RTIRZ-2011-05 - 2011-06-13RESOLUTION NO. RTIRZ- 2011 -05
A RESOLUTION OF THE TAX INCREMENT REINVESTMENT
ZONE NO. 2 (TIRZ), ACCEPTING THE 2010 ANNUAL
FINANCIAL REPORT FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 2010.
BE IT RESOLVED BY TIRZ BOARD OF DIRECTORS:
Section 1. That the Tax Increment Reinvestment Zone No. 2 hereby
accepts the Fiscal Year 2010 Annual Financial Report as prepared by the
accounting firm of Null Lairson, L.L.P.
ATTEST:
PASSED, APPROVED, AND ADOPTED this 13 day of June, A.D., 2011.
MIKE YBUR
TIRZ NO. 2 SECRETARY
NNETH R. PHILLI
TIRZ NO. 2 CHAIR
AGENDA REQUEST
TAX INCREMENT REINVESTMENT ZONE NO. 2
PEARLAND, TEXAS
AGENDA OF: 6/13/2011
ITEM NO.: RTIRZ-2011-05
DATE SUBMITTED: 05/11/2011
REPRESENTING: City of Pearland
PREPARED BY: Rick Overgaard
PRESENTOR: Claire Bogard
SUBJECT: Fiscal Year 2010 Audit
EXHIBITS: Financial Statements,
Auditors Opinion
EXPENDITURE REQUIRED: None
PROJECT: N/A
EXECUTIVE SUMMARY
Pursuant to State law, a municipality shall have its records and accounts audited
annually and shall have an annual financial statement prepared based on the audit.
The TIRZ No. 2, which is considered a component unit of the primary government, was
included in the audit for the fiscal year ended September 30, 2010.
Attached is the auditor's opinion, which is unqualified or clean, as well as the
statements pertaining to the TIRZ. Staff will be prepared to review the results with the
board.
RECOMMENDED ACTION
Consideration and approval of the resolution accepting the TIRZ No. 2 Fiscal Year 2010
Annual Financial Report as prepared by the accounting firm of Null-Lairson, L.L.P.
Revised 2007-01-09
CITY OF PEARLAND, TEXAS
COMBINING STATEMENT OF NET ASSETS
DISCRETELY PRESENTED COMPONENT UNITS - GOVERNMENTAL ACTIVITIES
September 30, 2010
Pearland
Economic
Tax Increment
Development
Total
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
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
accumulated depreciation
7,326,790
7,326,790
Total Assets
17,090,763
6,888,038
10,617,103
34,595,904
Liabilities
Accounts payable and accrued
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
Restricted - debt service 567,059 2,559,497 3,126,556
Unrestricted (9,981,533) 6,884,573 (42,846,762) (45,943,722)
Total Net Assets $ (9,414,474) $ 6,884,573 $ (40,287,265) $ (42,817,166)
30
CITY OF PEARLAND, TEXAS
COMBINING STATEMENT OFACTIVITIE4
DISCRETELY PRESENTED COMPONENT UNITS - GOVERNMENTAL ACTIVITIES
For the Year Ended September 30, 2010
Net (Expense) and Changes In Net Assets
Economic
Tax Increment
Development
Development
Reinvestment
Authority of
FunetionsMrograms
Expenses
Corporation
Zone#2
Pearland
Totals
Component Units:
Pearland Economic
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)
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)
General Revenues:
Taxes;
Property taxes $
Sales and use tax 6,493,220
Other
$ 17,590,983 $ $ 17,590,983
6,493,220
Unrestricted investment earnings
16,964
15,770
10,259
42,993
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
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)
See Notes to Financial Statements.
31
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS (continued)
Note 3 - Receivables (continued)
Component Units:
Pearland
Tax Increment
Economic
Reinvestment Development
Development
Zone Authority of
Corporation
Developments Pearland
Total
Receivables
Sales and other taxes
$ 1,140,486
$ $
$ 1,140,486
Interest
24,953
24,953
Other
15,780
128,041
143,821
Total
$ 1,181,219
$ 128,041 $
$ 1,309,260
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:
Delinquent property taxes receivable - general fund
Delinquent property taxes receivable - debt service fund
Lease revenues -principal
Municipal fines and forfeitures
Lease interest revenues
Grants and revenues prior to meeting all eligibility requirements
Total Deferred Revenue for Governmental Funds
Property Taxes
Unavailable
$ 557,479
760,405
8,088,912
722,035
Unearned
2,789,048
412,582
$ 10,128,831 $ 3,201,630
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
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
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.
43
CITY OF PEARLAND, TEXAS
DISCRETELY PRESENTED COMPONENT UNITS
BALANCE SHEETS - GOVERNMENTAL FUNDS
September 30, 2010
Pearland
Economic
Tax Increment
Development
Total
Development
Reinvestment
Authority of
Component
Corporation
Zone #2
Pearland
Units
Assets
Cash and equivalents
$ 2,597,379
$ 6,759,997
$ 4,784,398
$ 14,141,774
Investments
2,027,982
2,027,982
Receivables -less allowance for
uncolIectibles
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
Customer 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
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)
Less interest payable
(98,195)
(189,996)
(288,191)
Net Assets
$ (9,414,474) $
6,884,573 $ (40,287,265)
$ 42,817,166)
94
CITY OF PEARLAND, TEXAS
DIS'CRETELYPRESENTED COMPONENT UNITS
STATEMENT OF REYENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCE- GOVERNMENTAL FUNDS
For the Year Ended September 30, 2010
Pearland
Economic
Tax Increment
Development
Total
Development
Reinvestment
Authority of
Component
Corporation
Zone #2
Pearland
Units
Revenues
Taxes:
Property taxes
$
$ 17,590,983
S
$17,590,983
Sales and use taxes
6,493,220
6,493,220
Investment earnings
16,964
15,770
10,259
42,993
Other
248,268
248,268
Total Revenues
6,758,452
17,606,753
10,259
24,375,464
Expenditures
Current:
General government
11,034
11,034
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
Interest
920,566
2,453,020
3,373,586
Bond issuance cost
84,465
2,500
86,965
Intergovernmental - City
439,635
439,635
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
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
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
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
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)
Changes in interest payable
54,497
5,414
59,911
Less changes in other long-term liabilities (7,685,000) (7,685,000)
Add premium/discount on bonds
Less post -employment benefit
liability expense (16,825) (16,825)
Less issuance ofrevenue bonds
Add capital outlay 3,304,259 3,304,259
Changes in Net Assets $ 1,605,394 $ (1,Q76,844) $ 4,309,171 $ 4,837,721
M
/,TLNu11-Lairson P.C.
JiTIFIFDPUBLICACC0IIK(ANiS
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
www.nuti-lairson.com
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.
Null-Lairson, P.C,
Houston, Texas
February 21, 2011