HomeMy WebLinkAboutR2009-028 - 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:
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APPROVED AS TO FORM:
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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.
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Houston, Texas
February 12, 2009
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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
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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
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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
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Introductory Section
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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.
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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.
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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.
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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
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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.
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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.
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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).
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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
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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
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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.
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To the Honorable Mayor,Members
Of City Council, and Citizens of the
City of Pearland,Texas
Page 7
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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.
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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,
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, # . Aicti,, Ellait._
Bill Eisen,City Manager Claire Bogard,Director of Finance
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Rick Overgaard,Assistant Director of Finance 7
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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
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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
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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
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Financial Section
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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
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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
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Management's Discussion and Analysis
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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.
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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
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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
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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.
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I CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued)
lif 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
increase are as follows:
IF • Sales and use tax revenues increased by $1.6 million, mainly due to the opening of two retail
developments, Shadow Creek Ranch Town Center and Pearland Town Center.
• Miscellaneous Revenue increased significantly, mainly due to a Brazoria County contribution
If of$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.
V
Expenses and Program Revenues -Governmental Activities
I $20,000
$18,000
ir
$14,000 ■Expenses
o $12,000 ' ■Program Revenues
e $10,000
5 $8,000
$6,000
1r $4,000
$2,000
I 4,, ��` ��ti9 ohs ��s <s• a�
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CITY OF PEARLAND,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued)
Revenues by Source-Governmental Activities I
Grants and
Charges for services contributions
13jjpSoies 6/o
and use taxes
Other /
18% 44 Franchise taxes I
6%
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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
■Expenses 1
$20,000 ■Program Revenues
c $15,000
$10,000
$5,000
$-
Watcrand sestirr Solid waste management
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CITY OF PEARLAND,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(Continued)
Revenues by Source -Business-type Activities
V
Other
Grants and Charges for
contributions services
17% 78%
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
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
�r decrease of$0.1 million in the general fund.
fWith a current year decrease of$0.1 million, the General Fund's fund balance totaled $13.5 million at year
r end.
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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
ending fund balance of$110.7 million.
Proprietary Funds - The City's business-type activities contain two activities (water and sewer, and solid I
waste) The City's proprietary funds provide the same type of information found in the government-wide
financial statements.
GENERAL FUND BUDGETARY HIGHLIGHTS
During the year there was a $6.4 million increase in appropriations between the original and final I
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. 1
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
reimbursements related to Hurricane Ike.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets - At the end of fiscal year 2008, the City's governmental activities and business-type
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
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 1
2008 2007 2008 2007 2008 2007
Land $ 27,646 $ 27,642 $ 3,610 $ 1,105 $ 31,255 $ 28,747 1
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 1
Machinery and equipment 4,357 2,577 1,166 958 5,522 3,535
Total Capital Assets $ 559,258 $ 535,206 $ 210,390 $ 185,242 $ 769,648 $ 720,449
Construction in progress at year-end represents numerous ongoing projects,the largest of which relate to 1
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.
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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.
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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.
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Basic Financial Statements
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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
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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.
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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
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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
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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)
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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)
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CITY OF PEARLAND,TEXAS
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BALANCE SHEET
GOVERNMENTAL FUNDS
September 30,2008
Other Total '-]
Capital Governmental Governmental
General Fund Debt Service Projects Fund Funds Funds
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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
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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
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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.
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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
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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.
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CITY OF PEARLAND,TEXAS
STATEMENT OF REVENUES,EXPENDITURES AND7
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended September 30,2008
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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
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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
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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.
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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
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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
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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
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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
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See Notes to Financial Statements. '
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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-
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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.
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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)
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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.
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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.
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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
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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
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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
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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.
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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
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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
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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
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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.
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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
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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.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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
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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.
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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
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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.
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CITY OF PEARLAND,TEXAS
REQUIRED PENSION SYSTEM SUPPLEMENTARY INFORMATION
September 30,2008
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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.
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Statements and Schedules
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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.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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7 DEVELOPMENT AUTHORITY OF PEARLAND
COMBINING SCHEDULE OF GENERAL LONG-TERM DEBT OF
DEVELOPMENT AUTHORITY OF PEARLAND BY MATURITY DATE
September 30,2008
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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
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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
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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
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(Unaudited)
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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.
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Sources: Unless otherwise noted,the information in these schedules is derived from the comprehensive
annual financial reports for the relevant year.
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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.
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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
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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.
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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
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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
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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
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Debt service as a percentage of noncapital
expenditures 16.6% 15.0% 14.3% 10.9%
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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
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19.4% 23.6% 22.1% 22.0% 27.3% 30.4%
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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
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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%
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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.
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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
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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
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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
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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.
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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%
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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
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Note:Details regarding the city's outstanding debt can be found in the notes to the financial statements.
*Information not avaialble.
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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
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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.
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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
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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
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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.
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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.
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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.
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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
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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
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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:
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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
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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
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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
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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
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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
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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.
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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
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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
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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:
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Water mains(miles) 240 250 296 361 395 410
Sanitary sewers(miles) 230 240 279 321 353 360
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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. ^�
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