pay-as-you-go basis similar to current employees,but the City does not pay any portion of the retiree premium. The costs of providingthese benefits and number of retired employees are as follows: Emp/Dep Number Total City's Coverage of Retired Cost Cost Cost Employees $ 47,838 $ $ 47,838 7 Retirees who are entitled to receive retirement benefits under the City's retirement plan may purchase continued health benefits coverage for the retiree and the retiree's dependents, but shall pay 100% of the premium for coverage.The retiree,however,is able to receive a lower rate by participating in the City's plan as opposed to individually purchasing health insurance. The City's coverage is secondary to Medicare when the person becomes eligible for these benefits. 55 1 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) 1 Note 10-Other Post Employment Benefits(Continued) The Governmental Accounting Standards Board published a guideline regarding accounting and financial reporting by employers for post employment benefits other than pensions. This document gives guidance regarding the methods and timing for reporting. The effect of the Guideline is to cause the cost of retiree benefits to be paid for during the working lifetime of the employees.This requires pre-funding or accruing of a liability.The City has elected to accrue the liability, and the unfunded liability will be funded over a period of 30 years. The Other Post Employment Benefits cost and liability are as follows: FY 2008 (Future) Past Total Annual Normal Service Present Value Cost Cost Cost of Liability $ 346,171 $ 229,630 $ 116,541 $ 6,063,524 The annual cost recorded to the general ledger for fiscal year 2008 is$346,171,which includes the estimated normal cost of $229,630 to provide for the benefits earned by active employees, and the $116,541 amortization of past service at 4% over thirty years. The total liability, which is not recorded to the general ledger,is$6,063,524,and represents the actuarial present value of benefits. Note 11 -Commitments and Contingencies Litigation and Other Contingencies 1 The City was involved in various lawsuits and arbitration proceedings at September 30, 2008. 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, 2008, the City estimates arbitrage liability at approximately$218,458 for its general obligation debt and$30,732 for its water/sewer revenue bonds. I 1 1 56 1 1 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 11 -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 nine through 30) shall be retained by the City; (2)amounts required to be maintained in the Alvin 76, 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 FM 518. 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 generate 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 $2,001,931. 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 either 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. The Developer met the targets set forth in the agreement in fiscal year 2008. As of September 30, 2008,the City remitted sales tax to the developer pursuant to the agreement in the amount of$132,186. 57 r I CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 11 -Commitments and Contingencies(Continued) Reimbursement due to Developers(Continued) Pearland Town Center On January 31,2007,the City 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 0.1 for the costs associated with the public infrastructure 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 the 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 Reimbursement Amount, including interest within three years of the completion date. Construction of the project began in fiscal year 2007 and Pearland Town Center opened on July 31, 2008. The City received notice in November 2008 that at ) least 525,000 square feet had been open for thirty days.Reimbursement will begin in fiscal year 2009. Surface Water-Interim Water Supply Agreement with Gulf Coast Water Authority I On November 6, 2006, the City entered into an interim water supply agreement with the Gulf Coast Water Authority ("GCWA"). The contract reserves the right for the City to purchase up to 14.3 million GPD of the Brazos River surface water at a mutually agreed upon delivery point. GCWA 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 GCWA its pro-rate share (40.19%) of the debt ($27,805,000 principal amount)that GCWA will issue to purchase these assets. In two years,the City can either prepay its obligation with respect to the outstanding principal amount of the bonds, through the issuance of City debt or the City can continue to pay GCWA its pro-rata share of the annual debt service. Payment of $7.7 million is due to GCWA by December 1, 2008, pursuant to the agreement. Due to market conditions, the City has opted to extend its portion of the debt to March 1, 2009, where at that time the City,through issuance of City debt,will remit payment to GCWA. Note 12-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 I Municipal League's Intergovernmental Risk-Pool (TML-1RP), and through commercial insurance carriers. The participation of the City in TML-IRP is limited to payment of premiums. The City has not had any significant reduction in insurance coverage, and the amounts of insurance settlements have not exceeded insurance coverage for any of the last three years. The City also provides Workers' Compensation insurance on its employees through TML-Workers' I Compensation Fund. Workers' Compensation premiums are subject to change when audited by TML Workers' Compensation Fund.At fiscal year-end September 30,2008,the City believed the amounts paid on Workers' Compensation would not change significantly from the amounts recorded. 58 1 1 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 13-Subsequent Events Rate Increases Water and Sewer The City of Pearland increased water/sewer revenues by 13% through a rate increase effective with October 1, 2008 consumption. The rate increase will generate an additional $2.7 million in revenues and rim Lj is necessary to meet bond coverage requirements. The City has also gone to a conservation rate, establishing an irrigation rate as well as an inclining block rate for residential. Monthly Rates are as follows: Sewer: Current New Base $ 12.53 $ 14.41 !�4 Volume,per 1000 over 2000 $ 2.24 $ 3.03 Water: Current New Residential/Single Unit Base $ 11.98 $ 11.98 Volume,per 1000 over 2000 $ 2.93 2,001-6,000 gallons $ 2.93 6,001-15,000 gallons $ 3.67 15,001-25,000 gallons $ 4.40 25,000+gallons $ 5.86 Multi-Unit Base $ 10.89 $ 10.89 Volume,per 1000 over 2000 $ 2.93 $ 3.67 Irrigation Base $ 11.98 $ 11.98 Volume,per 1000 over 2000 $ 2.93 $ 4.40 Non-Residential Base $ 11.98 $ 11.98 Volume,per 1000 over 2000 $ 2.93 $ 3.67 59 E I CITY OF PEARLAND, TEXAS NOTES TO FINANCIAL STATEMENTS(Continued) Note 13-Subsequent Events(Continued) Hurricane Ike On September 12, 2008, the City sustained substantial damage to City facilities, mainly the Library, Community Center, and City Hall. Affected City employees have been relocated. Since that time, environmental remediation has been completed. On December 8, 2008, City Council approved a contract for construction services for the restoration of the City Hall, Community Center and Library in the amount of$1,553,563. It is anticipated that all three buildings will be complete by June 2010. To date, it is estimated that the City will spend approximately $8.4 million on expenses related to Hurricane Ike, including facility restoration of $2.0 million, debris removal of $4.8 million and $1.6 million on emergency protective measures which include personnel, roof repairs, and environmental remediation. 1 Between City insurance and FEMA reimbursement, it is anticipated the City will be out-of-pocket only a fraction of this amount. University of Houston Pearland Campus In June 2007, the City executed a Letter of Intent with the University of Houston ("U of H") system to design and construct a 30,000 square foot facility on the U of H Clearlake-Pearland campus site. On January 5, 2009, the City approved a Development Agreement that will govern the partnership between the two entities. The City will build and construct the Pearland facility, and U of H will lease 22,616 square feet. U of H will pay their pro-rata share of the debt service in addition to operations and1 maintenance costs. The term of the lease is 20 years, after which the City will convey full title interest in the property to U of H. On January 5, 2009, City Council also approved a construction contract in the amount of$11,115,847 for this facility. I Electricity Contract On October 20, 2008, City Council approved an Ordinance locking in electricity prices and authorizing 1 contracts with Direct Energy and Florida Power & Lights via CAPP (Cities Aggregation Power Project, Inc.) for the next five years, locking in an 8 cent to 8.5 cent range per kwh, which is substantially below current member prices by about 2.5 cents per kwh. This results in an estimated savings of approximately $225,000 in the General Funds and$270,000 in the Water/Sewer Fund. Water/Sewer Revenue Bonds,Series 2009 On January 26, 2009, the City approved the issuance of $13,130,000 in Water and Sewer System Revenue Bonds, Series 2009. A portion of the proceeds will be used to construct a 30 inch water transmission line to provide 10 MGD of fresh water to the City of Pearland as well as the purchase of 10MGD of surface water from the Gulf Coast Water Authority. The City received an upgrade from Standard & Poor's from A to AA- and Fitch rated the bonds A+. These ratings reflect the system's growing and diverse customer base; the expanding service area economy; and strong debt service coverage. I 60 J 1 r r r Required Supplementary Information r r r r r r 61 r 7 7 CITY OF PEARLAND, TEXAS GENERAL FUND SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN r FUND BALANCES-BUDGET AND ACTUAL For the year ended September 30,2008 Variance _ with Final Budget- 7Budgeted Amounts Positive Original Final Actual (Negative) Revenues 7 Property taxes $11,207,504 $10,998,987 $11,259,460 $ 260,473 Sales and use taxes 11,870,603 12,127,756 12,234,799 107,043 Franchise fees 3,954,964 4,269,164 4,426,856 157,692 E7 Licenses and permits 3,779,350 3,023,963 2,991,549 (32,414) Fees and forfeitures 1,949,200 2,015,484 1,986,530 (28,954) pw� Charges for services 7,377,872 7,543,619 7,511,637 (31,982) f Investment earnings 650,000 500,000 515,464 15,464 l Intergovernmental 133,475 3,157,089 2,624,517 (532,572) Other 794,581 1,103,775 470,940 (632,835) 7 Total Revenues 41,717,549 44,739,837 44,021,752 (718,085) L. 7 Expenditures Current: General government 9,166,856 7,820,771 7,223,807 596,964 17 Public safety 18,697,740 20,514,332 19,305,021 1,209,311 Public works 6,492,308 10,162,290 7,535,792 2,626,498 Community services 3,544,625 4,273,360 3,402,437 870,923 7 Parks and recreation 5,302,346 6,877,422 6,557,427 319,995 Total Expenditures 43,203,875 49,648,175 44,024,484 5,623,691 Excess(deficiency)of revenues over 7 expenditures _ (1,486,326) (4,908,338) (2,732) 4,905,606 Other Financing Sources(Uses) 7 Transfers in 1,707,855 2,093,238 2,093,238 Transfers out (2,279,245) (2,205,296) (2,200,461) 4,835 Total Other Financing Sources (Uses) (571,390) (112,058) (107,223) 4,835 7 Net change in fund balances (2,057,716) (5,020,396) (109,955) 4,910,441 Fund balances,beginning of year 13,636,186 13,636,186 13,636,186 7 Fund balances at year end $11,578,470 $ 8,615,790 $13,526,231 $ 4,910,441 7 7 63 7 I CITY OF PEARLAND, TEXAS NOTES TO REQUIRED SUPPLEMENTARY BUDGET INFORMATION Year Ended September 30,2008 Budgetary Compliance 1 The City of Pearland has complied with all material budget requirements for the year ended September 30,2008. 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. 1 Expenditures may not legally exceed budgeted appropriations at the fund level (i.e. General Fund, Debt Service Fund,etc.).Expenditure requests,which would require an increase in total budgeted appropriations, �q 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 1 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. I Amounts reported in the accompanying financial statements represent the amended budgeted amount plus all supplemental appropriations. I I 1 I 64 1 I CITY OF PEARLAND,TEXAS REQUIRED PENSION SYSTEM SUPPLEMENTARY INFORMATION September 30,2008 n TEXAS MUNICIPAL RETIREMENT SYSTEM(UNAUDITED) Schedule of Funding Progress Unfunded Actuarial (UAAL)as a Actuarial Actuarial Accrued Annual Percentage of Valuation Date Actuarial Accrued Percentage Liability Covered Covered December 31, Value of Assets Liabilities Funded (UAAL) Payroll Payroll 2007 $ 31,242,862 $ 44,076,397 71% $12,833,535 $ 19,967,051 64% 2006 28,049,186 33,668,925 83% 5,619,739 16,985,950 33% 2005 24,661,930 29,638,024 83% 4,976,094 15,233,614 33% The Percentage of Covered Payroll increased for December 31, 2007 because of a change in actuarial funding method. Since its inception, TMRS has used the Unit Credit actuarial funding method. This method accounts for liability accrued as of the valuation date, but does not project the potential future liability of provisions adopted by a city. For the December 31, 2007 valuation, the TMRS Board determined that the Projected Unit Credit (PUC) funding method should be used, which facilitates advance funding for future updated service credits and annuity increases that are adopted on an annually repeating basis. r p p p p p 65 I I I I I I I I I (This page intentionally left blank) I I I I I I I I 66 1 I r r r r r Other Supplementary Information r r r r r 67 r p f L ;1 r r Tat Combining and Individual Fund Statements and Schedules r 69 �i CITY OF PEARLAND, TEXAS ric NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS To account for the proceeds of specific revenue sources that, are legally restricted to expenditures for 14.1(- 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 cit y 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 regional detention development. Park Donation Fund - A fund used to account for park donations for park special events and j development of parks. This fund also includes funds from tree trust donations. Police Seizure Fund-A fund created to account for state and federal seizure funds which are used solely for law enforcement purposes. Park and Recreation Development Fund-A fund created to account for the receipt and expenditure of payment in lieu of parkland for the development of parks. Sidewalk Fund-A fund created to account for resources designated for sidewalks. Grant Fund-A fund created to account for revenues and expenditures associated with federal, state, and local grants. Street Assessments Fund-A fund created to account for resources for street assessments. Emergency Management Fund- A fund created to account for funds distributed by the National Flood Insurance Program, to be used by the City to buy out program participating homeowners in flood prone areas. Management District 1 Fund - A fund created to account for sales tax collections from the Poag & McEwen Lifestyle Center development to finance and assist the development of public infrastructure. p i 71 p I CITY OF PEARLAND,TEXAS «�q COMBINING BALANCE SHEET jj NONMAJOR GOVERNMENTAL FUNDS September 30,2008 I Hotel/Motel City-Wide Court Regional Park Tax Court Security Donations Technology Detention Donations Assets 7 Cash and cash equivalents $ 1,146,598 $ 132,289 $ 51,378 $ 299,531 $ 116,515 $ 197,627 Investments sq Receivables(net of allowance S( for uncollectibles) 91,087 2,664 3,290 9 Prepaid items 13,754 Total Assets $ 1,251,439 $ 134,953 $ 51,378 $ 302,821 $ 116,515 $ 197,636 7 Liabilities and Fund Balances Liabilities: Accounts payable $ 4,661 $ $ 630 $ $ $ Due to other funds 1,045 Deferred revenue 2,664 3,290 Total Liabilities 4,661 2,664 630 3,290 1,045 7 Fund Balance: Unreserved,reported in Special revenue funds 1,246,778 _ 132,289 50,748 299,531 116,515 196,591 1 Total Fund Balances 1,246,778 132,289 50,748 299,531 116,515 196,591 Total Liabilities and Fund Balances $ 1,251,439 $ 134,953 $ 51,378 $ 302,821 $ 116,515 $ 197,6361 7 I 1 si 1 1 72 1 7 L 7 r Parks and Recreation Street Emergency Management Police Seizure Development Sidewalk Grant Fund Assessments Management District 1 Totals 7 $ 150,594 $ 1,009,941 $ 178,409 $ 9,665 $ 748,969 $ $ 301,809 $ 4,343,325 7 126,581 54 502,687 726,372 13,754 7 $ 150,594 $ 1,009,941 $ 178,409 $ 136,246 $ 749,023 $ 502,687 $ 301,809 $ 5,083,451 71 $ 70 $ 23,576 $ $ 3,018 $ $ 9,100 $ $ 41,055 47,283 48,328 7 5,954 70 23,576 50,301 9,100 95,337 7 150,524 986,365 178,409 85,945 749,023 493,587 301,809 4,988,114 150,524 986,365 178,409 85,945 749,023 493,587 301,809 4,988,114 7 $ 150,594 $ 1,009,941 $ 178,409 $ 136,246 $ 749,023 $ 502,687 $ 301,809 $ 5,083,451 r _ 7 7 7 7 7 7 7 73 7 7 CITY OF PEARLAND,TEXAS COMBINING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended September 30,2008 Hotel/Motel Court City-Wide Court Regional Park 7 Tax Security Donations Technology Detention Donations Revenues Sales and use taxes $ 346,018 $ $ $ $ $ Fines and forfeitures 44,660 54,315 Investment earnings 33,539 4,238 1,726 8,768 3,658 7,963 Intergovernmental Other 161 19,439 57,128 Total Revenues 379,718 48,898 21,165 63,083 3,658 65,091 Expenditures Current: General government 183,873 Public safety 17,645 Community services 767 24 22,483 Parks and recreation 47,402 Capital outlay Total Expenditures 183,873 767 17,669 22,483 47,402 Excess(deficiency)of revenues over expenditures 195,845 48,131 3,496 40,600 3,658 17,689 Other Financing Sources (Uses) Transfers in Transfers out (42,262) (100,000) Total Other Financing Sources (Uses) (42,262) (100,000) 7 Net change in fund balances 195,845 5,869 3,496 40,600 3,658 (82,311) Fund balances-beginning 1,050,933 126,420 47,252 258,931 _ 112,857 278,902 7 Fund balances-ending $ 1,246,778 $ 132,289 $ 50,748 $ 299,531 $ 116,515 $ 196,591 I 7 1 1 f ri I 74 1 1 7 Parks and 7 Police Recreation Grant Street Emergency Management Seizure Development Sidewalk Fund Assessments Management District 1 Totals 7 $ $ $ $ $ $ $ $ 346,018 98,975 5,206 43,185 5,152 1,754 23,543 138,732 • 240,711 502,687 100,593 843,991 4 33,930 230,600 20,533 361,791 39,136 273,785 25,685 242,465 23,543 502,687 100,593 1,789,507 7 L 31,950 215,823 94,820 177,138 9,100 298,703 23,274 7 47,402 872,754 14,042 886,796 94,820 872,754 223,130 9,100 1,471,998 7 (55,684) (598,969) 25,685 19,335 23,543 493,587 100,593 317,509 7 211,427 201,216 412,643 p� (146,224) (288,486) r 1 211,427 (146,224) 201,216 124,157 (55,684) (387,542) 25,685 19,335 (122,681) 493,587 301,809 441,666 7 206,208 1,373,907 152,724 66,610 871,704 4,546,448 $ 150,524 $ 986,365 $ 178,409 $ 85,945 $ 749,023 $ 493,587 $ 301,809 $4,988,114 I 7 7 7: ri„ 75 1 CITY OF PEARLAND,TEXAS ,� DEBT SERVICE FUND J SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2008 with comparative actual totals for the year ended September 30,2007 2008 1 Variance Positive/ Final Budget Actual (Negative) 2007 7 Revenues 3 Property taxes $ 17,511,132 $ 17,940,551 $ 429,419 $ 13,221,832 Investment earnings 394,390 403,780 9,390 474,685 7 Intergovernmental 1,629 1,629 1,578,344 Total Revenues 17,905,522 18,345,960 440,438 15,274,861 Expenditures I Debt Service: Principal 3,159,611 3,159,611 3,227,659 Interest 12,407,464 12,230,657 176,807 9,222,973 Intergovernmental 2,886,987 2,886,987 2,169,287 Total Expenditures 18,454,062 18,277,255 176,807 14,619,919 Revenues over(under)expenditures (548,540) 68,705 617,245 654,942 7 Other Financing Sources(Uses) Proceeds from long-term debt 40,694,986 Payments to refunding escrow agent (40,694,986) 7 Transfers from other funds 214,486 214,486 1,238,754 Total Other Financing Sources(Uses) 214,486 214,486 1,238,754 7 Net change in fund balance (334,054) 283,191 617,245 1,893,696 Fund Balances-Beginning 6,551,997 6,551,997 4,658,301 Fund Balances-Ending $ 6,217,943 $ 6,835,188 $ 617,245 $ 6,551,997 int 1 7 1 7 76 7 7 7 CITY OF PEARLAND,TEXAS L SPECIAL REVENUE FUND-HOTEL/MOTEL TAX SCHEDULE OF REVENUES,EXPENDITURES,AND 7 CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2008 with comparative actual totals for the year ended September 30,2007 7 2008 Variance 7 Positive/ Final Budget Actual (Negative) 2007 7 Revenues Hotels occupancy tax $ 330,400 $ 346,018 $ 15,618 $ 280,462 Investment earnings 32,000 33,539 1,539 45,139 7 Other 161 161 Total Revenues 362,400 379,718 17,318 325,601 Expenditures 7 Current: General government 205,050 183,873 21,177 138,346 Total Expenditures 205,050 183,873 21,177 138,346 I Revenues over(under)expenditures 157,350 195,845 38,495 187,255 7 Net change in fund balance 157,350 195,845 38,495 187,255 Fund Balances-Beginning 1,050,933 1,050,933 863,678 7 Fund Balances-Ending $ 1,208,283 $ 1,246,778 $ 38,495 $ 1,050,933 7 7 7 7 7 7 77 7 7 CITY OF PEARLAND,TEXAS 7 SPECIAL REVENUE FUND-COURT SECURITY SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2008 with comparative actual totals for the year ended September 30,2007 20087 Variance Positive/ Final Budget - Actual (Negative) 2007 7 Revenues Fines and forfeitures $ 47,300 $ 44,660 $ (2,640) $ 46,078 7, Investment earnings 4,280 4,238 (42) 5,995 Total Revenues 51,580 48,898 (2,682) 52,073 Expenditures 7 Current: Community services 1,227 767 460 660 Total Expenditures 1,227 767 460 660 Revenues over(under)expenditures 50,353 48,131 (2,222) 51,413 Other Financing Sources(Uses) I Transfers(out) (42,262) (42,262) (33,659) Net change in fund balance 8,091 5,869 (2,222) 17,754 Fund Balances-Beginning 126,420 126,420 108,666 7 Fund Balances-Ending $ 134,511 $ 132,289 $ (2,222) $ 126,420 7 1 I 1 1 7 7 78 7 7 CITY OF PEARLAND,TEXAS 7 SPECIAL REVENUE FUND-CITY-WIDE DONATIONS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL CFor the Year Ended September 30,2008 with comparative actual totals for the year ended September 30,2007 7. 2008 Variance Positive/ i Final Budget Actual (Negative) 2007 Revenues 7 Investment earnings $ 1,750 $ 1,726 $ (24) $ 2,611 Other income 20,840 19,439 (1,401) 19,392 Total Revenues 22,590 21,165 (1,425) 22,003 7 Expenditures Current: Public safety 17,822 17,645 177 12,188 7 Community services 19,119 24 19,095 25 L' Capital outlay 8,300 Total Expenditures 36,941 17,669 19,272 20,513 7 Revenues over(under)expenditures (14,351) 3,496 17,847 1,490 7. Net change in fund balance (14,351) 3,496 17,847 1,490 Fund Balances-Beginning 47,252 47,252 45,762 Fund Balances-Ending $ 32,901 $ 50,748 $ 17,847 $ 47,252 7 7 J 7 fl E 11 7 ri 79 7 CITY OF PEARLAND,TEXAS ^� SPECIAL REVENUE FUND-COURT TECHNOLOGY J SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2008 1 with comparative actual totals for the year ended September 30,2007 2008 7 Variance Positive/ 7 Final Budget Actual (Negative) 2007 Revenues Fines and forfeitures $ 56,000 $ 54,315 $ (1,685) $ 54,9517 Investment earnings 8,500 8,768 268 11,406 Total Revenues 64,500 63,083 (1,417) 66,357 7 Expenditures Current: Community services 26,340 22,483 3,857 4,244 Total Expenditures 26,340 22,483 3,857 4,244 a Revenues over(under)expenditures 38,160 40,600 2,440 62,113 Net change in fund balance 38,160 40,600 2,440 62,113 fl Fund Balances-Beginning 258,931 258,931 196,8187 Fund Balances-Ending $ 297,091 $ 299,531 $ 2,440 $ 258,931 1 71 1 7 7 1 1 80 7 1 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 30,2008 with comparative actual totals for the year ended September 30,2007 2008 Variance Positive I Final Budget Actual (Negative) 2007 Revenues pL Investment earnings $ 3,700 $ 3,658 $ (42) $ 5,457 Total Revenues 3,700 3,658 (42) 5,457 Revenues over(under)expenditures 3,700 3,658 (42) 5,457 Net change in fund balance 3,700 3,658 (42) 5,457 Fund Balances-Beginning 112,857 112,857 107,400 Fund Balances-Ending $ 116,557 $ 116,515 $ (42) $ 112,857 r n 81 7 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-PARK DONATIONS 7 SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL ""� For the Year Ended September 30,2008 JI with comparative actual totals for the year ended September 30,2007 2008 7 Variance Positive/ Final Budget Actual (Negative) 2007 7 Revenues Investment earnings $ 7,971 $ 7,963 $ (8) $ 14,615 7 Other 61,138 57,128 (4,010) 35,262 Total Revenues 69,109 65,091 (4,018) 49,877 Expenditures Current: Parks and recreation 47,402 47,402 4,035 Total Expenditures 47,402 47,402 4,035 Revenues over(under)expenditures 21,707 17,689 (4,018) 45,842 7 Other Financing Sources(Uses) 1 Transfers(to)other funds (100,000) (100,000) (30,975) Net change in fund balance (78,293) (82,311) (4,018) 14,8677 Fund Balances-Beginning 278,902 278,902 264,035 Fund Balances-Ending $ 200,609 $ 196,591 $ (4,018) $ 278,902 7 7 7 7 7 1 82 1 7 r 7 CITY OF PEARLAND, TEXAS SPECIAL REVENUE FUND-POLICE SEIZURE SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL 7 For the Year Ended September 30,2008 with comparative actual totals for the year ended September 30,2007 7, 2008 Variance i Positive I Final Budget Actual (Negative) 2007 7 Revenues Investment earnings $ 4,950 $ 5,206 $ 256 $ 9,478 Other 4,690 33,930 29,240 56,422 7 Total Revenues 9,640 39,136 29,496 65,900 Expenditures 7 Current: Public safety 96,815 94,820 1,995 793 Capital outlay 30,000 30,000 6,252 7 Total Expenditures 126,815 94,820 31,995 7,045 L'f Revenues over(under)expenditures (117,175) (55,684) 61,491 58,855 L Net change in fund balance (117,175) (55,684) 61,491 58,855 7 Fund Balances-Beginning 206,208 206,208 147,353 Fund Balances-Ending $ 89,033 $ 150,524 $ 61,491 $ 206,208 7 7 7 7 7 7 7 83 7 1 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 30,2008 with comparative actual totals for the year ended September 30,2007 2008 7 Variance Positive/ Final Budget Actual (Negative) 2007 al Revenues 7 Investment earnings $ 42,500 $ 43,185 $ 685 $ 61,738 J Intergovernmental Other 230,600 230,600 65,650 Total Revenues 273,100 273,785 685 127,388 Expenditures Capital outlay 922,897 872,754 50,143 91,168 7 Total Expenditures 922,897 872,754 50,143 91,168 Revenues over(under)expenditures (649,797) (598,969) 50,828 36,220 7 Other Financing Sources(Uses) Transfers from other funds 211,427 211,427 208,000 Net change in fund balance (438,370) (387,542) 50,828 244,220 Fund Balances-Beginning 1,373,907 1,373,907 1,129,687 1 Fund Balances-Ending $ 935,537 $ 986,365 $ 50,828 $ 1,373,907 I 7 1 7 7 7 84 7 r_, , i 7 7 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-SIDEWALK SCHEDULE OF REVENUES,EXPENDITURES,AND �j CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2008 with comparative actual totals for the year ended September 30,2007 L 2008 Variance 7 Positive I Final Budget Actual (Negative) 2007 7 Revenues Investment earnings $ 5,000 $ 5,152 $ 152 $ 8,008 Other 20,533 20,533 14,656 7 Total Revenues 25,533 25,685 152 22,664 Expenditures Capital outlay 21,000 CTotal Expenditures 21,000 Revenues over(under)expenditures 25,533 25,685 152 1,664 7 Net change in fund balance 25,533 25,685 152 1,664 Fund Balances-Beginning 152,724 152,724 151,060 7 Fund Balances-Ending $ 178,257 $ 178,409 $ 152 $ 152,724 7 7 7 p p 7 7 7 85 7 1 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 30,2008 1 with comparative actual totals for the year ended September 30,2007 2008 7 Variance Positive/ Final Budget Actual (Negative) 2007 Revenues Investment earnings $ 2,290 $ 1,754 $ (536) $ 4,090 1 Intergovernmental 916,280 240,711 (675,569) 160,575 Total Revenues 918,570 242,465 (676,105) 164,665 7 Expenditures Current: General government 32,000 31,950 50 18,000 1 Public safety 257,277 177,138 80,139 153,442 Community service 38,153 38,153 14,046 Capital outlay 292,163 14,042 278,121 113,337 Total Expenditures 619,593 223,130 396,463 298,825 Revenues over(under)expenditures 298,977 19,335 (279,642) (134,160) 71 Other Financing Sources(Uses) 7 Transfers from other funds Transfers(to)other funds (305,896) 305,896 Net change in fund balance (6,919) 19,335 26,254 (134,160) 1 Fund Balances-Beginning 66,610 66,610 200,770 7 3 Fund Balances-Ending $ 59,691 $ 85,945 $ 26,254 $ 66,610 I 7 7 7 3 86 1 1 3 7 7 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-STREET ASSESSMENTS SCHEDULE OF REVENUES,EXPENDITURES,AND 7 CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2008 with comparative actual totals for the year ended September 30,2007 7 2008 Variance Positive/ 7 Final Budget Actual (Negative) 2007 Revenues C Investment earnings $ 22,000 $ 23,543 $ 1,543 $ 42,888 Other 22,790 Total Revenues 22,000 23,543 1,543 65,678 7 Expenditures Public Works 22,680 22,680 7 Total Expenditures 22,680 22,680 Revenues over(under)expenditures (680) 23,543 24,223 65,678 L' Transfers(to)other funds (146,224) (146,224) Total Other Financing Sources(Uses) (146,224) (146,224) 7 Net change in fund balance (146,904) (122,681) 24,223 65,678 7 Fund Balances-Beginning 871,704 871,704 806,026 7 Fund Balances-Ending $ 724,800 $ 749,023 $ 24,223 $ 871,704 7 7 7 a 7 7 7 87 7 I CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-MANAGEMENT DISTRICT I SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2008 with comparative actual totals for the year ended September 30,2007 2008 1 Variance Positive/ Final Budget Actual (Negative) 2007 Revenues Intergovernmental $ 103,010 $ 100,593 $ (2,417) $ 1 Total Revenues 103,010 100,593 (2,417) Revenues over(under)expenditures 103,010 100,593 (2,417) Other Financing Sources(Uses) Transfers from other funds 206,051 201,216 (4,835) Total Other Financing Sources(Uses) 206,051 201,216 (4,835) 1 Net change in fund balance 309,061 301,809 (7,252) Fund Balances-Beginning 1 Fund Balances-Ending $ 309,061 $ 301,809 $ (7,252) $ j I I J I 3 1 I 88 I r r r r Discretely Presented Component Units { Fund Based Financial Statements 'I L' r 89 r 7 CITY OF PEARLAND,TEXAS DISCRETELY PRESENTED COMPONENT UNITS 1 BALANCE SHEETS-GOVERNMENTAL FUNDS September 30,2008 Pearland Economic Tax Increment Development Total Development Reinvestment Authority of Component1 Corporation Zone#2 Pearland Units Assets Cash and equivalents $ 7,609,897 $ 6,461,524 $ 558,102 $ 14,629,523 Investments 3,965,250 3,965,250 Receivables-less allowance for uncollectibles 1,084,866 125,473 1,210,339 Prepaid items 13,570 13,570 7 Restricted cash 808,210 808,210 Total Assets 12,673,583 6,586,997 1,366,312 20,626,892 Liabilities Accounts payable and accrued expenses $ 116,414 $ 19,321 $ 1,777 $ 137,512 1 Total Liabilities 116,414 19,321 1,777 137,512 Fund Balance I Reserved for debt service 808,210 808,210 Unreserved 12,557,169 6,567,676 556,325 19,681,170 Total Fund Balance 12,557,169 6,567,676 1,364,535 20,489,3807 Total Liabilities and Fund Balance $ 12,673,583 $ 6,586,997 $ 1,366,312 $ 20,626,892 I Reconciliation from fund balance to net assets 7 fund balance $ 12,557,169 $ 6,567,676 $ 1,364,535 $ 20,489,380 Less revenue bonds payable (19,251,186) (42,071,746) (61,322,932) Less other long-term liabilities (58,524) (58,524) °� Less interest payable (69,708) (164,792) (234,500) 1 Net Assets $ (6,822,249) $ 6,567,676 $ (40,872,003) $ (41,126,576) 7 7 7 90 1 7 p CITY OF PEARLAND,TEXAS 7 DISCRETELY PRESENTED COMPONENT UNITS STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-GOVERNMENTAL FUNDS For the Year Ended September 30,2008 I Pearland Economic Tax Increment Development Total Development Reinvestment Authority of Component 7 Corporation Zone#2 Pearland Units Revenues 7 Taxes: Property taxes $ $ 10,257,193 $ $ 10,257,193 Sales and use taxes 6,049,035 6,049,035 Intergovernmental 546,515 546,515 L Investment earnings 332,311 178,597 24,845 535,753 Total Revenues 6,927,861 10,435,790 24,845 17,388,496 r Expenditures Current: General government 18,294 18,294 Economic development 1,720,695 3,840,047 16,898,700 22,459,442 7 Debt Service Principal 525,000 1,105,000 1,630,000 �R Interest 889,369 2,002,861 2,892,230 i Bond issuance cost 1,302,948 1,302,948 [ Intergovernmental-City 582,941 582,941 Total Expenditures 3,718,005 3,840,047 21,327,803 28,885,855 Revenues over(under)expenditures 3,209,856 6,595,743 (21,302,958) (11,497,359) 7 Other Financing Sources(Uses) 7Transfers from other component units 5,848,991 5,848,991 Transfers(to)other component units (5,848,991) (5,848,991) Issuance of revenue bonds 15,950,000 15,950,000 Total other financing sources(uses) (5,848,991) 21,798,991 15,950,000 7 Changes in fund balance 3,209,856 746,752 496,033 4,452,641 Fund Balances-Beginning 9,347,313 5,820,924 868,502 16,036,739 Fund Balances-Ending $ 12,557,169 $ 6,567,676 $ 1,364,535 $20,489,380 7 Reconciliation from changes in fund balance to changes in net assets Change in fund balance $ 3,209,856 $ 746,752 $ 496,033 $ 4,452,641 Add principal payments 525,000 1,105,000 1,630,000 7 Bond issuance costs 840,718 840,718 Changes in interest payable 875 (53,616) (52,741) 7 Less changes in other long-term liabilities (45,238) (45,238) Add premium/discount on bonds 196,013 196,013 ri Less post employment benefit liability expense (4,748) (4,748) Less issuance of revenue bonds (15,950,000) (15,950,000) Changes in Net Assets $ 3,685,745 $ 746,752 $ (13,365,852) $ (8,933,355) 7 7 91 7 r E_ r r r r Long-Term Debt Amortization Schedules E _ r r r r r 93 r 7 CITY OF PEARLAND,TEXAS COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT BY MATURITY DATE September 30,2008 Permanent Improvement Refunding Bonds Series 2000 G.O.Series 2001(TIRZ Obligation) 7 Fiscal Year Principal Interest Total Principal Interest Total 2009 $ 1,980,000 $ 48,510 $ 2,028,510 $ 260,000 $ 11,895 $ 271,895 1 2010 175,000 3,413 178,413 2011 2012 2013 2014 2015 2016 2017 S{) 2018 2019 2020 2021 2022 2023 2024 2025 20267 2027 2028 2029 20307 2031 2032 $ 1,980,000 $ 48,510 $ 2,028,510 $ 435,000 $ 15,308 $ 450,308 I Certificates of Obligation,Series 2001 Permmanent Improvement Bonds,Series 2002 Fiscal Year Principal Interest Total Principal Interest Total 7 2009 $ 115,000 $ 54,450 $ 169,450 $ 695,000 $ 174,850 $ 869,850 2010 560,000 37,000 597,000 730,000 128,450 858,450 2011 575,000 11,500 586,500 770,000 79,800 849,800 2012 810,000 28,350 838,350 2013 2014 2015 2016 2017 2018 2019 2020 2021 72022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 $ 1,250,000 $ 102,950 $ 1,352,950 $ 3,005,000 $ 411,450 $ 3,416,450 94 J 1 7 Page 1 of 3 7 7 Permmanent Improvement Bonds,Series 2003 Permanent Improvement&Refund Bonds,Series 2005 7 Fiscal Year Principal Interest Total Principal Interest Total 2009 $ 140,000 $ 616,129 $ 756,129 $ 425,000 $ 1,673,258 $ 2,098,258 2010 335,000 601,879 936,879 1,635,000 1,637,739 3,272,739 2011 350,000 581,329 931,329 1,705,000 1,578,223 3,283,223 2012 370,000 559,728 929,728 1,775,000 1,514,039 3,289,039 7 2013 390,000 536,929 926,929 1,845,000 1,445,011 3,290,011 2014 525,229 525,229 1,930,000 1,370,664 3,300,664 2015 525,228 525,228 2,010,000 1,281,814 3,291,814 2016 455,000 516,129 971,129 2,115,000 1,178,689 3,293,689 7 2017 725,000 492,529 1,217,529 865,000 1,108,514 1,973,514 2018 765,000 462,729 1,227,729 995,000 1,071,314 2,066,314 2019 805,000 430,826 1,235,826 380,000 1,043,624 1,423,624 2020 845,000 396,266 1,241,266 385,000 1,027,893 1,412,893 2021 885,000 359,283 1,244,283 395,000 1,011,658 1,406,658 7 2022 935,000 320,153 1,255,153 405,000 994,756 1,399,756 2023 980,000 278,613 1,258,613 875,000 967,338 1,842,338 2024 1,030,000 234,000 1,264,000 2,625,000 882,900 3,507,900 2025 1,085,000 186,413 1,271,413 2,760,000 748,275 3,508,275 7 2026 1,140,000 136,350 1,276,350 2,900,000 606,775 3,506,775 2027 1,200,000 83,700 1,283,700 3,045,000 465,763 3,510,763 2028 1,260,000 28,350 1,288,350 4,010,000 297,000 4,307,000 2029 3,935,000 98,375 4,033,375 r 2030 2031 2032 $ 13,695,000 $ 7,871,789 $ 21,566,789 $ 37,015,000 $ 22,003,618 $ 59,018,618 r Certificates of Obligation,Series 2003 Certificates of Obligation,Series 2004 7 Fiscal Year Principal Interest Total Principal Interest Total 2009 $ 435,000 $ 719,695 $ 1,154,695 $ 290,000 $ 601,921 $ 891,921 2010 1,110,000 685,420 1,795,420 340,000 589,321 929,321 2011 1,175,000 631,233 1,806,233 365,000 575,221 940,221 7 2012 1,235,000 580,095 1,815,095 380,000 560,322 940,322 2013 1,295,000 531,114 1,826,114 385,000 545,021 930,021 2014 1,035,000 488,203 1,523,203 710,000 523,121 1,233,121 2015 1,090,000 449,408 1,539,408 710,000 494,721 1,204,721 7 2016 1,145,000 407,488 1,552,488 730,000 465,922 1,195,922 2017 1,210,000 361,533 1,571,533 1,030,000 430,721 1,460,721 2018 1,180,000 313,733 1,493,733 1,070,000 388,186 1,458,186 2019 1,240,000 265,333 1,505,333 1,160,000 341,891 1,501,891 2020 1,310,000 213,023 1,523,023 317,532 317,532 d 2021 1,380,000 156,188 1,536,188 317,531 317,531 2022 1,455,000 95,944 1,550,944 317,531 317,531 2023 1,530,000 32,513 1,562,513 317,531 317,531 2024 317,532 317,532 7 2025 1,625,000 280,969 1,905,969 2026 1,675,000 205,672 1,880,672 2027 1,730,000 126,931 1,856,931 2028 1,830,000 43,463 1,873,463 7 2029 2030 2031 2032 $ 17,825,000 $ 5,930,918 $ 23,755,918 $ 14,030,000 $ 7,761,060 $ 21,791,060 7 7 95 7 7 CITY OF PEARLAND,TEXAS COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT1 BY MATURITY DATE September 30,2008 BCMUD#1 Series 1998 BCMUD#1 Series 2001 Fiscal Year Principal Interest Total Principal Interest Total 2009 $ 45,000 $ 2,070 $ 47,070 $ 455,000 $ 107,560 $ 562,560 7 2010 230,000 88,223 318,223 2011 185,000 78,332 263,332 2012 200,000 70,193 270,193 2013 210,000 61,192 271,192 7 2014 220,000 51,428 271,428 2015 230,000 40,977 270,977 2016 235,000 29,765 264,765 2017 255,000 18,250 273,250 2018 110,000 5,500 115,500 7 2019 2020 2021 2022 2023 2024 2025 2026 2027 7 2028 2029 2030 1 2031 2032 $ 45,000 $ 2,070 $ 47,070 $ 2,330,000 $ 551,420 $ 2,881,420 BCMUD#1 Series 2007 1 Fiscal Year Principal Interest Total 2009 $ $ 80,527 $ 80,527 7 2010 80,528 80,528 2011 15,000 80,527 95,527 2012 55,000 79,927 134,927 ^J 2013 60,000 77,865 137,865 - �lI 2014 65,000 75,585 140,585 2015 70,000 73,082 143,082 2016 75,000 70,353 145,353 2017 75,000 67,428 142,428 71 2018 80,000 64,428 144,428 2019 85,000 61,228 146,228 2020 90,000 57,827 147,827 2021 95,000 54,228 149,228 2022 100,000 50,333 150,333 7 2023 110,000 46,232 156,232 2024 115,000 41,612 156,612 2025 120,000 36,782 156,782 2026 130,000 31,622 161,6227 2027 135,000 26,033 161,033 2028 145,000 20,227 165,227 2029 155,000 13,920 168,920 2030 165,000 7,178 172,178 2031 2032 $ 1,940,000 $ 1,197,472 $ 3,137,472 1 96 1 7 7 Page 2 of 3 7 7 Permanent Improvement&Refund Bonds,Series 2006 Permanent Improvement&Refund Bonds,Series 2007 Fiscal Year Principal Interest Total Principal Interest Total 7 2009 $ 50,000 $ 1,530,194 $ 1,580,194 $1 2009 $ 50,000 $ 1,530,194 $ 1,580,194 $ 3,218,862 $ 3,218,862 2010 50,000 1,528,194 1,578,194 40,000 3,218,063 3,258,063 2011 320,000 1,520,794 1,840,794 150,000 3,214,263 3,364,263 2012 385,000 1,506,694 1,891,694 885,000 3,193,562 4,078,562 7 2013 400,000 1,490,994 1,890,994 1,940,000 3,137,063 5,077,063 2014 410,000 1,474,794 1,884,794 2,510,000 3,048,062 5,558,062 2015 430,000 1,457,994 1,887,994 2,685,000 2,924,025 5,609,025 2016 445,000 1,440,216 1,885,216 2,345,000 2,791,562 5,136,562 2017 460,000 1,421,263 1,881,263 2,460,000 2,671,438 5,131,438 7, 2018 480,000 1,401,288 1,881,288 2,220,000 2,554,437 4,774,437 2019 1,335,000 1,361,050 2,696,050 3,830,000 2,403,188 6,233,188 2020 1,485,000 1,293,888 2,778,888 5,190,000 2,190,662 7,380,662 7 2021 1,580,000 1,217,263 2,797,263 5,395,000 1,952,500 7,347,500 2022 1,675,000 1,135,888 2,810,888 5,610,000 1,704,887 7,314,887 2023 2,150,000 1,040,263 3,190,263 5,005,000 1,466,050 6,471,050 2024 2,150,000 932,763 3,082,763 5,230,000 1,235,763 6,465,763 2025 2,270,000 822,263 3,092,263 3,835,000 1,034,197 4,869,197 2026 2,395,000 705,638 3,100,638 3,845,000 866,197 4,711,197 2027 2,525,000 585,794 3,110,794 4,010,000 686,850 4,696,850 7, 2028 3,690,000 438,188 4,128,188 2,290,000 537,225 2,827,225 2029 7,380,000 175,275 7,555,275 2,370,000 426,550 2,796,550 7 2030 2,590,000 308,750 2,898,750 2031 2,620,000 185,012 2,805,012 2032 2,585,000 61,394 2,646,394 $ 32,065,000 $ 24,480,691 $ 56,545,691 $ 69,640,000 $ 45,030,562 $ 114,670,562 7 Certificates of Obligation,Series 2006 Certificates of Obligation,Series 2007 7 Fiscal Year Principal Interest Total Principal Interest Total 2009 $ 25,000 $ 455,726 $ 480,726 $ 50,000 $ 1,053,525 $ 1,103,525 2010 50,000 453,429 503,429 100,000 1,049,650 1,149,650 2011 125,000 448,069 573,069 150,000 1,043,088 1,193,088 2012 315,000 434,594 749,594 200,000 1,033,900 1,233,900 7 2013 335,000 414,688 749,688 250,000 1,022,088 1,272,088 2014 355,000 393,557 748,557 300,000 1,007,650 1,307,650 2015 370,000 371,354 741,354 350,000 990,588 1,340,588 2016 395,000 349,654 744,654 400,000 970,900 1,370,900 2017 405,000 330,932 735,932 450,000 948,587 1,398,587 ri 2018 405,000 314,074 719,074 1,005,000 910,394 1,915,394 2019 505,000 294,838 799,838 1,060,000 856,187 1,916,187 2020 470,000 274,001 744,001 1,115,000 799,094 1,914,094 d 2021 500,000 253,146 753,146 1,170,000 739,112 1,909,112 I 2022 525,000 230,912 755,912 1,230,000 676,113 1,906,113 2023 555,000 207,218 762,218 1,295,000 609,831 1,904,831 2024 585,000 181,991 766,991 1,360,000 540,137 1,900,137 2025 605,000 155,363 760,363 1,430,000 466,900 1,896,900 C 2026 730,000 125,325 855,325 1,500,000 389,988 1,889,988 2027 765,000 91,688 856,688 1,580,000 324,937 1,904,937 2028 805,000 56,363 861,363 1,660,000 272,288 1,932,288 2029 850,000 19,125 869,125 1,745,000 216,956 1,961,956 7 2030 1,540,000 163,575 1,703,575 2031 1,600,000 104,550 1,704,550 2032 1,660,000 35,275 1,695,275 $ 9,675,000 $ 5,856,044 $ 15,531,044 $ 23,200,000 $ 16,225,313 $ 39,425,313 7 7 97 7 1 1 1 1 1 1 1 (This page intentionally left blank) 1 I 1 1 I I 1 1 98 1 1 ri, CITY OF PEARLAND,TEXAS Page 3 of 3 COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITYLONG-TERM DEBT I BY MATURITY DATE September 30,2008 CPermanent Improvement&Refund Bonds,Series 2008 Certificates of Obligation,Series 2008 7 Fiscal Year Principal Interest Total Principal Interest Total 2009 $ 170,000 $ 1,099,025 S 1,269,025 $ 80,000 $ 421,269 $ 501,269 2010 240,000 1,090,825 1,330,825 110,000 417,469 527,469 2011 205,000 1,080,900 1,285,900 95,000 413,428 508,428 2012 290,000 1,068,525 1,358,525 130,000 409,150 539,150 7 2013 235,000 1,055,400 1,290,400 105,000 404,678 509,678 2014 335,000 1,041,150 1,376,150 155,000 399,641 554,641 2015 310,000 1,025,025 1,335,025 145,000 393,828 538,828 2016 325,000 1,009,150 1,334,150 150,000 388,019 538,019 7 2017 340,000 992,525 1,332,525 160,000 381,819 541,819 2018 360,000 975,025 1,335,025 165,000 375,319 540,319 2019 405,000 955,900 1,360,900 185,000 368,319 553,319 2020 425,000 934,619 1,359,619 195,000 360,719 555,719 7 2021 445,000 911,781 1,356,781 205,000 352,591 557,591 2022 470,000 887,763 1,357,763 215,000 343,794 558,794 2023 490,000 861,950 1,351,950 225,000 334,388 559,388 2024 515,000 834,313 1,349,313 240,000 324,300 564,300 2025 545,000 805,163 1,350,163 250,000 313,550 563,550 7 2026 625,000 772,988 1,397,988 290,000 301,525 591,525 2027 660,000 737,650 1,397,650 305,000 287,375 592,375 2028 695,000 700,388 1,395,388 320,000 271,750 591,750 2029 730,000 664,850 1,394,850 335,000 255,375 590,375 7 2030 4,530,000 543,669 5,073,669 1,335,000 213,625 1,548,625 2031 4,705,000 330,109 5,035,109 1,675,000 138,375 1,813,375 2032 4,785,000 110,653 4,895,653 1,930,000 48,250 1,978,250 S 22,835,000 $ 20,489,344 S 43,324,344 S 9,000,000 $ 7,918,553 S 16,918,553 7 C 7 7 rill 7 7, 7 99 71 CITY OF PEARLAND,TEXAS COMBINING SCHEDULE OF ENTERPRISE FUND LONG-TERM DEBT BYMATURITYDATE 1 September 30,2008 Certificates of Obligation,1998 Water&Sewer System Adjustable Rate Revenue Bonds, 1 Series 1999 Fiscal Year Principal Interest Total Principal Interest Total 2009 $ 980,000 $ 461,198 $ 1,441,198 $ 215,000 $ 275,067 $ 490,067 7 2010 1,015,000 428,271 1,443,271 220,000 267,659 487,659 2011 1,050,000 393,158 1,443,158 230,000 258,408 488,408 2012 1,090,000 355,698 1,445,698 240,000 248,736 488,736 �J 2013 1,125,000 316,100 1,441,100 250,000 238,644 488,644 Jll 2014 1,170,000 274,498 1,444,498 260,000 228,132 488,132 2015 1,210,000 230,760 1,440,760 270,000 217,199 487,199 2016 1,250,000 184,938 1,434,938 290,000 205,625 495,625 2017 2,090,000 121,790 2,211,790 1,080,000 193,651 1,273,651 7 2018 2,160,000 41,040 2,201,040 1,125,000 148,237 1,273,237 2019 1,175,000 100,941 1,275,941 2020 1,225,000 51,522 1,276,522 2021 2022 2023 7 2024 . 2025 2026 20277 2028 2029 2030 2031 7 2032 2033 2034 $ 13,140,000 $ 2,807,449 $ 15,947,449 $ 6,580,000 $ 2,433,817 $ 9,013,817 7 Water and Sewer System Revenue and Refunding Bonds, Water and Sewer System Revenue and Refunding Bonds, Series 2006 Series 2007 Fiscal Year Principal Interest Total Principal Interest Total 7 2009 $ 550,000 $ 657,656 $ 1,207,656 $ 200,000 $ 1,860,313 $ 2,060,313 2010 570,000 635,656 1,205,656 760,000 1,849,313 2,609,313 2011 600,000 611,431 1,211,431 790,000 1,807,513 2,597,513 2012 625,000 585,931 1,210,931 830,000 1,764,063 2,594,063 7 2013 650,000 559,369 1,209,369 880,000 1,718,413 2,598,413 2014 680,000 530,119 1,210,119 920,000 1,670,013 2,590,013 2015 710,000 499,519 1,209,519 965,000 1,619,413 2,584,413 2016 745,000 467,569 1,212,569 1,010,000 1,566,338 2,576,338 7 2017 100,000 434,044 534,044 950,000 1,510,788 2,460,788 2018 100,000 429,744 529,744 995,000 1,458,538 2,453,538 2019 100,000 425,369 525,369 1,045,000 1,403,813 2,448,813 2020 100,000 420,869 520,869 1,095,000 1,348,950 2,443,950 2021 100,000 416,244 516,244 1,155,000 1,294,200 2,449,200 7 2022 100,000 411,619 511,619 1,210,000 1,236,450 2,446,450 2023 100,000 406,994 506,994 1,275,000 1,175,950 2,450,950 2024 100,000 402,369 502,369 2,295,000 1,112,200 3,407,200 2025 100,000 397,744 497,744 2,480,000 997,450 3,477,45011 2026 1,150,000 393,119 1,543,119 3,120,000 873,450 3,993,450 2027 1,205,000 338,494 1,543,494 3,280,000 717,450 3,997,450 2028 1,265,000 278,244 1,543,244 3,440,000 553,450 3,993,450 2029 1,330,000 214,994 1,544,994 3,615,000 398,650 4,013,650 2030 1,395,000 146,831 1,541,831 3,795,000 272,125 4,067,125 2031 1,470,000 75,338 1,545,338 3,980,000 139,300 4,119,300 2032 2033 2034 $ 13,845,000 $ 9,739,263 $ 23,584,263 $ 40,085,000 $ 28,348,138 $ 68,433,1387 100 7 7 7 7 7 Water&Sewer System Revenue Bonds,Series 2001 Water&Sewer System Revenue Bonds,Series 2003 7 Fiscal Year Principal Interest Total Principal Interest Total 2009 $ 210,000 $ 455,630 $ 665,630 $ 270,000 $ 363,313 $ 633,313 2010 230,000 442,505 672,505 285,000 352,513 637,513 2011 240,000 428,130 668,130 300,000 341,113 641,113 r 2012 255,000 413,130 668,130 315,000 323,113 638,113 2013 270,000 397,830 667,830 330,000 304,213 634,213 2014 290,000 386,018 676,018 340,000 285,238 625,238 2015 300,000 372,968 672,968 355,000 271,638 626,638 2016 320,000 359,093 679,093 365,000 257,438 622,438 7 2017 340,000 343,893 683,893 375,000 242,838 617,838 2018 365,000 327,573 692,573 385,000 227,838 612,838 2019 390,000 309,688 699,688 390,000 212,438 602,438 2020 420,000 290,188 710,188 395,000 196,350 591,350 7 2021 1,730,000 269,188 1,999,188 395,000 179,563 574,563 2022 1,825,000 182,688 2,007,688 410,000 162,775 572,775 2023 1,925,000 91,438 2,016,438 420,000 145,350 565,350 2024 1,500,000 127,500 1,627,500 2025 1,500,000 63,750 1,563,750 7 2026 2027 2028 2029 7 2030 2031 2032 2033 2034 7 $ 9,110,000 $ 5,069,955 $ 14,179,955 $ 8,330,000 $ 4,056,975 $ 12,386,975 Water&Sewer System Revenue Bonds,Series 2008 7 Fiscal Year Principal Interest Total 2009 $ 150,000 $ 685,353 $ 835,353 2010 190,000 680,478 870,478 7 2011 205,000 674,303 879,303 2012 225,000 667,640 892,640 2013 235,000 660,328 895,328 2014 255,000 652,690 907,690 2015 275,000 641,215 916,215 7. 2016 290,000 628,840 918,840 2017 315,000 615,790 930,790 2018 340,000 601,615 941,615 2019 370,000 586,315 956,315 7 2020 395,000 569,665 964,665 2021 420,000 551,890 971,890 2022 440,000 532,990 972,990 2023 460,000 514,840 974,840 2024 490,000 495,520 985,520 7 2025 510,000 474,450 984,450 ' 2026 540,000 448,950 988,950 2027 560,000 421,950 981,950 2028 595,000 393,950 988,950 2029 600,000 364,200 964,200 7 2030 580,000 334,200 914,200 2031 560,000 305,200 865,200 2032 1,890,000 277,200 2,167,200 2033 1,980,000 182,700 2,162,700 r 2034 2,080,000 93,600 2,173,600 $ 14,950,000 $ 13,055,870 $ 28,005,870 7 1o1 • 1 PEARLAND ECONCOMIC DEVELOPMENT CORPORATION COMBINING SCHEDULE OF GENERAL LONG-TERM DEBT OF PEARLAND ECONOMIC DEVELOPMENT CORPORATION BY MATURITY DATE 7 September 30,2008 7 Sales Tax Revenue Bonds,Series 2005 Sales Tax Revenue Bonds,Series 2006 Fiscal Year Principal Interest Total Principal Interest Total 7 2009 $ 375,000 $ 391,850 $ 766,850 $ 170,000 $ 478,294 $ 648,294 2010 385,000 380,600 765,600 180,000 471,069 651,069 2011 400,000 368,088 768,088 185,000 463,419 648,419 2012 410,000 355,088 765,088 200,000 454,169 654,169 2013 425,000 340,738 765,738 210,000 444,169 654,169 2014 445,000 323,738 768,738 215,000 433,669 648,669 2015 460,000 305,938 765,938 230,000 422,919 652,919 2016 480,000 287,538 767,538 240,000 411,419 651,419 2017 505,000 263,538 768,538 255,000 401,219 656,219 72018 530,000 238,288 768,288 265,000 390,381 655,381 2019 555,000 211,788 766,788 280,000 378,788 658,788 2020 575,000 189,588 764,588 300,000 366,538 666,538 2021 600,000 166,588 766,588 310,000 353,038 663,038 2022 625,000 141,988 766,988 325,000 339,088 664,088 al 2023 650,000 116,363 766,363 345,000 322,838 667,838 2024 675,000 89,550 764,550 365,000 305,588 670,588 2025 705,000 61,200 766,200 385,000 287,338 672,338 2026 735,000 31,238 766,238 405,000 268,088 673,0887 2027 1,190,000 247,838 1,437,838 2028 1,255,000 188,338 1,443,338 2029 1,320,000 128,725 1,448,725 2030 1,390,000 66,025 1,456,025 $ 9,535,000 $ 4,263,700 $ 13,798,700 $ 10,020,000 $ 7,622,950 $ 17,642,950 1 7 1 7 7 7 7 7 102 1 7 7 7 DEVELOPMENT AUTHORITY OF PEARLAND COMBINING SCHEDULE OF GENERAL LONG-TERM DEBT OF DEVELOPMENT AUTHORITY OF PEARLAND BY MATURITY DATE September 30,2008 C rill Tax Increment Revenue Bonds,Series 2004 Tax Increment Revenue Bonds,Series 2005 Fiscal Year Ending Principal Interest Total Principal Interest Total 7 2009 S 375,000 S 601,060 $ 976,060 $ 270 000 S 360,904 S 630,904 2010 390,000 586,435 976,435 280,000 350,779 630,779 2011 405,000 570,348 975,348 290,000 339,929 629,929 2012 425,000 552,933 977,933 300,000 328,329 628,329 2013 440,000 534,020 974,020 315,000 315,954 630,954 7 2014 460,000 513,780 973,780 330,000 302,566 632,566 2015 485,000 492,160 977,160 340,000 288,129 628,129 2016 505,000 469,365 974,365 360,000 272,829 632,829 2017 530,000 445,125 975,125 375,000 257,529 632,529 7 2018 555,000 418,625 973,625 390,000 241,216 631,216 2019 585,000 390,875 975,875 390,000 223,666 613,666 2020 615,000 361,625 976,625 410,000 206,116 616,116 2021 645,000 330,875 975,875 425,000 187,256 612,256 7 2022 675,000 298,625 973,625 450,000 168,131 618,131 2023 710,000 264,031 974,031 470,000 147,319 617,319 2024 750,000 227,644 977,644 485,000 125,581 610,581 2025 790,000 186,806 976,806 510,000 103,150 613,150 [141 2026 835,000 143,788 978,788 530,000 79,563 609,563 2027 880,000 98,313 978,313 560,000 54,388 614,388 2028 925,000 50,388 975,388 585,000 27,788 612,788 2029 rS 11,980,000 $ 7,536,821 $ 19,516,821 $ 8,065,000 $ 4,381,122 $ 12,446,122 Tax Increment Revenue Bonds,Series 2006 Tax Increment Revenue Bonds,Series 2008 7 Fiscal Year Ending Principal Interest Total Principal Interest Total 2009 S 335,000 S 400,186 S 735,186 S 510,000 S 694,909 S 1,204,909 7 2010 345,000 386,786 731,786 450,000 674,509 1,124,509 2011 365,000 372,986 737,986 460,000 656,509 1,116,509 2012 375,000 358,386 733,386 485,000 638,109 1,123,109 2013 395,000 343,386 738,386 500,000 618,709 1,118,709 7 2014 405,000 327,586 732,586 520,000 600,209 1,120,209 2015 425,000 311,386 736,386 540,000 580,709 1,120,709 2016 440,000 294,387 734,387 560,000 560,189 1,120,189 2017 455,000 276,788 731,788 585,000 537,789 1,122,789 j 2018 480,000 258,586 738,586 605,000 514,389 1,119,389 L 2019 460,000 239,387 699,387 680,000 489,433 1,169,433 2020 480,000 220,986 700,986 620,000 460,533 1,080,533 2021 500,000 201,306 701,306 650,000 433,408 1,083,408 7 2022 520,000 180,307 700,307 680,000 404,158 1,084,158 2023 540,000 158,206 698,206 710,000 373,558 1,083,558 2024 570,000 134,986 704,986 740,000 341,608 1,081,608 2025 590,000 110,476 700,476 775,000 308,308 1,083,308 7 2026 620,000 84,811 704,811 810,000 273,433 1,083,433 2027 640,000 57,531 697,531 850,000 235,363 1,085,363 2028 675,000 29,531 704,531 885,000 194,988 1,079,988 2029 3,220,000 152,950 3,372,950 S 9,615,000 $ 4,747,990 S 14,362,990 S 15,835,000 S 9,743,763 S 25,578,763 7 7 103 7 r r r r r r r r r Statistical Section (Unaudited) r r r r r r r 105 r I I I 1 I I I 1 (This page intentionally left blank.) I I I 1 1 I 1 I 106 1 1 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 109 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 116 C These schedules contain information to help the reader assess the government's most significant local revenue sources, the property tax and sales tax. Debt Capacity 124 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 129 pA These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information 132 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. r Sources: Unless otherwise noted,the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 107 1 I I 1 1 I I I I (This page intentionally left blank) 1 1 I 1 1 I I 1 108 1 1 7 7 CITY OF PEARLAND,TEXAS 1 NET ASSETS BY COMPONENT Last Six Fiscal Years* Amounts in(000's) 7 (Accrual Basis of Accounting) 2003 2004 2005 2006 2007 2008 7 Governmental Activities Invested in capital assets,net of related debt $418,713 $405,052 $396,619 $402,103 $400,522 $410,002 7 Restricted 4,151 6,391 6,862 8,085 10,130 10,864 Unrestricted 3,210 6,746 5,785 8,917 11,809 10,903 Total governmental activities net assets $426,074 $418,189 $409,266 $419,105 $422,461 $431,769 I Business-type activities Invested in capital assets,net of 7 related debt Restricted $107,472 $113,736 $127,144 $130,648 $126,779 $138,679 7,027 10,129 24,258 16,094 Unrestricted 25,749 18,986 552 700 1,638 3,406 7 Total business-type activities net assets $133,221 $132,722 $134,723 $141,477 $152,675 $158,179 7 Primary government Invested in capital assets $526,185 $518,788 $523,763 $532,751 $527,301 $548,681 Restricted 4,151 6,391 13,889 18,214 34,388 26,958 Unrestricted 28,959 25,732 6,337 9,617 13,447 14,309 7 Total primary government net assets $559,295 $550,911 $543,989 $560,582 $575,136 $589,948 7 *GASB 34 was implemented in fiscal 2003,therefore 10 years of data is unavailable. 7 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. CI 1 7 p 7 7 7 109 7 71 CITY OF PEARLAND,TEXAS !"1 CHANGES IN NET ASSETS Last Six Fiscal Years* Amounts in(000's) (Accrual Basis of Accounting) 2003 2004 2005 2006 2007 2008 1 Expenses Governmental activities: General government $ 6,275 $ 7,314 $ 8,714 $ 8,574 $ 8,660 $ 11,161 1 Public safety 9,645 10,525 11,857 12,564 14,655 17,674 Public works 25,729 25,913 28,858 26,914 24,041 16,287 Community services 2,874 2,700 2,939 2,903 3,113 3,337 Parks and recreation 4,131 4,882 4,357 Interest on long-term debt 4,559 5,549 5,115 6,559 9,070 12,266 Total government activities expenses 49,082 52,001 57,483 61,645 64,421 65,082 Business-type activities: Water and sewer 13,643 19,265 17,624 20,531 21,076 22,570 Solid waste management _ 5,218 6,024 Total business-type activities: 13,643 19,265 17,624 20,531 26,294 28,594 Total primary government expenses $ 62,725 $ 71,266 $ 75,107 $ 82,176 $ 90,715 $ 93,676 Program Revenue Governmental activities: Charges for services: General government $ 161 $ 506 $ 185 $ $ $ Public safety 1,998 2,975 3,640 2,627 2,788 2,959 Public works 5,547 6,864 7,221 4,331 195 103 Community services 866 696 1,263 6,312 5,822 5,130 Parks and recreation 825 818 936 Operating grants and contributions: General government 5 2 1,239 1,659 3,951 Public safety 370 839 673 111 154 182 Public works 12 456 4 Community services 324 17 479 55 34 88 Parks and recreation 21 11 82 Capital grants and contributions: General government. 14 _ 1,319 800 Public safety 1,618 756 312 Public works 586 6 15,743 8,690 263 Parks and recreation 6 Total governmental activities program revenues 11,501 13,972 14,581 31,270 20,627 13,698 7 Business-type activities: Charges for services: Water and sewer 8,809 11,893 11,219 13,849 17,754 21,524 Solid waste management 5,218 6,038 Operating grants and contributions: Water and sewer 47 474 385 315 Capital grants and contributions: r^{ Water and sewer 9,882 6,933 8,365 13,434 12,621 5,869 4J Total business-type activities program revenues 18,691 18,873 19,585 27,757 35,978 33,746 Total primary government program revenues $ 30,192 $ 32,845 $ 34,166 $ 59,027 $ 56,605 $ 47,444 7 7 110 1 7 7 7 7 2003 2004 2005 2006 2007 2008 Net(Expense)/Revenue 11 Governmental activities $(37,581) $(38,029) $ (42,902) $ (30,375) $ (43,794) $ (51,384) Business-type activities 5,048 (392) 1,961 7,226 9,684 5,152 Total primary government net expense $(32,533) $(38,421) $ (40,941) $ (23,149) $ (34,110) $ (46,232) 7 General Revenues and Other Changes in Net Assets Governmental activities: Taxes: 7 Property taxes $ 15,120 $ 17,907 $ 19,805 $ 21,845 $ 24,823 $ 29,492 �' Sales and use taxes 6,008 6,933 8,026 9,980 11,025 12,581 Franchise taxes 2,533 2,883 3,097 3,426 3,760 4,427 Investment earnings 171 1,115 1,863 2,991 4,943 4,572 i Miscellaneous 741 782 828 740 1,331 8,290 Transfers 728 524 359 1,230 1,268 1,330 Total governmental activities $ 25,301 $ 30,144 $ 33,978 $ 40,212 $ 47,150 $ 60,692 7 Business-type activities: Investment earnings $ 196 $ 417 $ 399 $ 682 $ 2,574 $ 1,669 Miscellaneous 12 7 Transfers (728) (524) (359) (1,154) (1,060) (1,330) Total business-type activities (532) (107) 40 (472) 1,514 351 Total primary government $ 24,769 $ 30,037 $ 34,018 $ 39,740 $ 48,664 $ 61,043 7 Change in Net Assets Governmental activities $ (12,280) $ (7,885) $ (8,924) $ 9,837 $ 3,356 $ 9,308 Business-type activities 4,516 (499) 2,001 6,754 11,198 5,503 7 Total primary government $ (7,764) $ (8,384) $ (6,923) $ 16,591 $ 14,554 $ 14,811 L'I *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 7 GASB 34. Prior year presentations have been adjusted to reflect the retroactive reporting of depreciation expenses. 7 p 7 7 p 111 7 I CITY OF PEARLAND,TEXAS FUND BALANCES OF GOVERNMENTAL FUNDS Last ten Fiscal Years Amounts in(000's) (Modified Accrual Basis of Accounting) 1 1999 2000 2001 2002 General fund Reserved $ 155 $ 295 $ 472 $ 286 Unreserved 4,302 4,911 6,092 4,739 Total General Fund $ 4,457 $ 5,206 $ 6,564 $ 5,025 All other governmental funds Reserved for debt service $ 208 $ 681 $ 1,545 $ 2,230 Unreserved,reported in: Special revenue funds 291 603 861 877 Capital projects funds 5,038 5,114 3,654 28,494 Total other Governmental Funds $ 5,537 $ 6,398 $ 6,060 $ 31,601 1 I I J I I 1 I 1 112 1 7 i 11 fl2003 2004 2005 2006 2007 2008 $ 52 $ 70 $ 71 $ 636 $ 704 $ 4,879 5,310 8,216 8,132 9,961 12,932 8,647 7 $ 5,362 $ 8,286 $ 8,203 $ 10,597 $ 13,636 $ 13,526 fl $ 2,130 $ 3,008 $ 3,855 $ 4,658 $ 6,552 $ 6,835 1,724 2,849 2,462 3,215 4,546 4,988 41,255 46,580 44,338 53,763 96,542 110,715 7 $ 45,109 $ 52,437 $ 50,655 $ 61,636 $ 107,640 $ 122,538 7 7 1 7 7 7 p fl113 7 71 CITY OF PEARLAND,TEXAS 7 CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years Amounts in(000's) (Modified Accrual Basis of Accounting) 7 1999 2000 2001 2002 7 Revenues Property taxes $ 8,193 $ 9,272 $ 10,833 $ 12,858 �"� Sales and use taxes 3,484 3,745 4,863 5,103 }1 Franchise fees 1,944 2,023 2,304 2,454 Licenses and permits 956 1,470 1,897 2,257 Fines and forfeitures 676 732 857 845 1 Charges for services 2,960 3,062 3,203 3,652 Investment earnings 649 Intergovernmental 490 319 334 9,0011 Other 1,499 2,084 1,961 1,584 Total Revenues 20,202 22,707 26,252 38,403 Expenditures General government 3,690 3,972 4,235 16,225 Public safety 5,698 5,952 6,692 8,303 Public works 5,138 5,635 5,975 7,604 Community services 1,599 1,782 2,662 2,932 Parks and recreation 7 Debt service: Principal 1,440 1,605 1,680 1,920 Interest and other charges 1,770 1,459 1,596 2,374 Capital outlay 4,511 1,680 4,517 12,239 j Intergovernmental Total Expenditures 23,846 22,085 27,357 51,597 Excess of revenues over(under)expenditures (3,644) 622 (1,105) (13,194) Other Financing Sources(Uses) 1 Transfers in 1,368 1,686 1,023 4,382 Transfers out (464) (923) (128) (3,752) Bonds issued 10,895 38,550 Capital leases 425 152 Other (10,822) (1,900) Total other Financing Sources(uses) 1,329 988 895 37,2801 Net change in fund balances $ (2,315) $ 1,610 $ (210) $ 24,086 7 Debt service as a percentage of noncapital expenditures 16.6% 15.0% 14.3% 10.9% 1 114 1 1 7 7 7 7 2003 2004 2005 2006 2007 2008 7 $ 15,120 $ 17,891 $ 19,745 $ 22,150 $ 24,525 $ 29,200 6,008 6,933 8,026 9,980 11,025 12,581 2,533 2,883 3,097 3,426 3,760 4,427 17 2,682 3,441 3,864 4,067 4,030 2,992 1,422 1,608 1,935 2,038 2,048 2,086 3,982 5,260 6,139 8,734 5,250 7,512 17 171 1,115 1,863 2,991 4,938 4,568 2,398 3,040 2,382 7,852 14,463 3,731 1,133 1,076 1,172 1,744 1,815 5,638 35,449 43,247 48,223 62,982 71,854 72,735 7 5,852 6,221 6,750 6,381 6,293 7,388 7 9,650 10,142 11,081 12,870 14,598 19,604 8,770 8,709 10,450 9,728 6,278 7,536 2,827 2,904 2,747 3,787 3,102 3,426 1 3,358 4,908 6,605 2,040 3,000 3,535 3,429 3,228 3,160 4,469 7 5,665 5,555 6,771 10,197 12,382 23,568 18,058 28,661 36,706 28,530 27,777 1,084 1,684 2,169 3,434 117 57,176 54,699 69,863 84,714 79,303 91,312 (21,727) (11,452) - (21,640) (21,732) (7,449) (18,577) 7 1,534 1,431 4,870 5,852 4,596 4,912 7 (806) (907) (4,510) (4,698) (3,536) (3,582) 34,653 184 37,015 41,959 94,559 31,835 21,000 271 1,568 94 (15,926) (8,004) (40,695) 200 I 35,381 21,802 21,720 35,109 56,492 33,365 $ 13,654 $ 10,350 $ 80 $ 13,377 $ 49,043 $ 14,788 7 19.4% 23.6% 22.1% 22.0% 27.3% 30.4% r r_11,... 115 7 CITY OF PEARLAND,TEXAS ASSESSED VALUE AND ESTIMATED ACTUAL VALUE 1 OF TAXABLE PROPERTY Last Three Fiscal Years Real Property Less Other Fiscal Tax Personal Less Tax Exempt Exemptions and Year Year Residential Commercial Property Real Property Abatements 2006 2005 $2,664,192,960 $ 1,009,432,370 $ 310,036,660 $ 269,648,350 $ 133,137,398 2007 2006 3,368,820,420 1,177,351,983 378,469,355 306,851,500 204,366,148 or 2008 2007 4,081,340,145 1,427,275,982 446,376,276 381,706,892 178,519,992 Notes: 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. 1 1 I } 1 I I 1 1 116 1 I to: Assessed Value as a Percent of Total Taxable Total Direct Estimated Actual Actual Assessed Value Tax Rate Taxable Value Taxable Value $ 3,580,876,242 $ 0.6744 $ 3,580,876,242 100% 4,413,424,110 0.6527 4,413,424,110 100% 5,394,765,519 0.6526 5,394,765,519 100% r 117 4111 CITY OF PEARLAND,TEXAS "l DIRECT AND OVERLAPPING PROPERTY TAX RATES Last Ten Fiscal Years (rate per$100 of assessed value) City Direct Rates _ 7 Pearland Harris Independent Alvin Fort Port of County Fiscal M&0 I&S Total School Comm Brazoria Bend Harris Houston Flood Year Rate Rate Direct District College County County County Authority Control 1999 0.440 0.255 0.695 $ 1.862 $ 0.239 $ 0.358 $ 0.585 $ 0.370 $ 0.020 $ 0.031 7 2000 0.440 0.255 0.695 1.650 0.239 0.400 0.590 0.350 0.018 0.062 2001 0.435 0.260 0.695 1.820 0.239 0.400 0.575 0.384 0.018 0.048 2002 0.430 0.256 0.686 1.837 0.241 0.420 0.538 0.360 0.020 0.050 2003 0.406 0.280 0.686 1.837 0.255 0.420 0.513 0.360 0.020 0.050 2004 0.346 0.350 0.696 1.809 0.255 0.420 0.499 0.388 0.020 0.042 7 2005 0.339 0.356 0.695 1.792 0.241 0.422 0.500 0.400 0.017 0.033 2006 0.345 0.329 0.674 1.792 0.238 0.408 0.517 0.400 0.015 0.033 2007 0.299 0.354 0.653 1.662 0.220 0.382 0.517 0.402 0.013 0.0327 2008 0.250 0.402 0.653 1.427 0.210 0.311 0.517 0.402 0.014 0.031 Source:Brazoria County and Harris County Appraisal District. 1 Note:The city's basic property tax rate may be increased only by a majority vote of the city's 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. I 1 7 1 7 I 7 I 1 118 7 I 7 7 7 Overlapping Rates a Harris Brazoria/ County Ft Bend I Hospital MUD MUD MUD MUD MUD MUD MUD MUD MUD District No.1 No.6 No.17 No.18 No.19 No.23 No.26 No.28 No.34 $ 0.147 4 0.203 0.750 0.650 0.800 0.190 0.750 0.650 0.800 0.190 0.750 0.650 0.800 0.190 0.750 0.650 0.800 0.850 7 0.190 0.750 0.650 0.800 0.850 0.190 0.890 0.750 0.650 0.800 0.850 0.850 0.82 0.850 r 0.192 0.850 0.800 0.750 0.640 0.800 0.850 0.850 0.82 0.850 0.192 0.850 0.720 0.750 0.610 0.780 0.850 0.770 0.82 0.850 0.192 0.850 0.670 0.730 0.590 0.680 0.850 0.710 0.82 0.850 l + L. imil n 7 7 n 7 7 7 .___, 119 7 7 CITY OF PEARLAND,TEXAS PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years 7 Fiscal Collected within the Year Taxes Levied Fiscal Year of the Levy Collections Total Collections to Date Ended for the Percentage in Subsequent Percentage7 Sept 30, Fiscal Year Amount of Levy Years Amount of Levy 1999 $ 8,147,473 $ 7,992,304 98.10% $ 140,905 $ 8,133,209 99.8% 2000 9,174,224 9,022,542 98.35% 121,979 9,144,521 99.7% 2001 10,864,049 10,609,654 97.66% 233,039 10,842,693 99.8% 2002 12,890,902 12,477,283 96.79% 380,055 12,857,338 99.7% al 2003 14,869,170 14,575,297 98.02% 258,904 14,834,201 99.8% 2004 17,987,752 17,633,986 98.03% 306,748 17,940,734 99.7% 2005 20,979,391 20,576,812 98.08% 356,425 20,933,237 99.8% 7 2006 24,212,025 23,690,031 97.84% 455,653 24,145,684 99.7% 2007 28,770,925 28,235,276 98.14% 370,319 28,605,595 99.4% 2008 35,020,237 34,461,652 98.40% 34,461,652 98.4% 7 Source:Brazoria County Tax Office Taxes levied based on adjusted tax roll. fal I 7 1 1 7 7 1 1 120 7 1 r CITY OF PEARLAND,TEXAS PRINCIPAL PROPERTY TAX PAYERS Current Year And Nine Years Ago 7 2008 1999 Percentage Percentage 7 Taxableof Total City of Total City Taxable Taxable Taxable Assessed Assessed Assessed Assessed 7 Taxpayer Value Rank Value Value Rank Value Weatherford U.S.,Inc. $ 58,576,390 1 1.09% $27,693,720 1 2.36% 7 Pearland Investments Ltd 35,550,941 2 0.66% ShadowCreek Ranch 27,417,780 3 0.51% Wal-Mart Real Estate 24,854,860 4 0.46% 7 HCA Healthcare 23,044,270 5 0.43% Centerpoint Energy 22,638,126 6 0.42% Waterford SCR LP 19,088,150 7 0.35% i USA Tranquility Lake 18,723,390 8 0.35% Turbocare Inc 18,701,417 9 0.35% Wal-Mart Stores 16,199,250 10 0.30% 7 Aggreko,Inc. 9,092,480 2 0.78% Houston Lighting&Power 9,405,670 3 0.80% Southwestern Bell Telephone 8,266,920 4 0.71% 7 Phillips 6,934,060 5 0.59% Whispering Winds Apts 6,157,800 6 0.53% Texas Windmill Apts 6,108,210 7 0.52% 7 Continental 34 Fund Ltd. 6,093,140 8 0.52% K-Mart Corp 6,087,890 9 0.52% Pauluhn Electric Mfg 5,948,890 10 0.51% 7 Total $ 264,794,574 4.91% $91,788,780 7.83% Source:Brazoria County Appraisal District 7 7 7 7 r 7 121 7 7 CITY OF PEARLAND,TEXAS 1 TAXABLE SALES BY CATEGORY Last Ten Calendar Years (in thousands of dollars) Calendar Year 1999 2000 2001 2002 Agriculture,Forestry,Fishing $ 1,495 $ 1,732 $ 1,783 $ 6 Mining,Quarrying,Oil and Gas 299 434 1,222 4,061 i Utilities Manufacturing 8,464 12,018 15,648 24,365 7 Wholesale Trade 10,873 9,062 13,269 13,248 i Retail Trade 180,126 218,485 253,792 240,757 Transportation/Warehousing 1,955 1,929 2,083 50 7 Information 2,294 Finance,Insurance 1,646 2,161 2,940 3,095 Real Estate/Rental/Leasing 14,892 1 Professional/Scientific/Technical 2,421 Management of Companies/Enterprises ,.,g Admin/Support/Waste Mgmt/Remediation 7,740 Educational Services 95 Health Care/Social Assistance 17 Arts,Entertainment&Recreation 3,990 7 Accommodations&Food Services 43,421 Construction 23,170 20,124 16,902 17,586 Other Services(Except Public Admin) 43,177 52,158 61,834 13,332 lall Other 5,574 Total $ 271,205 $318,103 $369,473 $396,943 7 City direct sales tax rate b 1.00% 1.00% 1.00% 1.00% Source: State Comptroller's Office. 1 a 2008 taxable sales thru 2nd quarter of 2008. 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. 7 , ,) 7 1 1 122 1 1 s 7 p 7 7 2003 2004 2005 2006 2007 2008 a 7 $ 13 $ 199 $ 283 $ 453 $ 473 $ 298 4,283 3,738 4,053 11,186 9,280 6,273 7 3 27,491 36,758 40,855 46,387 50,290 23,315 _ 11,234 14,563 23,037 30,585 28,478 16,080 278,527 303,664 370,783 464,857 535,698 284,778 fl 43 43 69 155 169 66 2,851 3,570 6,388 8,553 10,073 5,652 3,403 3,505 1,811 1,722 1,038 447 7 14,219 16,423 18,629 33,329 45,312 23,899 2,743 3,407 3,538 3,747 4,120 2,612 2,399 2,278 7 10,529 12,113 13,674 8,060 9,216 6,379 159 116 207 110 110 120 14 9 72 56 63 15 7 4,080 4,621 4,789 5,208 8,789 5,317 54,331 65,719 80,198 95,125 107,830 60,470 14,392 13,600 13,214 18,362 16,232 6,648 14,709 15,276 16,806 20,377 20,794 11,244 2,423 548 13 2 4 7 $445,445 $500,272 $ 600,697 $748,280 $ 847,972 $453,613 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 7 7 7 7 k 7 123 7 7 CITY OF PEARLAND,TEXAS 7 RATIOS OF OUTSTANDING DEBT BY TYPE I Last Ten Fiscal Years (dollars in thousands,except per capita) Governmental Activities Business-Type Activities 71 General Certificates Capital Certificates Capital Fiscal Obligation of Obligation Lease Revenue of Obligation Lease Year Bonds Bonds Obligations Bonds Bonds Obligations7 1999 $ 15,105 $ 17,525 $ 826 $ 9,045 $ 17,100 $ 62 2000 13,760 16,210 381 16,675 17,050 2001 12,610 15,680 75 16,140 17,000 2002 13,335 51,585 25,570 16,925 "'� 2003 26,880 70,650 34,485 16,835 1 2004 25,345 90,185 184 33,505 16,735 2005 60,175 72,390 396 32,480 15,880 1 2006 90,305 81,275 309 40,170 15,000 2007 164,810 66,220 1,538 79,180 13,915 2008 184,985 74,980 1,187 92,900 13,140 1 7 Note:Details regarding the city's outstanding debt can be found in the notes to the financial statements. *Information not avaialble. 1 1 7 7 1 1 124 1 1 r Total Percentage g Primary of Personal Per Government Income Capita $ 59,663 * $ 1,728 64,076 6.2% 1,643 61,505 5.8% 1,519 107,415 9.5% 2,492 148,850 10.6% 3,167 165,954 10.3% 3,073 181,321 9.3% 2,895 227,059 11.1% 2,862 325,663 12.4% 3,854 367,192 12.4% 4,126 r r 125 r 7 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) 1 1 7 7 Ratio of Net General Less Debt Net Bonded Debt Percentage Fiscal Tax Obligation Service Bonded to Assessed of Personal Per7 Year Year Bonds Funds Debt Value Income a Capita a 1999 1998 $ 49,730 $ 208 $49,522 5.7% * $ 1,434 2000 1999 47,020 681 46,339 4.6% 4.5% 1,188 2001 2000 45,290 1,545 43,745 3.7% 4.1% 1,080 2002 2001 81,845 2,230 79,615 6.0% 7.0% 1,8477 2003 2002 114,365 2,130 112,235 7.2% 8.0% 2,388 2004 2003 132,265 3,008 129,257 6.9% 8.0% 2,394 2005 2004 148,445 3,855 144,590 7.1% 7.4% 2,308 al 2006 2005 186,580 4,658 181,922 7.8% 8.9% 2,293 2007 2006 244,945 6,552 238,393 6.7% 9.1% 2,821 2008 2007 273,105 6,835 266,270 6.0% 9.0% 2,9927 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. 1 *Information not avaialble. 7 I 7 I I 1 26 1 7 7 7 CITY OF PEARLAND, TEXAS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT September 30,2008 7 (dollars in thousands, except per capita) 7 Overlapping Gross Taxing Jurisdiction Debt a Percentage Amount nAlvin Community College District $ 18,675 21.09% $ 3,939 Brazoria County 55,725 25.17% 14,026 Brazoria County MUD No. 17 28,365 100.00% 28,365 7 Brazoria County MUD No. 18 33,090 100.00% 33,090 Brazoria County MUD No. 19 40,720 100.00% 40,720 Brazoria County MUD No.23 16,830 100.00% 16,830 7 Brazoria County MUD No.26 53,975 100.00% 53,975 Brazoria County MUD No.28 11,060 100.00% 11,060 Brazoria County MUD No. 34 10,430 100.00% 10,430 C Brazoria-Fort Bend County MUD No. 1 53,655 100.00% 53,655 Fort Bend County 367,690 0.13% 478 Harris County(a) 2,381,089 0.15% 3,572 7 Harris County Flood Control District 108,981 0.15% 163 Pearland ISD 341,213 93.85% 320,228 Port of Houston Authority 563,015 0.15% 845 flTotal Overlapping Debt 591,376 City Direct Debt 273,105 100% 273,105 7 Total Direct and Overlapping in Debt $ 864,481 7 Population 89,000 Per Capita Debt-Direct and Overlapping Debt $ 9,713 7 Sources:Individual jurisdictions and/or Texas Municipal Reports. 7 *Debt amounts are as of September 30,2008 7 7 7 7 127 7 7 CITY OF PEARLAND,TEXAS PLEDGED REVENUE COVERAGE Amounts in(000's) Last Ten Fiscal Years Water&Sewer Revenue Bonds 1 Net 7 Less: Revenue Debt Service Fiscal Gross Operating Available for Year Revenues Expenses Debt Service Principal Interest Total Coverage 7 1999 $ 7,187 $ 3,464 $ 3,723 $ 370 $ 409 $ 779 4.78 2000 8,745 3,899 4,846 535 785 1,320 3.67 2001 8,727 4,947 3,780 570 760 1,330 2.841 2002 9,037 5,244 3,793 575 1,159 1,734 2.19 2003 9,023 6,282 2,741 980 1,635 2,615 1.05 2004 12,357 10,877 1,480 1,025 1,504 2,529 0.59 1 2005 11,619 8,607 3,012 1,075 1,459 2,534 1.19 2006 15,004 11,228 3,776 1,125 1,829 2,954 1.28 2007 20,713 12,151 8,562 1,125 2,915 4,040 2.12 2008 23,507 14,827 8,680 1,230 4,011 5,241 1.66 1 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. 1 7 7 I 7 I 7' 1 128 1 I 7 7 CITY OF PEARLAND,TEXAS DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS 4 ; Education Personal Per Capita Level in School 7 Fiscal Population Income (in Personal Median Years of Enrollment Unemployment Year (A) $000's) Income(B) Age(B) Schooling (C) Rate(D) 1999 34,535 * * * 14.1 9,500 4.1% 7 2000 39,000 $ 1,025,934 $ 26,306 34.0 14.3 9,700 3.8% 2001 40,500 1,065,393 26,306 34.0 14.3 10,224 3.6% 2002 43,103 1,133,868 26,306 34.0 14.3 11,700 4.3% 7 2003 47,000 1,400,741 29,803 35.1 14.3 12,103 4.7% 2004 54,000 1,609,362 29,803 35.1 14.3 13,401 4.5% 2005 62,634 1,951,801 31,162 35.5 14.3 14,236 4.6% L+ 2006 79,322 2,050,394 25,849 33.4 14.3 16,179 3.6% 72007 84,500 2,631,837 31,146 34.9 14.3 17,083 3.6% 2008 89,000 2,963,255 33,295 35.8 14.3 17,111 3.8% 7 (A)Estimated (B) Pearland Economic Development Corporation (C)Pearland Independent School District [11 (D) Bureau of Labor Statistics *Information not presented is not avaialble. 7 7 71_t 7 7 i 7 129 7 CITY OF PEARLAND,TEXAS PRINCIPAL EMPLOYERS 7 Current Year and Three Years Ago 7 2008 2005 Percentage Percentage 7 of Total City of Total City Employer Employees Rank Employment Employees Rank Employment Pearland ISD 1 2,291 1 6.19% 1,820 1 7.26% 7 Wal-Mart 2 800 2 2.16% 800 2 3.19% City of Pearland 3 543 3 1.47% 420 3 1.71% 7 HEB 4 500 4 Weatherford 5 325 5 0.88% 250 4 1.00% TurboCare 6 280 6 0.76% 175 7 0.70% 1 Randall's 7 250 7 0.68% 250 5 1.00% Home Depot 8 225 8 0.61% Kemlon 9 200 9 0.54% 185 6 0.74% 73 EMS Pipeline 10 195 10 0.53% Super Target 11 150 8 0.60% Tele-flow 12 140 9 0.56% 7 Lowes 13 132 10 0.53% Total 5,609 13.81% 4,322 17.27% 7 Note: Information for the period nine years ago is not readily available. 1 Source: Pearland Economic Development Corp. 1 7 I 7 1 1 130 1 7 7 7 CITY OF PEARLAND,TEXAS FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Last Ten Fiscal Years 7 Full-time Equivalent Employees as of Sept 30 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Function/Program: 7 Governmental Activities 7 General Government 31 32 34 37 45 41 42 49 51 55 Public Safety 102 113 113 132 132 160 170 184 205 242 Public Works 26 29 30 32 41 42 43 44 47 45 A Community Services 25 21 22 26 34 37 41 47 50 51 L t Parks and Recreation 59 47 47 50 52 55 58 52 59 68 Business Type Activities Water&Sewer 47 47 49 51 56 62 62 76 78 77 7 Component Unit Economic Development 4 4 4 4 4 4 4 4 4 5 7 Total 294 293 299 332 364 401 420 456 494 543 Source: City Budget 7 n 7 7 r i 7 7 I ' 7 131 7 7 CITY OF PEARLAND,TEXAS Page I of 2 7 OPERATING INDICATORS BY FUNCTION/PROGRAM Last Six Fiscal Years Fiscal Year 2003 2004 2005 2006 2007 2008 4 { Function/Program Jl General Government Finance: Number of purchase orders 3,953 3,667 3,183 3,085 3,475 3,552 Number of budget transfers 61 82 117 226 194 398 Number of invoices paid N/A N/A 21,180 22,438 22,279 23,434 "�+ Average number of employees paid per month 764 848 930 984 1,026 1,185 ! Human Resources: Number of hires 69 58 77 95 97 109 Number of interviews conducted 320 292 333 360 449 353 Number of applications received 2,318 2,541 3,138 2,808 3,074 2,495 J Legal: Number of resolutions and ordinances prepared 261 268 234 295 269 293 Information Technology: 7 Average monthly service requests 275 300 350 370 486 616 Number of PC's supported 175 185 205 220 354 386 Public Safety 7 Police: Number of police calls resulting in dispatch 23,706 25,849 27,443 30,496 32,747 34,865 Total police arrests made 4,234 4,222 3,753 4,809 5,053 4,4247 Dispatched calls per patrol officer 677 680 704 555 544 592 Commercial vehicles equipment violations 991 1,104 1,015 1,069 980 860 UCR Part I cases assigned 398 398 418 366 371 349 7 Fire: Total number of arson incidents 8 6 4 11 21 9 Fires investigated 33 71 70 120 96 28 Total annual inspections 300 1,059 965 1,307 2,333 2,6777 Total calls for service 644 889 1,168 1,188 1,202 2,215 EMS Total calls for service N/A 3,297 3,941 4,290 5,372 6,029 7 Patients treated 2,858 3,124 - 3,848 4,048 4,983 5,529 Public Works Fleet Maintenance: Fleet maintenance jobs completed 3,593 3,850 3,950 4,778 4,686 4,153 Preventative maintenance performed 1,348 1,501 2,251 1,815 1,889 1,756 Other Public Works: Fuel issued(gallons) 143,686 183,000 220,000 303,930 318,587 343,865 71 Street sweeping(miles) 145 790 790 790 583 2,324 Street signs maintained/replaced 865 758 1,170 1,725 1,404 1,288 Total work orders completed 15,463 16,888 19,327 21,181 19,961 18,723 7 7 I oi132 71 7 CITY OF PEARLAND,TEXAS Page 2 of 2 7 OPERATING INDICATORS BY FUNCTION/PROGRAM Last Six Fiscal Years Fiscal Year 2003 2004 _ 2005 2006 2007 2008 7 Function/Program Parks and Recreation 7 All Parks and recreation: ROW maintained-acres 760 N/A N/A 478 385 210 Trees maintained-acres N/A N/A 3,450 3,450 4,280 5,000 Acres of city property mowed N/A N/A N/A 167 439 470 Total number of parkwork orders received N/A N/A N/A 227 361 316 Parkland-acres N/A N/A N/A 175 175 180 Total number of special events held 24 23 24 20 25 25 7 Total number of tournaments held N/A N/A N/A 19 25 9 Number of recreation classes offered N/A 632 1,170 1,189 1,222 1,083 Average monthly attendance(all locations) 2,543 5,211 5,977 6,723 7,988 7,607 LCommunity Services Animal Control: Number of animals at shelter 2,357 1,834 2,228 2,898 3,068 2,947 Total number of calls for service 3,721 3,535 5,443 4,600 6,099 4,296 7 Community Development: Total building inspections 35,007 44,973 53,924 36,724 31,004 34,773 Total code violation cases 5,242 3,687 2,792 2,739 3,962 3,629 7 Total permits issued 11,515 13,738 15,289 14,889 13,769 9,878 Number of plans reviewed 2,136 2,482 3,026 2,682 3,055 1,309 Municipal Court: Number of trials 1,667 2,195 2,800 1,952 2,305 1,616 7 Number of charges 24,494 20,964 18,275 22,185 20,481 19,666 Warrants cleared N/A N/A N/A N/A •3,596 6,402 7Water&Sewer L.,,, Distribution and Collection: Fire hydrant maintenance and inspections 1,730 1,730 1,967 99* 537 740 �! Backed up sewer repairs 313 261 278 251 330 393 i Water mains repaired 29 37 71 129 108 160 Water Production: Water produced-wells(in millions of gallons) 1,465 1,850 1,925 2,044 1,597 2,128 6 Surface Water Purchased(in millions of gallons) 118 280 683 967 1,121 1,147 Billing&Collections: Annual meter reads N/A N/A 211,956 234,875 285,930 325,471 �R Number of bills 146,055 N/A 192,014 248,848 293,833 318,160 L Wastewater Treatment: Wastewater treated(in millions of gallons) 1,467 1,386 1,398 1,668 2,305 2,096 7 Sources:Various city departments. *In Water&Sewer,Distribution and Collection fire hydrant maintenance and inspections is contracted out. 7, During FY06,the contractor's services were disrupted by a storm. 7 7 133 r 1 CITY OF PEARLAND,TEXAS - CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM 7 Last Six Fiscal Years Fiscal Year 2003 2004 2005 2006 2007 2008 el Function/Program Public Safety7 Police: Police stations 1 1 1 1 1 1 Police vehicles 89 100 109 112 117 126 7 Fire: Fire stations 4 4 4 4 4 4 Fire vehicles 14 15 15 16 16 17 !"'� EMS: J EMS Stations 3 3 3 3 3 3 EMS Ambulances 5 5 5 5 5 6 7. Public Works Other public works: Streets(miles)a 202 232 248 578 758 7737 Streetlights 3,425 3,425 3,494 3,563 5,294 5,479 Traffic signals 43 43 47 48 57 67 7 Parks and Recreation Parks and recreation: Developed acreage 124 124 124 175 175 180 �f Pools N/A 1 1 1 1 1 J Outdoor basketball courts N/A N/A N/A 10 10 10 Soccer fields N/A N/A N/A 12 12 12 '"} Activity buildings 2 2 3 3 3 3 I Baseball/Softball Fields 4 4 4 4 4 4 Water&Sewer 7 Water Production: Water wells 8 8 9 9 10 11 Pumping stations 2 2 2 2 2 2 Ground storage tanks 10 10 13 15 15 15 Elevated towers 4 4 4 5 5 5 Wastewater: 7 Treatment Plants 4 4 4 4 5 5 Lift Stations 74 74 78 74 78 76 Distribution and Collection: 7 Water mains(miles) 240 250 296 361 395 410 Sanitary sewers(miles) 230 240 279 321 353 360 7 Sources:Various city departments. Note:No capital asset indicators are available for the general government and community services functions. a=Inside city limits. Prior to FY07,street miles were measured visually. Beginning FY07,a GIS system was used to measure street miles. ^� 134 7 . 1