RTIRZ-2010-04 - 2010-06-07RESOLUTION NO. RTIRZ-2010-04
A RESOLUTION OF THE TAX INCREMENT REINVESTMENT ZONE
NO. 2 (TIRZ), ACCEPTING THE 2009 ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2009.
BE IT RESOLVED BY TIRZ BOARD OF DIRECTORS:
Section 1. That the Tax Increment Reinvestment Zone No. 2 hereby
accepts the Fiscal Year 2009 Annual Financial Report as prepared by the
accounting firm of Null-Lairson, L.L.P.
PASSED, APPROVED, and ADOPTED this 7t" day of June, A.D., 2010.
NIGEL HARRISON
TIRZ No. 2 CHAIRMAN
ATTEST:
a//W-11h,�
MIKE 10YBU
TIRZ No. 2 SECRETARY
/AVLNO-Lairson P.C.
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, 2009, 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, 2009, 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 January 25,
2010 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.
1
3411 Richmond Ave. I Suite 500 1 Houston, TX 770461 (P) 713.621.1515 1 (F) 713.621.1570
www.nuil-lairson.com
To the Honorable Mayor and Members of
the City Council
City of Pearland, Texas
Page 2
The Management's Discussion and Analysis on pages 5 through 14, budgetary comparison information
and Required Pension System Supplementary information on pages 65 through 67 are not required parts
of the basic financial statements but are supplementary information required by accounting principles
generally accepted in the United States of America. We have applied certain limited procedures, which
consisted principally of inquiries of management regarding the methods of measurement and presentation
of the supplementary information. However, we did not audit the information and express no opinion on
it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City'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.
Houston, Texas
January 25, 2010
N
CITY OF PEARLAND, TEXAS
COMBINING STA MWENT OF NET ASSETS
DISCRETELY PRESENTED COAIPONENT UNITS - GOVERNMENTAL ACTIVITIES
September 30, 2009
Pearland
Economic
Tax Increment
Development
Total
Development
Reinvestment
Authority of
Component
Corporation
Zone #2
Pearland
Units
Assets
Cash and cash equivalents
$ 2,000,000
$ 7,836,347
$ 3,150,004
$ 12,986,351
Receivables -less allowance for
uncollectibles
1,089,606
133,256
14,857
1,237,719
Prepaid items
21,272
21,272
Restricted cash
1,522,642
1,522,642
Deferred charges
384,943
3,355,745
3,740,688
Capital assets not subject to
depreciation
6,875,415
6,875,415
Total Assets
10,371,236
7,969,603
8,043,248
26,384,087
Liabilities
Accounts payable and accrued expenses
1,070,683
8,185
1,078,868
Accrued interest
68,228
195,410
263,638
Due to primary government
1,058,590
1,058,590
Non -current liabilities:
Due within one year
565,000
1,760,000
2,325,000
Due in more than one year
18,628,004
50,684,274
69,312,278
Total Liabilities
21,390,505
8,185 52,639,684
74,038,374
Net Assets
Restricted -debt service 1,327,232 1,327,232
Unrestricted (11,019,269) 7,961,418 (45,923,668) (48,981,519)
Total Net Assets $ (1i,D19,269) $ 7,961,418 $ (44,596,436) $ (47,654,287)
See Notes to Financial Statements.
28
CITY OF PEARLAND, TEXAS
COAlBINING STATEMENT OF ACTIVITIES
DISCRETEL Y PRESENTED C031PONENT UNITS- GOVERMWENTAL ACTIVITIES
For the Year Ended September 30, 2009
Net (Expense) and Changes in Net Assets
Economic Tax Increment Development
Development Reinvestment Authority of
Functious/Programs Expenses Corporation Zone #2 Pearland Totals
Component Units:
Pearland Economic
Development Corporation $
Tax Increment
Reinvestment Zone #2
Development Authority of
Pearland 10,654,274 (10,654,274) (10,654,2741
$ 26,578,505 (11,148,886) (4,775,345) (10,654,274) (26,578,505)
11,I48,836 $ (11,148,886) $ $ $ (11,148,886)
4,775,345 (4,775,345) (4,775,345)
General Revenues:
Taxes:
Property taxes
Sales and use tax
Unrestricted investment earnings
Miscellaneous
Transfers behveen component units
$ $ 12,931,900 $
6,801,185
150,475 62,866 35,826
206 68,336
(6,825,679) 6,825,679
$ 12,931,900
6,801,185
249,167
68,542
Total General Revenues and Transfers
6,951,866
6,169,087
6,929,841
20,050,794
Change in net assets
(4,197,020)
1,393,742
(3,724,433)
(6,527,711)
Net assets, beginning
(6,822,249)
6,567,676
(40,872,003)
(41,I26,576)
Net assets, ending
$ (11,019,269) $
7,961,418
$ (44,596,436) $
(47,654,287)
See Notes to Financial Statements.
29
CITY OF PEARLAND, TEXAS
DISCRETELY PRESENTED COMPONENT UNITS
BALANCE SHEETS - GOVERNMENTAL FUNDS
September 30, 2009
Assets
Cash and equivalents
Receivables -less allowance for
uncollectibles
Prepaid items
Restricted cash
Total Assets
Liabilities
Pearland
Economic
Development
Corporation
Tax Increment
Reinvestment
Zone #2
Development
Authority of
Pearland
Total
Component
Units
$ 2,000,000 $ 7,836,347 $ 3,150,004 $ 12,986,351
1,089,606 133,256 14,857 1,237,719
21,272 21,272
1,522,642 1,522,642
$ 3,110,878 $ 7,969,603 $ 4,687,503 $ 15,767,984
Accounts payable and accrued expenses $
1,070,683 $
8,185
$
$ 1,078,868
Due to primary government
1,058,590
1,058,590
Total Liabilities
2,129,273
8,185
2,137,458
Fund Balance
Reserved for debt service
1,522,642
1,522,642
Unreserved
981,605
7,961,418
3,164,861
12,107,884
Total Fund Balance
981,605
7,96I,418
4,687,503
13,630,526
Total Liabilities and Fund Balance $
3,110,878 $
7,969,603
$ 4,687,503
$ 15,767,984
Reconciliation from fund balance to net assets
fund balance $
981,605 $
7,961,418 $ 4,687,503
$ 13,630,526
Add capital assets
6,875,415
6,875,415
Less revenue bonds payable
(18,738,069)
(49,088,529)
(67,826,598)
Less other long -tern liabilities
(69,992)
(69,992)
Less interest payable
(68,228)
(195,410)
(263,638)
Net Assets $
(I1,019,269) $
7,961,418 $ (44,596,436)
$ (47,654,287)
94
CITY OF PEARLAND, TEXAS
DISCRETELY PRESENTED COMPONENT UNITS
STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE - GO VERNMENTAL FUNDS
For the Year Ended Septeneher 30, 2009
PearIand
Economic
Tax Increment
Development
Total
Development
Reinvestment
Authority of
Component
Corporation
Zone #2
PearIand
Units
Revenues
Taxes:
Property taxes
$
$ 12,931,900
$
$ 12,931,900
Sales and use taxes
6,801,185
6,801,185
Investment earnings
150,475
62,866
35,826
249,167
Other
206
206
Total Revenues
6,951,866
12,994,766
35,826
19,982,458
Expenditures
Current:
General government
11,118
11,118
Economic development
5,850,108
4,775,345 8,105,000
18,730,453
Capital Outlay
6,875,413
6,875,413
Debt Service
Principal
545,000
1,490,000
2,035,000
Interest
871,644
2,151,312
3,022,956
Bond issuance cost
5,000
596,107
601,107
Intergovernmental -City
4,380,265
4,380,265
Total Expenditures
18,527,430
4,775,345 12,353,537
35,656,312
Revenues over (under) expenditures
(11,575,564)
8,219,421 (12,317,7t 1)
(15,673,854)
Other Financing Sources (Uses)
Transfers from other component units
6,825,679
6,825,679
Transfers (to) other component units
(6,825,679)
(6,825,679)
Issuance of revenue bonds
8,815,000
8,815,000
Total other financing sources (uses)
(6,825,679)
15,640,679
8,815,000
Changes in fund balance
(11,575,564) 1,393,742
3,322,968
(6,858,854)
Fund Balances - Beginning
12,557,169 6,567,676
1,364,535
20,489,380
FundBalances- Ending
$ 981,605 $ 7,961,418
$ 4,687,503
$ 13,630,526
Reconciliation from changes in fund balance
to changes in net assets
Change in fund balance
$ (11,575,564) $
1,393,742 $ 3,322,968
$ (6,858,854)
Add principal payments
545,000
1,490,000
2,035,000
Bond issuance costs
239881
239,881
Changes in interest payable
1,480
(30:618)
(29,138)
Less changes in other long-term liabilities
(40,481)
(40,481)
Add premium/discount on bonds
68,336
68,336
Less post employment benefit liability
expense
(2,869)
(2,869)
Less issuance of revenue bonds
(8,815,000)
(8,815,000)
Add capital outlay
6,875,414
6,875,414
Changes in Net Assets
$ (4,197,020) $
1,393,742 $ (3,724,433)
$ (6,527,711)
a,