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R2011-032 - 2011-03-07RESOLUTION NO. R2011 -32 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS, ACCEPTING THE CITY'S COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR 2010 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 7 day of March, A.D., 2011. C)" 2, 0 TOM REID MAYOR ATTEST: • ,kQ�ARLq�; >>i Y NG L G, TP/AC SEC TARY APPROVED AS TO FORM: DARRIN M. COKER CITY ATTORNEY AXNulkairson PC 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, 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, 2010, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of City's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the 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, each major fund, and the aggregate remaining fund information of the City as of September 30, 2010, 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 21, 2011, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 5 through 16, and budgetary comparison, required pension system, and other post - employment benefits on pages 65 through 67 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion 1 3411 Richmond I Suite 500 1 Houston, TX 77046 1 (P) 713.621.1515 1 (F) 713.621.1570 w .null4airsonxom or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's financial statements as a whole. The introductory section, combining and individual non -major fund financial statements, and statistical section, are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual non -major fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. 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Q O O U� rz N N v > v v N v 0. cts � ^ � c� ZD cL =3 r M 0 V U O O O V) O O O .�..� wi a N 0 0 i � J a � �I s � c Q) CL 0 7_ C CITY OF PEARLAND,TEXAS FEDERAL SINGLE AUDIT REPORT For the Year Ended September 30,2010 Exhibit "A" R2011-32 L / C Null-Lairson P.C. /i1LCER1,FlEDPUBUCACCOUNTANTS 3411 Richmond Avenue,Suite 500 LLL Houston,Texas 77046 (713)621-1515 FILE COPY CITY SECRETARY'S OFFICE DO NOT REMOVE L CCITY OF PEARLAND,TEXAS FEDERAL SINGLE AUDIT REPORT FOR THE YEAR ENDED SEPTEMBER 30,2010 TABLE OF CONTENTS Page Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed In Accordance With Government Auditing Standards I Independent Auditors' Report on Compliance with the Requirements that Could Have a Direct and Material Effect on each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 3 Schedule of Expenditures of Federal Awards 5 Notes to Schedule of Expenditures of Federal Awards 6 Schedule of Findings and Questioned Costs 7 r r L' NullFIED-Lai IlL • ACCOon P.C. ER� PUBLIrs C CL1NTANTS Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards To the Honorable Mayor and Members of City Council City of Pearland,Texas We have audited the fmancial 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, 2010, which collectively comprise the City's basic financial statements and have issued our report thereon dated February 21, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit,we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination C of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented,or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. However, we identified certain deficiencies in internal control over financial reporting, described in the accompanying schedule of findings and questioned costs that we consider to be significant deficiencies in internal control over financial reporting. See reference 10-01. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those 1 3411 Richmond!Suite 500 I Houston,TX 77046 I(P)713.621.1515 I(F)713.621.1570 www.null-lairson.com To the Honorable Mayor and Members of City Council City of Pearland,Texas Page 2 provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. The City's response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the City's response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of management, City Council, others within the entity, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. 47141/6gu:soire Houston,Texas February 21,2011 I I I I I I I 1 1 I 2 Nu -Lairson P.C. CER11FIEllD PUBLIC ACCOUNTANTS L4 Independent Auditors' Report on Compliance with the Requirements that Could have a Direct and Material Effect on each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A-133 To the Honorable Mayor and Members of City Council City of Pearland,Texas Compliance We have audited City of Pearland, Texas' (the "City") compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of the District's major federal programs for the year ended September 30, 2010. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133,Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Our audit does not provide a legal determination of the City's compliance with those requirements. In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30,2010. Internal Control Over Compliance Management of City of Pearland,Texas, is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. hi planning and performing our audit, we considered the City's internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test {L and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a 3 3411 Richmond'Suite 500!Houston,TX 77046 1(P)713.621.1515 1(F)713.621.1570 www.null-lairson.com To the Honorable Mayor and Members of City Council City of Pearland,Texas Page 2 federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented,or detected and corrected,on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses,as defined above. Schedule of Expenditures of Federal Awards We have audited the financial statements of the governmental activities,business activities,the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Pearland, Texas as of and for the year ended September 30, 2010, and have issued our report thereon dated February 21,2011. Our audit was performed for the purpose of forming our opinions on the financial statements that collectively comprise the City's basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and,in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. j Closing This report is intended solely for the information and use of management, City Council, others within the City, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. )761/Wg'44:if'',RC Houston,Texas February 21,2011 I 1 1 4 7 CITY OF PEARLAND,TEXAS 7 SCHEDULE OF EXPENDITURE OF FEDERAL AWARDS September 30,2010 i Pass Through CFDA Grantor Federal Grant 7 Federal grantor/Pass through grantor/Program title Number Number Expenditures U.S.HOUSING AND URBAN DEVELOPMENT 7 Community Development Block Grant 2008 14.218 B-08-MC-48-0400 $ 85,563 Community Development Block Grant 2009 14.218 B-09-MC-48-0400 83,108 Community Development Block Grant-ARRA 14.253 B-09-MY-48-0400 19,365 7 188,036 U.S.DEPARTMENT OF HOMELAND SECURITY Passed through Texas Department of Public Safety 7 Emergency Management Performance Grants 97.042 10TX-EMPG 0328 $ 42,243 Citizens Emergency Response Team 97.067 2007-GE-T7-0024 11,441 Citizens Emergency Response Team 97.067 2008-GE-T8-0034 7,400 7 HGAC Source Reduction&Recycling(SRR) N/A 10-16-GO8 13,590 HGAC Household Waste(IiHW) N/A 10 16 G07 15,367 Public Assistance Grant Program-Hurricane Ike 97.036 FEMA-1791-DR 49,833 Repetitive Flood Claims Grant 97.092 FEMA-DR-RFC-08 93,843 7 Total Passed through Texas Department of Public Safety 233,717 7 U.S.DEPARTMENT OF JUSTICE Passed through Texas Office of Governor E.Byme Memorial JAG 16.804 22304-01 $ 450,904 7 Passed through Brazoria County E.Byme Memorial JAG 16.804 Interlocal Agreement 51,203 7 Bureau of Justice Assistance Bulletproof Vest Partnership Program 16.607 N/A 15,595 E.Byrne Memorial JAG 16.804 2009-DJ-BX-0644 12,861 7 Total Direct Award-Bureau of Justice Assistance 28,456 Total U.S.Department of Justice $ 530,563 7 U.S.DEPARTMENT OF ENERGY Energy Efficiency and Conservation Block Grant Program 7 (EECBG)-ARRA 81.128 DE-SC0002889 $ 269,636 7 Total Federal Awards $ 1,221,952 L 7 5 7 CITY OF PEARLAND,TEXAS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended September 30,2010 Note 1 -Basis of Accounting The City accounts for awards under federal programs in the General and Special Revenue governmental funds. In the Governmental funds, these programs are accounted for using a current financial resources measurement focus. With this measurement focus,only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e. revenues and other financing sources) and decreases (i.e. expenditures and other financing uses) in net current assets. The modified accrual basis of accounting is used for these funds. This basis of accounting recognizes revenues in the accounting period in which they become susceptible to accrual, i.e.,both measurable and available, and expenditures in the accounting period in which the liability is incurred, if measurable, except for certain compensated absences and claims and judgments, which are recognized when the obligations are expected to be liquidated with expendable available financial resources. Expenditures are recognized following the cost principles contained in OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, wherein certain types of expenditures are not allowable or are limited to reimbursement.Pass-through entity identifying numbers are presented where available. Federal grants are considered to be earned to the extent of expenditures made under the provisions of the grant, and, accordingly, when such funds are received, they are recorded as deferred revenues until earned. Generally,unused balances are returned to the grantor at the close of specified project periods. Note -Basis of Presentation The accompanying schedule of expenditures of federal awards (the"Schedule")includes the federal grant activity of the City under programs of the federal government for the year ended September 30,2010.The "'� information in this schedule is presented in accordance with the requirements of the Office of J Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Because the schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position,changes in net assets or cash flows of the City. 7] 1 1 I 6 CITY OF PEARLAND,TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended September 30,2010 I. SUMMARY OF AUDITORS' RESULTS Financial Statements Type of auditors' report issued: Unqualified Internal control over financial reporting: Material weakness(es)identified? No Significant deficiency(ies)identified that are not Yes-See 10-01 considered to be material weaknesses? Noncompliance material to financial statements No noted? Federal Awards Internal control over major programs: Material weakness(es)identified? No Significant deficiencies(s)identified that are not None reported considered to be material weaknesses? Type of auditors' report issued on compliance with major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a)OMB No Circular A-133? Identification of major programs Name of Federal Program or Cluster CFDA Numbers Recovery Act-Edward Byrne Memorial Justice 16.804 Assistance Grant(JAG)Program/Grants To Units Of Local Government 1. Dollar Threshold Considered Between Type A $300,000 and Type B Federal Programs 2. Auditee qualified as low-risk auditee? Yes L.' r 7 1 CITY OF PEARLAND,TEXAS ^� SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended September 30,2010 Section II.-Financial Statement Findings 1 Finding#10-01 -Out of Period Adjustment Criteria 1 In the preparation of financial statements in accordance with generally accepted accounting principles, proper internal controls should be in place to ensure that transactions are recorded in the proper period. Implementing procedures that identify and record all material transactions in the proper period will ensure that the financial statements are free of material misstatements. Condition It was noted that management discovered an adjustment was needed to the financial statements during the 2010 fiscal period that related to the 2009 fiscal period.Although it was management that discovered this item,it was not done so on a timely basis. 1 Context This matter was brought to the auditor's attention by the organization's management. Effect The effects of a lack of controls over ensuring that transactions are recorded in the proper period are that the financial reports could be misstated. 1 Cause The City does not have adequate procedures to ensure that correcting journal entries are performed on a timely basis. Recommendations The City's accounting department should reconcile significant accounts to source documents such as invoices, subsidiary ledgers, budgetary data, and other information in order to identify variances from expected amounts. Section III.-Federal Award Findings and Questioned Costs The audit disclosed no findings to be reported. 1 1 1 1 1 Ti 8 CITY OF PEARLAND, TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS LI For the Year Ended September 30,2010 Section IV.-Status of Prior Year Findings and Questioned Costs Not Applicable Section V.-Corrective Action Plan Finding#10-01 -Out of Period Adjustment Responsible Person- Claire Bogard—Director of Finance Corrective Action Plan- Management is in agreement with the audit recommendation. Procedures have since been put in place to ensure that corrections are made on a timely basis. We will assess training needs and take appropriate action in this area. Reconciliations of significant account balances will be performed on a monthly basis and reviewed by an appropriate level of supervision. The Accounting Department will also review all year-end journal entries for subsequent reversal in the following year. Estimated Completion Date— October 1,2010 n 9 Exhibit "A" R2011-32 CITY OF PEARLAND, TEXAS FPI viN re .:r4449 4 ro ( ' ,1 f f s D 7.1 • COMPREHENSIVE ANNUAL FINANCIAL REPORT FILE COPY CITY SECRETARY'S OFFICE DO NOT REMOVE Fiscal Year Ended September 30, 2010 Officials Issuing Report Bill Eisen Jon Branson Mickiel Hodge Claire Bogard Rick Overgaard E City Manager Assistant City Assistant City Director of Finance Assistant Director L Manager Manager of Finance p p CITY OF PEARLAND, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Page Introductory Section Letter of Transmittal i Principal Officials x Organization Chart xi GFOA Certificate of Achievement xii _1 Financial Section Independent Auditors'Report 1 Management's Discussion and Analysis 5 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets 19 Statement of Activities 20 Fund Financial Statements: Balance Sheet-Governmental Funds 22 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 23 Statement of Revenues,Expenditures, and Changes in Fund Balances- Governmental Funds 24 Reconciliation of the Statement of Revenues,Expenditures,and Changes in Fund Balance of Governmental Funds to the Statement of Activities 25 Statement of Net Assets-Proprietary Funds 26 Statement of Revenues,Expenses and Changes in Fund Net Assets-Proprietary Funds 27 Statement of Cash Flows-Proprietary Funds 28 Combining Statement of Net Assets-Discretely Presented Component Units - Governmental Activities 30 Combining Statement of Activities -Discretely Presented Component Units- Governmental Activities 31 Notes to the Financial Statements 32 Required Supplementary Information: General Fund- Schedule of Revenues,Expenditures,and Changes in Fund Balances- Budget and Actual 65 Notes To Required Supplementary Budget Information 66 Required Pension System and Other Post Retirement Benefit Supplementary Information 67 WI 7 CITY OF PEARLAND, TEXAS r COMPREHENSIVE ANNUAL FINANCIAL REPORT L TABLE OF CONTENTS(Continued) 7 Financial Section(Continued) Page 7 Other Supplementary Information: Combining and Individual Fund Statements and Schedules Combining Balance Sheet-Non-Major Governmental Funds 72 7 Combining Statement of Revenues,Expenditures,and Changes in Fund Balances - Non-Major Governmental Funds 74 Schedules of Revenues, Expenditures,and Changes in Fund Balance-Budget 7 and Actual: Debt Service Fund 76 Hotel/Motel Tax Fund 77 7 Court Security Fund 78 City-Wide Donations Fund 79 7 Court Technology Fund 80 Regional Detention Fund 81 Park Donations Fund 82 PI Police Seizure Fund 83 Parks and Recreation Development Fund 84 Sidewalk Fund 85 CGrant Fund 86 Traffic Impact Improvements 87 7 Emergency Management Fund 88 Management District 1 Fund 89 U of H Fund 90 7 Juvenile Management Fund 91 Discretely Presented Component Units Fund Based Financial Statements: 7 Balance Sheets-Governmental Funds 94 Schedules of Revenues,Expenditures and Changes in Fund Balance- Governmental Funds 95 7 Long-Term Debt Amortization Schedules: Combining Schedule of Governmental Activity Long-Term Debt 98 Combining Schedule of Enterprise Fund Long-Term Debt 104 L Combining Schedule of General Long-Term Debt of Pearland Economic Development Corporation 108 7 Combining Schedule of General Long-Term Debt of Development Authority of Pearland 110 7 7 r 1 CITY OF PEARLAND,TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS(Continued) Statistical Section (Unaudited) Page Net Assets by Component 116 Changes in Net Assets 118 Fund Balances of Governmental Funds 122 Changes in Fund Balances of Governmental Funds 124 Assessed Value and Estimated Actual Value of Taxable Property 126 Direct and Overlapping Property Tax Rates 128 Property Tax Levies and Collections 130 1 Principal Property Taxpayers 131 Taxable Sales by Category 132 Outstanding Debt by Type 134 1 Ratios of General Bonded Debt to Assessed Value and Net Bonded Debt per Capita 136 Direct and Overlapping Governmental Activities Debt 137 Pledged Revenue Coverage 138 Demographic and Economic Statistics 139 Principal Employers 140 Full-time Equivalent City Government Employees by Function/Program 141 Operating Indicators by Function/Program 142 Capital Asset Statistics by Function/Program 146 1 7 1 1 7 7 7 J 1 7 1 F F F F F F F F Introductory Section F r F r r F F F 1 1 1 1 1 9 (This page intentionally left blank.) 1 I J 1 f 1 1 r v k., rca 4 �,, HFIA T iE x n s ,` a. 4,Sr9r7 February 21,2011 p 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, 2010, 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, PC, Certified Public Accountants, have'issued an unqualified (or "clean") opinion on the City of Pearland's financial statements for the year ended September 30,2010. The independent auditor's report is located at the front of the financial section of this report. LManagement's discussion and analysis (MD&A) immediately follows the independent auditor's report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it. PROFILE OF THE GOVERNMENT The City of Pearland, incorporated in 1959, is located across the northern end of Brazoria County and shares a common border with Houston, Texas to the north. The City also extends into Fort Bend and Harris Counties. The City of Pearland, encompassing approximately 48 square miles, is the fastest growing city in Brazoria County, increasing from' approximately 18,000 residents in 1990 to 96,097 residents estimated as of June 2010. The City of Pearland is a home-rule City operating under a Council-Manager form of government. Policy-making and legislative authority are vested in a governing council (Council) consisting of the mayor and five other members. The Mayor and all Council members are elected at large. The Mayor is allowed to vote only in case of a tie vote. The Mayor and each Council member hold office for a period i To the Honorable Mayor,Members of City Council, and Citizens of the City of Pearland,Texas 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; fl 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 codes,and health inspections, and plans for new infrastructure and rehabilitation of infrastructure to meet the needs of the citizens today, as well as tomorrow. The City is authorized to issue debt, subject to certain limitations, for the purpose of financing its capital projects and the City is empowered to levy a property tax on real property within its boundaries. 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 r' 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 TRIZ#2. ECONOMIC CONDITIONS Local Economy Located minutes away from downtown Houston, Texas, the nation's second largest seaport, the world- renowned Texas Medical Center, and NASA-Johnson Space Center, Pearland is the premier location for } residential and commercial growth. With abundant land, business facilities, a sound infrastructure, and a diverse workforce supported by educational programs, Pearland's growth has been consistent and will continue to be sustained over time with continued residential and commercial development. The total of all new construction permitted during calendar year 2010 totaled over$171.0 million, a 39% reduction in value from 2009. New single-family housing permits totaled 723 with a construction value fl of$140 million, down $8 million from 2009. The number of permits are in-line with the 744 anticipated _J ii To the Honorable Mayor,Members of City Council,and Citizens of the City of Pearland,Texas for the year and declined by 53 from 2009 and by 517 from 2008;however,Pearland continues to grow at a respectable pace, faring better than the rest of the nation. Residential permitting activity is anticipated to remain at these levels for fiscal year 2011. For calendar year 2010, the City had 40 commercial permits with a value of $25 million, down from the 78 permits with a value of$95 million in 2009. Permits in 2009 included several large municipal facilities: Public Safety Facility, Recreation Center/Natatorium, and the University of Houston Clear Lake Campus. Broad downward pressure remains on all segments of the commercial real estate market. In Houston home sales plunged after the tax credit was cancelled. Double-digit declines in home sales took their toll on the market, which has historically been one of the lower priced urban markets in the country. It will be difficult to get a feel for a full recovery in Houston for a while since sales have turned slow and would-be buyers are holding off,still worried about the state of the national economy. Houston is big oil and the drilling moratorium in the Gulf of Mexico and NASA related funding issues are adding challenges to an already perplexing market,as well as a projected$27 billion budget deficit for the State of Texas. Sales are showing weakness,which means prices should continue to move southward. However, a lower inventory of homes listed for sale than in many other regions should aid Houston and send it on its way into a housing recovery. But that, like so many other things, will take time. The Institute of Regional Forecasting expects that it will take another 2 to 3 years for the housing market to embark on its initial move towards a true recovery. Despite all of the gimmicks to forestall them, residential foreclosures will remain stubbornly high. Right now, there are nearly 10% of American households who will have to abandon their homes to foreclosure, and programs to keep them in their rhomes will only postpone the inevitable. For fiscal year 2010, Pearland had 870 foreclosure filings, up from the 588 in fiscal year 2009. These filings include areas in the ETJ, but with a Pearland address. Even though foreclosure filings have increased,this only represents 3%of total households in Pearland. Pearland's unemployment rate was 6.9% in September 2010, up from 6.3% in September 2009. This is compared to the national unemployment rate of 9.6%and the State of Texas unemployment rate of 8.2% as-of September 2010. While Pearland's unemployment is less than the national and state rates, businesses are still slow to hire and it will take time for the private sector to begin hiring again.However, Texas has been recognized as having the best business climate in the country. Houston's economy will continue to grow next year, adding more jobs in 2011 than in 2010. The Greater Houston Partnership forecasts the region to add 23,300 private sector jobs,however, the public sector is expected tolose 5,100 jobs. The public sector job loss could be much higher if the announced budget cuts in education at the State level are realized. The Houston area is built on businesses,on jobs, and on economic opportunities. Recovery will take time and Pearland is ready to take advantage of those opportunities when that time comes. Pearland has two prime areas for commercial, mixed use, livable developments along the Highway 288 corridor. A strategic and target market study completed in 2009 shows that life sciences, port-related activities, production/industrial, campus based back-office, and the education/public sectors are prime areas of interest for the Pearland area. Combined with a mix of reinforcing land uses,urban planning,key entertainment and cultural attractions,public spaces, and walkability and connectivity,all will provide for livable sustainable developments. City Council has just approved staff to proceed with zoning of the Spectrum Area via form based codes, which allows the development to function as if being developed by p i To the Honorable Mayor,Members of City Council, and Citizens of the City of Pearland,Texas a single master developer. Summer 2009 saw the completion of an 80,000 square foot class "A" office building in Shadow Creek Ranch. ZT Wealth, a financial service firm, relocated from their Houston Galleria office and occupies 20,000 square feet and American Business Consulting, a provider of practice services to the dental and medical community, leased 13,000 square feet and brought 25 new jobs to Pearland. Delta Rigging and Tool has also moved into 7,800 square feet,bringing this facility to over 75%occupancy. rj A Minnesota based firm, CSI, a medical device company developing and commercializing innovative interventional treatment systems for vascular disease leased a 46,000 square foot facility, moved in and began operations in fiscal year 2010. CSI and could hire approximately 250 employees over the course of five-years to work at the Pearland facility, expanding the area's already thriving medical technology sector. ,•-I The Pearland Economic Development Corporation continues to promote Pearland and is working with a myriad of companies on future relocations and site visits as well as working with existing businesses on future expansions. Sales tax for fiscal year 2010 totaled $19.5 million, a decrease of$924 thousand or 4.5% over fiscal year 2009. Pearland is a regional shopping destination however with lower consumer confidence,potential for job loss, debt, credit tightening, etc.,homeowners tightened their budgets and spending. However,for the JI past nine months, sales tax exceeded the previous year remittances, signaling that consumer confidence is rising. As such,the City projected a 2.5%growth in sales tax for fiscal year 2011. Long-Tern 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 2011 through fiscal year 2015 totals $199 million and continues to implement the $162 million bond program approved by the voters in May 2007, though at a slower pace, which is financially feasible given the current economy. Projects include Drainage($19M), Streets ($65M), Facilities ($14M), Parks ($22M), Water ($27M), and Wastewater ($52M). Projects in the CIP have identified funding sources or potential funding sources. Funding for these projects comes from the issuance of debt through Certificates of Obligation, General Obligation Bonds, and Revenue Bonds, as well as impact fees, cash, and contributions from the State, County, and other sources. Those projects fl that are unfunded will be identifying projects for a new bond referendum. The Debt Service Fund forecast shows a need to increase the Debt Service component of the tax rate to 1 $0.5125 by tax year 2013 to implement the Five-Year CIP. This is slightly higher than last years forecast due to slower increases in property valuations through-out the forecast, however still consistent with the financial modeling that the City undertook when analyzing the Debt Service tax implications of implementing the$162 million bond referendum. The City completes a Water/Sewer Cost of Service Rate Study annually for the forecast. The study is built around the Five-Year CIP, operating budget, and future needs. Due to funds on hand for pay-as-you go capital improvements,no rate increase was necessary for fiscal year 2011,however,the model anticipates iv To the Honorable Mayor,Members of City Council, and Citizens of the City of Pearland,Texas rate increases for 2012 and 2014. With the implementation of past rate increases,the City's utility system continues to be self-supporting and financially sound. Relevant Financial Policies/Guidelines Financial Policies guide the development and implementation of the budget and are a framework for fiscal decision making and that ensure financial resources are available to meet the current and future needs of the City. City Council adopted a set of Financial Management Policy Statements in August 2009. The policy statements address areas of reporting and auditing, budgeting, revenues, capital improvements,debt, and grants to name a few. 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. • Leverage City dollars by seeking outside funding sources. • Maintain stable property tax rates. Major Initiatives 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 and the City delivers programs in the areas of law enforcement,emergency management, emergency medical services, and fire protection. The City completed a 79,800 square foot public safety facility totaling approximately $21.5 million. The facility includes a police station including a jail, a state of the art Emergency Operations Center, court facilities and an annex for utility bill paying and a county annex. The facility opened in the spring of 2010. The City also constructed and opened in January 2011a$2.2 million,9,800 square foot Fire Station located off Kirby Drive. The facility has living quarters to accommodate a 24/7 fire and EMS operation. The fire department, in 2010, was a combination paid-volunteer department with 18 paid firefighters and approximately 45 volunteers. In order to enhance response times and to protect life and property,the City budgeted in fiscal year 2011 for three, stations to be staffed 24/7 with a combination of full-time, paid part-time, and volunteers, including staffing for the new Fire Station. As of January 2011, this has been completed. Brazoria County MUD's 21 and 22 are also in the midst of constructing a Fire Station in the City's ETJ. This station will be staffed and operated by Pearland Volunteer Firefighters with the MUD's bearing the i . v r To the Honorable Mayor,Members of City Council,and Citizens of the City of Pearland,Texas cost of operations, pursuant to a Strategic Partnership Agreement. This will greatly enhance response times out in the ETJ,where development continues. Economic Development Economic development provides long-term benefits to a community. It increases property values and sales taxes, lowers property tax rates, creates jobs and wealth and leads to higher living standards. The City is dedicated to helping foster the City's economic base to improve the quality of life for its citizens and business community through business attraction, expansion,and retention programs. The Pearland Economic Development Corporation also began an initiative in the Spectrum area, along Hwy 288 and Beltway 8, to build upon previous investments, identify development issues, and to create an identity for the area to seek a sustainable development. This initiative and study will be completed in 2011. The area is currently owned by several developers/persons and is not under a master developer: as such, along with the economy, has been slow to develop. As a result of the study, the City Council authorized staff to move forward with zoning via form based codes, which will allow the area to function as if there were a master developer. Land Use Plan/Annexation Land use planning seeks to order and regulate the use of land in an efficient and ethical way, thus preventing land use conflicts. Land use planning is the systematic assessment of land, alternatives for land use, and social and economic conditions in order to select and adopt the best land use options. Its purpose is to select and put into practice those land uses that will best meet the needs of the people while safeguarding resources and ensuring sustainability. City staff worked extensively on reviewing and updating the land use plan with the Planning&Zoning Commission. There were approximately eighteen public meetings over a two-month period seeking public input from the community on the land use plan. One of the recommendations out of the land-use plan was the proposal to annex six areas into the City. The six areas totaled 2,673 acres with 390 tracts and a total population of approximately 600 residents. The City began the process for annexation, however in the fall of 2010, City Council directed staff to proceed with the annexation of Area 5 but delay action on the remaining areas. Area 5 is 590 acres with 64 tracts. The City began communications with the landowners via letters, a public forum, and one-on- one meetings and staff will prepare a service plan of the area if directed by Council. Annexation of Area 5 could be completed by summer 2011. The City will then consider annexation of the other areas. The City will also begin planning for the annexation of Brazoria County MUD#4, which will occur December 2012,pursuant to a Strategic Partnership Agreement between the City and MUD. The land use plan was approved June 2010 with not only modifications to the land use plan, but 1 modifications to the Thoroughfare Plan and Comprehensive Plan text. Capital Improvement Projects and 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 2011 — 2015 totals $199 million. Projects include Drainage ($19M), Streets ($65M), Facilities ($14M), Parks ($22M), Water ($27M), and Wastewater($52M). Major thoroughfare projects include the widening of Bailey Road between FM1128 and Veterans, widening three miles of Mykawa Road to a four lane facility, reconstruction of one mile of Old Alvin vi 1 r To the Honorable Mayor,Members of City Council, and Citizens of the City of Pearland,Texas Road from Plum Street to McHard Road, the extension of Pearland Parkway to Dixie Farm Road, and Longwood Street Reconstruction. Major drainage projects include expansion of the D.L. Smith detention pond by approximately 150 acre-feet, an additional 200 acre-feet of storm water storage in the Hickory Slough watershed, and future storm water regional detention. Major park projects include 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 Public Works annex on the west-side of town, and an 11,500 square feet expansion and renovation to the Tom Reid Library.Also included is the renovation of the Old Police Facility on Veterans to accommodate City departments that will move from the City Hall Complex. Water projects include the preliminary design of a 20 million gallon per day surface water plant along with various waterline extensions. Wastewater projects include the replacement of Southdown wastewater treatment plant, rehabilitation of the Barry Rose Lift Station, design for the expansion of the John Hargrove Environmental Center wastewater treatment plant and major rehabilitation projects. Transportation Improvements and Strategic Planning Charged with planning, establishing, and maintaining an effective transportation system, the City of Pearland is involved in numerous activities to face this challenge. The $84 million transportation bond program (passed in 2007) will construct major projects over the next seven years as mentioned previously. The City is also involved in regional efforts.for long-range transportation planning. The Mayor is a member of H-GAC's Transportation Policy Council(TPC)and an Assistant City Manager is a member of the Technical Advisory Committee (TAC), a sub-committee of the TPC. The City has submitted several proposed roadway projects from its Capital Improvement Program for possible funding in the region's Transportation Improvement Program for 2011-2014.- The TPC and TAC will-be considering the list in 2011 with a recommendation of a list of projects to be approved in September 2011 by the TPC. The City has also been working the Brazoria County Toll Road Authority (BCTRA) to develop viable low cost alternatives for the Hwy 288 toll facility that can be constructed on a near-term schedule (3-5 years) to provide immediate relief to congestion along the corridor. The City will continue to secure state and federal funding for projects in order to reduce the funding burden on the city taxpayers. Because rail service is an integral part of a comprehensive transportation system and enhances accessibility and mobility, the City of Pearland in 2009, adopted a resolution supporting the Kirby rail route as the preferred passenger rail route in Pearland as organizations develop their transit plans for the region. Rail will also generate economic development, jobs, and tourism along with establishing and strengthening social,historical, commercial, and cultural bonds between communities. In 2010, a Pearland Transit Feasibility Study was conducted to examine the need, demand, and service options to determine whether fixed route local bus service is a practical option for the City of Pearland. Pearland is the fastest growing city in the Houston urbanized area and the city is projected to continue to grow at an accelerated pace. To date, transit service provided by Connect Transit/Gulf Coast Center on a demand response basis is offered to the residents of Pearland. Five Connect Transit vans provide service in Pearland and the remainder of Brazoria County. It is estimated that during FY 2009 Connect Transit provided over 4,300 trips in Pearland and Alvin. Presently,plans are underway for the implementation of commuter bus service between Pearland and destinations in the Texas Medical Center. The City of Pearland and the Metropolitan Transit Authority of Harris County (METRO) are in the process of vii L 1 To the Honorable Mayor,Members of City Council, and Citizens of the City of Pearland,Texas coordinating the site selection and service plan for Park and Ride operations. The plan also outlined transportation needs and operations within the City of Pearland. There were four options presented: keep the status quo and work with Connect Transit for appropriate funding; add a user side subsidized taxi service; the third option includes the provision of a user side subsidized taxi service and the implementation of two fixed bus routes; and the fourth option, which is more long-term and not recommended at this time, is subsidized taxi service, three fixed bus routes in Pearland, and two intercity routes connecting Pearland/Alvin and Pearland/Houston. Council directed the staff to continue to monitor transit need in the City. Fiscal Responsibility and Sustainability Fiscal sustainability can be defined as "the extent to which patterns of Government spending do not undermine the capability of the Government to continue to spend to achieve its public purposes." City Council takes a pro-active stance in ensuring the fiscal health and sustainability of the City. Council adopted a set of Financial Management Policy Statements and receives quarterly Finance "Snapshot" presentations, which includes economic indicators. The City also prepares a Five-Year Forecast for the City's major funds to see how the spending decisions made today affect the future as well as to identify any issues/concerns that are forthcoming and to put strategies in place today to address those issues/concerns for the future. Fiscal Sustainability is even more important given the current state of the economy. Based on the long- range forecast and impacts to the debt service and operating funds, the City has delayed several major capital improvement projects until it is anticipated that the City can afford those projects. The City also identified programs and line-items that could be reduced with little or no impact to the citizens resulting in budget reductions totaling $3.3 million in the City's General Fund budget and $800 thousand in the Water/Sewer Fund for the 2010-2011 fiscal year. While only a few months into the 2011 fiscal year, the City is already beginning to prepare for the 2012 budget process and up-coming forecast with the same goal of being fiscally responsible to our citizens. AWARDS AND ACKNOWLEDGEMENTS 1 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, 2009. This was the 33rd SJ 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 1 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. The City has 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. viii 1 To the Honorable Mayor,Members of City Council, and Citizens of the City of Pearland,Texas In addition, the City also received The International City/County Management Association (ICMA) Certificate of Achievement for Performance Measurement. The program assesses a local government's performance measurement program and encourages analysis of results by comparing to peers and gauging performance over time. The preparation of this report was accomplished with the dedicated service of the Accounting`staff of the Finance Department. We express our sincere appreciation to these individuals who have continually demonstrated the core beliefs of the City and who assisted and contributed to the preparation of this report. We also thank the Mayor and members of the City Council for their support in planning and conducting the financial operations of the City in a responsible manner. Respectfully submitted, Bill Eisen, City Manager Claire Bogard,Director of Finance Rick Overgaard,Assistant Director of Finance r r r r r r L ix 1 CITY OF PEARLAND, TEXAS PRINCIPAL OFFICIALS 1 Term Expires Elected Officials Position May Tom Reid Mayor 2011 Woody Owens Council Member at Large-Position One 2013 Scott Sherman Council Member at Large-Position Two,Mayor Pro Tern 2012 Steve Saboe Council Member at Large-Position Three 2011 Felicia Kyle Council Member at Large-Position Four 2012 Ed Thompson Council Member at Large-Position Five 2013 Appointed Officials Position Bill Eisen City Manager Darrin Coker City Attorney Letitia Farnie Municipal Court Judge City Management Position Michel Hodge Assistant City Manager Jon Branson Assistant City Manager Claire Bogard Director of Finance Matt Buchanan Executive Director PEDC Jeff Sundseth Director of Emergency Medical Services Young Lorfing City Secretary Danny Cameron Director of Public Works Bonita Hall Director of Human Resources Chris Doyle Police Chief "+ Narciso Lira City Engineer David Whittaker Building Official Michelle Smith Director of Parks and Recreation Glen Turner Interim Director of Fire Services Andrew Fearn Head Librarian Lata Krishnarao Director of Planning Trent Epperson Projects Director 1 1 f ""I x 1 1 7 Organizational Chart 7 citizenspearian of f [I Mayor&City Council Municipal Boards& 7 Judges comm,ssions City Attorney City IVIajnager PIC ...... Exe tive 7 Director, Assistant City !Assistant City. Manager Manager [7 City Engineer Projects Parks&Rec Director , -Director Director... . ,... .., .. , [7, Building 1 Planning blic Affai Public VVorks Official Director- 1---. . , Pu rs Manager I Director [7 1lAnimal Control 7 rvi Police Chief I- Supesor Director of Director of Fire Finance 7 Emergency I tor HI . I Fire Marshall Budget Officer Management Asst Direc of Finance EMS Director, Purchasing Utility Billing Officer Supervisor City Secretary,--- Information Technoloav municipal. -- Court Admin 7 7 xi r 1 1 Certificate of Achievement for Excellence ^`I in Financial Reporting Presented to City of Pearland Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30,2009 A Certificate of Achievement for Excellence,in Financial Reporting is presented by the Government Financo Officers Association of the United States and Canada to governmentunits and public employee retirement systems whose comprehensive annual financial reports(CAFRs)achieve the highest a� standards in government accounthtg and financial reporting. tGt ofq„ IHO 0 mg; y taro , S President *ire", Executive Director 1 T xii 1 r r r r Financial Section r r r r xiii 7 1 (This page intentionally left blank) 1 xiv • h!!. Null-Lairson RC. a LA CERTIFIED PUBIJC ACCOtNTANTS Independent Auditors'Report L To the Honorable Mayor and Members of the City Council City of Pearland,Texas L, We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Pearland, Texas (the City) as of and for the year ended September 30, 2010, which collectively comprise the City's basic financial statements as listed in the,table of contents. These financial statements are the responsibility of City's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used [11. and the 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, each major fund, and the aggregate remaining fund information of the City as of September 30, 2010, 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 21, 2011, on our consideration of the City's internal control over financial reporting and on our tests of its • compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require_that the management's discussion and analysis on pages 5 through 16, and budgetary comparison, required pension system, and other post-employment benefits on pages 65 through 67 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion 1 3411 Richmond I Suite 500 I Houston,TX 77046 I(P)713.621.1515 I(F)713.621.1570 www.nu11-lairson.com r or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's financial statements as a whole. The introductory section, combining and individual non-major fund financial statements and schedules, and statistical section, are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual non-major fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly,we do not express an opinion or provide any assurance on it. �-1 '1741,7/( 7a,Zsei„ Null-Lairson,P.C, Houston,Texas February 21,2011 n 1 1 fl l 1 2 1 r r r r Management's Discussion and Analysis r r 3 r CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Pearland, we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30,2010. FINANCIAL HIGHLIGHTS • The assets of the primary government of the City of Pearland exceeded its liabilities as of September 30, 2010,by $639.8 million(net assets). Of this amount, $25.6 million(unrestricted net assets) may be used to meet the City's ongoing obligations to citizens and creditors in accordance with the City's fund designation and fiscal policies. The remaining amount is for investments in capital assets, net of related debt and amounts restricted for capital projects, debt service,and community development projects. • The City's total primary government net assets increased by$13.0 million. • At the close of the current fiscal year, the City of Pearland's governmental funds reported combined ending fund balances of $54.7 million, a decrease of $31.6 million in comparison with the prior year, approximately all of which is related to capital projects. Approximately $31.0 million of the September 30, 2010, fund balance can be attributed to work in progress for capital projects. • As of September 30, 2010, the unreserved, undesignated fund balance for the General Fund was $12.6 million or 26% of total General Fund expenditures. The total fund balance for the General Fund is $12.9 million or 27%of General Fund expenditures. • The City of Pearland's General Obligation and Certificates of Obligation debt for governmental activities totaled $298.6 million, a net increase of $26.1 million over the previous year. The increase is attributable to the issuance of new debt offset by principal payments of$6.0 million. The City's debt for business activities totaled $128.8 million, a net increase of approximately $11 million from the previous year. The key factors were the issuing of the Permanent Improvement and Refunding Bonds of$11.7 million related to water and sewer activities and Water and Sewer revenue bonds of$23 million. This was offset by refundings of$20.6 million and principal payments of$3.7 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 p� occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this Lstatement 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). 5 r 1 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) 1 Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Pearland include general government,public safety, public works, community services and parks and recreation. The business-type activities of the City include water, sewer, and solid waste. The government-wide financial statements can be found on pages 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 1 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 1 proprietary funds. Governmental Funds - Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statement focus on current sources and uses of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental funds balance sheet and the governmental fund statements of revenues, expenditures, and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Beginning on page 20 of this report, information is presented separately in the Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues,Expenditures, and Changes in Fund Balances for the General, Debt Service, Capital Projects and other funds, which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The City of Pearland adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with the budget. 1 6 1 1 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) 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 24 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 24 through 27 of this report. Combining Component Unit Financial Statements - The City's three discretely presented component units shown in aggregate on the face of the government-wide financial statements have individual information for each of the major discretely presented component units presented in the form of combining statements immediately following the fund financial statements of the primary government. 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. Other Information - In addition to the basic financial statements and accompanying notes, this report also presents other required supplementary information as well as combining and individual fund statements and schedules that further support the information in the financial statements. This information is presented immediately following the notes to the financial statements beginning on page 65 of this report. 7 7 CITY OF PEARLAND, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) 7 Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City, assets exceeded liabilities by $639.8 million at the close of the most recent fiscal year. 1 By far the largest portion of the City's net assets (90% percent) reflects its investment in capital assets pn (e.g., land, buildings, machinery, and equipment), less any related debt used to acquire those assets that 1 is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt,it should be noted that the resources needed to repay this debt must be provided from 7 other sources,since the capital assets themselves cannot be used to liquidate these liabilities. COMPARATIVE SCHEDULE OF NET ASSETS September 30,2010 and 2009 Amounts in(000's) Governmental Activities Business-type Activities Totals 2010 2009 2010 2009 2010 2009 7 Assets Current and other assets $ 79,176 $ 102,663 $ 47,585 $ 35,952 $ 126,761 $ 138,615 Capital assets 696,476 634,110 263,167 255,257 959,643 889,3671 Total Assets 775,652 736,773 310,752 291,209 1,086,404 1,027,982 Liabilities Other liabilities 11,043 11,371 8,159 6,210 19,202 17,581 7 Long-term liabilities outstanding 298,553 272,403 128,820 117,628 427,373 390,031 Total Liabilities 309,596 283,774 136,979 123,838 446,575 407,612 7 Net assets Invested in capital assets,net of related debt 434,344 429,054 144,244 146,150 578,588 575,204 7 Restricted 18,020 10,615 17,587 11,965 35,607 22,580 Unrestricted 13,692 13,330 11,942 9,256 25,634 22,586 Total Net Assets $ 466,056 $ 452,999 $ 173,773 $ 167,371 $ 639,829 $ 620,370 7 An additional portion of the City's net assets (six percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets (four percent) may be used to meet the government's ongoing obligations to citizens and creditors. The increase in Total Net Assets from the prior year is $19.5 million, of which $8.0 million can be attributed to the capital lease on the University of Houston Clear Lake Pearland campus building. Restricted assets also increased by $5.0 million due to the issuance of debt for the design and construction of ongoing capital projects. 1 1 8 1 7 CITY OF PEARLAND, TEXAS L' MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) COMPARATIVE SCHEDULE OF CHANGES IN NET ASSETS 7j For the Years Ended September 30,2010 and 2009 Amounts in(000's) 7 Governmental Activities Business-type Activities Totals 2010 2009 2010 2009 2010 2009 Revenues 7 Program revenues: Charges for services $ 8,524 $ 8,985 $ 32,274 $ 33,383 $ 40,798 $ 42,368 Operating grants and contributions 6,646 6,360 70 2,464 6,716 8,824 C Capital grants and contributions 29,898 31,025 8,611 6,125 38,509 37,150 Property taxes 32,963 _ 31,140 32,963 31,140 7 Sales and use taxes 13,578 14,218 13,578 14,218 Franchise taxes 5,426 5,075 5,426 5,075 Investment earnings 253 1,376 100 363 353 1,739 Other 1,028 6,294 779 23 1,807 6,317 7 Total Revenues 98,316 104,473 41,834 42,358 140,150 146,831 L Expenses General Government 13,439 12,355 13,439 12,355 Public Safety 24,268 22,438 24,268 22,438 7 Public Works 23,978 26,893 23,978 26,893 Community Services 3,323 3,290 3,323 3,290 Parks and Recreation 7,699 - 7,240 7,699 7,240 7 Interest on long-term debt 13,738 11,647 13,738 11,647 Water and Sewer 27,157 25,439 27,157 25,439 Solid Waste 7,089 7,106 7,089 7,106 Total Expenses 86,445 83,863 34,246 32,545 120,691 116,408 7 . Increase(decrease)in net assets before transfers 11,871 20,610 7,588 9,813 19,459 30,423 Transfers 1,186 621 (1,186) (621) 7 Increase in net assets 13,057 21,231 6,402 9,192 19,459 30,423 Net assets-beginning 452,999 431,768 167,371 158,179 620,370 589,947 Net assets-ending $ 466,056 $ 452,999 $ 173,773 $ 167,371 $ 639,829 $ 620,370 7 At the end of the current fiscal year, the City is able to report positive balances in all three categories of net assets,both for the government as a whole, as well as for its separate governmental and business-type activities. 7 The most significant change in net assets occurred with a net increase in capital assets, of$7.2 million due to contribution of infrastructure by developers. C 7 7 • 7 9 7 1 CITY OF PEARLAND, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) Governmental activities - Governmental activities increased the City's net assets by $13.1 million, 7 thereby accounting for 67%percent of the total growth in the net assets of the City. Key elements of this i increase are as follows: • Property taxes, sales and use taxes, and franchise taxes totaled $33.0 million, $13.6 million, and $5.4 million respectively. These revenues increased by $1.5 million from prior year primarily as a result of an increase in property tax valuations. • Capital Contributions totaled $29.9 million as a result of infrastructure contributed by developers. • The revenues were offset by expenses for general government, public safety, and public works of $13.4 million, $24.3 million, and $24.0 million respectively. These expenses were 7 relatively consistent with the prior year. i • The increase in net assets was also offset by interest expense on long-term debt of $13.7 million, an increase of $2.1 million from the prior year. This increase is due to new debt issued during the fiscal year. Expenses and Program Revenues -Governmental Activities Pi 1 $35,000 $30,000 $25,000 • n Expenses ri c $20,000 ■Program Revenues o $15,000 —. F $10,000 $5,000 II I WM IL , , - , , , '-i ,,, , Se' of tic, <s be' ti� 7 7 J 7 7 i 10 1 F.1 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) Revenues by Source-Governmental Activities Charges for Services 9% Grants and Other Contributions L 1% 37% [1q 4t 1 • i Property Taxes 34% Sales and Use Taxes 14% Franchise Taxes 5% Business-type activities-Business-type activities increased the City's net assets by $6.4 million,accounting for 33% percent of the total growth in the government's net assets. Key elements of this increase are as follows. • Charges for services of $32.3 million decreased approximately $1.1 million over the prior year primarily due to a decrease in water and sewer consumption. • Capital grants and contributions of$8.6 million increased $2.5 million from the prior year due to increased contributions of infrastructure from developers. • The revenues listed above were offset by expenses of $27.2 million and $7.1 million respectively for Water and Sewer and Solid Waste. Expenses for Water and Sewer increased from prior year by $1.7 million due to an increase of$427 thousand for interest on debt, an increase of$585 thousand for depreciation and an increase of$700 thousand in operating costs to maintain the system. Expenses for Solid Waste Management decreased by $17.0 thousand due to expenses which are based on rates and number of customers. • Operating.grants and contributions decreased by $2.4 million due to completion of a Pearland Economic Development Corporation capital project during the current fiscal year that the corporation has contributed to. p L 11 CITY OF PEARLAND, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) Expenses and Program Revenues -Business-type Activities 1 $35,000 $30,000 I $25,000 ElExpenses ■Program Revenues �3 CI $20,000 a $15,000 ~ S 10,000 $5,000 $ Water and Sewer Solid Waste J Revenues by Source -Business-type Activities Other 2% Charges for I Grants and ••, Services Contributions 77% 21% / r NN,fg . H 1 1 12 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) FINANCIAL ANALYSIS OF THE CITY'S FUNDS As noted earlier, fund accounting is used to demonstrate andensure 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 L 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 $54.7 million. Of this, $12.6 million is unreserved and available for day-to-day operations of the City; $6.5 million is reserved for debt service; and the remaining balance is reserved or designated for capital projects and other projects. There was a decrease in the combined fund balance of $31.6 million from the prior year. The decrease in fund balance includes a decrease in the capital projects fund balance of approximately $31.6 million due to the capital outlay expenditure of $60.8 million,offset by recent bond issues of $29.1 million;a decrease of $540.9 thousand in the debt service fund balance, and a combined decrease of $106.6 thousand in the remaining special revenue funds. - [11 With a current year increase of $642.7 thousand, mainly due to increases of transfers in for in-house engineering and project management on capital projects, the General Fund's fund balance totaled $12.9 million at year end. In the Capital Projects Fund, the City spent $60.8 million on various improvement projects. Additionally, the City issued$16.5 million in General Obligation Bonds and$12.1 million in Certificates of Obligation, leaving an ending fund balance of $30.9 million. Proprietary Funds - The City's business-type activities contain two activities (water and sewer, and solid waste) The City's proprietary funds provide the same type of information found in the government-wide financial statements. r E r r 13 7 1 CITY OF PEARLAND,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) J GENERAL FUND BUDGETARY HIGHLIGHTS `al During the year, there was a $883 thousand increase in appropriations between the original and final amended budget. The increase in appropriations is attributable to carryover funding from prior-year 7 encumbrances and projects and to reflect projections during the 2010-2011 budget process. Budget estimates for revenues and other sources combined decreased by approximately $171 thousand for 7 the year. Also to reflect carryovers and revised projections, actual revenues of $43.9 million were $408 ; thousand over the final budget mainly in sales and use taxes and franchise fees. Actual expenditures of $48.1 million were under budget by $2.4 million, resulting in the year-end fund balance of$12.9 million over budget by$2.4 million. 7 J At year-end,equipment purchases and several projects were still in progress and part of the$2.4 million will be carried over and reappropriated in the 2010-2011 budget year. ri CAPITAL ASSETS AND DEBT ADMINISTRATION '-] Capital Assets - At the end of fiscal year 2010, the City's governmental activities and business-type activities had invested $696.5 million and $263.2 million, respectively, in a variety of capital assets and infrastructure, as reflected in the following schedule. This represents a net increase of$7.9 million, or 3% 7 percent over the end of last fiscal year for the business-type activities capital assets and a change of$62.4 J million or 10%percent for the governmental activities capital assets. Governmental Activities Business-Type Activities Totals 1 2010 2009 2010 2009 2010 2009 Land $ 28,457 $ 28,457 $ 3,610 $ 3,610 $ 32,066 $ 32,066 7I Construction in progress 131,534 85,710 27,808 19,202 159,342 104,912 J Infrastructure 509,657 497,271 172,082 170,614 681,739 667,885 Buildings and improvements 20,586 17,421 27,152 27,781 47,738 45,201 Machinery and equipment 6,242 5,252 1,148 1,303 7,390 6,555 Contractual water rights 31,368 32,749 31,368 32,749 Total Capital Assets $ 696,476 $ 634,110 $ 263,167 $ 255,257 $ 959,643 $ 889,368 J Construction in progress at year-end represents numerous ongoing projects, the largest of which relate to street, building and water/sewer projects. Additional information on the City's capital assets can be found �j in Note 4 to the financial statements. J I I J 14 7 I 1 7 CITY OF PEARLAND, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) 7 Long-Term Debt - At the end of the current fiscal year, the City had total bonds, certificates of 7 obligation, notes, .capital leases, and post employment liabilities outstanding of$427.4 million. Of this amount, $193.8 million is composed of general obligation bonds, $102.9 million is composed of certificates 7 of obligation and$116.4 million represents revenue bonds secured solely by specified revenue sources. Governmental Activities Business-Type Activities Totals 2010 2009 2010 2009 2010 2009 7 General obligation bonds $ 193,785 $ 180,765 $ $ $ 193,785 $ 180,765 Deferred amount for issuance premium/(discount) 3,623 2,776 783 186 4,406 2,962 Revenue bonds 116,440 104,435 116,440 104,435 7 Certificates of obligation 92,380 82,505 10,540 12,160 102,920 94,665 Capital leases payable 3,237 1,479 345 200 3,582 1,679 Compensated absences 4,654 4,395 546 520 5,200 4,915 7 Post employment benefit liability 873 484 166 92 1,039 576 $ 298,552 $ 272,404 $ 128,820 $ 117,593 $ 427,372 $ 389,997 The City had the following debt issuances during the year: $12.1 million Certificate of Obligations, $28.4 7 million Permanent Improvement Bonds (of which $12.2 million was refunded to pay Water and Sewer Certificate of Obligations), $14.0 million Water and Sewer Revenue bonds, and $8.9 million Water and Sewer Refunding bonds. The net effect of these issuances was an increase in debt of$33.3 million or 8.8% 7 percent. The City of Pearland's General Obligation and Certificates of Obligation debt for governmental activities increased to $298.6 million, a net increase of$26.1 million over the previous year. The key factor was 7 the sale of Permanent Improvement and Refunding Bonds of$28.4 million, of which $12.1 million was bonds refunded to pay Water and Sewer activities, and $12.1 million in Certificates of Obligation. The increase was offset by principal payments of $6.0 million. The City's debt for business activities 7 increased to $127.7 million, a net increase of$11 million from the previous year. Other key factors were the issuance of Water and Sewer Revenue bonds totaling $23.0 million, offset by principal payments of $12.6 million. LI I I 4 Current ratings on debt issues are as follows: 7 Standard and Poors Fitch General obligation bonds AA- AA1 Revenue bonds AA- AA- 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 Al from 7 Moody's. The DAP bonds are rated A-by Standard and Poors. Additional information on the City's long- term debt can be found in Note 5 to the financial statements. 7 7 15 7 CITY OF PEARLAND, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS(continued) ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES Two primary factors in the 2011 budget are the economy and the cost of operating new facilities that were either completed late in FY 2010 or will be completed early in FY 2011. Negative economic conditions in the nation and the Houston region will continue to impact the City's revenues with lower than anticipated property values, sales tax and permits. New home starts for 2011 are expected to remain at a relatively low level with the issuance of 744 single family building permits projected to be issued in FY 2011, flat with 2010. Commercial construction is expected to continue along the current trend of relatively high numbers of permits,but a lower average value per permit. This is due to most commercial permits being for finish-out of tenant space in existing structures rather than the larger building construction permits for shopping centers that were issued in 2008. Sales tax revenues are down approximately 4% compared to the 2009 fiscal year.From March through September,however,we saw a more positive trend with sales for each of these months up over the comparable month of the prior year. As a result, a 2.5%increase in sales tax revenue is projected in FY 2011. --y Operating costs for new facilities will also be a major factor in the City's General Fund budget for FY II 2011. The budget provides funding for a full year of operating costs for both the new Recreation Center and Public Safety Buildings,Fire Station 5 and night staffing of two existing stations,takeover of TxDOT traffic signals, and contracted maintenance of new medians and major City facilities. To offset these increased costs and limited revenues, the budget includes $3.3 million in General Fund expenditure reductions, $888,488 in revenue enhancements, delay of planned capital projects, and an increase of 1.25 cents in the ad valorem tax rate. The increase in the tax rate is related only to debt service, as the portion of the property tax rate that funds operations is to be reduced by a half a cent. The Pearland City Council approved a$49.67 million General Fund budget for FY 2011. This is a 0.17% decrease from the FY 2010 adopted budget. The budget funds a net increase of 15 new full-time equivalent positions, primarily due to increased staffing in Fire Services. The budget incorporates a tax rate of$0.6551 per$100 of valuation,which is an increase of$0.0125 or 1.9% over last year. The Water and Sewer fund is able to fund operations, debt service, and bond coverage requirements with no increase in rates. This is mainly attributable to efficient operations and transfers in from water and sewer impact fee funds used towards annual debt service payments. 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 at www.cityofpearland.com. 1 y J 16 1 1 r r r r r Basic Financial Statements i r r r I r r r r 17 r 7 CITY OF PEARLAND,TEXAS L STATEMENT OF NET ASSETS September 30,2010 Primary Government l Discretely L ' Presented Governmental Business-type Component Activities Activities Total Units 7 Assets Cash and equivalents $ 41,949,007 $ 6,352,059 $ 48,301,066 $ 14,141,774 Investments 14,080,127 4,046,958 18,127,085 2,027,982 r Receivables,net of allowance for uncollectibles 17,144,984 3,599,922 20,744,906 1,309,260 Due from other governmental agencies 1,360,967 1,360,967 Inventories 92,372 92,372 L. Prepaid items 302,935 78,972 381,907 16,535 Restricted cash and investments 31,484,883 31,484,883 3,414,747 7 Deferred charges 4,245,268 2,022,129 6,267,397 3,506,532 Capital assets: Capital assets not subject to depreciation 159,990,403 31,417,754 191,408,157 3,220,907 7 Capital assets,net of accumulated depreciation 536,485,205 231,749,402 768,234,607 6,958,167 Total Capital Assets 696,475,608 263,167,156 959,642,764 10,179,074 y" Total Assets 775,651,268 310,752,079 1,086,403,347 34,595,904 t Liabilities Accounts payable and accrued liabilities 6,624,076 5,407,439 12,031,515 88,485 7 Accrued interest 1,034,000 442,705 1,476,705 288,191 Unearned revenues 3,201,630 11,602 3,213,232 Customer deposits 182,802 2,297,840 2,480,642 38,333 7 Long-term liabilities Due within one year 8,477,042 4,114,753 12,591,795 2,630,000 Due in more than one year 290,075,287 124,704,920 414,780,207 74,368,061 Total Liabilities 309,594,837 136,979,259 446,574,096 77,413,070 7 Net Assets Invested in capital assets,net of 7 related debt 434,343,656 144,243,716 578,587,372 (66,818,987) Restricted for: Capital projects 16,953,173 16,953,173 Debt service 13,760,600 633,562 14,394,162 2,559,497 7 Community development projects 4,260,554 4,260,554 Unrestricted 13,691,621 11,942,369 25,633,990 21,442,324 Total Net Assets $ 466,056,431 $ 173,772,820 $ 639,829,251 $ (42,817,166) 7 See Notes to Financial Statements. 7 7 7 19 7 I CITY OF PEARLAND,TEXAS STATEMENT OF ACTIVITIES I For the Year Ended September 30,2010 -- 7 Program Revenue i Operating Capital Grants Charges for Grants and and mn Functions/Programs Expenses Services Contributions Contributions Primary Government Governmental Activities: "1 General Government $ 13,439,107 $ $ 5,215,399 $ Public Safety 24,267,990 3,296,233 641,304 97,743 Public Works 23,977,123 10,407 206,566 29,800,443 7 Community Services 3,323,056 4,311,524 158,841 1 Parks and Recreation 7,698,457 905,761 423,791 Interest on long-term debt 13,738,197 Total Governmental Activities 86,443,930 8,523,925 6,645,901 29,898,1861 Business-type activities: 4-1 Water and Sewer 27,158,623 24,960,621 70,340 8,611,451 Solid Waste 7,088,779 7,313,507 Total Business-Type Activities 34,247,402 32,274,128 70,340 8,611,451 F.l Total Primary Government $ 120,691,332 $ 40,798,053 $ 6,716,241 $ 38,509,637 1 _1 Component Units: Pearland Economic Development Corporation 5,153,058 fl Tax Increment Reinvestment Zone#2 5,291,784 Development Authority of Pearland 9,092,901 Total Component Units $ 19,537,743 $ $ $ General Revenues: ''''1 Taxes: 1 Property taxes Sales and use taxes Franchise taxes Unrestricted investment earnings Miscellaneous Transfers7 Total General Revenues and Transfers Change in net assets Net assets-beginning 1 Net assets-ending See Notes to Financial Statements. '1 1 20 7 i 7 7 Net(Expense)Revenue and Changes in Net Assets Primary Government 7 Governmental Business-type Component Activities Activities Total Units r: $ (8,223,708) $ $ (8,223,708) (20,232,710) (20,232,710) 7 6,040,293 6,040,293 1,147,309 1,147,309 (6,368,905) (6,368,905) 7: (13,738,197) (13,738,197) (41,375,918) (41,375,918) r6,483,789 6,483,789 224,728 224,728 , 6,708,517 6,708,517 7 (41,375,918) 6,708,517 (34,667,401) 7 $ (5,153,058) (5,291,784) (9,092,901) 7 (19,537,743) 7 32,962,570 32,962,570 17,590,983 13,578,412 13,578,412 6,493,220 71 5,426,110 5,426,110 252,911 100,486 353,397 42,993 1,027,593 778,483 1,806,076 248,268 7 1,186,124 (1,186,124) 54,433,720 (307,155) 54,126,565 24,375,464 13,057,802 6,401,362 19,459,164 4,837,721 7 452,998,629 167,371,458 620,370,087 (47,654,887) $ 466,056,431 $ 173,772,820 $ 639,829,251 $ (42,817,166) 7 7 7 21 r f`1 CITY OF PEARLAND,TEXAS BALANCE SHEET GOVERNMENTAL FUNDS September 30,2010 7 Other Total __i Capital Governmental Governmental General Fund Debt Service Projects Fund Funds Funds Assets 7 Cash and cash equivalents $ 8,754,435 $ 4,590,635 $ 24,315,446 $ 4,193,350 $ 41,853,866 Investments 2,019,794 2,007,194 10,053,139 14,080,127 Receivables,net of allowance 11 for uncollectibles 5,128,138 11,755,569 28,061 233,216 17,144,984 -'I Due from other governments 634,281 726,686 1,360,967 Due from other funds 87,599 87,5997 Inventories 92,372 92,372 Prepaid items 53,994 219,334 3,944 25,663 302,935 Total Assets $ 16,770,613 $ 18,572,732 $ 35,127,276 $ 4,452,229 $ 74,922,850 Liabilities and Fund Balances 1 Liabilities Accounts payable $ 1,276,286 $ 171,219 $ 4,234,036 $ 83,546 $ 5,765,087 Accrued expenditures 835,623 835,623 Deposits 182,802 182,802 Due to other funds 87,599 87,599 Deferred revenue 1,614,106 11,695,825 20,530 13,330,461 Total Liabilities 3,908,817 11,867,044 4,234,036 191,675 20,201,572 Fund balances: rh Reserved for: } Inventories 92,372 92,372 Encumbrances 117,144 117,144 Prepaid items 53,994 219,334 25,663 298,991 Debt service 6,486,354 6,486,354 _l Unreserved,reported in: General fund 12,598,286 12,598,286 Special revenue funds 4,234,891 4,234,891 i Capital projects funds 30,893,240 30,893,240 Total fund balances 12,861,796 6,705,688 30,893,240 4,260,554 54,721,278 Total Liabilities and7 Fund Balances $ 16,770,613 $ 18,572,732 $ 35,127,276 $ 4,452,229 $ 74,922,850 See Notes to Financial Statements. I 1 7 22 7 I r CITY OF PEARLAND,TEXAS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS September 30,2010 Total fund balance,governmental funds $ 54,721,278 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not current financial resources and therefore are not reported in this fund financial statement,but are reported in the governmental activities of the Statement of Net Assets. 696,475,608 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. 10,128,831 Some liabilities are not due and payable in the current period and are not included in the fund financial statement,but are included in the governmental activities of the Statement of Net Assets. rBonds and capital leases payable (293,025,192) 1 Compensated absences (4,654,191) Accrued interest governmental activity debt (1,034,000) Estimated post employment benefit liability (872,946) Deferred bond issuance costs 4,245,268 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. 71,775 Net Assets of Governmental Activities in the Statement of Net Assets $ 466,056,431 See Notes to Financial Statements. r r r 23 01 al 7 i CITY OF PEARLAND,TEXAS STATEMENT OF REVENUES,EXPENDITURES AND 17 CHANGES IN FUND BALANCES 1 GOVERNMENTAL FUNDS - For the Year Ended September 30,2010 7 Other Total 1 Capital Governmental Governmental General Fund Debt Service Projects Fund Funds Funds r"'1 Revenues Property taxes $ 11,115,823 $ 21,740,334 $ $ $ 32,856,157 Sales and use taxes 13,082,134 496,278 13,578,412 Franchise fees 5,426,110 5,426,110 n Licenses and permits 1,806,692 1,806,692 1 Fines and forfeitures 2,310,041 164,495 2,474,536 -i Charges for services 9,245,791 81,766 9,327,557 Investment earnings 63,164 377,463 142,176 7,709 590,512 r`1i i Intergovernmental 477,929 2,035,497 1,175,834 3,689,260 Other 383,189 222,140 377,599 982,928 Total Revenues 43,910,873 22,199,563 2,399,813 2,221,915 70,732,164 1 I Expenditures Current: General government 8,064,367 60 462,662 8,527,089 77 Public safety 23,141,409 642,590 23,783,999 II Public works 7,108,143 7,108,143 Community services 3,648,920 190,346 3,839,266 Parks and recreation 6,096,658 208,320 6,304,978 ""� Debt Service: Principal 6,200,254 6,200,254 Interest and other charges 13,103,133 13,103,133 Bond issuance costs 531,589 531,589 7 Capital outlay 60,806,973 509,626 61,316,599 Intergovernmental 3,794,164 3,794,164 Total Expenditures 48,059,497 23,097,551 61,338,622 2,013,544 134,509,214 ,'l Excess(deficiency)of revenues over expenditures (4,148,624) (897,988) (58,938,809) 208,371 (63,777,050) Other Financing Sources(Uses) 9-"1 Issuance of debt 29,107,632 29,107,632 Discount on general obligation debt (145,590) (145,590) — Capital leases 2,050,000 2,050,000 Transfers in 3,024,510 357,127 97,388 19,069 3,498,094 r1 Transfers out (283,197) (1,694,731) (334,042) (2,311,970) Total Other Financing Sources(Uses) 4,791,313 357,127 27,364,699 (314,973) 32,198,166 Net change in fund balances 642,689 (540,861) (31,574,110) (106,602) (31,578,884) Fund balances-beginning 12,219,107 7,246,549 62,467,350 4,367,156 86,300,162 Fund balances-ending $ 12,861,796 $ 6,705,688 $ 30,893,240 $ 4,260,554 $ 54,721,278 -i See Notes to Financial Statements. '" l 7 1 1 24 7 I I r CITY OF PEARLAND,TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended September 30,2010 Net change in fund balances-total governmental funds: $ (31,578,884) 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$65,599,903 exceeded depreciation of$22,991,275 in the current period. 42,608,628 Capital assets net of related debt acquired as a result of Municipal Utility District annexation. 27,790,341 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. 130,704 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. (25,772,983) 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. 531,588 Some expenses reported in the statement of activities do not require the use of current financial LLL resources and these are not reported as expenditures in governmental funds: Accrued interest not reflected in Governmental funds (35,747) Amortization of bond issuance costs (80,864) Post employment benefit liability (648,140) Internal service funds are used by management to charge 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. 113,159 Change in net assets of governmental activities $ 13,057,802 See Notes to Financial Statements. fp. r 25 r 7 1 CITY OF PEARLAND,TEXAS STATEMENT OF NET ASSETS j PROPRIETARY FUNDS September 30,2010 Governmental ry Business-type Activities-Enterprise Funds Activities- 1 Water and Sewer Solid Waste Internal Fund Fund Total Service Fund Assets Current assets: 7 Cash and cash equivalents $ 5,706,878 $ 645,181 $ 6,352,059 $ 95,141 Investments 4,046,958 4,046,958 Accounts receivable,net of allowance for doubtful accounts 2,769,825 830,097 3,599,922 rq Prepaid items 78,972 78,972 Restricted cash and cash equivalents 31,484,883 31,484,883 Total current assets 44,087,516 1,475,278 45,562,794 95,141 Non-current assets: 1...1 Deferred charges 2,022,129 2,022,129 Capital assets: Land and improvements 3,609,542 3,609,542 Construction in progress 27,808,212 27,808,212 .a-' Contractual rights to water supply 34,511,428 34,511,428 Infrastructure 241,377,160 241,377,160 , Buildings 29,101,323 29,101,323 Machinery and equipment 2,985,148 2,985,148 Less Accumulated depreciation (76,225,657) (76,225,657) i Total non-current assets 265,189,285 265,189,285 Total Assets 309,276,801 1,475,278 310,752,079 95,141 Liabilities Current liabilities: Accounts payable and accrued expenses 4,174,511 1,232,928 5,407,439 23,366 Accrued interest payable 442,705 442,705 t..' Customer deposits 2,297,840 2,297,840 I Unearned revenue 11,602 11,602 Compensated absences-current portion 78,646 78,646 Bonds and certificates of obligation payable-current portion 3,980,000 3,980,000 r-n Capital lease-current portion 56,107 56,107 Total current liabilities 11,041,411 1,232,928 12,274,339 23,366 Non-current liabilities: Compensated absences 466,954 466,954 Capital lease obligation 289,250 289,250 Other post-employment benefits 165,567 165,567 - 1 Bonds and certificates of obligation payable 123,783,149 _ 123,783,149 Total non-current liabilities 124,704,920 124,704,920 Total Liabilities 135,746,331 1,232,928 136,979,259 23,366 i Net Assets Invested in capital assets,net of related debt 144,243,716 144,243,716 Restricted for debt service 633,562 633,562 Restricted for capital projects 16,953,173 16,953,173 - Unrestricted 11,700,019 242,350 11,942,369 71,775 Total Net Assets $ 173,530,470 $ 242,350 $ 173,772,820 $ 71,775 7I See Notes to Financial Statements. 7 ....., 26 7 r CITY OF PEARLAND,TEXAS 7 STATEMENT OF REVENUES,EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Year Ended September 30,2010 • Governmental Business-type Activities-Enterprise Funds Activities- Water and Sewer Solid Waste Internal Service Fund Fund Total Fund 7 Revenues Charges for services $ 24,960,621 S 7,313,507 $ 32,274,128 $ 871,639 • Operating Expenses • Personnel services 4,221,319 4,221,319 7 Supplies and materials 2,024,449 2,024,449 Contractual services 5,506,180 7,088,779 12,594,959 758,586 Repairs and maintenance 882,358 882,358 55,069 Other expenses 950,078 950,078 7 Depreciation and amortization 7,956,855 7,956,855 Total Operating Expenses 21,541,239 7,088,779 28,630,018 813,655 Operating income(loss) 3,419,382 224,728 3,644,110 57,984 7 Non-Operating Revenues(Expenses) Earnings on investments 100,260 226 100,486 106 Miscellaneous revenue(expense) 769,735 1,705 771,440 Operating grants and contributions 70,340 70,340 r Gain(loss)on disposal of capital assets 7,045 7,045 Interest expense (5,617,386) (5,617,386) Total Non-Operating Revenues(Expenses) (4,670,006) 1,931 (4,668,075) 106 Income(loss)before contributions and transfers (1,250,624) 226,659 (1,023,965) 58,090 7 Capital contributions 8,611,451 8,611,451 Transfers in 169,739 169,739 Transfers out (1,355,863) (1,355,863) Change in net assets 6,174,703 226,659 6,401,362 58,090 rit Total net assets-beginning 167,355,767 15,691 167,371,458 13,685 Total net assets-ending $ 173,530,470 $ 242,350 $173,772,820 $ 71,775 See Notes to Financial Statements. 7 7 1 • 7 7. 7 7 r 27 7 n 1 CITY OF PEARLAND,TEXAS Page 1 of 2 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended September 30,2010 • Governmental n Business-type Activities-Enterprise Funds Activities- Water and Sewer Solid Waste Internal I Fund Fund Total Service Fund Cash Flows from Operating Activities Receipts from customers and users $ 25,142,857 $ 7,203,878 $ 32,346,735 $ 872,139 Disbursed for personnel services (4,214,187) (4,214,187) Disbursed for goods and services (8,278,711) (6,481,199) (14,759,910) (790,810) Net cash provided(used)by operating activities 12,649,959 722,679 13,372,638 81,329 . Cash Flows from Noncapital Financing Activities Transfers from funds 169,739 (77,723) 92,016 7 Transfers to other funds (1,355,863) (1,355,863) Operating grants and contributions 70,340 70,340 Net cash provided by(used by)noncapital financing activities (1,115,784) (77,723) (1,193,507) 1 Cash Flows from Capital and Related Financing Activities Proceeds from the sale of equipment 7,045 7,045 Capital grants and contributions 4,211,519 4,211,519 Proceeds from the sale of bonds 35,387,840 35,387,840 Principal payments on debt (3,695,000) (3,695,000) Bonds refunded (20,590,000) (20,590,000) Issuance costs (513,466) (513,466) 7 Acquisition and construction of capital assets (10,653,806) (10,653,806) (18,562) _ 1 Net cash used by capital and related financing activities 4,154,132 4,154,132 (18,562) '-'1 Cash Flows from Investing Activities Purchase of investments (1,047,898) (1,047,898) Interest received 100,260 225 100,485 106 Interest paid (5,617,384) (5,617,384) Net cash provided by(used by)investing activities (6,565,022) 225 (6,564,797) 106 Net increase(decrease)in cash and equivalents 9,123,285 645,181 9,768,466 62,873 '-1 Cash and equivalents,beginning 27,068,476 27,068,476 32,268 Cash and equivalents,end $ 36,191,761 $ 645,181 $ 36,836,942 $ 95,141 Unrestricted cash and equivalents $ 5,706,878 $ 645,181 $ 6,352,059 $ 95,141 ,'1 Restricted cash and equivalents 30,484,883 30,484,883 $ 36,191,761 $ 645,181 $ 36,836,942 $ 95,141 on rn ri 28 i 7 1 7 CITY OF PEARLAND,TEXAS Page 2 of 7 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended September 30,2010 7 Governmental Business-type Activities-Enterprise Funds Activities- Water and Sewer Solid Waste Internal Fund Fund Total Service Funds 7 Reconciliation of operating income to net cash provided by operating activities 7 Operating income(loss) $ 3,419,382 $ 224,728 $ 3,644,110 $ 57,984 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 7,956,855 7,956,855 7 (Increase)decrease in accounts receivable (109,629) (109,629) 500 (Increase)decrease in prepaid expenses (57,817) (57,817) Increase(decrease)in accounts payable 1,142,171 605,875 1,748,046 22,845 Increase(decrease)in salaries payable 7,132 7,132 Increase(decrease)in customer deposits 170,634 170,634 r Increase(decrease)in unearned revenue 11,602 11,602 Net Cash Provided by Operating Activities $ 12,649,959 $ 720,974 $ 13,370,933 $ 81,329 Summary of non-cash transactions 7 $ 4,399,932 $ $ 4,399,932 $ r 7 7 7 7 7 7 7 C 29 7 n CITY OF PEARLAND,TEXAS COMBINING STATEMENT OF NET ASSETS 1 i DISCRETELY PRESENTED COMPONENT UNITS-GOVERNMENTAL ACTIVITIES _1 September 30,2010 Pi Pearland Economic Tax Increment Development Total 7 Development Reinvestment Authority of Component Corporation Zone#2 Pearland Units Assets Cash and cash equivalents $ 2,597,379 $ 6,759,997 $ 4,784,398 $ 14,141,774 fl Investments 2,027,982 2,027,982 Receivables-less allowance for uncollectibles 1,181,219 128,041 1,309,260 Prepaid items 16,535 16,535 Restricted cash 665,254 2,749,493 3,414,747 Deferred charges 423,320 3,083,212 3,506,532 Capital assets not subject to depreciation 2,852,284 2,852,284 Capital assets net of 7accumulated depreciation 7,326,790 7,326,790 Total Assets 17,090,763 6,888,038 10,617,103 34,595,904 Liabilities 'j Accounts payable and accrued J expenses 84,969 3,465 88,434 Accrued interest 98,195 189,996 288,191 Customer deposits 38,333 38,333 Non-current liabilities: Due within one year 800,000 1,830,000 2,630,000 Due in more than one year 25,483,740 48,884,372 74,368,112 Total Liabilities 26,505,237 3,465 50,904,368 77,413,070 Net Assets Invested in capital assets,net of related debt (16,104,666) (50,714,372) (66,819,038) Restricted-debt service 567,059 2,559,497 3,126,556 Unrestricted 6,123,133 6,884,573 7,867,610 20,875,316 Total Net Assets $ (9,414,474) $ 6,884,573 $ (40,287,265) $ (42,817,166) 1 ''i 1 7 30 1 J 7 CITY OF PEARLAND,TEXAS C COMBINING STATEMENT OF ACTIVITIES DISCRETELY PRESENTED COMPONENT UNITS-GOVERNMENTAL ACTIVITIES For the Year Ended September 30,2010 7 Net(Expense)and Changes in Net Assets Economic Tax Increment Development Development Reinvestment Authority of 7 _Functions/Programs Expenses Corporation Zone#2 Pearland Totals Component Units: Pearland Economic 7 Development Corporation $ 5,153,058 $ (5,153,058) $ $ $ (5,153,058) Tax Increment Reinvestment Zone#2 5,291,784 (5,291,784) (5,291,784) 7 Development Authority of Pearland 9,092,901. (9,092,901) (9,092,901) $ 19,537,743 (5,153,058) (5,291,784) (9,092,901) (19,537,743) rik General Revenues: Taxes: 7 Property taxes $ $ 17,590,983 $ $ 17,590,983 Sales and use tax 6,493,220 6,493,220 Other Unrestricted investment earnings 16,964 15,770 10,259 42,993 7 Miscellaneous 248,268 248,268 Transfers between component units (13,391,813) 13,391,813 Total General Revenues and Transfers 6,758,452 4,214,940 13,402,072 24,375,464 Change in net assets 1,605,394 (1,076,844) 4,309,171 4,837,721 7 Net assets,beginning (11,019,868) - 7,961,417 (44,596,436) (47,654,887) Net assets,ending $ (9,414,474) $ 6,884,573 $ (40,287,265) $ (42,817,166) ri See Notes to Financial Statements. 7 • 7 7 7 . 7 31 7 CITY OF PEARLAND, TEXAS NOTES TO FINANCIAL STATEMENTS Note 1 -Summary of Significant Accounting Policies The City of Pearland, Texas (the "City") was incorporated in December 1959 and adopted a "Home Rule Charter"February 6, 1971.The Charter,as amended,provides for a Council-Manager form of government and provides services authorized by its charter. Presently, these services include police and emergency medical, water and sewer services, drainage, sanitation, building and code inspection, planning, zoning, engineering, street repair and maintenance,park maintenance,recreational activities for citizens,and general administrative services. Fire protection is provided through a 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. 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 fmancially 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(DAP). 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 in 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 32 1 r CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 1 -Summary of Significant Accounting Policies(continued) A. Financial Reporting Entity(continued) Discretely Presented Component Units: Pearland Economic Development Corporation(PEDC) In 1995, the citizens of Pearland established the Pearland Economic Development Corporation (PEDC) to help the citizens and public officials of Pearland attract new businesses and to help 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. pw 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 The government-wide financial statements (i.e., the Statement of Net Assets and the Statement of Changes in Net Assets) report information about the City as a whole. These statements include all activities of the primary government and its component units. For the most part, the effect of interfund activity has been eliminated from the government-wide statements. Exceptions to this general rule are charges between the City's business-type and governmental funds.Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities,which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues.Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase,use or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. L 33 1 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) 1 Note 1 -Summary of Significant Accounting Policies(continued) C. Measurement Focus,Basis of Accounting and Financial Statement Presentation The government-wide financial statements and all proprietary funds are reported using the economic 1 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-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. I The governmental' fund financial statements are presented on a current financial resources measurement focus and modified accrual basis of accounting. This is the manner in which these funds are normally budgeted. Revenues are recognized as soon as they are both measurable and available. Measurable means that the amount of the transaction can be determined and available means collectible within the current period • or soon enough thereafter to pay liabilities of the current period.For this purpose,the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Revenues 1 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. rj 1 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 1 City reports the following major governmental funds: The General Fund is used to account for all financial transactions not properly includable in other funds. The principal sources of revenues include local property taxes, sales and franchise taxes, licenses and permits, fines and forfeitures, and charges for services. Expenditures include general government, administrative services,public works,parks and recreation,community development,and public safety. 1 I 34 1 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 1-Summary of Significant Accounting Policies(continued) C. Measurement Focus,Basis of Accounting and Financial Statement Presentation(continued) The Debt Service Fund is used to account for the payment of interest and principal on all general obligation bonds and other governmental long-term debt of the City.The primary source of revenue for debt service is local property taxes.The Debt Service Fund is considered a major fund for reporting purposes. The Capital Projects Fund is used to account for the expenditures of resources accumulated from sales tax revenues and the sale of bonds and related interest earnings for capital improvement projects. The Capital Projects Fund is considered a major fund for reporting purposes. L The City's Business type activities consist of the following funds: rug 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 fmanced 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 fmancial reporting issued prior to December 1, 1989,generally are followed to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private sector guidance for their business-type activities and enterprise funds, subject to this same limitation. All assets, liabilities, equities, revenues, expenses and transfers relating to the government's business activities are accounted for through proprietary funds. The measurement focus is on determination of net income, financial position and cash flows. Operating revenues include charges for services. Operating expenses include costs of materials, contracts, personnel and depreciation. In accordance with GASB Statement No. 20, the City has elected to follow GASB statements issued after November 30, 1989, rather than the Financial Accounting Standards Board,in accounting for enterprise funds. As a general rule, the effect of interfund activity has been eliminated 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. L 35 E 7 CITY OF PEARLAND, TEXAS NOTES TO FINANCIAL STATEMENTS(continued) rj Note 1 - Summary of Significant Accounting Policies (continued) C. Measurement Focus,Basis of Accounting and Financial Statement Presentation(continued) Amounts reported as program revenues include: (1)charges to customers or applicants for goods,services,or privileges provided, (2)operating grants and contributions, and(3)capital grants and contributions,including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenue.Likewise,general revenue includes all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's Enterprise Fund are charges to customers for sales and services. Operating expenses for Enterprise Funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenue and expense. D. Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of funds are recorded in order to reserve that portion of the applicable appropriation, is employed in the governmental funds. Open encumbrances are reported as reservations of fund balances since they do not constitute expenditures or liabilities. Encumbrances outstanding at year-end are appropriately provided for in the subsequent year's budget. n E. Cash and Cash Equivalents The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.For the purpose of the statement of cash flows, the Proprietary Fund Types consider temporary investments with maturity of three months or less when purchased to be cash equivalents. n The City pools cash resources of its various funds to facilitate the management of cash. Cash applicable to a l particular fund is readily identifiable. The balance in the pooled cash accounts is available to meet current operating requirements. Cash in excess of current requirements is invested in various interest-bearing accounts and securities and disclosed as part of the City's investments. The City pools excess cash of the various individual funds to purchase these investments. These pooled investments are reported in the combined balance sheet as Investments in each fund based on each fund's share of the pooled investments. Interest income is allocated to each respective individual fund, monthly, based on their respective share of investments in the pooled investments. F. Investments Investments consist of United States (U.S.) Government Agency securities. The City reports all investments at fair value based on quoted market prices at year-end date. 36 1 I CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 1-Summary of 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. [111 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 Pearland Economic Development Corporation and 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. l` Property,plant,and equipment are depreciated using the straight-line method over the following useful lives: E Asset Years Buildings and improvements 10-45 Machinery and equipment 3-15 Infrastructure 10-50 L 37 E CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 1 -Summary of Significant Accounting Policies(continued) L. Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation, sick and holiday pay benefits. Employees hired prior to October 1, 2005, earn vacation leave at the rate of 15 days per year from 1 to 15 1 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 staffing problems, may, with the City Manager's approval, receive compensation for half of the remaining balance up to a maximum of forty(40)hours. City employees receive 11 paid holidays per year. Employees required to work on a City-observed holiday may be paid or may elect to receive compensatory time off for the holiday. Overtime is earned at one and one-half times the regular rate of pay 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 n The preparation of financial statements, in conformity with generally accepted accounting principles,requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenditures during the reporting period.Actual results could differ from those estimates. 1 1 rt n 38 CITY OF PEARLAND,TEXAS ENOTES 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 7 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, bankers' 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. E r 39 E r- CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 2-Deposits(Cash) and Investments (continued) 7I The following schedule shows the City's recorded cash and investments at year-end: Total Fair Value r-- Primary Component Government Units Cash deposits $ 76,738,794 $ 17,556,521 Temporary Investments FHLB discount note 15,137,253 1,001,501 FHLMC discount note 4,024,357 1,026,481 FNMA discount note 2,012,630 $ 97,913,034 $ 19,584,503 1 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 1 investment income as follows: 1 Primary Component Government Units Interest income $ 339,786 $ 42,931 Unrealized gain(loss)on 7 temporary investments 13,611 62 Investment earnings $ 353,397 $ 42,993 1 Interest Rate Risk l I At year-end, the City had the following investments subject to interest rate risk disclosure, under U.S. generally accepted accounting principles: Primary Government Component Units Weighted Weighted ri Average Average Total Fair Value Maturity(days) Total Fair Value Maturity(days) Temporary Investments r FHLB discount note $ 15,137,253 208 $ 1,001,501 236 FHLMC discount note 4,024,357 90 1,026,481 200 FNMA discount note 2,012,630 210 $ 21,174,240 $ 2,027,982 ri Portfolio weighted average maturity 186 218 r— 40 H 1 7 CITY OF PEARLAND, TEXAS 7 NOTES TO FINANCIAL STATEMENTS(continued) 7 Note 2-Deposits(Cash) and Investments (continued) 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. The City does not directly invest in securities with a stated maturity date more than three years or.1,095 7 days from date of purchase. The settlement date is considered the date of purchase. 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 7 security type. As of September 30, 2010, the City had investments in U.S. Agency securities that exceeded five percent of the total investment portfolio at year-end. Primary Government Component Units 7 Percentage of Percentage of Investment Type Total Fair Value Total Portfolio Total Fair Value Total Portfolio FHLB discount note $ 15,137,253 71% $ 1,001,501 49% 7 FHLMC discount note 4,024,357 19% 1,026,481 51% FNMA discount note 2,012,630 10% Total $ 21,174,240 100% $ 2,027,982 100% 7 Credit Risk 7 Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, and the Federal National Mortgage Association Discount 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. 7 Restricted Assets The Enterprise Funds have restricted certain cash and investments for customer deposits, reserve and emergency expenditures, capital improvements, cash restricted for others, and revenue bond debt service. 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 Revenue bond debt service $ 1,076,267 $ 3,414,747 7 Customer deposits 2,297,090 Capital improvements 28,111,526 Total $ 31,484,883 $ 3,414,747 7 41 7 1 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 3-Receivables Receivables at September 30,2010,consisted of the following: Primary Government: 1 Governmental Funds: Other Non-Major Debt Service Capital Governmental r—) General Fund Fund Projects Fund Funds Total Receivables Property taxes,including penalties and interest $ 631,396 $ 889,193 $ $ $ 1,520,589 f"" Lease receivable 10,877,960 10,877,960 Sales and other taxes 3,384,300 3,384,300 Fines and forfeitures 722,035 722,035 Interest 17,990 9,931 28,061 55,982 Due from other 11 governments 634,281 726,686 1,360,967 Other 387,548 233,216 620,764 Allowance for uncollectibles (15,131) (21,515) (36,646) $ 5,762,419 $ 11,755,569 $ 754,747 $ 233,216 $ 18,505,951 eta i ProP r Funds: +Y Water and Sewer Fund Solid Waste Fund Total Receivables Customer accounts $ 2,964,208 $ 894,616 $ 3,858,824 1f Interest 40,702 40,702 Other 12,114 12,114 Allowance for uncollectibles (247,199) (64,519) (311,718) $ 2,769,825 $ 830,097 $ 3,599,922 r-a • 1 r 42 1 7 CITY OF PEARLAND, TEXAS 7 NOTES TO FINANCIAL STATEMENTS(continued) 7 Note 3-Receivables (continued) Component Units: 7 Pearland Tax Increment Economic Reinvestment Development 7 Development Zone Authority of Corporation Developments Pearland Total Receivables 7 Sales and other taxes $ 1,140,486 $ $ $ 1,140,486 Interest 24,953 24,953 Other 15,780 128,041 143,821 7 Total $ 1,181,219 $ 128,041 $ $ 1,309,260 7 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: CUnavailable Unearned Delinquent property taxes receivable-general fund $ 557,479 $ Delinquent property taxes receivable-debt service fund 760,405 7 Lease revenues-principal 8,088,912 Municipal fines and forfeitures 722,035 7 Lease interest revenues 2,789,048 Grants and revenues prior to meeting all eligibility requirements 412,582 Total Deferred Revenue for Governmental Funds $ 10,128,831 $ 3,201,630 7 7 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 7 which imposed. On January 1 of each year,a tax lien attaches to property to secure the payment of all taxes, penalties,- and interest ultimately imposed. The Central Appraisal District ("CAD") of Brazoria County, Harris County, and Fort Bend County, Texas, establishes appraised values. Taxes are levied by the City 7 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. 7 • 7 43 7 7 CITY OF PEARLAND, TEXAS NOTES TO FINANCIAL STATEMENTS(continued) 7 Note 4- Capital Assets A summary of changes in the primary government's capital assets for the year ended September 30, 2010, follows: Primary Government Balance Balance September 30, September 30, 2009 Increases (Decreases) 2010 7 Governmental Activities Capital assets not being depreciated: Land $ 28,456,629 $ $ $ 28,456,629 ri Construction in progress 85,710,196 45,823,578 131,533,774 Total capital assets not being depreciated 114,166,825 45,823,578 159,990,403 Other capital assets: `'r Infrastructure 662,638,535 32,406,430 695,044,965 J Buildings and improvements 27,420,836 5,192,066 (585,320) 32,027,582 Machinery and equipment 11,870,114 2,627,604 (439,120) 14,058,598 Total other capital assets 701,929,485 40,226,100 (1,024,440) 741,131,1457 Less accumulated depreciation for: Infrastructure (165,367,676) (20,020,045) (185,387,721) Buildings and improvements (10,000,221) (1,441,589) (11,441,810) Machinery and equipment (6,617,931) (1,529,640) 331,162 (7,816,409) 7 Total accumulated depreciation (181,985,828) (22,991,274) 331,162 (204,645,940) Other capital assets,net 519,943,657 17,234,826 (693,278) 536,485,205 7Totals $ 634,110,482 $ 63,058,404 $ (693,278) $ 696,475,608 Balance Balance September 30, September 30, 1 2009 Increases (Decreases) 2010 Business-type Activities . Capital assets not being depreciated: Land and intangibles $ 3,609,542 $ $ $ 3,609,542 Construction in progress 19,201,511 8,606,701 27,808,212 Total capital assets not being depreciated 22,811,053 8,606,701 31,417,754 Other capital assets: 7 Water and sewer system 234,295,776 7,081,384 241,377,160 Buildings and improvements 29,062,375 38,948 29,101,323 Machinery and equipment 2,873,319 124,446 (12,617) 2,985,148 7 Contractual water rights 34,511,428 34,511,428 Total other capital assets 300,742,898 7,244,778 (12,617) 307,975,059 Less accumulated depreciation for: Water and sewer system (63,682,067) (5,613,486) (69,295,553) 7 Buildings and improvements (1,281,530) (667,949) (1,949,479) Machinery and equipment (1,570,365) (279,830) 12,617 (1,837,578) Contractual water rights (1,762,588) (1,395,590) 15,132 (3,143,046) 7 Total accumulated depreciation (68,296,550) (7,956,855) 27,749 (76,225,656) Other capital assets,net 232,446,348 (712,077) 15,132 231,749,403 Totals $ 255,257,401 $ 7,894,624 $ 15,132 $ 263,167,157 i 44 1 E CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 4-Capital Assets (continued) Depreciation was charged to programs as follows: General government $ 724,503 Public safety 1,235,873 Public works 19,431,331 Li Community services 94,911 Parks and recreation 1,504,656 Total Governmental Activity $ 22,991,274 Water and sewer $ 7,956,855 L. Total Business-Type Activity $ 7,956,855 E The City had active construction projects as of September 30, 2010. The projects included various improvements to streets, drainage and facilities as well as and water and sewer improvements. At year- end,the City's contractual commitments on projects were as follows: Project Description Total In Progress Commitment Drainage Improvement $ 14,417,795 $ 6,434,492 Building Improvements 22,942,495 7,754,217 Street Improvement 74,715,216 20,514,659 Park Improvements 19,458,268 2,351,431 Water and Sewer Improvements 27,808,212 28,258,238 Totals $ 159,341,986 $ 65,313,037 45 1 CITY OF PEARLAND, TEXAS NOTES TO FINANCIAL STATEMENTS(continued) 1 Note 5-Long-Term Debt 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 used to acquire and construct major capital facilities.General obligation bonds, certificates of obligation, and assumed obligations from dissolved and annexed areas are for both governmental and business-type activities. The bonds are reported in the Proprietary Funds only if they are expected to be repaid from proprietary revenues. The general long-term bonds, certificates of obligation and assumed obligations are paid through the Debt Service Fund from tax revenues. The following is a summary of changes in the City's total governmental long-term liabilities for the year ended September 30, 2010. 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 fl 2009 Additions (Reductions) 2010 Within One Year Governmental Activities Bonds payable: General obligation bonds $ 180,765,000 $ 16,735,000 $ (3,715,000) $ 193,785,000 $ 4,090,000 Certificates of obligation 82,505,000 12,145,000 (2,270,000) 92,380,000 3,325,000 Deferred amount for issuance premium/(discount) 2,775,624 1,119,133 (271,952) 3,622,805 Total bonds payable 266,045,624 29,999,133 (6,256,952) 289,787,805 7,415,000 Other liabilities: Obligations under capital leases 1,478,536 2,050,000 (291,149) 3,237,387 434,806 Compensated absences 4,395,127 2,924,388 (2,665,324) 4,654,191 627,236 Other post-employment benefits 483,870 389,076 872,946 Total Governmental Activities $ 272,403,157 $ 35,362,597 $ (9,213,425) $ 298,552,329 $ 8,477,042 Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period, and accordingly, are not reported as fund liabilities in the governmental funds. Interest on long- term debt is not accrued in governmental funds,but rather is recognized as an expenditure when due. The full amount estimated to be 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)transfers from the Water and Sewer Enterprise Fund. Transfers from the Enterprise Funds are approved at the discretion of City 1 Council and are not intended to service a specific bond series. n 1 1 46 1 re CITY OF PEARLAND,TEXAS ral NOTES TO FINANCIAL STATEMENTS(continued) 7 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 30,2010, follows: 7 Series Original Issue Matures Interest Rate(%) Debt Outstanding General Obligation Bonds General Obligation Bonds,Series 2001 $ 1,900,000 2010 3.90 $ 175,000 7 Permanent Improvement,Series 2002 25,000,000 2027 5.10-5.08 1,580,000 Permanent Improvement,Series 2003 15,000,000 2028 4.00-6.00 13,220,000 Permanent Improvement and Refunding Bonds,Series 2005 37,015,000 2029 3.25-5.00 34,955,000 Permanent Improvement and Refunding Bonds,Series 2006 32,165,000 2029 4.00-5.00 31,965,000 7 Permanent Improvement and Refunding Bonds,Series 2007 69,640,000 2032 4.00-5.00 69,600,000 Permanent Improvement,Series 2008 22,835,000 2032 4.50-5.50 22,425,000 Permanent Improvement and Refunding Bonds,Series 2009 16,735,000 2034 2.00-5.00 16,455,000 7 Annexed Municipal Utility District Bonds BC MUD 1 Series 2001 4,940,000 2018 4.00-5.00 1,645,000 BC MUD 1 Series 2007 1,940,000 2030 3.75-4.35 1,940,000 Total General Obligation Bonds $ 193,785,000 7 Certificates of Obligation Certificates of Obligation,Series 2001 11,650,000 2022 5.00-6.00 $ 575,000 7 Certificates of Obligation,Series 2003 25,000,000 2023 3.00-4.50 16,280,000 Certificates of Obligation,Series 2004 21,000,000 2028 4.00-5.25 13,400,000 Certificates of Obligation,Series 2006 9,700,000 2029 3.65-4.68 9,600,000 Certificates of Obligation,Series 2007 23,250,000 2032 3.25-5.25 23,050,000 7 Certificates of Obligation,Series 2008 9,000,000 2032 3.75-5.00 8,810,000 Certificates of Obligation,Series 2009 8,520,000 2034 2.25-5.00 8,520,000 Certificates of Obligation,Series 2009A 12,145,000 2029 2.00-4.50 12,145,000 Total Certificates of Obligation $ 92,380,000 7 r Prior Year Refunding L In prior years, the City defeased certain general obligation and other bonds by placing the proceeds of the new bonds in an irrevocable trust to provide for all future debt service payments on the refunded bonds. 7 Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. At September 30, 2010, approximately $43.7 million of previously refunded bonds outstanding were considered defeased. C 7 7 7 47 7 r"1 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 5-Long-Term Debt (continued) A. General Obligation Bonds and Certificates of Obligation(continued) Capital Lease Obligations The City has entered into certain capital lease agreements in order to purchase public safety and management information systems equipment and other construction-related equipment. The capital lease obligations are paid out of the General,Debt Service and Water and Sewer Funds.The historical purchase price of the capital assets under lease is approximately$4.6 million. Following is a summary of future lease payments due on this equipment: Fiscal Year Obligations 2011 $ 621,115 2012 621,115 2013 621,115 2014 621,115 2015 721,115 2016-2017 996,313 Total 4,201,888 Less: Interest (619,144) Obligations under capital leases $ 3,582,744 n 1 1 1 48 1i 7 CITY OF PEARLAND,TEXAS 7 NOTES TO FINANCIAL STATEMENTS(continued) 7 Note 5-Long-Term Debt(continued) A. General Obligation Bonds and Certificates of Obligation(continued) 7 The annual requirements to amortize governmental activity general obligation bonds and certificates of t obligation outstanding at September 30,2010,were as follows: 7 Governmental Activities General Obligation Certificates of Obligation Fiscal Year Principal Interest Principal Interest 7 2011 $ 4,090,000 $ 8,883,186 $ 3,325,000 $ 3,879,819 2012 5,080,000 8,683,035 3,125,000 3,758,041 am+ 2013 5,460,000 8,459,571 3,270,000 3,639,707 7 2014 5,860,000 8,228,480 3,425,000 3,514,839 2015 6,140,000 7,954,899 3,540,000 3,381,616 2016 6,415,000 7,651,781 3,700,000 3,239,850 L2017 5,615,000 7,371,213 4,140,000 3,081,059 2018 5,465,000 7,112,874 4,720,000 2,894,236 2019 7,430,000 6,813,703 5,110,000 2,686,692 7 2020 9,035,000 6,439,018 4,050,000 2,490,495 2021 9,430,000 6,023,787 4,235,000 2,310,495 2022 9,850,000 5,588,269 4,415,000 2,120,221 7 2023 10,290,000 5,130,565 4,610,000 1,919,698 2024 12,370,000 4,605,671 3,210,000 1,742,825 2025 11,350,000 4,050,045 4,945,000 1,554,482 7 2026 11,800,000 3,507,074 5,255,000 1,317,188 2027 12,370,000 2,942,094 5,460,000 1,080,583 2028 12,915,000 2,344,869 5,715,000 846,799 7 2029 15,435,000 1,667,385 4,055,000 644,684 2030 8,120,000 1,108,972 3,290,000 493,950 2031 8,270,000 719,996 3,685,000 ' 338,925 7 2032 8,460,000 326,047 4,065,000 159,025 2033 1,235,000 95,875 505,000 51,750 2034 1,300,000 32,500 530,000 26,500 E $ 193,785,000 $ 115,740,909 $ 92,380,000 $ 47,173,479 7 r 7 7 49 7 7 J CITY OF PEAIRLAIND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) 1 Note 5-Long-Term Debt(continued) 1 B. Enterprise Fund Debt a-- The following is a summary of changes in the City's total business-type long-term liabilities for the year ended September 30,2010. 7— Balance Balance September 30, September 30, Amounts Due 2009 Additions (Reductions) 2010 Within One Year Business-type Activities Bonds payable: Certificates of obligation $ 12,160,000 $ 11,660,000 $ (13,280,000) $ 10,540,000 $ 810,000 _ Water and sewer revenue bonds 104,435,000 23,010,000 (11,005,000) 116,440,000 3,170,000 Deferred amount for issuance r- premium/(discount) 186,111 717,840 (120,802) 783,149 Total bonds payable 116,781,111 35,387,840 (24,405,802) 127,763,149 3,980,000 Other liabilities: Obligations under capital leases 200,156 189,681 (44,480) 345,357 56,107 Compensated absences 519,632 307,856 (281,888) 545,600 78,646 Other post-employment benefits 91,931 73,636 165,567 Total Business-type Activities $ 117,592,830 $ 35,959,013 $ (24,732,170) $ 128,819,673 $ 4,114,753 r... A summary of the terms of certificates of obligation and revenue bonds recorded in the Enterprise Funds as of September 30,2010,is as follows: 1 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 4.41-4.60 $ 6,145,000 Water and Sewer System Revenue Bonds,Series 2001 10,000,000 2023 4.37-6.25 240,000 r-i Water and Sewer System Revenue Bonds,Series 2003 9,500,000 2025 4.00-6.00 7,775,000 Water and Sewer System Revenue and Refunding Bonds, j Series 2006 13,845,000 2031 3.74-4.82 12,725,000 Water and Sewer System Revenue and Refunding Bonds, Series 2007 40,135,000 2031 3.50-5.50 39,125,000 Water and Sewer System Revenue Bonds,Series 2008 14,950,000 2034 4.125-5.00 14,610,000 Water and Sewer System Revenue Bonds,Series 2009 13,130,000 2034 3.00-5.50 12,810,000 Pennanent Improvement and Refunding Bonds,Series 2009 11,660,000 2018 2.00-5.00 ' 10,540,000 Water and Sewer System Revenue Bonds,Series 2010A 14,040,000 2035 1.75-4.50 14,040,000 Water and Sewer System Refunding Bonds,Series 2010B 8,970,000 2023 1.75-4.00 8,970,000 Total Utility System Fund $ 126,980,000 7 1 Current Year Refunding On March 22, 2010, the City issued $8,970,000 in Water and Sewer Refunding Bonds. The refunding bonds 1 have interest rates from 1.75% to 4.00%,with an average rate of 3.71%. The proceeds were deposited into an escrow fund and were used to lower the City's overall debt service and to pay costs of issuing the Bonds. This refunding decreased the City's total debt service payment by $392,883 for an economic gain (difference 1 between the present values of the debt service payments on the old and new debt)of$262,835. r 50 7 CITY OF PEARLAND,TEXAS 7 NOTES TO FINANCIAL STATEMENTS(continued) 7 Note 5-Long-Term Debt(continued) B. Enterprise Fund Debt(continued) 7 October 1, 2009, the City issued $28,395,000 in Permanent Improvement and Refunding Bonds, of which $12,160,000 was used to refund its Series 1998 Combination Tax and Revenue Certificates of Obligation for Water and Sewer activities. The proceeds were deposited into an escrow fund and were used to lower the 7 City's overall debt service and to pay costs of issuing the Bonds. The refunding bonds have interest rates of 2.0% to 5.0% with an average rate of 3.82%. This refunding decreased the City's total debt service payment by$525,943 for an economic gain (difference between the present values of the debt service payments on the 7 old and new debt)of$490,396. The annual requirements to amortize governmental activity revenue bonds and certificates of obligation outstanding at September 30,2010,were as follows: 7 Business-Type Activities Revenue Bonds Certificates of Obligation EFiscal Year Principal Interest Principal Interest 2011 $ 3,170,000 $ 5,154,774 $ 810,000 $ 363,300 2012 3,305,000 5,016,099 830,000 346,900 E2013 3,445,000 4,883,637 1,110,000 327,500 2014 3,580,000 4,744,239 1,155,000 287,525 2015 3,720,000 4,599,949 1,195,000 243,712 7 2016 3,880,000 4,449,216 1,220,000 212,000 2017 4,040,000 4,287,148 2,065,000 143,601 2018 4,210,000 4,114,630 2,155,000 45,988 7 2019 4,395,000 3,932,513 2020 4,580,000 3,741,485 2021 4,780,000 3,542,164 7 2022 4,990,000 3,334,541 2023 5,205,000 3,118,216 2024 5,460,000 2,891,514 . 7 2025 5,715,000 2,639,768 L 2026 5,980,000 2,371,443 2027 6,270,000 2,080,606 g��e 2028 6,580,000 1,771,825 4E 2029 6,890,000 1,463,326 2030 7,180,000 1,173,994 7 2031 7,480,000 871,113 2032 3,410,000 555,025 2033 3,580,000 384,475 2034 3,750,000 215,225 7 2035 845,000 38,025 $ 116,440,000 $ 71,374,947 $ 10,540,000 $ 1,970,526 7 7 51 r 1 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) 1 Note 5-Long-Term Debt(continued) 1 C. Component Unit Long-Term Debt The following is a summary of the long-term debt transactions of the Pearland Economic Development 7 Corporation and the Development Authority of Pearland for the year ended September 30,2010: Balance Balance 11 September 30, September 30, Amounts Due 2009 Additions (Reductions) 2010 Within One Year Pearland Economic Development Corporation 7 Sales tax revenue bonds $ 19,010,000 $ 7,685,000 $ (565,000) $ 26,130,000 $ 800,000 _1 Deferred amount for issuance premium/(discount) 113,012 (11,107) 101,905 Compensated absences 69,992 28,241 (46,398) 51,835 7 Development Authority of Pearland _ Tax Increment Revenue Bonds 52,820,000 (1,760,000) 51,060,000 1,830,000 Deferred amount for issuance 7 premium/(discount) (375,726) 30,098 (345,628) J $ 71,637,278 $ 7,713,241 $ (2,352,407) $ 76,998,112 $ 2,630,000 - A summary of the terms of the revenue bonds recorded as long-term liabilities in the Pearland Economic Development Corporation and Development Authority of Pearland as of September 30,2010,is as follows: J Series Original Issue Matures Interest Rate(%) Debt Outstanding P"J Pearland Economic Development Corporation J+ Sales Tax Revenue Bonds,Series 2005 $ 10,590,000 2026 2.30-4.42 $ 8,775,000 Sales Tax Revenue Bonds,Series 2006 10,235,000 2030 3.66-4.75 9,670,000 Sales Tax Revenue Bonds,Series 2010 _ 7,685,000 2030 variable-resets every 6 7,685,000 months Development Authority of Pearland Tax Increment Revenue Bonds,Series 2004 13,995,000 2028 2.50-5.50 11,215,000 Tax Increment Revenue Bonds,Series 2005 9,775,000 2028 3.50-4.75 7,515,000 Tax Increment Revenue Bonds,Series 2006 9,970,000 2028 4.00-4.40 8,935,000 Tax Increment Revenue Bonds,Series 2007 15,950,000 2029 3.70-4.75 14,875,000 7 Tax Increment Revenue Bonds,Series 2009 8,815,000 2029 3.00-5.875 8,520,000 1 Total Component Unit Long-Term Debt $ 77,190,000 7 i J 7 1 52 1 1 1 7 CITY OF PEARLAND,TEXAS 7 NOTES TO FINANCIAL STATEMENTS(continued) 7 Note 5-Long-Term Debt(continued) L C. Component Unit Long-Term Debt(continued) 7 The annual requirements to amortize component unit revenue bonds outstanding at September 30,2010,were as follows: 7 Revenue Bonds Pearland Development Corporation Development Authority of Pearland Fiscal Year Principal Interest Principal Interest 7 2011 $ 800,000 $ 1,259,177 $ 1,830,000 $ 2,371,673 2012 840,000 1,257,457 1,900,000 2,300,358 2013 880,000 1,219,307 1,975,000 2,224,827 2014 920,000 1,177,107 2,055,000 2,144,711 i, 2015 965,000 1,132,957 2,140,000 2,059,779 2016 1,010,000 1,086,557 2,230,000 1,968,415 2017 1,060,000 1,034,957 2,330,000 1,871,539 2018 1,115,000 980,869 2,430,000 1,769,317 7 2019 1,175,000 923,576 2,540,000 1,659,862 2020 1,230,000 868,726 2,540,000 1,544,511 w� 2021 1,285,000 810,926 2,655,000 1,427,346 ,ri 2022 1,350,000 749,876 2,780,000 1,303,429 2023 1,415,000 684,001 2,915,000 1,171,434 2024 1,480,000 614,738 3,055,000 1,032,070 2025 1,555,000 541,738 3,200,000 882,421 7 2026 1,635,000 464,626 3,360,000 724,969 2027 1,715,000 383,438 3,530,000 556,764 2028 1,805,000 292,438 3,705,000 379,364 7 2029 1,895,000 199,825 3,890,000 192,313 2030 2,000,000 102,625 $ 26,130,000 $ 15,784,921 $ 51,060,000 $ 27,585,095 rD. Legal Compliance Long-term debt assumed by the City upon dissolution of annexed municipal utility district in fiscal years L' 2006 and 2007 has been recorded as part of the City's long-term debt. A portion of the assumed debt is related to assets recorded in the Water and Sewer Fund. Even though the debt is related to assets recorded in the Water and Sewer Fund,the debt is considered general obligation debt based on Texas law. I. 7 7 53 7 1 CITY OF PEARLAND, TEXAS 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 30,2010,is as follows: Transfers In Transfers Out Amounts Purpose General Fund Capital Projects Fund $ 1,614,731 Transfer of funds for capital projects costs Non-Major General Fund Governmental Fund 331,042 Transfer of funds for operating costs General Fund Water and Sewer Fund 1,078,738 Transfer of funds for administrative costs 1 Debt Service Fund Water and Sewer Fund 277,127 Transfer of funds for debt service payments - Debt Service Fund Capital Projects Fund 80,000 Transfer of funds for debt service payments Non-Major Governmental Fund General Fund 16,069 Transfer of funds for capital project costs Non-Major Governmental Non-Major Fund Governmental Fund 3,000 Transfer of donations Water and Sewer Fund General Fund 169,740 Transfer of funds for operating costs Capital Projects Fund General Fund 97,388 Transfer of funds for operating costs $ 3,667,835 A summary of interfund receivables and payables at September 30,2010, follows: Receivable Fund Payable Fund Amount Purpose Non-Major General Fund Governmental Fund $ 87,599 Short-term loan to fund operations $ 87,599 Note 7-Fund Equity/Net Assets The City records fund balance reserves on the fund level to indicate that a portion of the fund balance is legally restricted for a specific future use or to indicate that a portion of the fund balance is not available for expenditures. The Pearland Economic Development Corporation and the Development Authority of Pearland, discretely presented component units of the City, had negative net asset balances at year-end of approximately $9.4 _ and $40.3 million respectively. These deficit balances are caused by these entities issuing bonds for economic development related construction projects and, in accordance with state law, transferring the capital assets to the primary government while retaining the related debt. As noted in Note 5, the debt is expected to be retired with future dedicated sales and property tax revenues. J 1 54 r 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 1.1 L Plan Description and Provisions 7 The City provides pension benefits for all of its full-time employees through a non-traditional, joint contributory, defined benefit plan in the state-wide Texas Municipal Retirement System ("TMRS"), one of 837 currently administered by TMRS,an agent multiple-employer public employee retirement system. Benefits depend upon the sum of the employee's contributions to the plan,with interest,and the City-financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest,prior to establishment of the plan. Monetary credits for service since the plan began are a percent (100%, 150%, or 200%) of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated, with interest, if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions, with interest, and the employer- financed monetary credits,with interest,were used to purchase an annuity. The plan provisions are adopted by the City Council of the City, within the options available in the state statutes governing TMRS and,within the actuarial constraints also in the statutes.Plan provisions for the City were as follows: Plan Year 2009 Plan Year 2010 Employee deposit rate 7.0% 7.0% Matching ratio(City to employee) 2 to 1 2 to 1 Years required for vesting 5 5 Service retirement eligibility (expressed as age/years of service) 60/5,0/20 60/5,0/20 Updated Service Credit 100%Repeating,Transfers 100%Repeating,Transfers Annuity Increase(to retirees) 70%of CPI Repeating 70%of CPI Repeating Members can retire at ages 60 and above with 5 or more years of service or with 20 years of service regardless of age. 55 r 1 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) 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 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 "'1 amortizes the unfunded (over funded) actuarial liability (asset) over the remainder of the plan's 30-year amortization period. The projected unit credit actuarial cost method is used for determining the City contribution rate using a 28-year closed period. Both the employees and the City make contributions r� 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 2010 was $27.5 million and the City's contributions were based on a payroll of $26.7 million. Contributions made by employees totaled $1.9 million, and the City made contributions of$3.0 million during the fiscal year ended September 30,2010. 1 Three-year trend information is presented below: 2010 2009 2008 Annual Pension Cost(APC) $ 2,995,119 $ 2,331,353 $ 1,907,416 Percentage of APC Contributed 100% 100% 100% NPO at the End of Period Because the actuary determines contribution rates on an annual basis and the City pays the calculated rate each month,the City will always have a net pension obligation(NPO)of zero at the beginning and end of the period,and the annually required contributions(ARC)will always equal contributions made. r, All assumptions for the December 31, 2009, valuations are contained in the 2009 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 28 Years-Closed Period Asset Valuation Method Amortized cost Actuarial Assumptions: Investment Rate of Return 7.50% Projected Salary Increases Varies by age and service Includes Inflation At 3.00% Cost-of-Living Adjustments 2.1% 56 7 • CITY OF PEARLAND, TEXAS 7 NOTES TO FINANCIAL STATEMENTS(continued) 7 Note 9-Employee Retirement System (continued) In order to provide a reasonable retirement benefit at a reasonable cost to employers and to provide better 7 long-range rate forecasts, TMRS' actual funding method is the Projected Unit Credit method using a 25- 30 year"closed"period. For cities that have adopted annually repeating annuity increases (COLA's) this change in method results 7 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. These were reflected in 2009. 7 A schedule of funding status and progress for TMRS for the most recent valuation date follows: 7 Unfunded Actuarial (UAAL)as a Actuarial Actuarial Accrued Annual Percentage of Valuation Date Actuarial Accrued Percentage Liability Covered Covered 7 December 31, Value of Assets Liabilities Funded (UAAL) Payroll Payroll 2009 $ 40,139,722 $ 57,645,422 70% $17,505,700 $ 25,519,548 69% 7 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. 7 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. The City's other post-employment benefit plan is a L single-employer plan. 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 r employees, but the City does not pay any portion of the retiree premium. Therefore, there is an implicit subsidy due to the blended rate paid by the retirees. Thus, there is no direct liability due from the City as it does not pay any portion of the retiree's costs. 7 The costs of providing these benefits and number of retired employees are as follows: Emp/Dep Number 7 Total City's Coverage of Retired Cost Cost Cost Employees $ 58,395 $ $ 58,395 8 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 7 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. 7 - 7 57 7 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) 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 r-, regarding the methods and timing for reporting. The effect of the Guideline is to cause the cost of retiree benefits to be accrued 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 P. period of 30 years.The results of the City's most recent actuarial valuation are as follows: Unfunded Actuarial (UAAL)as a fo? Actuarial Actuarial Accrued Percentage of J Valuation Date Accrued Liability Annual Covered October 1, Liabilities (UAAL) Covered Payroll Payroll r„j 2009 $ 6,063,524 $ 6,063,524 $ 25,519,548 24% Net OPEB obligations at year-end for the last two fiscal years are as follows: 2009 2010 .1 Normal cost $ 229,630 $ 323,138 Amortization of UAAL 116,541 116,541 Annual required contribution(ARC) 346,171 439,679 Interest on prior-year net OPEB obligation 13,847 23,032 Estimated increase in Net OPEB obligation 360,018 462,711 Net OPEB Obligation-beginning of year 215,783 575,801 Net OPEB obligation-end of year $ 575,801 $ 1,038,513 The annual cost recorded to the general ledger for fiscal year 2010 is$462,711 ,which includes the estimated normal cost of$323,138 to provide for the benefits earned by active employees. The total liability, which is not recorded to the general ledger,is$6,063,524,and represents the actuarial present value of benefits. Actuarial valuations for OPEB plans involve estimates of the value of reported amounts and assumptions about the probability of events far into the future.Actuarially determined amounts are subject to continual ,..) revision as results are compared to past expectations and new estimates are made about the future. The methods and assumptions used as of the measurement date of October 1, 2008, include using the Projected Unit Credit actuarial costs method, amortization period of 30 years, a discount rate of 4%, medical inflation and ultimate pre-Medicare rate of 10% and 5% respectively, with a straight years of service amortization method. Separate, audited GAAP-basis postemployment benefit plan reports are not applicable for the other post *"' retirement benefit plan for the City as there are no separately issued plan financial statements. Note 11 -Commitments and Contingencies Litigation and Other Contingencies The City was involved in various lawsuits and arbitration proceedings at September 30, 2010. 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. 58 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) Note 11 -Commitments and Contingencies (continued) Reimbursements 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 rat ISD Suspense Account; (3) an amount sufficient to pay reasonable current and anticipated administrative L 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 provided for the construction of segments of Broadway Street, Business Center Drive, Memorial Hermann Drive, as well as landscaping, underground utilities, pipeline relocation and other 'associated costs. The source of funds for reimbursement of the public infrastructure is both the TIRZ #2 and City and PEDC sales tax revenue generated from the project. The total funded from TIRZ #2 is $11,749,618 and the amount 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,the City and PEDC, shall remit,monthly,thirty-three percent of sales tax received by the City and PEDC to the Developer until paid in full plus interest at eight percent per annum for the first two years following completion of the widening of Broadway and interest at five percent per annum for the subsequent two years. The Developer met the targets set forth in the agreement in fiscal year 2008. Through September 30,2010, the City remitted sales tax to the developer pursuant to the agreement in the amount of$638,059,of which$248,893 was remitted in fiscal year 2010. p r 59 p CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) fl Note 11 -Commitments and Contingencies (continued) Reimbursements 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-foot retail and commercial development, including public infrastructure to serve the project and then convey the public infrastructure to the City. In consideration of the development which will bring additional sales tax revenue to the City and additional jobs, the City will reimburse the Developer solely for the costs associated with the public infrastructure from city sales tax revenues. The cost of the _j 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. As of September 30, 2010, reimbursements totaled$761,512,of which$428,415 was remitted in fiscal year 2010. Shadow Creek Ranch Office Building-ZT Group The Pearland Economic Development Corporation approved an incentive agreement with ZT Group for construction of an 80,000-square-foot class"A" office building in Shadow Creek Ranch. The incentive is broken into two parts: Part A-If 50%or more of the building is leased prior to the end of construction of the shell building,then PEDC will pay up to $1,500 for each new job created provided that the average for jobs with each lease is $40,000 annually and that all jobs are in the facility in Pearland. The benefit is capped at$600,000. Part B - If the building is not 50% pre-leased, PEDC will pay a gross lease on the facility at the rate of $100,000 per month for a maximum of 12 months or 30 days after the facility is 50%or more leased. As of 9/30/2009, the building was not 50% pre-leased and the Pearland Economic Development Corporation began paying $100,000 a month in October 2009 for a total of$1.2 million in fiscal year , 2010. Cardiovascular Systems Inc. (CSI) The Pearland Economic Development Corporation approved an incentive agreement with Cardiovascular Systems Inc. for a potential total incentive of $13.85 million. CSI is a medical device company developing and commercializing innovative interventional treatment systems for vascular disease. The ,--, incentive includes a 10-year lease agreement for a new 46,000-square-foot manufacturing facility in Pearland. The company received $3.5 million upon the signing of the lease and could receive up to an additional $2.75 million over five years as milestones are met. CSI could hire approximately 250 employees over the course of five years to work at the Pearland facility, expanding the area's already thriving medical technology sector. CSI began operations in fiscal year 2010 and received $300,000 upon -1 occupying the facility. 60 CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) 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 Texas Municipal League's Intergovernmental Risk-Pool (TML-IRP), and through commercial insurance carriers. The participation of the City in TML-IRP is limited to payment of premiums. The City has not had any significant reduction in insurance coverage, and the amounts of insurance settlements have not exceeded insurance coverage for any of the last three years. The City also provides Workers' Compensation insurance on its employees through TML-Workers' Compensation Fund. Workers' Compensation premiums are subject to change when audited by TML Workers' Compensation Fund. At fiscal year-end September 30, 2010, the City believed the amounts paid on Workers' Compensation would not change significantly from the amounts recorded. Note 13-Capital Lease The City has a 20-year agreement to lease a facility to the University of Houston Clear Lake (UHCL), which commenced in July 2010. Rent or lease payments are broken into two parts, debt service and operating. For accounting purposes the City has classified the lease as a direct financing lease. Because this lease is recorded in a governmental fund, the receivable is deferred and the distinction between a sales and direct financing lease is not relevant at the fund level. [11. UHCL has an option to purchase the facility upon the commencement date of July 2010 until the 61S`day preceding the 20th anniversary of the commencement date. The lease payments related to debt service to be received coincide with debt service payments the City is required to make on a bond that matures on March 1, 2029. At September 30, 2010, the future minimum debt service lease payments tobe received under the lease are as follows: Fiscal year ending September 30, Payment 2011 $ 690,507 2012 681,977 2013 673,447 2014 664,384 2015 654,255 2016-2029 7,513,390 Total $ 10,877,960 Note 14-Operating Lease The City has a five-year agreement to lease a portion of the UHCL facility to the Pearland Economic Development Corporation which commenced in July 2010. For accounting, purposes the City has classified the lease as an operating lease. The agreement calls for up to three additional five-year terms for a total of 20 years. The rent/lease payments are broken into two parts, debt service and operating. 61 r CITY OF PEARLAND,TEXAS NOTES TO FINANCIAL STATEMENTS(continued) fl Note 14-Operating Lease(continued) The debt service lease payments to be received coincide with debt service payments the City is required to make on a bond that matures on March 1, 2029. At September 30, 2010, the future minimum debt service lease payments to be received under the lease are as follows: Fiscal year ending September 30, Payment 2011 $ 116,256 2012 114,820 ,.r 2013 113,384 2014 111,858 2015 110,153 2016-2029 1,278,165 Total $ 1,844,636 Note 15-Subsequent Events Development Authority of Pearland-Developer Reimbursement On October 25, 2010, the Development Authority of Pearland authorized a $4.7 million cash reimbursement to the developer in association with the Master Development agreement and financing plan. To date, the DAP has issued $58.5 million in debt based on supported value on the ground and reimbursed the Developer $67.5 million, including interest. Of this amount $16.9 million was made in cash reimbursements. Cash contributions assist in paying off the obligations earlier as well as reduce interest and carrying cost of the bonds. There is approximately $90.2 million of improvements approved for reimbursement by the TIRZ board, but not yet reimbursed. The amended plan, estimated that throughout the life of the TIRZ,infrastructure projects to be financed totaled$169.1 million. Lease Purchase Financing On December 22, 2009, City Council approved adoption of a resolution declaring the City's intention to reimburse certain fiscal year 2010 capital expenditures from future capital lease proceeds, with aggregate purchase prices in an amount not to exceed $1,650,000. On December 13, 2010, City Council approved lease purchase financing on actual purchase amounts totaling $570,721. The best proposal was received from SunTrust Equipment Finance & Leasing Corporation with an interest rate of 2.410%. The annual fl payment is $88,158, for a grand total of$617,105 over the term of the lease. The bank will obtain a security interest in the subject fixtures and equipment, an interest which will be released upon final payment,resulting in the City holding full ownership rights to the equipment. r--, General Obligation and Refunding Bonds, Series 2010 A and 2010 B On September 13, 2010, City Council approved the sale of General Obligation and Refunding Bonds totaling $13.9 million. The sales included $12.2 million for street, drainage and recreation projects as approved by voters in May 2007. Refunding bonds totaled $1.7 million and resulted in savings of approximately $154,930 over eight years, by taking coupons ranging from 4.4% to 5.0% down to 0.75% to 2.54%. The bond document was dated October 1, 2010, and bond proceeds were received on October 12,2010. 62 n r r rmi r r Required Supplementary Information r 63 r 7 CITY OF PEARLAND,TEXAS 7 GENERAL FUND SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL For the year ended September 30,2010 7 y� Variance with Final Budget- E Budgeted Amounts Positive Original Final Actual (Negative) 7 Revenues Property taxes $ 10,968,001 $ 11,030,995 $ 11,115,823 $ 84,828 Sales and use taxes 14,358,740 12,883,866 13,082,134 198,268 Franchise fees 5,201,751 5,153,140 5,426,110 272,970 7 Licenses and permits 2,048,457 2,002,934 1,806,692 (196,242) Fees and forfeitures 2,508,098 2,340,157 2,310,041 (30,116) Charges for services 9,940,817 9,219,385 9,245,791 26,406 7 Investment earnings 180,000 65,938 63,164 (2,774) Intergovernmental 105,870 477,929 477,929 Other 311,155 328,340 383,189 54,849 7 Total Revenues 45,622,889 43,502,684 43,910,873 408,189 Expenditures 7 Current: General government 9,034,828 8,474,679 8,064,367 410,312 Public safety 23,472,480 23,837,073 23,141,409 695,664 Public works 7,121,596 7,973,660 7,108,143 865,517 7 Community services 3,280,591 3,833,917 3,648,920 184,997 Parks and recreation 6,659,115 6,332,376 6,096,658 235,718 Total Expenditures 49,568,610 50,451,705 48,059,497 2,392,208 7 Excess(deficiency)of revenues over expenditures (3,945,721) (6,949,021) (4,148,624) 2,800,397 7 Other Financing Sources(Uses) Proceeds from capital leases 1,151,176 2,539,562 2,050,000 (489,562) Transfers in 2,421,916 2,982,890 3,024,510 41,620 Transfers out (263,509) (283,197) (283,197) 7 Total Other Financing Sources(Uses) 3,309,583 5,239,255 4,791,313 (447,942) Net change in fund balances (636,138) (1,709,766) 642,689 2,352,455 7 Fund balances,beginning 12,219,107 12,219,107 12,219,107 Fund balances,ending $ 11,582,969 $ 10,509,341 $ 12,861,796 $ 2,352,455 7 r • 7 C 65 7 CITY OF PEARLAND,TEXAS NOTES TO REQUIRED SUPPLEMENTARY BUDGET INFORMATION • Budgetary Compliance The City of Pearland has complied with all material budget requirements for the year ended September 30,2010. Annual appropriated budgets are adopted for the General,Special Revenue and Debt Service Funds,using the same basis of accounting as for financial reporting. All annual appropriations lapse at fiscal year end. Project length budgets are adopted for the Capital Project Funds. The City, for management control, approves a financial plan for the Enterprise Fund. City Council approves the annual budget for the Pearland Economic Development Corporation,which is included in the City's financial reporting entity. Expenditures may not legally exceed budgeted appropriations at the fund level (i.e. General Fund, Debt ! Service Fund, etc.). Expenditure requests,which would require an increase in total budgeted appropriations, must be approved by City Council through a formal budget amendment. At any time in the fiscal year, the Council may make emergency appropriations to meet a pressing need for public expenditure in order to protect the public health, safety,or welfare. The Council has the power to transfer any unencumbered funds allocated by the budget from one activity, function, or department, to another activity, function, or department,to re-estimate revenues and expenditures,and to amend the budget. Because City Council adopts the budget at the fund level,management has the authority to transfer available funds allocated by the budget from one function/department or activity to another function or activity within the same department. In cooperation with the directors and department heads of the City, the Budget 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, P-1I and revision, both a letter describing the proposed new budget, as well as a balanced budget for the forthcoming fiscal year, between 60 (sixty) and 90 (ninety) days prior to the beginning of the fiscal year. The budget, as adopted, must set forth the appropriations for services, functions, and activities of the various City departments and agencies, and shall meet all fund requirements provided by law and required by bond covenants. Capital projects are budgeted on a project-length basis. Amounts reported in the accompanying financial statements represent the budgeted amount with all supplemental appropriations. I 1 I I 66 1 .,J 7 CITY OF PEARLAND,TEXAS 7 REQUIRED PENSION SYSTEM SUPPLEMENTARY INFORMATION September 30,2010 7 7 TEXAS MUNICIPAL RETIREMENT SYSTEM(UNAUDITED) Schedule of Funding Progress Unfunded 7 Actuarial (UAAL)as a Actuarial Actuarial Accrued Annual Percentage of Valuation Date Actuarial Accrued Percentage Liability Covered Covered 7 December 31, Value of Assets Liabilities Funded (UAAL) Payroll Payroll 2009 $ 40,139,722 $ 57,645,422 70% $17,505,700 $ 25,519,548 69% 2008 35,087,719 52,248,976 67% 17,161,257 25,135,418 68% 7 2007 31,242,862 44,076,397 71% 12,833,535 19,967,051 64% 7 CITY OF PEARLAND OTHER POST-EMPLOYMENT BENEFIT OBLIGATION Schedule of Funding Progress 7 Unfunded Actuarial (UAAL)as a Actuarial Actuarial Accrued Annual Percentage of Valuation Date Actuarial Accrued Percentage Liability Covered Covered 7 December 31, Value of Assets Liabilities Funded (UAAL) Payroll Payroll 2009 $ $ 6,063,524 0% $ 6,063,524 $ 25,519,548 24% 2008 6,063,524 0% 6,063,524 25,135,418 24% 7 2007 N/A N/A N/A N/A N/A N/A While retirees get the benefit of an overall employee blended rate for the Other Post-Employment Benefit 7 Obligation,benefits are funded on a pay-as-you go basis via premiums paid by the retirees and to be paid by future retirees. Therefore, the City does not pay for retiree health insurance directly and there is an implicit subsidy due to the blended rate paid by the retirees. Thus, there is no direct liability due from the City as it does not pay any portion of the retiree's costs. 7 Trend information is designed to provide information about the progress made in accumulating sufficient assets to pay benefits when due. 7 7 7 7 7 67 7 1 1 1 I i 1 1 Other Supplementary Information 1 1 1 1 1 1 68 1 1 r L r r r r r r Combining and Individual Fund Statements and Schedules r r r r r 69 CITY OF PEARLAND, TEXAS NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS To account for the proceeds of specific revenue sources that, are legally restricted to expenditures for specific purposes. Hotel Motel Tax Fund-A fund created to account for hotel/motel occupancy tax revenue. Court Security Fund- A fund created to account for the receipt and expenditure of revenues from court fines for court security. - City-Wide Donation Fund - A fund created to account for miscellaneous donations for all city departments,except parks. Court Technology Fund- This fund is used to account for the receipt and expenditure of revenues from court fines for court technology. - - - Regional Detention Fund-A fund created to account for regional detention development. Park Donation Fund - A fund used to account for park donations for park special events and 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. Traffic Impact Improvement Fund-A fund created to account for resources for street assessments. Juvenile Management Fund- A fund created to account for receipt and expenditure of revenues from court fines for juvenile case manager. 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. University of Houston (U of H) Fund- A fund created to account for lease revenues and the operating expenditures related to the University of Houston Clear Lake-Pearland Campus built by the City and leased to the University of Houston Clear Lake and the Pearland Economic Development Corporation. r 71 CITY OF PEARLAND,TEXAS COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS September 30,2010 • Hotel/Motel City-Wide Court Regional Park Tax Court Security Donations Technology Detention Donations Police Seizure Assets Cash and cash equivalents $ 1,325,516 $ 135,655 $ 44,486 $ 196,055 $ 4,033 $ 50,394 $ 249,043 Receivables(net of allowance foruncollectibles) 111,878 2,655 2,525 Prepaid items 25,663 Total Assets $ 1,463,057 $ 138,310 $ 44,486 $ 198,580 $ 4,033 $ 50,394 $ 249,043 Liabilities and Fund Balances J Liabilities: Accounts payable $ 44,637 $ 352 $ $ $ $ $ 2,780 Due to other funds Deferred revenue 2,655 2,525 Total Liabilities 44,637 3,007 2,525 2,780 Fund Balance: Unreserved,reported in Prepaid expenses 25,663 Special revenue funds 1,392,757 135,303 44,486 196,055 4,033 50,394 246,263 Total Fund Balances 1,418,420 135,303 44,486 196,055 4,033 50,394 246,263 Total Liabilities and Fund Balances $ 1,463,057 $ 138,310 $ 44,486 $ 198,580 $ 4,033 $ 50,394 $ 249,043 • 1 1 1 1 r'1 1 72 . 7 C 7 Parks and Juvenile Recreation Traffic Impact Management Emergency Management Development Sidewalk Grant Fund Improvements Fund Management District 1 U of H Fund Totals $ 1,166,315 $ 213,139 $ 11,300 $ 546,564 $ 9,071 $ $ 198,140 $ 43,639 $ 4,193,350 7 115,414 744 233,216 25,663 $ 1,166,315 $ 213,139 $ 126,714 $ 546,564 $ 9,815 $ $ 198,140 $ 43,639 $ 4,452,229 7 $ 2,089 $ $ 8,704 $ $ $ $ $ 24,984 $ 83,546 7 87,599 87,599 744 14,606 20,530 2,089 96,303 744 39,590 191,675 7 25,663 1,164,226 213,139 30,411 546,564 9,071 198,140 4,049 4,234,891 1,164,226 213,139 30,411 546,564 9,071 198,140 4,049 4,260,554 7 $ 1,166,315 $ 213,139 $ 126,714 $ 546,564 $ 9,815 $ $ 198,140 $ 43,639 $ 4,452,229 C E 7 7 7 7 E 7 7 7 73 7 CITY OF PEARLAND,TEXAS COMBINING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES 7 NON-MAJOR GOVERNMENTAL FUNDS i For the Year Ended September 30,2010 1 HoteUMotel City-Wide Court Regional Park `'") Tax Court Security Donations Technology Detention Donations Police Seizure Revenues Sales and use taxes S 496,278 S S S S S S Fines and forfeitures 50,888 62,452 Investment earnings 2,432 256 94' 455 7 99 481 Intergovernmental "1 Other 139 25,716 86,764 61,289 Total Revenues 498,849 51,144 25,810 62,907 7 86,863 61,770 Expenditures Current: General government 441,253 Public safety 26,229 81,575 Public works Community services 1,913 10,351 146,816 Parks and recreation 82,326 1 Capital outlay Total Expenditures 441,253 1,913 36,580 146,816 82,326 81,575 Excess(deficiency)of revenues over expenditures 57,596 49,231 (10,770) (83,909) 7 4,537 (19,805) I Other Financing Sources(Uses) Transfers in 3,000 Transfers out (49,122) (3,000) Total Other Financing Sources(Uses) (49,122) 3,000 (3,000) Net change in fund balances 57,596 109 (7,770) (83,909) 7 1,537 (19,805) �j Fund balances-beginning 1,360,824 135,194 52,256 279,964 4,026 48,857 266,068 J Fund balances-ending $ 1,418,420 $ 135,303 S 44,486 S 196,055 $ 4,033 $ 50,394 S 246,263 1 1 7 7 1 n i n 1 1 ri 74 7 1 l E • . Parks and Juvenile Recreation Traffic Impact Management Emergency Management 7 Development Sidewalk Grant Fund Improvements • Fund Management District I U of H Fund Totals S S S $ S $ $ S $ 496,278 7 51,155 164,495 1,922 379 25 1,009 8 539 3 7,709 1,066,293 97,743 11,798 1,175,834 147,150 10,407 4,670 41,464 377,599 ' 149,072 10,786 _ 1,066,318 5,679 51,163 97,743 539 53,265 2,221,915 7 • 21,409 462,662 440,943 93,843 642,590 C - 31,266 -• 190,346 29,365 50 067 46,562 208,320 509,626 509,626 29,365 1,053,311 93,843 46,562 2,013,544 [ii 119,707 10,786 13,007 5,679 51,163 3,900 539 6,703 208,371 7 . 16,069 19,069 (35,453) •(42,596) (201,217) (2,654)_ (334,042) (19,384) (42,596) (201,217) (2,654) (314,973) 119,707 10,786 (6,377) 5,679 8,567 3,900 (200,678) 4,049 (106,602) 7 1,044,519 202,353 36,788 540,885 504 - (3,900) 398,818 4,367,156 S 1,164,226 S 213,139 S 30,411 $ 546,564 S 9,071 S $ 198,140 S 4,049 $ 4,260,554 7 7 ... ril, 7 . 7 a L 7 75 7 n I CITY OF PEARLAND,TEXAS DEBT SERVICE FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2010 'l with comparative actual totals for the year ended September 30,2009 I 2010 7 Variance i Positive/ Final Budget Actual (Negative) 2009 Revenues Property taxes $ 21,477,390 $ 21,740,334 $ 262,944 $ 20,660,512 Charges for services 31,310 81,766 50,456 Investment earnings 372,707 377,463 4,756 147,127 Total Revenues 21,881,407 22,199,563 318,156 20,807,639 Expenditures 7 Debt Service: 1 Principal 6,200,096 6,200,254 (158) 5,482,132 Interest 13,101,209 13,103,133 (1,924) 11,941,654 7Intergovernmental 3,794,165 3,794,164 1 3,249,619 Total Expenditures 23,095,470 23,097,551 (2,081) 20,673,405 '`' Revenues over(under)expenditures (1,214,063) (897,988) 316,075 134,234 '"1 Other Financing Sources(Uses) 1 Transfers from other funds 357,127 357,127 277,127 1 Total Other Financing Sources(Uses) 357,127 357,127 277,127 111 Net change in fund balance (856,936) (540,861) 316,075 411,361 Fund Balances-Beginning 7,246,549 7,246,549 6,835,188 Fund Balances-Ending $ 6,389,613 $ 6,705,688 $ 316,075 $ 7,246,549 7 1 7 n 1 76 ' 1 E CITY OF PEARLAND,TEXAS 7 SPECIAL REVENUE FUND-HOTEL/MOTEL TAX SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL 7 For the Year Ended September 30,2010 with comparative actual totals for the year ended September 30,2009 7 2010 Variance Positive/ Final Budget Actual (Negative) 2009 7 Revenues Hotel occupancy tax $ 495,544 $ 496,278 $ 734 $ 456,872 7 Investment earnings 1,709 2,432 723 11,766 Other 139 139 Total Revenues 497,253 498,849 1,596 468,638 r Li Expenditures Current: 7 General government T 473,479 441,253 32,226 354,590 otal Expenditures 473,479 441,253 32,226 354,590 Revenues over(under)expenditures 23,774 57,596 33,822 114,048 7 Other Financing Sources(Uses) Transfers to other funds (4,817) 4,817 7 Net change in fund balance 18,957 57,596 38,639 114,048 Fund Balances-Beginning 1,360,824 1,360,824 1,246,776 Fund Balances-Ending $ 1,379,781 $ 1,418,420 $ 38,639 $ 1,360,824 7 7 C 7 7 C 7 77 7 7 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-COURT SECURITY SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2010 with comparative actual totals for the year ended September 30,2009 J 2010 Variance Positive/ Final Budget Actual (Negative) 2009 7 I Revenues -' Fines and forfeitures $ 50,255 $ 50,888 $ 633 $ 50,312 Investment earnings 210 256 46 1,305 '—.) Total Revenues 50,465 51,144 679 51,617 Expenditures Current: 7 Community services 3,900 1,913 1,987 2,405 Total Expenditures 3,900 1,913 1,987 2,405 Revenues over(under)expenditures 46,565 49,231 2,666 49,212 J Other Financing Sources(Uses) Transfers(out) (49,122) (49,122) (46,307) Net change in fund balance (2,557) 109 2,666 2,905 Fund Balances-Beginning 135,194 135,194 132,289 Fund Balances-Ending $ 132,637 $ 135,303 $ 2,666 $ 135,194 1 J 7 7 i 7 7 1 1 7 J 78 7, H 7 CITY OF PEARLAND,TEXAS 7 SPECIAL REVENUE FUND-CITY-WIDE DONATIONS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL 7 For the Year Ended September 30,2010 with comparative actual totals for the year ended September 30,2009 7 2010 Variance Positive/ Final Budget Actual (Negative) 2009 CRevenues Investment earnings $ 87 $ 94 $ 7 $ 558 7 Other income 21,279 25,716 4,437 31,955 Total Revenues 21,366 25,810 4,444 32,513 7 Expenditures Current: Public safety 28,689 26,229 2,460 21,255 Community services 20,469 10,351 10,118 9,750 7 Total Expenditures 49,158 36,580 12,578 31,005 C Revenues over(under)expenditures (27,792) (10,770) 17,022 1,508 Other Financing Sources(Uses) Transfers in(out) 3,000 3,000 Net change in fund balance (27,792) (7,770) 20,022 1,508 7 Fund Balances-Beginning 52,256 52,256 50,748 Fund Balances-Ending $ 24,464 $ 44,486 $ 20,022 $ 52,256 7 7 7 7 7 7 7 79 7 7 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-COURT TECHNOLOGY 7 SCHEDULE OF REVENUES,EXPENDITURES,AND J CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2010 7 with comparative actual totals for the year ended September 30,2009 J 2010 Variance 7 Positive/ Final Budget Actual (Negative) 2009 Revenues 7 Fines and forfeitures $ 61,642 $ 62,452 $ 810 $ 61,844 Investment earnings 422 455 33 2,751 Total Revenues 62,064 62,907 843 64,595 7 Expenditures '" Current: J Community services 149,618 146,816 2,802 84,161 Total Expenditures 149,618 146,816 2,802 84,161 Revenues over(under)expenditures (87,554) (83,909) 3,645 (19,566) 7 Net change in fund balance (87,554) (83,909) 3,645 (19,566) Fund Balances-Beginning 279,964 279,964 299,530 7 Fund Balances-Ending $ 192,410 $ 196,055 $ 3,645 $ 279,964 7 J 7 7 7 7 J 7 80 1 H r 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 30,2010 with comparative actual totals for the year ended September 30,2009 2010 Variance Positive/ Final Budget Actual (Negative) 2009 Revenues Investment earnings $ 6 $ 7 $ 1 $ 813 Other income 3,255 Total Revenues 6 7 1 4,068 Other Financing Sources(Uses) Operating Transfers(Out) (116,557) Net change in fund balance 6 7 1 (112,489) Fund Balances-Beginning 4,026 4,026 116,515 Fund Balances-Ending $ 4,032 $ 4,033 $ 1 $ 4,026 [P! r E 81 7 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-PARK DONATIONS SCHEDULE OF REVENUES,EXPENDITURES,AND 1 CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2010 with comparative actual totals for the year ended September 30,2009 j 2010 Variance Positive/ Final Budget Actual (Negative) 2009 Revenues 1 Investment earnings $ 67 $ 99 $ 32 $ 1,561 Other 80,850 86,764 5,914 68,320 Total Revenues 80,917 86,863 5,946 69,881 ExpendituresFl Current: Parks and recreation 91,899 ' 82,326 9,573 35,790 Total Expenditures 91,899 82,326 9,573 35,790 ,,,I Revenues over(under)expenditures (10,982) 4,537 15,519 34,091 i Other Financing Sources(Uses) Transfers(to)other funds (3,000) (3,000) (181,825) Net change in fund balance (10,982) 1,537 12,519 (147,734) Fund Balances-Beginning 48,857 48,857 196,591 1 Fund Balances-Ending $ 37,875 $ 50,394 $ 12,519 $ 48,857 7 1 7 1 1 1 82 7 1 l ri 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 30,2010 with comparative actual totals for the year ended September 30,2009 7 • 2010 Variance Positive/ Final Budget Actual (Negative) 2009 7 Revenues Investment earnings $ 415 $ 481 $ 66 $ 1,341 Other 56,650 61,289 4,639 250,852 7 Total Revenues 57,065 61,770 4,705 252,193 1117 Expenditures Current: Public safety 124,775 81,575 43,200 136,648 Total Expenditures 124,775 81,575 43,200 136,648 7 Revenues over(under)expenditures (67,710) (19,805) 47,905 115,545 ENet change in fund balance (67,710) (19,805) 47,905 • 115,545 Fund Balances-Beginning 266,068 266,068 150,523 7 Fund Balances-Ending $ 198,358 $ 246,263 $ 47,905 $ 266,068 i 7 7 E 7 7 E E 7 83 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-PARKS AND RECREATION DEVELOPMENT SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2010 with comparative actual totals for the year ended September 30,2009 2010 Variance Positive/ Final Budget Actual (Negative) 2009 Revenues Investment earnings $ 1,530 $ 1,922 $ 392 $ 9,493 Other 148,650 147,150 (1,500) 67,500 Total Revenues 150,180 149,072 (1,108) 76,993 Expenditures Current: Parks and recreation 30,000 29,365 635 18,839 Total Expenditures 30,000 29,365 635 18,839 r, Revenues over(under)expenditures 120,180 119,707 (473) 58,154 Other Financing Sources(Uses) Transfers from other funds Net change in fund balance 120,180 119,707 (473) 58,154 Fund Balances-Beginning 1,044,519 1,044,519 986,365 1 Fund Balances-Ending $ 1,164,699 $ 1,164,226 $ (473) $ 1,044,519 1 �l n 84 7 CITY OF PEARLAND,TEXAS 7 SPECIAL REVENUE FUND-SIDEWALK SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL 7 For the Year Ended September 30,2010 with comparative actual totals for the year ended September 30,20097 2010 Variance Positive/ Final Budget Actual (Negative) 2009 7 Revenues Investment earnings $ 307 $ 379 $ 72 $ 1,776 7 Other 12,000 10,407 (1,593) 22,168 Total Revenues 12,307 10,786 (1,521) 23,944 Net change in fund balance 12,307 10,786 (1,521) 23,944 L' Fund Balances-Beginning 202,353 202,353 178,409 Fund Balances-Ending $ 214,660 $ 213,139 $ (1,521) $ 202,353 7 7 7 7 . , 7 E 7 • 7 85 7 7 i CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-GRANT FUND 7 SCHEDULE OF REVENUES,EXPENDITURES,AND _ i CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2010 with comparative actual totals for the year ended September 30,2009 2010 Variance Positive/ ' Final Budget Actual (Negative) 2009 ri Revenues Investment earnings $ 33 $ 25 $ (8) $ 260 Intergovernmental 2,049,803 1,066,293 (983,510) 664,921 Other 353 _ J Total Revenues 2,049,836 1,066,318 (983,518) 665,534 Expenditures Current: General government 21,542 21,409 133 36,915 ,..-d Public safety 523,298 440,943 82,355 148,231 Public works Community service 494,846 31,266 463,580 84,872 Parks and recreation 250,255 50,067 200,188 1 Capital outlay 706,031 509,626 196,405 138,775 Total Expenditures 1,995,972 1,053,311 942,661 408,793 Revenues over(under)expenditures 53,864 13,007 (40,857) 256,741 j Other Financing Sources(Uses) Transfers from other funds 16,069 16,069 Transfers(to)other funds (66,251) (35,453) 30,798 (305,897) Total other financing sources(uses) (50,182) (19,384) 30,798 (305,897) 7 Net change in fund balance 3,682 (6,377) (10,059) (49,156) Fund Balances-Beginning 36,788 36,788 85,944 1 Fund Balances-Ending $ 40,470 $ 30,411 $ (10,059) $ 36,788 fl ri r'- '1 _ J 86 7 1 7 CITY OF PEARLAND,TEXAS 7 SPECIAL REVENUE FUND-TRAFFIC IMPACT IMPROVEMENTS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2010 7 with comparative actual totals for the year ended September 30,2009 2010 7 Variance Positive/ Final Budget Actual (Negative) 2009 7 Revenues Investmentearnings $ 850 $ 1,009 $ 159 $ 6,726 7 Other 4,670 - 4,670 - Total Revenues 5,520 5,679 159 6,726 Expenditures 7 Public works 22,680 Total Expenditures 22,680 7 Revenues over(under)expenditures 5,520 5,679 _ 159 (15,954) Transfers(to)other funds (192,184) PI Total Other Financing U Sources(Uses) (192,184) i Net change in fund balance 5,520 5,679 159 (208,138) 7 Fund Balances-Beginning 540,885 540,885 749,023 Fund Balances-Ending $ 546,405 $ 546,564 $ 159 $ 540,885 i 7 7 7 7 , 7 7 87 7 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-EMERGENCY MANAGEMENT SCHEDULE OF REVENUES,EXPENDITURES,AND ' CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2016 with comparative actual totals for the year ended September 30,2009 2010 Variance Positive/ Final Budget Actual (Negative) 2009 Revenues Intergovernmental $ 97,743 $ 97,743 $ $ 279,466 Total Revenues 97,743 97,743 279,466 Expenditures Current: Public safety 93,843 93,843 1,450 Capital outlay 775,503 Total Expenditures 93,843 93,843 776,953 Revenues over(under)expenditures 3,900 3,900 (497,487) Net change in fund balance 3,900 3,900 (497,487) Fund Balances-Beginning (3,900) (3,900) 493,587 Fund Balances-Ending $ $ $ $ (3,900) fl �1 rr. 1 fl 88 1 1 C CITY OF PEARLAND,TEXAS C SPECIAL REVENUE FUND-MANAGEMENT DISTRICT I SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES 1N FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2010 7 with comparative actual totals for the year ended September 30,2009 2010 7 Variance Positive/ Final Budget Actual (Negative) 2009 7 Revenues Investment earnings $ 504 $ 539 $ 35 $ 479 Intergovernmental 96,530 7 Total Revenues 504 539 35 97,009 7 Other Financing Sources(Uses) Transfers from other funds 7 Transfers(to)other funds Total (201,216) (201,217) (1) Other Financing Sources(Uses) (201,216) (201,217) (1) Net change in fund balance (200,712) (200,678) 34 97,009 7 Fund Balances-Beginning 398,818 398,818 301,809 Fund Balances-Ending $ 198,106 $ 198,140 $ 34 $ 398,818 7 7 7 7 E r• 7 89 7 7 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-U OF H FUND 7 SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2010 with comparative actual totals for the year ended September 30,2009 2010 Variance Positive/ ' Final Budget Actual (Negative) 2009 Revenues 7 Investment earnings $ $ 3 $ 3 $ Intergovernmental 11,798 11,798 Other 35,127 41,464 6,337 Total Revenues 46,925 53,265 6,340 Expenditures 7 Current: Parks and recreation 43,925 46,562 (2,637) Total Expenditures 43,925 46,562 (2,637) 7 Revenues over(under)expenditures 3,000 6,703 3,703 Other Financing Sources(Uses) 7 Transfers from other funds Transfers(to)other funds (3,000) (2,654) 346 Total Other Financing Sources(Uses) (3,000) (2,654) 346 7 Net change in fund balance 4,049 4,049 Fund Balances-Beginning 7 Fund Balances-Ending $ $ 4,049 $ 4,049 $ 7 1 1 1 7 7 90 71 CITY OF PEARLAND,TEXAS SPECIAL REVENUE FUND-JUVENILE MANAGEMENT FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL For the Year Ended September 30,2010 with comparative actual totals for the year ended September 30,2009 2010 • Variance Positive/ Budget _ Actual (Negative) 2009 Revenues Fines and Fees $ 61,642 $ 51,155 $ (10,487) $ 504 Investment earnings 5 8 3 Total Revenues 61,647 51,163 (10,484) 504 Revenues over(under)expenditures 61,647 51,163 (10,484) 504 Other Financing Sources/(Uses) Transfers(to)other funds (42,596) (42,596) Total other financing sources(uses) (42,596) (42,596) Net change in fund balance 19,051 8,567 (10,484) 504 Fund Balances-Beginning 504 504 Fund Balances-Ending $ 19,555 $ 9,071 $ (10,484) $ 504 91 E r r P P P P P P Discretely Presented Component Units Fund Based Financial Statements P P P P P P P 93 P 1 CITY OF PEARLAND,TEXAS DISCRETELY PRESENTED COMPONENT UNITS BALANCE SHEETS-GOVERNMENTAL FUNDS 1 September 30,2010 Pearland 7 Economic Tax Increment Development Total Development Reinvestment Authority of Component Corporation Zone#2 Pearland Units 9 Assets Cash and equivalents $ 2,597,379 $ 6,759,997 $ 4,784,398 $ 14,141,774 Investments 2,027,982 2,027,982 ri Receivables-less allowance for uncollectibles 1,181,219 128,041 1,309,260 Prepaid items 16,535 16,535 Restricted cash 665,254 2,749,493 3,414,747 Total Assets $ 6,488,369 $ 6,888,038 $ 7,533,891 $ 20,910,298 Liabilities Accounts payable and accrued expenses $ 84,969 $ 3,465 $ $ 88,434 "-1Customer deposits 38,333 38,333 Total Liabilities 123,302 3,465 126,767 Fund Balance Reserved for debt service 665,254 2,749,493 3,414,747 Unreserved 5,699,813 6,884,573 4,784,398 17,368,784 Total Fund Balance 6,365,067 6,884,573 7,533,891 20,783,531 Total Liabilities and Fund Balance $ 6,488,369 $ 6,888,038 $ 7,533,891 $ 20,910,298 7 Reconciliation from fund balance to net assets fund balance $ 6,365,067 $ 6,884,573 $ 7,533,891 $ 20,783,531 Add capital assets 10,179,074 10,179,074 Less revenue bonds payable (25,808,585) (47,631,160) (73,439,745) Less other long-term liabilities (51,835) (51,835) 7 Less interest payable (98,195) (189,996) (288,191) ) Net Assets $ (9,414,474) $ 6,884,573 $ (40,287,265) $ (42,817,166) 7 i "'1 1 i 1 947 7 7 CITY OF PEARLAND,TEXAS 7 DISCRETELY PRESENTED COMPONENT UNITS STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-GOVERNMENTAL FUNDS 7 For the Year Ended September 30,2010 Pearland Economic Tax Increment Development Total 7 Development Reinvestment Authority of Component Corporation Zone#2 Pearland Units Revenues 7 Taxes: Property taxes $ $ 17,590,983 $ $ 17,590,983 Sales and use taxes 6,493,220 6,493,220 Investment earnings 16,964 15,770 10,259 42,993 L Other 248,268 248,268 Total Revenues 6,758,452 17,606,753 10,259 24,375,464 7 Expenditures Current: General government 11,034 11,034 7 Economic development 3,804,748 5,291,784 6,329,130 15,425,662 Capital Outlay 3,245,575 3,245,575 Debt Service Principal 565,000 1,760,000 2,325,000 7 Interest 920,566 2,453,020 3,373,586 Bond issuance cost 84,465 2,500 86,965 Intergovernmental-City 439,635- 439,635 7 Total Expenditures 9,059,989 5,291,784 10,555,684 24,907,457 Revenues over(under)expenditures (2,301,537) 12,314,969 (10,545,425) (531,993) C Other Financing Sources(Uses) Transfers from other component units 13,391,813 13,391,813 Transfers(to)other component units (13,391,813) (13,391,813) Issuance of revenue bonds 7,685,000 7,685,000 7 Total other financing sources(uses) 7,685,000 (13,391,813) 13,391,813 7,685,000 Changes in fund balance 5,383,463 (1,076,844) 2,846,388 7,153,007 Fund Balances-Beginning 981,604 7,961,417 4,687,503 13,630,524 7 - Fund Balances-Ending $ 6,365,067 $ 6,884,573 $ 7,533,891 $20,783,531 Reconciliation from changes in fund �{ balance to changes in net assets - L� Change in fund balance 5,383,463 (1,076,844) 2,846,388 $ 7,153,007 Add principal payments 565,000 1,760,000 2,325,000 Bond issuance costs (302,631) (302,631) 7 Changes in interest payable 54,497 5,414 59,911 Less changes in other long-term liabilities (7,685,000) (7,685,000) 7 Add premium/discount on bonds Less post-employment benefit liability expense (16,825) (16,825) Less issuance of revenue bonds 7 Add capital outlay 3,304,259 3,304,259 Changes in Net Assets $ 1,605,394 $ (1,076,844) $ 4,309,171 $ 4,837,721 ro L' 95 7 1 J fl 7 • J T (This page intentionally left blank) 7 1 96 7 i r r r r r P P P Long-Term Debt Amortization Schedules P P P P P P P 97 P 7 1 J CITY OF PEARLAND,TEXAS COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT 7BY MATURITY DATE September 30,2010 i Certificates of Obligation,Series 2001 BCMUD#1 Series 2001 1 Fiscal Year Principal Interest Total Principal Interest Total 2011 $ 575,000 S 11,500 S 586,500 S 185,000 $ 78,332 $ 263,332 7 2012 200,000 70,193 270,193 2013 210,000 61,192 271,192 2014 220,000 51,428 271,428 2015 230,000 40,977 270,977 2016 235,000 29,765 264,765 J 2017 255,000 18,250 273,250 2018 110,000 5,500 115,500 2019 7 2020 2021 2022 2023 72024 2025 J 2026 2027 2028 on 2029 2030 2031 2032 2033 2034 J $ 575,000 S 11,500 S 586,500 S 1,645,000 $ 355,637 $ 2,000,637 Certificates of Obligation,Series 2003 Permanent Improvement Bonds,Series 2002 Fiscal Year Principal Interest Total Principal Interest Total 2011 $ 1,175,000 S 631,233 S 1,806,233 S 770,000 $ 79,800 S 849,800 1 2012 1,235,000 580,095 1,815,095 810,000 28,350 838,350 2013 1,295,000 531,114 1,826,114 2014 1,035,000 488,203 1,523,203 2015 1,090,000 449,408 1,539,408 7 2016 1,145,000 407,488 1,552,488 2017 1,210,000 361,533 1,571,533 2018 1,180,000 313,733 1,493,733 on 2019 1,240,000 265,333 1,505,333 2020 1,310,000 213,023 1,523,023 J 2021 1,380,000 156,188 1,536,188 2022 1,455,000 95,944 1,550,944 ""n 2023 1,530,000 32,513 1,562,513 2024 2025 2026 2027 "`I 2028 1 2029 - j 2030 2031 2032 I $ 16,280,000 S 4,525,803 S 20,805,803 S 1,580,000 $ 108,150 S 1,688,150 7 i 1 98 1 1 [7 7 Page 1 of 3 7 Permanent Improvement Bonds,Series 2002 Permanent Improvement Bonds,Series 2003 Fiscal Year Principal Interest Total Principal Interest Total 7 2011 $ 770,000 $ 79,800 $ 849,800 $ 350,000 $ 581,329 $ 931,329 2012 810,000 28,350 838,350 370,000 559,728 - 929,728 2013 390,000 536,929 926,929 2014 525,229 525,229 2015 525,228 525,228 L 2016 455,000 .516,129 971,129 2017 725,000 492,529 1,217,529 2018 765,000 462,729 1,227,729 2019 .805,000 430,826 1,235,826 7 2020 845,000 . 396,266 1,241,266 2021 885,000 359,283 1,244,283 2022 935,000 320,153 1,255,153 2023 980,000 . 278,613 1,258,613 1,264,000 I 2024 1,030,000 234,000 2025 1,085,000 186,413 1,271,413 2026 1,140,000 136,350 1,276,350 2027 1,200,000 83,700 1,283,700 7 • 2028 1,260,000 28,350 1,288,350 2029 2030 2031 2032 f I 2033 fL 2034 S 1,580,000 S 108,150 $ 1,688,150 $ 13,220,000 $ 6,653,781 $ 19,873,781 7 Certificates of Obligation,Series 2004 Permanent Improvement&Refund Bonds,Series 2005 Fiscal Year Principal Interest Total Principal Interest Total 2011 S 365,000 S. 575,221 S 940,221 $ 1,705,000 $ 1,578,223• $ 3,283,223 2012 380,000 560,322 940,322 1,775,000 1,514,039 3,289,039 2013 385,000 545,021 .930,021 1,845,000 1,445,011 3,290,011 2014 710,000 523,121 1,233,121 1,930,000 1,370,664 3,300,664 E 2015 710,000 494,721 1,204,721 2,010,000 1,281,814 3,291,814 2016 730,000 465,922 1,195,922 2,115,000 1,178,689 3,293,689 2017 1,030,000 430,721 1,460,721 865,000 1,108,514 1,973,514 2018 1,070,000 388,186 1,458,186 995,000 1,071,314 2,066,314 72019 1,160,000 341,891 1,501,891 380,000 1,043,624 1,423,624 2020 317,532 317,532 385,000 1,027,893 1,412,893 2021 317,531 317,531 395,000 , 1,011,658 1,406,658 2022 317,531 317,531 . 405,000 994,756 1,399,756 2023 317,531 317,531 875,000 967,338 1,842,338 ��L__. 2024 317,532 317,532 2,625,000 882,900 3,507,900 2025 1,625,000 280,969 1,905,969 2,760,000 748,275 3,508,275 72026 1,675,000 205,672 1,880,672 2,900,000 606,775 3,506,775 2027 1,730,000 126,931 1,856,931 3,045,000 465,763 3,510,763 2028 1,830,000 43,463 1,873,463 4,010,000 297,000 4,307,000 2029 3,935,000 98,375 4,033,375 2030 2031 2032 7 $ 13,400,000 S 6,569,818 - $ 19,969,818 $ 34,955,000 $ 18,692,622 $ 53,647,622 7 L' 99 7 7 CITY OF PEARLAND,TEXAS COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT r"I BY MATURITY DATE September 30,2010 Permanent Improvement&Refund Bonds,Series 2006 Permanent Improvement&Refund Bonds,Series 2007 7 7 Fiscal Year Principal Interest Total Principal Interest Total 2011 $ 320,000 $ 1,520,794 $ 1,840,794 $ 150,000 $ 3,214,263 $ 3,364,263 7 2012 385,000 1,506,694 1,891,694 885,000 3,193,562 4,078,562 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 tI 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 J 2017 460,000 1,421,263 1,881,263 2,460,000 2,671,438 5,131,438 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 7 2020 1,485,000 1,293,888 2,778,888 5,190,000 2,190,662 7,380,662 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 r� 2024 2,150,000 932,763 3,082,763 5,230,000 1,235,763 6,465,763 II 2025 2,270,000 822,263 3,092,263 3,835,000 1,034,197 4,869,197 1 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 2028 3,690,000 438,188 4,128,188 2,290,000 537,225 2,827,225 1.01 2029 7,380,000 175,275 7,555,275 2,370,000 426,550 2,796,550 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 2033 2034 $ 31,965,000 $ 21,422,303 $ 53,387,303 $ 69,600,000 $ 38,593,637 $ 108,193,637 elBCMUD#1 Series 2007 Certificates of Obligation,Series 2006 Fiscal Year Principal Interest Total Principal Interest Total 2011 $ 15,000 $ 80,527 $ 95,527 $ 125,000 $ 448,069 $ 573,069 2012 55,000 79,927 134,927 315,000 434,594 749,594 2013 60,000 77,865 137,865 335,000 414,688 749,688 2014 65,000 75,585 140,585 355,000 393,557 748,557 2015 70,000 73,082 143,082 370,000 371,354 741,354 2016 75,000 70,353 145,353 395,000 349,654 744,654 2017 75,000 67,428 142,428 405,000 330,932 735,932 2018 80,000 64,428 144,428 405,000 314,074 719,074 7 2019 85,000 61,228 146,228 505,000 294,838 799,838 2020 90,000 57,827 147,827 470,000 274,001 744,001 2021 95,000 54,228 149,228 500,000 253,146 753,146 2022 100,000 50,333 150,333 525,000 230,912 755,912 2023 110,000 46,232 156,232 555,000 207,218 762,218 2024 115,000 41,612 156,612 585,000 181,991 766,991 el 2025 120,000 36,782 156,782 605,000 155,363 760,363 2026 130,000 31,622 161,622 730,000 125,325 855,325 2027 135,000 26,033 161,033 765,000 91,688 856,688 7 2028 145,000 20,227 165,227 805,000 56,363 861,363 2029 155,000 13,920 168,920 850,000 19,125 869,125 2030 165,000 7,178 172,178 2031 2032 2033 2034 $ 1,940,000 $ 1,036,417 $ 2,976,417 $ 9,600,000 $ 4,946,890 $ 14,546,890 "'1 100 7 Page 2 of 3 7 7 Permanent Improvement,Series 2008 Certificates of Obligation,Series 2008 Fiscal Year Principal Interest Total Principal Interest Total 72011 $ 205,000 $ 1,080,900 $ 1,285,900 $ 95,000 $ 413,428 $ 508,428 2012 290,000 1,068,525 1,358,525 I30,000 409,150 539,150 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 7 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 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 7 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 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 7 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 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 7 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 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 7 $ 22,425,000 $ 18,299,494 $ 40,724,494 $ 8,810,000 $ 7,079,816 $ 15,889,816 7 Certificates of Obligation,Series 2007 Certificate of Obligation,Series 2009 7 Fiscal Year Principal Interest Total Principal Interest Total 2011 $ I50,000 $ 1,043,088 $ 1,193,088 $ 200,000 $ 361,115 $ 561,115 2012 200,000 1,033,900 1,233,900 225,000 356,615 581,615 2013 250,000 1,022,088 1,272,088 260,000 351,553 611,553 7 2014 300,000 1,007,650 1,307,650 230,000 345,703 575,703 2015 350,000 990,588 1,340,588 235,000 339,953 574,953 2016 400,000 970,900 1,370,900 240,000 332,903 572,903 2017 450,000 948,587 1,398,587 245,000 325,703 570,703 2018 1,005,000 910,394 1,915,394 255,000 317,128 572,128 7 2019 1,060,000 856,187 1,916,187 320,000 307,565 627,565 2020 1,115,000 799,094 1,914,094 325,000 294,765 619,765 2021 1,170,000 739,112 1,909,112 340,000 281,765 621,765 2022 1,230,000 676,113 1,906,113 350,000 268,165 618,165 7 2023 1,295,000 609,831 1,904,831 365,000 253,815 618,815 2024 1,360,000 540,137 1,900,137 385,000 238,303 623,303 2025 1,430,000 466,900 1,896,900 400,000 221,363 621,363 2026 1,500,000 389,988 1,889,988 420,000 203,363 623,363 2027 1,580,000 324,937 1,904,937 440,000 183,938 623,938 2028 1,660,000 272,288 1,932,288 465,000 163,038 628,038 [11111 2029 1,745,000 216,956 1,961,956 485,000 139,788 624,788 2030 1,540,000 163,575 1,703,575 415,000 116,750 531,750 2031 1,600,000 104,550 1,704,550 410,000 96,000 506,000 7 2032 1,660,000 35,275 1,695,275 475,000 75,500 550,500 505,000 51,750 556,750 530,000 26,500 556,500 $ 23,050,000 $ 14,122,138 $ 37,172,138 $ 8,520,000 $ 5,653,035 $ 14,173,035 7 7 101 1 1 1 1 J 1 J 1 1 This page intentionally left blank.) 1 1 1 J J 102 1 1 C CITY OF PEARLAND,TEXAS C COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT Page 3of3 BY MATURITY DATE September 30,2010 7 Certificate of Obligation,Series 2009A Permanent Improvement&Refund Bonds,Series 2009 (General Activities Portion) 7 Fiscal Year Principal Interest Total Principal _ Interest Total 2011 $ 640,000 $ 396,165 $ 1,036,165 $ 390,000 $ 669,018 $ 1,059,018 2012 640,000 383,365 1,023,365 310,000 662,017 972,017 7 2013 640,000 370,565 1,010,565 380,000 655,118 1,035,118 2014 640,000 356,965 996,965 390,000 641,568 1,031,568 2015 640,000 341,765 981,765 405,000 626,754 1,031,754 2016 640,000 324,965 964,965 420,000 615,918 1,035,918 7 2017 640,000 301,765 941,765 435,000 599,267 1,034,267 2018 640,000 275,403 915,403 455,000 578,154 1,033,154 2019 640,000 252,560 892,560 590,000 557,888 1,147,888 2020 635,000 231,361 866,361 615,000 537,863 1,152,863 7 2021 640,000 210,163 850,163 635,000 517,075 1,152,075 2022 640,000 187,763 827,763 655,000 494,490 1,149,490 2023 640,000 164,403 804,403 680,000 470,120 1,150,120 2024 640,000 140,562 780,562 705,000 444,321 1,149,321 7 2025 635,000 116,338 751,338 735,000 416,953 1,151,953 2026 640,000 91,315 731,315 765,000 387,505 1,152,505 2027 640,000 65,715 705,715 795,000 356,305 1,151,305 2028 635,000 39,898 674,898 825,000 323,492 1,148,492 7 2029 640,000 13,440 653,440 865,000 288,415 1,153,415 2030 835,000 249,375 1,084,375 2031 945,000 204,875 1,149,875 2032 1,090,000 154,000 1,244,000 7 2033 1,235,000 95,875 1,330,875 2034 1,300,000 32,500 1,332,500 $ 12,145,000 $ 4,264,476 $ 16,409,476 $ 16,455,000 $ 10 578,866 $ 27,033,866 7 7 p L. 7 7 7 7 103 7 '.:1 ‘ CITY OF PEARLAND,TEXAS r COMBINING SCHEDULE OF ENTERPRISE FUND LONG-TERM DEBT BY MATURITY DATE September 30,2010 7 Water&Sewer System Revenue Bonds,Series 1999 Water&Sewer System Revenue Bonds,Series 2001 Fiscal Year Principal Interest Total Principal Interest Total 2011 $ 230,000 $ 276,827 $ 506,827 $ 240,000 $ 15,000 $ 255,000 2012 240,000 266,466 506,466 2013 250,000 255,654 505,654 2014 260,000 244,392 504,392 2015 270,000 232,678 502,678 2016 290,000 220,295 510,295 2017 1,080,000 207,451 1,287,451 2018 1,125,000 158,796 1,283,796 7 2019 1,175,000 108,110 1,283,110 2020 1,225,000 55,182 1,280,182 2021 2022 2023 7 2024 2025 2026 2027 11 2028 2029 2030 2031 20327 2033 2034 2035 $ 6,145,000 $ 2,025,851 $ 8,170,851 $ 240,000 $ 15,000 $ 255,000 Water&Server System Revenue and Refunding Bonds, Water&Sewer System Revenue and Refunding Bonds, Series 2006 Series 2007 Fiscal Year Principal Interest Total Principal Interest Total 7 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 2013 650,000 559,369 1,209,369 880,000 1,718,413 2,598,413 J 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 2017 100,000 434,044 534,044 950,000 1,510,788 2,460,788 7 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 2022 100,000 411,619 511,619 1,210,000 1,236,450 2,446,450 J 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 3,477,450 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 2035 7 $ 12,725,000 $ 8,445,950 $ 21,170,950 $ 39,125,000 $ 24,638,513 $ 63,763,513 ! 104 7 7 7 Page 1 of2 7 Water&Sewer System Revenue Bonds,Series 2003 Permanent Improvement and Refunding Bonds, Series 2009 Water&Sewer System Portion 7 Fiscal Year Principal Interest Total Principal Interest Total 2011 $ 300,000 $ 341,113 $ 641,113 $ 810,000 $ 363,300 $ 1,173,300 2012 315,000 323,113 638,113 830,000 346,900 1,176,900 2013 330,000 304,213 634,213 1,110,000 327,500 1,437,500 7 2014 340,000 285,238 625,238 1,155,000 287,525 1,442,525 2015 355,000 271,638 626,638 1,195,000 243,712 1,438,712 2016 365,000 257,438 622,438 1,220,000 ' 212,000 1,432,000 2017 375,000 242,838 617,838 2,065,000 143,601 2,208,601 7: 2018 385,000 227,838 612,438 2,155,000 45,988 2,200,988 2019 390,000 212,438 602, 38 2020 395,000 196,350 591,350 2021 395,000 179,563 574,563 r 2022 410,000 162,775 572,775 2023 420,000 145,350 565,350 2024 1,500,000 127,500 1,627,500 2025 1,500,000 63,750 1,563,750 2026 r2027 2028 2029 2030 C 2031 2032 2033 2034 7 2035 $ 7,775,000 $ 3,341,150 $ 11,116,150 $ 10,540,000 $ 1,970,526 $ 12,510,526 Water&Sewer System Revenue Bonds,Series 2008 Water& Sewer System Revenue Bonds,Series 2009 C Fiscal Year Principal Interest Total Principal Interest Total 2011 $ 205,000 $ 674,303 $ 879,303 $ 360,000 $ 591,463 $ 951,463 7 2012 225,000 667,640 892,640 360,000 580,662 940,662 2013 235,000 660,328 895,328 370,000 569,862 939,862 2014 255,000 652,690 907,690 380,000 558,763 938,763 2015 275,000 641,215 916,215 385,000 547,362 932,362 7 2016 290,000 628,840 918,840 400,000 535,812 5,812 2017 315,000 615,790 930,790 410,000 522,813 93 93 ,813 2018 340,000 601,615 941,615 420,000 508,975 928,975 2019 370,000 586,315 956,315 435,000 493,750 928,750 2020 395,000 569,665 964,665 450,000 476,350 926,350 7 2021 420,000 551,890 971,890 465,000 458,350 923,350 2022 440,000 532,990 972,990 485,000 438,588 923,588 2023 460,000 514,840 974,840 505,000 416,763 921,763 2024 490,000 495,520 985,520 520,000 393,406 913,406 r 2025 510,000 474,450 984,450 545,000 368,056 913,056 2026 540,000 448,950 988,950 570,000 340,806 910,806 2027 560,000 421,950 981,950 600,000 311,594 911,594 2028 595,000 393,950 988,950 630,000 280,844 910,844 2029 600,000 364,200 964,200 665,000 247,769 912,769 7. 2030 580,000 334,200 914,200 700,000 212,025 912,025 2031 560,000 305,200 865,200 730,000 173,525 903,525 2032 1,890,000 277,200 2,167,200 765,000 133,375 898,375 2033 1,980,000 182,700 2,162,700 815,000 91,300 906,300 7 2034 2,080,000 93,600 2,173,600 845,000 46,475 891,475 2035 $ 14,610,000 $ 11,690,040 $ 26,300,040 $ 12,810,000 $ 9,298,688 $ 22,108,688 7 105 7 1 7 7 1 7 1 1 (This page intentionally left blank.) 1 1 1 I 1 1 1 1 106 7 7 1 1 7 CITY OF PEARLAND,TEXAS COMBINING SCHEDULE OF ENTERPRISE FUND LONG-TERM DEBT Page 2 of 2 7 BY MATURITY DATE September 30,2010 • 7 Water&Sewer Revenue Bonds,Series 2010A , Water&Sewer Refunding Bonds,Series 2010B 7 Principal Interest Total Principal , Interest Total 2011 S 370,000 S 527,356 $ 897,356 S 75,000 $ 309,769 S 384,769 2012 380,000 519,956 899,956 330,000 308,269 638,269 2013 390,000 . 513,306 903,306 340,000 302,494 642,494 2014 395,000 506,481 901,481 350,000 296,544 646,544 7 2015 405,000 498,581 903,581 355,000 289,544 644,544 2016 410,000 490,481 900,481 370,000 282,444 652,444 2017 425,000 480,231 905,231 385,000 273,194 658,194 2018 440,000 467,481 907,481 405,000 261,644 666,644 7 2019 455,000 453,731 908,731 425,000 248,988 673,988 2020 475,000 438,944 913,944 445,000 235,175 680,175 2021 495,000 , 422,318 917,318 1,750,000 219,600 1,969,600 2022 515,000 402,519 917,519 1,830,000 149,600 1,979,600 7 2023 535,000 381,919 916,919 1,910,000 76,400 1,986,400 2024 555,000 360,519 915,519 2025 580,000 338,318 918,318 2026 600,000 315,118 915,118 2027 625,000 291,118 916,118 7 2028 650,000 265,337 915,337 . 2029 680,000 237,713 917,713 2030 710,000 208,813 918,813 2031 177,750 177,750 2032 144,450 144,450 7 2033 110,475 110,475 2034 75,150 75,150 2035 3,950,000 38,025 3,988,025 $ 14,040,000 S 8,666,090 $ 22,706,090 S 8,970,000 $ 3,253,665 5 12,223,665 7 7 7 7 7 7 107 PEARLAND ECONOMIC DEVELOPMENT CORPORATION COMBINING SCHEDULE OF GENERAL LONG-TERM DEBT OF e�"1 PEARLAND ECONOMIC DEVELOPMENT CORPORATION BY MATURITY DATE 1 September 30,2010 Sales Tax Revenue Bonds,Series 2005 Sales Tax Revenue Bonds,Series 2006 7 Fiscal Year Principal Interest Total Principal Interest Total 7 2011 $ 400,000 S 368,088 $ 768,088 S 185,000 $ 463,419 $ 648,419 2012 410,000 355,088 765,088 200,000 454,169 654,169 J 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 11 2017 505,000 263,538 768,538 255,000 401,219 656,219 2018 530,000 238,288 768,288 265,000 390,381 655,381 2019 555,000 211,788 766,788 280,000 378,788 658,788 2020 575,000 189,588 764,588 300,000 366,538 666,538 I 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 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 31,238 766,238 405,000 268,088 673,088 2027 1,190,000 247,838 1,437,838 2028 1,255,000 188,338 1,443,338 7 2029 1,320,000 128,725 1,448,725 2030 1,390,000 66,025 1,456,025 S 8,775,000 S 3,491,250 $ 12,266,250 S 9,670,000 S 6,673,588 $ 16,343,588 7 11 7 J 1 7 1 7 I ---i _ I °"1 108 7 7 7 Sales Tax Revenue Bonds,Series 2010 Fiscal Year Principal Interest Total 7 2011 $ 215,000 S 427,670 S 642,670 2012 230,000 448,200 678,200 2013 245,000 434,400 679,400 2014 260,000 419,700 679,700 7 2015 275,000 404,100 679,100 2016 290,000 387,600 677,600 2017 300,000 370,200 670,200 2018 320,000 352,200 672,200 7 2019 340,000 333,000 673,000 2020 355,000 312,600 667,600 2021 375,000 291,300 666,300 2022 400,000 268,800 668,800 2023 420,000 244,800 664,800 7 2024 440,000 219,600 659,600 2025 465,000 193,200 658,200 2026 495,000 165,300 660,300 ' 2027 525,000 135,600 660,600 7 2028 550,000 104,100 654,100 2029 575,000 71,100 646,100 2030 610,000 36,600 646,600 S 7,685,000 S 5,620,070 S 13,305,070 7 7 C . . C 7 7 7 7 7 C 109 7 Pi DEVELOPMENT AUTHORITY OF PEARLAND p'j COMBINING SCHEDULE OF GENERAL LONG-TERM DEBT OF I DEVELOPMENT AUTHORITY OF PEARLAND BY MATURITY DATE September 30,2010 Tax Increment Revenue Bonds,Series 2004 Tax Increment Revenue Bonds,Series 20057 Fiscal Year Ending Principal Interest Total Principal Interest Total 2011 $ 405,000 $ 570,348 $ 975,348 $ 290,000 $ 339,929 $ 629,929 7 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 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 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 f.j 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 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 750,000 227,644 977,644 485,000 125,581 610,5817 2025 790,000 186,806 976,806 510,000 103,150 613,150 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 $ 11,215,000 $ 6,349,326 $ 17,564,326 $ 7,515,000 $ 3,669,439 $ 11,184,439 7 Tax Increment Revenue Bonds,Series 2006 Tax Increment Revenue Bonds,Series 2007 Fiscal Year Ending Principal Interest Total Principal Interest Total �,.j 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 2014 405,000 327,586 732,586 520,000 600,209 1,120,209 72015 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 2018 480,000 258,586 738,586 605,000 514,389 1,119,389 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 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 "1 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 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 7 2028 675,000 29,531 704,531 885,000 194,988 1,079,988 1 2029 3,220,000 152,950 3,372,950 $ 8,935,000 $ 3,961,018 $ 12,896,018 $ 14,875,000 $ 8,374,345 $ 23,249,345 !"1 110 7 7 7 7 7 Tax Increment Revenue Bonds,Series 2009 Fiscal Year Ending Principal Interest Total 7 2011 $ 310,000 $ 431,901 $ 741,901 2012 315,000 422,601 737,601 2013 325,000 412,758 737,758 2014 340,000 400,570 740,570 rill 2015 350,000 387,395 737,395 2016 365,000 371,645 736,645 2017 385,000 354,308 739,308 2018 400,000 336,501 736,501 7 2019 425,000 316,501 741,501 2020 415,000 295,251 710,251 2021 435,000 274,501 709,501 2022 455,000 252,208 707,208 2023 485,000 228,320 713,320 7 2024 510,000 202,251 712,251 2025 535,000 173,681 708,681 2026 565,000 143,374 708,374 2027 600,000 111,169 711,169 7 2028 635,000 76,669 711,669 2029 670,000 39,363 709,363 $ 8,520,000 $ 5,230,967 $ 13,750,967 7 7 7 C 7 L_. 7 7 ill 7 7 7 (This page intentionally left blank.) 112 P P P P P P P P Statistical Section (Unaudited) P P P P P P P 113 1 1 1 I I J 1 (This page intentionally left blank) 1 1 I 7 114 1 I 1 Unaudited Statistical Section L-' This part of the City of Pearland, Texas' comprehensive annual fmancial 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 iM Financial Trends 116 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 - - 126 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 134 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 139 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 - 141 These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. Sources:Unless otherwise noted,the information in these schedules is derived from the comprehensive annual fmancial reports for the relevant year. - 115 CITY OF PEARLAND,TEXAS NET ASSETS BY COMPONENT Last Eight Fiscal Years* Amounts in(000's) (Accrual Basis of Accounting) 2003 2004 2005 2006 2007 Governmental Activities Invested in capital assets,net of related debt $ 418,713 $405,052 $396,619 $402,103 $400,522 Restricted 4,151 6,391 6,862 8,085 10,130 Unrestricted 3,210 6,746 5,785 8,917 11,809 Total governmental activities net assets $ 426,074 $418,189 $409,266 $419,105 $422,461 Business-type activities Invested in capital assets,net of related debt $ 107,472 $113,736 $127,144 $130,648 $126,779 Restricted 7,027 10,129 24,258 Unrestricted 25,749 18,986 552 700 1,638 Total business-type activities net assets $ 133,221 $132,722 $134,723 $141,477 $152,675 Primary government Invested in capital assets $ 526,185 $518,788 $523,763 $532,751 $527,301 Restricted 4,151 6,391 13,889 18,214 34,388 Unrestricted 28,959 25,732 6,337 9,617 13,447 Total primary government net assets $ 559,295 $550,911 $543,989 $560,582 $575,136 *GASB 34 was implemented in fiscal 2003,therefore 10 years of data is unavailable. j 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. 1 1 H 116 2008 2009 2010 $410,002 $429,054 $434;344 10,864 10,615 18,020 10,903 13,330 13,692 $431,769- $452,999 $466,056 $138,679 $146,150 $144,244 16,094 11,965 17,587 3,406 9,256 11,942 $158,179 $167,371 $173,773 $548,681 $575,204 $578,588 26,958 22,580 35,607 14,309 22,586 25,634 $589,948 $620,370 $639,829 LJ n 117 r- CITY OF PEARLAND,TEXAS CHANGES IN NET ASSETS Last Eight Fiscal Years* ,_ Amounts in(000's) (Accrual Basis of Accounting) 2003 2004 2005 2006 2007 -� Expenses Governmental activities General Government $ 6,275 $ 7,314 $ 8,714 $ 8,574 $ 8,660 Public Safety 9,645 10,525 11,857 12,564 14,655 Public Works 25,729 25,913 28,858 26,914 24,041 r<9 Community Services 2,874 2,700 2,939 2,903 3,113 JI Parks and Recreation 4,131 4,882 Interest on long-term debt 4,559 5,549 5,115 6,559 9,070 Total government activities expenses 49,082 52,001 57,483 61,645 64,421 7 Business-type activities: -' Water and Sewer 13,643 19,265 17,624 20,531 21,076 Solid Waste 5,218 Total business-type activities: 13,643 19,265 17,624 20,531 26,294 Total primary government expenses $ 62,725 $ 71,266 $ 75,107 $ 82,176 $ 90,715 riProgram Revenue Governmental activities Charges for services: General Government $ 161 $ 506 $ 185 $ $ Public Safety 1,998 2,975 3,640 2,627 2,788 i Public Works 5,547 6,864 7,221 4,331 195 Community Services 866 696 1,263 6,312 5,822 Parks and Recreation 825 818 Operating grants and contributions General Government 5 2 1,239 1,659 Public Safety 370 839 673 111 154 Public Works 12 456 Community Services 324 17 479 55 34 Parks and Recreation 21 11 Capital grants and contributions J General Government 14 1,319 800 Public Safety 1,618 756 312 Public Works 586 6 15,743 8,690 Parks and Recreation 6 Total governmental activities program revenues 11,501 13,971 14,582 31,270 20,627 Business-type activities: Charges for services Water and Sewer 8,809 11,893 11,219 13,849 17,754 Solid Waste 5,218 Operating grants and contributions Water and Sewer 47 474 385 Capital grants and contributions Water and Sewer 9,882 6,933 8,365 13,434 12,621 Total business-type activities program revenues 18,691 18,873 19,585 27,757 35,978 Total primary government program revenues $ 30,192 $ 32,844 $ 34,167 $ 59,027 $ 56,605 118 7 J 7 7 Page I of 2 7 2008 2009 2010 7 $ 11,161 $ 12,355 $ 13,439 17,684 22,438 24,268 �9 24,532 26,893 23,977 L�, 3,336 3,290 3,323 7,157 7,240 7,699 12,266 11,647 13,738 7 76,136 83,863 86,444 22,570 25,439 27,157 6,024 7,106 7,089 7 28,594 32,545 34,246 $ 104,730 $116,408 $120,690 7 . 7 $ $ $ L_ 2,959 3,524 3,296 103 35 10 7 5,130 4,755 4,312 - 936 672 906 C 3,951 4,913 5,215 230 420 641 551 375 207 • 129 202 159 . 7 115 450 424 7 503 279 98 15,263 26,092 29,800 261 4,653 PI 30,131 46,370 45,068 L 21,524 26,617 24,961 ril6,038 6,766 7,313 L 315 2,464 70 LI 5,869 6,125 8,611 33,746 41,972 40,955 $ 63,877 $ 88,342 $ 86,023 L. 7 119 7 CITY OF PEARLAND,TEXAS CHANGES IN NET ASSETS J Last Eight Fiscal Years* J Amounts in(000's) (Accrual Basis of Accounting) 2003 2004 2005 2006 2007 Net(Expense)/Revenue Governmental activities $ (37,581) $ (38,030) $ (42,901) $ (30,375) $ (43,794) Business-type activities 5,048 (392) 1,961 7,226 9,684 Total primary government net expense $ (32,533) $ (38,422) $ (40,940) $ (23,149) $ (34,110) 7 General Revenues and Other Changes in Net Assets Governmental activities: 7 - Taxes: Property taxes $ 15,120 $ 17,907 $ 19,805 $ 21,845 $ 24,823 Sales and use taxes 6,008 6,933 8,026 9,980 11,025 fl Franchise taxes 2,533 2,883 3,097 3,426 3,760 Investment earnings 171 1,115 1,863 2,991 4,943 Miscellaneous 741 782 828 740 1,539 7Transfers 728 524 359 1,230 1,060 Total governmental activities $ 25,302 $ 30,145 $ 33,978 $ 40,212 $ 47,150 Business-type activities: Investment earnings $ 196 $ 417 $ 399 $ 758 $ 2,574 Miscellaneous Transfers (728) (524) (359) (1,230) (1,060) Total business-type activities (532) (107) 40 (472) 1,514 Total primary government $ 24,770 $ 30,038 $ 34,018 $ 39,740 $ 48,664 Change in Net Assets Governmental activities $ (12,279) $ (7,885) $ (8,923) $ 9,837 $ 3,356 Business-type activities 4,516 (499) 2,001 6,754 11,198 Total primary government $ (7,763) $ (8,384) $ (6,922) $ 16,591 $ 14,554 *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 of depreciation expenses. ri n 1 1 H 120 7 7 Page 2 of 2 [1111_, 2008 2009 2010 $ (46,005) $ (37,493) $ (41,376) 5,152 9,427 6,709 $ (40,853) $ (28,066) $ (34;667) E $ 29,492 $ 31,140 $ 32,963 12,581 14,218 13,578 4,427 5,075 5,426 4,572 1,376 253 2,911 6,294 1,028 1,330 621 1,186 $ 55,313 $ 58,724 $ 54,434 L $ 1,669 $ 363 $ 100 12 23 779 (1,330) (621) (1,186) 351 (235) (307) $ 55,664 $ 58,489 $ 54,127 $ 9,308 $ 21,231 $ 13,058 5,503 9,192 6,402 $ 14,811 $ 30,423 $ 19,460 L r 121 CITY OF PEARLAND,TEXAS FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years Amounts in(000's) (Modified Accrual Basis of Accounting) �1 2001 2002 2003 2004 -1 General fund Reserved $ 472 $ 286 $ 52 $ 70 Unreserved 6,092 4,739 5,310 8,216 r. Total General Fund $ 6,564 $ 5,025 $ 5,362 $ 8,286 All other governmental funds -� Reserved for debt service $ 1,545 $ 2,230 $ 2,130 $ 3,008 Reserved for prepaid items Unreserved,reported in: Special revenue funds 861 877 1,724 2,849 Capital projects funds 3,654 28,494 41,255 46,580 Total other Governmental Funds $ 6,060 $ 31,601 $ 45,109 $ 52,437 T J r1 P-, 122 r 7 7 7 2005 2006 2007 2008 2009 2010 $ 71 $ 636 $ 704 $ 4,879 $ 818 $ 264 8,132 _ 9,961 12,932 8,647 11,401 12,598 7 $ 8,203 $ 10,597 $ 13,636 $ 13,526 $ 12,219 $ 12,862 7 $ 3,855 $ 4,658 $ 6,552 $ 6,835 $ 7,246 $ 6,486 245 7 2,462 3,215 4,546 4,988 4,368 4,235 44,338 53,763 96,542 110,715 62,467 30,893 7 $ 50,655 $ 61,636 $ 107,640 $ 122,538 $ 74,081 $ 41,859 7 7 17 , 7 7 7 Li 7 r: 123 7 .7 I CITY OF PEARLAND,TEXAS CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS fl Last Ten Fiscal Years - 1 Amounts in(000's) (Modified Accrual Basis of Accounting) 2001 ' 2002 2003 2004 Revenues 7 Property taxes $ 10,833 $ 12,858 $ 15,120 $ 17,891 Sales and use taxes 4,863 5,103 6,008 6,933 rn Franchise fees 2,304 2,454 2,533 2,883 Licenses and permits 1,897 2,257 2,682 3,441 Fines and forfeitures 857 845 1,422 1,608 Charges for services 3,203 3,652 3,982 5,260 Investment earnings 649 171 1,115 Intergovernmental 334 9,001 2,398 ' 3,040 Other 1,961 1,584 1,133 1,076 Total Revenues 26,251 38,403 35,451 43,247 --1 Expenditures General government 4,235 16,225 5,852 6,221 J Public safety 6,692 8,303 9,650 10,142 Public works 5,975 7,604 8,770 8,709 Community services 2,662 2,932 2,827 2,904 Parks and recreation Debt service: Principal 1,680 1,920 2,040 3,000 Interest and other charges 1,596 2,374 4,469 5,665 Capital outlay 4,517 12,239 23,568 18,058 Intergovernmental Total Expenditures 27,357 51,598 57,176 54,699 1 Excess of revenues over(under)expenditures (1,106) (13,195) (21,725) (11,452) r Other Financing Sources(Uses) Transfers in 1,023 4,382 1,534 1,431 Transfers out (128) (3,752) (806) (907) Bonds issued 38,550 34,653 184 Capital leases 21,000 Other (1,900) 94 Total other Financing Sources(uses) 895 37,280 35,381 21,803 Net change in fund balances $ (211) $ 24,085 $ 13,655 $ 10,350 7 Debt service as a percentage of noncapital expenditures 14.3% 10.9% 19.4% 23.6% 1 • 1 i 124 r r 7 2005 2006 2007 2008 2009 2010 [I7 $ 19,745 $ 22,150 $ 24,525 $ 29,200 $ 31,349 $ 32,856 8,026 9,980 11,025 12,581 14,218 13,578 3,097 3,426 3,760 4,427 5,075. 5,426 3,864 4,067 4,030 2,992 2,079 1,807 1,935 2,038 2,048 2,086 2,325 2,475 7 6,139 8,734 5,250 7,512 8,885 9,328 1,863 2,991 4,938 4,568 1,375 591 2,382 7,852 14,463 3,731 7,589 3,689 ret 1,172 1,744 1,815 5,638 8,980 983 48,223 62,982 71,854 72,735 81,875 70,732 7 6,750 6,381 6,293 7,388 8,412 8,527 11,081 12,870 14,598 19,604 22,310 23,784 10,450 9,728 6,278 7,536 12,051 7,108 ril 2,747 3,787 3,102 3,426 3,386 3,839 3,358 4,908 6,605 5,789 6,305 7 3,535 3,429 3,228 3,160 5,482 6,200 5,555 6,771 10,197 12,382 12,080 13,635 28,661 36,706 28,530 27,777 68,615 61,317 1,084 1,684 2,169 3,434 3,250 3,794 L 69,862 84,714 79,303 91,312 141,375 134,509 (21,639) (21,732) (7,449) (18,577) (59,500) (63,777) 7. 4,870 5,852 4,596 4,912 3,246 3,498 r (4,510) (4,698) (3,536) (3,582) (2,625) (2,312) L 37,015 41,959 94,559 31,835 8,520 28,962 271 1,568 649 2,050 (15,926) (8,004) (40,695) 200 (54) 7 21,719 35,108 56,492 33,365 9,736 32,198 $ 80 $ 13,376 $ 49,043 $ 14,788 $ (49,764) $ (31,579) 7 22.1% 22.0% 37.6% 33.3% 35.5% 40.4% 7 7 7 125 7 _.1 CITY OF PEARLAND,TEXAS ."I ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last Five Fiscal Years Real Property Fiscal Tax Less Tax Exempt Year Year Residential Commercial Personal Property Real Property 2006 2005 $ 2,689,041,440 $ 1,072,417,312 $ 309,552,190 $ 270,175,010 2007 2006 3,398,952,580 1,234,444,431 378,160,330 307,538,080 2008 2007 4,136,844,130 1,463,969,653 449,453,570 384,651,183 2009 2008 4,535,133,971 1,795,132,850 521,854,047 461,051,494 2010 2009 4,673,324,896 1,762,831,286 632,160,830 484,145,515 +� 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 �ry that was annexed into the City on December 31,2006. _ J Assessed value based on adjusted tax roll at September 30,2010. 1 1 7 1 1 126 1 1 L._ Assessed Value as Less Other a Percent of Exemptions and Total Taxable Total Direct Estimated Actual Actual Taxable Abatements Assessed Value Tax Rate Taxable Value Value $ 224,396,803 $ 3,576,439,129 $ 0.6744 $ 3,576,439,129 100% 291,197,312 4,412,821,949 0.6527 4,412,821,949 100% 275,826,005 5,389,790,165 0.6526 5,389,790,165 100% 486,242,814 5,904,826,560 0.6526 5,904,826,560 100% 315,123,559 6,269,047,937 0.6526 6,269,047,937 100% r r r r 127 • r del CITY OF PEARLAND,TEXAS DIRECT AND OVERLAPPING PROPERTY TAX RATES Last Ten Fiscal Years (rate per$100 of assessed value) City Direct Rates Overlapping Rates a 7 Pearland Pasadena Alvin Harris Independent Independent Independent Alvin Fort Port of County Fiscal M&0 I&S Total School School School Comm Brazoria Bend Harris Houston Flood Year Rate Rate Direct District District District College County County County Authority Control 2001 $ 0.435 $ 0.260 $ 0.695 $ 1.820 $ 0.239 $ 0.400 $ 0.575 $ 0.384 $ 0.018 $ 0.048 7 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 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 1.546 0.238 0.408 0.517 0.400 0.015 0.033 2007 0.299 0.354 0.653 1.662 1.350 1.328 0.220 0.382 0.517 0.402 0.013 0.032 2008 0.250 0.402 0.653 1.427 1.350 1.328 0.210 0.311 0.517 0.392 0.014 0.031 2009 0.220 0.433 0.653 1.419 1.350 1.304 0.200 0.330 0.500 0.391 0.018 0.031 2010 0.220 0.433 0.653 1.419 1.350 1.304 0.200 0.366 0.500 0.392 0.016 0.029 Source:Brazoria County,Harris County,and Fort Bend County Appraisal District. a Overlapping rates are those of local and county governments that apply to property owners within the City of Pearland.Not all 7 ' overlapping rates apply to all Pearland property owners. 1 1 1 7 7 7 1^9 J J 1 1 128 _ J 7 1 7 C rHarris Harris Brazoria/ County County Ft Bend Hospital Dept of MUD MUD MUD MUD MUD MUD MUD MUD MUD MUD District Education No.1 No.6 No.17 No.18 No.19 No.23 No.26 No.28 No.34 No.35 7 $0.190 $ 0.006 $0.750 $0.650 $0.800 0.190 0.006 0.750 0.650 0.800 0.190 0.006 0.750 0.650 0.800 0.850 0.190 0.006 0.750 0.650 0.800 0.850 7 0.190 0.006 0.890 0.750 0.650 0.800 0.850 0.850 0.820 0.850 0.192 0.006 0.850 0.800 0.750 0.640 0.800 0.850 0.850 0.820 0.850 0.192 0.006 0.850 0.720 0.750 0.610 0.780 0.850 0.770 0.820 0.850 0.192 0.006 0.850 0.670 0.730 0.590 0.680 0.850 0.710 0.820 0.850 0.850 0.192 0.006 0.850 0.630 0.630 0.570 0.660 0.820 0.710 0.820 0.850 0.890 70.192 0.060 0.850 0.630 '0.600 0.560 0.630 0.800 0.710 0.820 0.850 1.020 r . . 7 7 r 7 7 7 7 7 7 7 .129 7 mt 1 1 CITY OF PEARLAND,TEXAS PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years r� 7 Fiscal Collected within the _ i Year Taxes Levied Fiscal Year of the Levy Collections Total Collections to Date Ended for the Percentage in Subsequent Percentage r� Sept 30, Fiscal Year Amount of Levy Years Amount of Levy J{ 2001 $ 10,863,316 $ 10,609,654 97.66% $ 237,085 $ 10,846,739 99.8% 2002 12,890,017 12,477,283 96.79% 388,422 12,865,705 99.8% 2003 14,880,007 14,575,297 98.02% 275,606 14,850,903 99.8% - , 2004 18,030,473 17,633,986 98.03% 359,046 17,993,032 99.8% 2005 21,073,788 20,576,812 98.08% 463,553 21,040,365 99.8% 1 2006 24,284,597 23,690,031 97.84% 547,046 24,237,077 99.8% 2007 28,819,229 28,235,276 98.14% 525,845 28,761,121 99.8% 2008 35,035,569 34,461,652 98.36% 488,099 34,949,751 99.8% 7 2009 38,368,354 37,820,603 98.57% 369,095 38,189,698 99.5% i 2010 41,081,407 40,590,543 98.81% 40,590,543 98.8% Source:Brazoria County Tax Office ri Taxes levied based on adjusted tax roll. 7 0.1 1 1 ri 1 1 130 1 7 7 CITY OF PEARLAND,TEXAS PRINCIPAL PROPERTY TAX PAYERS 7 Current Year And Nine Years Ago 7 2010 2001 Percentage Percentage of Total City of Total City Taxable Taxable Taxable Taxable 7 Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Value Rank Value Pearland Town Center LP 75,533,070 1 1.21% 7 Weatherford U.S.,Inc. 58,636,172 2 0.94% 29,100,820 1 1.86% Pearland Investments Ltd 52,997,630 3 0.85% Amreit SPF Shadow Creek,LP 49,613,650 4 0.79% Inland American Shadow Creek,L: 30,000,000 5 0.48% 7 Pearland Lifestyle Center,LP 26,040,041 6 0.42% Centerpoint Energy,Inc. 24,885,690 7 0.40% Inland American Waterford,LTD 24,500,480 8- 0.39% . Walmart Real Estate Bus TR 24,373,700 9 0.39% i Shadow Kirby LTD Partnership 24,278,600 10 0.39% Reliant Energy 14,070,710 2 0.90% 711 Southwestern Bell Telephone 10,758,360 3 0.69% Pearland Enclave Apts.LTD 10,235,020 4 , 0.65% Albertson,Inc. 7,719,520 5 0.49% Aggreko,Inc. 7,649,420 6 0.49% Lowe's Home Centers,Inc. 6,931,600 ' 7 0.44% 7 Home Depot USA,Inc. 6,199,660 8 - 0.40% Continental 34 Fund,LTD 6,044,420 9 0.39% Phillips Petroleum Co 5,998,890 10 0.38% rTotal $ 390,859,033 6.25% $ 104,708,420 6.70% Source:Brazoria County Appraisal District 7 7 7 7 i 7 131 7 CITY OF PEARLAND, TEXAS TAXABLE SALES BY CATEGORY 7 Last Ten Calendar Years (in thousands of dollars) Calendar Year r 2001 2002 2003 2004 Agriculture,Forestry,Fishing $ 1,783 $ 6 $ 13 $ 190 Mining, Quarrying, Oil and Gas 1,222 4,062 4,283 3,738 Utilities Manufacturing 15,648 24,365 27,491 29,200 '--0 Wholesale Trade 13,269 13,248 11,234 13,059 Retail Trade 253,792 240,767 278,527 305,156 Transportation/Warehousing 2,083 50 43 54 j Information 2,323 2,851 3,365 Finance,Insurance 2,940 3,095 3,403 3,505 Real Estate/Rental/Leasing 14,900 14,243 10,722 1 Professional/Scientific/Technical 2,421 2,743 3,516 Management of Companies/Enterprises 2,399 en Admin/Support/Waste Mgmt/Remediation 7,760 10,515 17,880 1 Educational Services 133 195 95 Health Care/Social Assistance 17 14 9el Arts,Entertainment&Recreation 3,990 4,283 4,703 Accommodations&Food Services 43,421 54,331 65,708 Construction 16,902 18,204 14,392 13,288 Other Services (Except Public Admin) 61,834 13,315 14,500 15,108 Other 5,546 2,412 547 Total $ 369,473 $ 397,621 $ 445,474 $ 492,242 City direct sales tax rate b 1.00% 1.00% 1.00% 1.00% rn Source: State Comptroller's Office. a 2010 taxable sales thru 2nd quarter of 2010. b The City direct sales tax rate includes the City only and not the Pearland Economic Development Corp. (4B). r-. C Categories changed in 2007.Re-categorized data only available back to 2002. n n 132 1 7 i 7 n 7 , 7 Calendar Year 2005 2006 2007 2008 2009 . 2010a 7 $ 283 $ 453 $ . 473 $ 675 $ 566 43 2,985 11,186 9,280 10,520 5,134 3,432 7 3 6 6 7 41,057 46,241 50,134 47,447 29,457 18,838 24,070 30,592 28,782 32,999 24,613 13,464 370,665 _ 464,850 .536,352 668,080 701,277 320,050- _. 7 55 155 169 138 161 92 7,203 8,553 10,086 12,567 14,413 7,337 1,811 1,722 1,038 1,469 1,811 751 7. 18,629 33,329 44,560 51,665,529 37,573 19,541 3,538 • 3,893 4,103 5,218 5,923 2,910 2,278 1,161 2,594 7 13,688 8,060 204 .1109,209 12,656 11,666 5,472 110 212 138 78 72 56 63 37 ' 52. 77 7 4,787 5,208 8,789 9,751 9,909 5,448 80,185 95,154 107,850 127,994 145,857 75,697 13,234 18,348 16,232 17,496 14,372 6,729 7 16,921 20,390 20,794 23,764 23,647 11,963 13 2 $ 601,677 $ 748,310 $ 849,188 $ 52,639,153 $ 1,026,574 $ 491,921 7 . 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 7 7 7 7 LI7 133 7 J CITY OF PEARLANI),TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE _1 Last Ten Fiscal Years (dollars in thousands, except per capita) 11 Governmental Activities Business-Type Activities General Certificates Capital Certificates Capital Fiscal Obligation of Obligation Lease Revenue of Obligation Lease Year Bonds Bonds Obligations Bonds Bonds Obligations 7 1 2001 $ 12,610 $ 15,680 $ 75 $ 16,140 $ 17,000 $ 2002 13,335 51,585 25,570 16,925 1 2003 26,880 70,650 34,485 16,835 2004 25,345 90,185 184 33,505 16,735 2005 60,175 72,390 396 32,480 15,8801 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 2009 180,765 82,505 1,479 104,435 12,160 235 2010 193,785 92,380 3,237 116,440 10,540 345 1 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements. *Information not avaialble. - 1 J 7 1 en 134 7 1 Total Percentage Primary of Personal Per Government Income Capita $ 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% 4,126 381,579 13.0% 4,121 416,728 13.3% 4,337 n n r 135 E 1 CITY OF PEARLAND,TEXAS RATIO OF NET GENERAL BONDED DEBT TO ASSESSED j VALUE AND NET BONDED DEBT PER CAPITA Last Ten Fiscal Years (dollars in thousands,except per capita) 7 7 General Less Debt Ratio of Net Percentage Fiscal Tax Obligation Service Net Bonded Bonded Debt to of Personal Per Capita Year Year Bonds Funds Debt Assessed Value Income a a 2001 2000 $ 45,290 $ 1,545 $ 43,745 3.3% 4.1% $ 1,080 2002 2001 81,845 2,230. 79,615 5.1% 7.0% 1,847 • 2003 2002 114,365 2,130 112,235 6.0% 8.0% 2,388 2004 2003 132,265 3,008 129,257 6.3% 8.0% 2,394 fn 2005 2004 148,445 3,855 144,590 6.2% 7.4% 2,308 2006 2005 186,580 4,658 181,922 5.1% 8.9% 2,293 2007 2006 244,945 6,552 238,393 5.4% 9.1% 2,821 2008 2007 273,105 6,552 266,553 4.9% 9.0% 2,995 2009 2008 275,430 7,247 268,183 4.5% 9.1% 2,896 2010 2009 296,705 6,706 289,999 4.6% 9.2% 3,018 r-•• Note:Details regarding the city's outstanding debt can be found in the notes to the financial statements. a Population data can be found in demographic and economic statistics table. *Information not available. 9-1 J 1 ,-, 7 1 136 n 7 CITY OF PEARLAND,TEXAS 7 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT September 30,2010 7 Gross Overlapping Taxing Jurisdiction Debt* Percent Amount 7 Alvin Community College District $17,615,000 21.09% $ 3,715,004 Alvin ISD 332,900,000 27.34% 91,014,860 Brazoria County 66,370,000 22.93% 15,218,641 r_ Brazoria County MUD No. 17 31,115,000 100.00% 31,115,000 Brazoria County MUD No. 18 31,560,000 97.35% 30,723,660 Brazoria County MUD No. 19 38,965,000 100.00% 38,965,000 7 Brazoria County MUD No.23 16,130,000 100.00% 16,130,000 Brazoria County MUD No.26 51,770,000 100.00% 51,770,000 7 Brazoria County MUD No.28 10,660,000 100.00% 10,660,000 Brazoria County MUD No. 34 10,165,000 100.00% 10,165,000 Brazoria County MUD No.35 9,745,000 100.00% 9,745,000 7 Brazoria-Fort Bend County MUD No. 1 55,530,000 100.00% 55,530,000 Fort Bend County 457,230,000 0.16% 731,568 Harris County(a) 2,160,291,628 0.13% 2,808,379 ri: Harris County Dept.of Education 8,160,000 0.13% 10,608 Harris County Flood Control District 102,539,024 0.13% 133,301 Pasadena ISD 434,480,000 0.14% 608,272 7 Pearland ISD 330,192,590 93.85% 309,885,746 Port of Houston Authority 785,949,397 0.13% 1,021,734 7 TOTAL ESTIMATED OVERLAPPING - . 679,951,772 The City $296,705,000 100.00% 296,705,000 CTotal Direct and Estimated Overlapping Debt $ 976,656,772 Population 96,097 7 Per Capita Debt-Direct and Overlapping Debt $ 10,163 C Source: Individual jurisdictions and/or Texas Municipal Reports. *Debt amounts are as of September 30,2010. 7 C 7 7 137 7 1 CITY OF PEARLAND,TEXAS PLEDGED REVENUE COVERAGE Amounts in(000's) Last Ten Fiscal Years Water&Sewer Revenue Bonds7 Net Less: Revenue Debt Service Fiscal Gross Operating Available for 1 Year Revenues Expenses Debt Service Principal Interest Total Coverage 2001 $ 8,727 $ 4,947 $ 3,780 $ 570 $ 760 $ 1,330 2.84 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 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 '1 2008 23,507 14,827 8,680 1,230 4,011 5,241 1.66 1 2009 26,980 12,877 14,103 1,595 4,648 6,243 2.26 2010 25,061 13,585 11,476 2,575 4,848 7,423 1.55 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. 7 1 1 ,..., 7 1 1 ___, 7 138 J 7 _ J 7 CITY OF PEARLAND,TEXAS ! DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS 7 Education Per Capita level in School Fiscal Population Personal Income Personal Median Years of Enrollment Unemployment Year (A) (in$000's) Income(B) Age(B) Schooling (C) Rate(D) 7 2061 40,500 $ 1,065,393 $ 26,306 34.0 14.3 10,618 3.6% 2002 43,103 1,133,868 26,306 34.0. 14.3 11•,723 4.3% 2003 47,000 1,400,741 29,803 35.1 14.3 12,708 - 4.7% El 2004 54,000 1,609,362 29,803 35.1 14.3 13,600 4.5% 2005 62,634 1,951,801 31,162 35.5 14.3 15,023 4.6% 7 2006 79,322 2,050,394 25,849 33.4 14.3 16,629 3.6% _ 2007 84,500 2,631,837 , 31,146 34.9- 14.3 17,733 3.6% _ 2008 89,000 2,963,255 33,295 35.8 14.3 18,439 3.8% 7 2009 92,600 2,941,717 31,768 34.5 14.2 20,056 6.5% 2010 96,097 3,142,063 32,697 33.4 14.2 21,269 6.9% 7, (A)Estimated (B) Pearland Economic Development Corporation (C)Texas Education Agency 7 (D) Bureau of Labor Statistics *Information not presented is not avaialble. 7 , L..! , 7 7 7 7 139 7 7 1 CITY OF PEARLAND,TEXAS PRINCIPAL EMPLOYERS Current Year and Five Yeats Ago 2010 2005 7 Percentage Percentage of Total City of Total City e� Employer Employees Rank Employment Employees Rank Employment JI PearlandlSD 2,274 1 4.99% 1,820 1 7.26% Wal-Mart 800 2 1.75% 800 2 3.19% 1 City of Pearland 601 3 1.32% 420 3 1.71% Kemlon 325 4 0.71% 185 6 0.74% Bass Pro Shop 300 5 0.66% Packaging Service Co,Inc. 235 6 0.52% Home Depot - 225 7 0.49% TurboCare 180 8 0.39% 175 7 0.70% Weatherford 175 9 0.38% 250 4 1.00% Profax 160 10 0.35% Randall's 250 5 1.00% Super Target 150 8 0.60% Tele-flow 140 9 0.56% Lowes 132 10 0.53% Total 5,275 11.57% 4,446 17.73% Source:Pearland Economic Development Corp. 7 Note:Information for the period nine years ago is not readily available. r� I 1 I 1 1 1 1 1 140 1 1 n CITY OF PEARLAND,TEXAS FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Last Ten Fiscal Years Full-time Equivalent Employees as of Sept 30 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Function/Program Governmental Activities General Government 34 37 45 41 42 49 51 55 55 57 Public Safety 113 132 132 160 170 184 205 242 253 264 Public Works 30 32 41 42 43 44 47 45 47 47 Community Services 22 26 34 37 41 47 50 51 52 47 Parks and Recreation 47 50 52 55 58 52 59 68 72 99 Business Type Activities Water&Sewer 49 51 56 62 62 76 78 77 82 82 Component Unit Economic Development 4 4 4 4 4 4 4 5 5 6 Total 299 332 364 401 420. 456 494 . 543 564 601 Source: City Budget n r r E. 141 7 CITY OF PEARLAND,TEXAS 7OPERATING INDICATORS BY FUNCTION/PROGRAM Last Eight Fiscal Years Fiscal Year 2003 2004 2005 2006 2007 Function/Program GENERAL GOVERNMENT `� Finance J Number of purchase orders 3,953 3,667 3,183 3,085 3,475 Number of budget transfers 61 82 117 226 194 Number of invoices paid N/A N/A 21,180 22,438 22,279 Average number of employees paid per month 764 848 930 984 1,026 Human Resources Number of hires 69 58 77 95 97 Number of interviews conducted 320 292 333 360 449 Number of applications received 2,318 2,541 3,138 2,808 3,074 Legal Number of resolutions and ordinances prepared 261 268 234 295 269 Information Technology Average monthly service requests 275 300 350 370 486 Number of PC's supported 175 185 205 220 354 PUBLIC SAFETY 91 Police Number of police calls resulting in dispatch 23,706 25,849 27,443 30,496 32,747 - Total police arrests made 4,234 4,222 3,753 4,809 5,0537 Dispatched calls per patrol officer 677 680 704 555 544 Commercial vehicles equipment violations 991 1,104 1,015 1,069 980 UCR Part I cases assigned 398 398 418 366 371 Fire Total number of arson incidents 8 6 4 11 21 Fires investigated 33 71 70 120 96 Total annual inspections 300 1,059 965 1,307 2,333 Total calls for service 644 889 1,168 1,188 1,202 EMS Total calls for service N/A 3,297 3,941 4,290 5,372 Patients treated 2,858 3,124 3,848 4,048 4,983 en PUBLIC WORKS Fleet Maintenance Fleet maintenance jobs completed 3,593 3,850 3,950 4,778 4,686 Preventative maintenance performed 1,348 1,501 2,251 1,815 1,889 Other Public Works Fuel issued(gallons) 143,686 183,000 220,000 303,930 318,587 r°1 Street sweeping(miles) 145 790 790 790 583 11 Street signs maintained/replaced 865 758 1,170 1,725 1,404 Total work orders completed 15,463 16,888 19,327 21,181 19,961 1 142 1 Page 1 of 2 2008 2009 2010 r 3,552 3,264 2,913 398 406 470 23,434 23,259 21,632 1,185 1,230 1,220 109 90 91 353 431 532 2,495 3,137 3,880 293 266 229 616 649 734 386 394 429 34,865 37,440 35,676 4,424 5,188 5,986 • - 592 576 513 860 711 672 349 629 2,003 9 8 5 28 33 22 • 2,677 2,374 1,752 2,215 2,432 2,416 6,029 6,411 6,472 5,529 5,804 5,619 4,153 3,063 2,394. 1,756 1,998 1,741 ri343,865 313,596 354,422 2,324 2,561 2,239 1,288 2,864 2,049 18,723 20,213 18,632 143 r CITY OF PEARLAND,TEXAS OPERATING INDICATORS BY FUNCTION/PROGRAM fl Last Eight Fiscal Years Fiscal Year 2003 2004 2005 2006 2007 PARKS AND RECREATION All Parks and recreation • ROW maintained-acres 760 N/A N/A 478 385 '"1 Trees maintained-acres N/A N/A 3,450 3,450 4,280 _ i Acres of city property mowed N/A N/A N/A 167 439 Total number of parkwork orders received N/A N/A N/A 227 361 Parkland-acres N/A N/A N/A 175 175 Total number of special events held 24 23 24 20 25 Total number of tournaments held N/A N/A N/A 19 25 Number of recreation classes offered N/A 632 1,170 1,189 1,222 Average monthly attendance(all locations) 2,543 5,211 5,977 6,723 7,988 COMMUNITY SERVICES Animal Control Number of animals at shelter 2,357 1,834 2,228 2,898 3,068 Total number of calls for service 3,721 3,535 5,443 4,600 6,099 7 Inspection Services 1 Total building inspections 35,007 44,973 53,924 36,724 31,004 Total code violation cases 5,242 3,687 2,792 2,739 3,962 Total permits issued 11,515 13,738 15,289 14,889 13,769 Number of plans reviewed 2,136 2,482 3,026 2,682 3,055 Municipal Court Number of trials 1,667 2,195 2,800 1,952 2,305 Number of charges 24,494 20,964 18,275 22,185 20,481 Warrants cleared N/A N/A N/A N/A 3,596 WATER&SEWER Distribution and Collection Fire hydrant maintenance and inspections 1,730 1,730 1,967 99* 537 �1 Backed up sewer repairs 313 261 278 251 330 Water mains repaired 29 37 71 129 108 Water Production Water produced-wells (in millions of gallons) 1,465 1,850 1,925 2,044 1,597 Surface Water Purchased • (in millions of gallons) 118 280 683 967 1,121 Billing&Collections Annual meter reads N/A N/A 211,956 234,875 285,930 Number of bills 146,055 N/A 192,014 248,848 293,833 Wastewater Treatment Wastewater treated (in millions of gallons) 1,467 1,386 1,398 1,668 2,305 Sources:Various city departments. *In Water&Sewer,Distribution and Collection fire hydrant maintenance and inspections is contracted out. During FY06,the contractor's services were disrupted by a storm. 144 [414, page 2 0f 2 2008 2009 2010 . 210 228 245 5,000 5,004 5,800 470 851 1,301 316 275 252 { 180 138 139 E� 25 25 24 9 6 9 1,083 855 307 7,607 3,623 11,823 2,947 2,868 2,532 • 4,296 3,529 4,206 34,773 24,834 21,753 3,629 4,274 3,433 9,878 9,249 7,874 1,309 925 969 711 1,616 _ 1,391 402 19,666 24,400 325 6,402 7,374 82 740 451 402 393 270 325 160 168 82 2,128 2,574 3,065 1,147 1,146 634 325,471 340,281 344,618 318,160 325,201 336,668 • 2,096 2,106 2,361 145 7 CITY OF PEARLAND,TEXAS CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM 71 Last Six Fiscal Years J Fiscal Year 2005 2006 2007 2008 2009 2010 7 Function/Program PUBLIC SAFETY Police I Police stations 1 1 1 1 1 1 J Police vehicles 109 112 117 126 130 138 Fire 7 Fire stations 4 4 4 4 4 4 1 Fire vehicles 15 16 16 17 17 17 EMS r9 EMS Stations 3 3 3 3 3 3 EMS Ambulances 5 5 5 6 8 8 7 PUBLIC WORKS Other public works Streets(miles)* 248 578 758 773 807 807 Streetlights 3,494 3,563 5,294 5,479 5,479 5,479 Traffic signals 47 48 57 67 71 80 , PARKS AND RECREATION fl Parks and recreation Developed acreage** 124 175 175 180 138 139 Pools 1 1 1 1 1 3 7Outdoor basketball courts N/A 10 10 10 10 10 Soccer fields N/A 12 12 12 12 12 Activity buildings 3 3 3 3 3 4 Baseball/Softball Fields 4 4' 4 4 4 4 r I i WATER AND SEWER Water Production Water wells 9 9 10 11 11 11 Pumping stations 2 2 2 2 2 3 Ground.storage tanks 13 15 15 15 15 15 7 Elevated towers 4 5 5 5 5 6 Wastewater Treatment Plants 4 4 5 5 5 5 Lift Stations 78 74 78 76 78 78 Distribution and Collection Water mains(miles) 296 361 395 410 420 433 Sanitary sewers(miles) 279 321 353 360 370 378 7 Sources:Various city departments. Note:No capital asset indicators are available for the general government and community services functions. r 'Inside city limits. Prior to FY07,street miles were measured visually. Beginning FY07,a GIS system was used to measure street miles. . **Prior to 2009,Parkland acres included medians and Wastewater Treatment Plants. 1460-1 H