HomeMy WebLinkAboutR-2013-048-2013-03-25RESOLUTION NO. R2013-48
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND,
TEXAS, ACCEPTING THE CITY'S COMPREHENSIVE ANNUAL
FINANCIAL REPORT FOR FISCAL YEAR 2012 AS PREPARED BY THE
ACCOUNTING FIRM OF WHITLEY PENN.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That certain comprehensive annual financial report as prepared by
Whitley Penn, a copy of which is attached hereto as Exhibit "A" and made a part hereof for
all purposes, is hereby authorized and approved.
Section 2. That the City Council accepts the City's comprehensive annual
financial report.
PASSED, APPROVED and ADOPTED this the 25th day of March, A.D., 2013.
TOM REID
MAYOR
ATTEST:
APPROVED AS TO FORM:
DARRIN M. COKER
CITY ATTORNEY
■■
whitleypenn
Independent Auditors' Report
To the Honorable Mayor and Members of
the City Council
City of Pearland, Texas
EXHIBIT "A"
Resolution No. 2013-48
Houston Office
3411 Richmond Avenue
Suite 500
Houston, Texas 77046
713.621.1515 Main
whitleypenn.com
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, 2012, 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, 2012, 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 March 11,
2013, 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 15, and budgetary comparison, required pension system, and
other post -employment benefits on pages 68 through 70 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.
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An Independent
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NEXIA
INTERNATIONAL
To the Honorable Mayor and Members of
the City Council
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
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.
Wh+JOE7 L.
March 11, 2013
2
CITY OF PEARLAND, TEXAS
Ago
For
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COMPREHENSIVE ANNUAL
FINANCIAL REPORT
Fiscal Year Ended
September 30, 2012
Officials Issuing Report
Bill Eisen Jon Branson Mickiel Hodge Claire Bogard Rick Overgaard
City Manager Assistant City Assistant City Director of Finance Assistant Director
Manager Manager of Finance
CITY OF PEARLAND,TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
Page
Introductory Section
Letter of Transmittal
Principal Officials xii
Organizational Chart xiii
GFOA Certificate of Achievement xiv
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 68
Notes To Required Supplementary Budget Information 69
Required Pension System and Other Post Retirement Benefit Supplementary
Information 70
CITY OF PEARLAND,TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS(Continued)
Financial Section(Continued) Page
Other Supplementary Information:
Combining and Individual Fund Statements and Schedules
Combining Balance Sheet-Non-Major Governmental Funds 76
Combining Statement of Revenues,Expenditures,and Changes in Fund Balances-
Non-Major Governmental Funds 80
Schedules of Revenues, Expenditures,and Changes in Fund Balance-Budget
and Actual:
Debt Service Fund 84
Hotel/Motel Tax Fund 85
Court Security Fund 86
City-Wide Donations Fund 87
Court Technology Fund 88
Regional Detention Fund 89
Park Donations Fund 90
Police Seizure Fund 91
Parks and Recreation Development Fund 92
Sidewalk Fund 93
Grant Fund 94
Traffic Impact Improvements 95
Juvenile Management Fund 96
Educational TV Fund 97
UofHFund 98
Discretely Presented Component Units Fund Based Financial Statements:
Balance Sheets-Governmental Funds 100
Statement of Revenues, Expenditures and Changes in Fund Balance-
Governmental Funds 101
Long-Term Debt Amortization Schedules:
Combining Schedule of Governmental Activity Long-Term Debt 104
Combining Schedule of Enterprise Fund Long-Term Debt 110
Combining Schedule of General Long-Term Debt of Pearland Economic
Development Corporation 114
Combining Schedule of General Long-Term Debt of Development Authority of
Pearland 116
CITY OF PEARLAND,TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS(Continued)
Statistical Section(Unaudited) Page
Net Assets by Component 120
Changes in Net Assets 122
Fund Balances of Governmental Funds 126
Changes in Fund Balances of Governmental Funds 128
Assessed Value and Estimated Actual Value of Taxable Property 130
Direct and Overlapping Property Tax Rates 132
Property Tax Levies and Collections 134
Principal Property Taxpayers 135
Taxable Sales by Category 136
Outstanding Debt by Type 138
Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capita 140
Direct and Overlapping Governmental Activities Debt 141
Pledged Revenue Coverage 142
Demographic and Economic Statistics 143
Principal Employers 144
Full-time Equivalent City Government Employees by Function/Program 145
Operating Indicators by Function/Program 146
Capital Asset Statistics by Function/Program 150
(This page intentionally left blank.)
f r"`
T F. X A S
March 11, 2013
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, 2012, 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.
Whitley Penn, LLP, Certified Public Accountants, have issued an unqualified (or"clean") opinion on the
City of Pearland's financial statements for the year ended September 30,2012. The independent auditor's
report is located at the front of the financial section of this report.
Management's discussion and analysis (MD&A) immediately follows the independent auditor's report
and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A
complements this letter of transmittal and should be read in conjunction with it.
PROFILE OF THE GOVERNMENT
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 99,800
residents estimated as of September 2012.
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
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 are limited to two
full consecutive terms of office and there is no limitation on the office of Mayor. The City Manager is
appointed by Council and is responsible for implementation of Council policy, execution of the laws, and
all day-to-day operations of the City.
A full range of municipal services is provided by the City of Pearland including public safety(police,fire,
and emergency medical services); solid waste; water and wastewater utilities; public improvements;
repair and maintenance of infrastructure; recreational and community activities; and general
administrative services. In addition, the City provides planning for future land use, traffic control,
building 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
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 voters of 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 TIRZ#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.
ii
To the Honorable Mayor,Members
of City Council,and Citizens of the
City of Pearland, Texas
The total of all new construction permitted during calendar year 2012 totaled over $254.0 million, a
14.3% increase in value from 2011. New single-family housing permits totaled 951 with a construction
value of $192 million. This is 260 permits and $58.0 million more than 2011; however Pearland's
economy continues to grow at a respectable pace, faring better than the rest of the nation. Residential
permitting activity is anticipated to increase for fiscal year 2013,budgeted at 1,142 permits. For calendar
year 2012,the City had 77 commercial permits with a value of$62 million, compared to 42 permits with
a value of$23 million in 2011. In addition, one multi-family development was permitted with a value of
$19.6 million. The downward trend on the commercial real estate market has turned upward and
strengthened.
Sales of homes throughout the greater Houston area remained strong in 2012, driven by a combination of
good local job numbers and historically low interest rates. The Houston Association of Realtors reported
62,229 single family home sales for 2012, up 16.1% from the 53,606 sales in 2011. Indications are that
the Houston area will continue to have a healthy market with a balanced supply of housing inventory and
strong pricing—conditions that put Houston in an enviable position compared to other markets around the
Country. For fiscal year 2012, Pearland had 696 foreclosure filings, down from the 800 in fiscal year
2011, but still higher than the 588 we saw in fiscal year 2009. These filings also include areas in the ETJ
with a Pearland address, but the number of filings only represents less than 3% of total households in
Pearland. The decrease in foreclosures is another sign that the economy has turned around.
Houston is the world's energy capital, and much of the recovery is from the oil and gas industry. During
the recession the exploration sector lost 1,200 jobs, but added 8,100 in the recovery. Oil field services lost
9,700 jobs and have since recouped 9,500. Much of this growth is from hydraulic fracturing and much of
it from the South Texas Eagle Ford Shale oil and gas reserves. The Eagle Ford produced 844 barrels of
crude per day in 2009; in August of 2012 it produced 297,079 per day. With the high price of oil, and the
South Texas Eagle Ford Shale oil and gas reserves, it is forecasted that this trend will continue keeping
the Houston oil industry busy for the next 20 years.
Pearland's unemployment rate was 5.2% in September 2012, down from 6.7% in September 2011. This
is compared to the national unemployment rate of 8.0% and the State of Texas unemployment rate of
7.5% as of September 2012. Pearland's unemployment is less than the national and state rates with the
economy turning around. Texas has been recognized by business publications as having the best business
climate in the country. Houston's economy will continue to grow next year, adding more jobs in 2013
than in 2012. The Greater Houston Partnership forecasts the region to add 76,000 jobs in 2013. The
Houston area is built on businesses, on jobs, and on economic opportunities. Pearland is poised to take
advantage of those opportunities.
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.
iii
To the Honorable Mayor,Members
of City Council,and Citizens of the
City of Pearland,Texas
Kelsey-Seybold, a major healthcare organization of 370 physicians, is building a new 170,000 square
foot, four story corporate headquarters on an 18 acre site in Shadow Creek Ranch, which will be home to
approximately 750 employees. The facility will be next to the Shadow Creek Business Center, an 80,000
square foot office building built in 2009, and Hospital Corporation of America's (HCA) 78,000 square
foot medical office building. Merit Medical Systems, a global medical device company, is building on a
12 acre site, a 120,000 square foot facility for research and development and manufacturing. Merit
Medical is expected to employ 220 employees at the Pearland facility. Ref Chem, an oil and gas service
company is constructing a 39,000 square foot regional headquarters on Beltway 8 that will employ 100
people.
Sales tax for fiscal year 2012 totaled $22.0 million, an increase of$2.2 million or 11.3% over fiscal year
2011. 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 in 2010 and
2011. The economy, however, has turned around, which should translate to higher consumer confidence.
As such,the City projected a 5.4%growth in sales tax in the fiscal year 2013 operating budget.
Long-Term Financial Planning
The City adopts a one-year operating 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 2013 through fiscal year 2017 totals $346 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 slower economy in 2008-2011. Projects include Drainage
($24M), Streets ($149M), Facilities ($24M), Parks ($35M), Water and Wastewater($114M). 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 that are unfunded will be identifying projects for a new bond referendum.
The Debt Service Fund forecast projects a need to increase the Debt Service component of the tax rate to
$0.5250 by fiscal year 2015 to implement the Five-Year CIP. The debt service component of the tax rate
for FY 2013 increased $0.02 to $0.4900, which is 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 or 2012, however, the model
anticipates rate increases for 2015 and 2016. The City's utility system continues to be self-supporting and
financially sound.
iv
To the Honorable Mayor,Members
of City Council, and Citizens of the
City of Pearland, Texas
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, last amended in September 2011. 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. Pearland was recently rated as one of the safest Cities in the United States ranking number 48
in the nation. Pearland was one of two Cities in the Houston area in the top 50. 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.
For more than a decade, the City of Pearland public safety departments have been subscribers to an 800
MHZ trunked radio system provided by Harris County. This system was originally designed for mobile
radios in vehicles and at a time when the western half of Pearland was sparsely populated. COP public
safety departments have experienced significant radio reception difficulties creating safety issues for the
City. Harris County is not able to improve radio coverage in west Pearland, and to switch to the digital
version of the Harris County system is costly and would not guarantee improved radio coverage. The
City of Houston has recently established a $130 million dollar 700 MHz trunked radio system designed
for in-building coverage using portable radios. After radio testing and research, the City of Pearland
would be switching to the City of Houston's radio system with tremendous improvements in coverage
improving public safety for employees and citizens of Pearland, and at a lesser cost than creating a new
radio system or staying as a subscriber to the current radio system.
V
To the Honorable Mayor,Members
of City Council,and Citizens of the
City of Pearland,Texas
The City of Pearland Police Department communications division currently provides dispatch services for
the city's Police, Fire, and EMS departments. Due to the rapid population growth and increased demands
for service in the City, it has become apparent that the Police communications division workload is
unsustainable. As an alternative to hiring more dispatchers, the City has contracted with Harris County
Emergency Corps for the provision of Fire Department and EMS dispatch services. In addition to the
cost savings of not having to hire additional employees, the contracted dispatch center brings added
capabilities to the Fire and EMS departments. By utilizing personnel specifically trained and certified for
the Fire and EMS dispatch role, as well as employing a Computer Aided Dispatch system specifically
configured for Fire and EMS dispatching, this arrangement will contribute to better deployment and
utilization of resources.
Brazoria County MUD's 21 and 22 in cooperation with Friendswood Development have constructed Fire
Station 6 in the City's ETJ, which opened in 2012. This station is staffed and operated by Pearland
Volunteer Firefighters with the MUD's bearing the cost of operations, pursuant to a Strategic Partnership
Agreement. This will greatly enhance response times in the City's southwestern ETJ,where development
continues.
The City is also currently designing the reconstruction of Fire Station#3 on the eastern edge of the City to
accommodate 24/7 fire and EMS crews, improving response times to that area of the City.
Economic Development
The Pearland Economic Development Corporation(PEDC) is a Type B non-profit corporation under the
Texas Development Corporation Act that utilizes a half cent sales tax collected in the City to carry out
economic development activities. The Corporation assists new and existing businesses that create new
jobs and capital investment. The Corporation works with the City to utilize various tools such as tax
abatement and the authority granted the City under Chapter 380 of the Local Government Code to
encourage new jobs and investment in the community.
PEDC celebrated the successful recruitment of Ref-Chem, L.P. to our community and kicked off their
construction with a groundbreaking ceremony in June for the engineering, construction and maintenance
firm's new office building. Ref-Chem L.P. is an Odessa, Texas based heavy industrial construction,
engineering, EPC and maintenance organization with an annual sales volume of over $100 million. Ref-
Chem's new office building will be located on an 11-acre site at Beltway 8 and Tom Bass Parkway. The
three-story facility will be 39,000 square feet with space for a staff of approximately 100 employees,
including management personnel, engineers,designers and administrative staff.
PEDC assisted Hatch Mott MacDonald, a leading North American engineering and environmental
consulting firm, in expanding and relocating its Pearland office to a new location in late 2012. HMM was
previously located at 2950 Cullen Parkway and moved to its new location on the fourth floor of the
Shadow Creek Business Center at 11233 Shadow Creek Parkway in mid-November. The new 20,000
square-foot Pearland office, which serves as headquarters to HMM's Pipeline Division and Houston
Subdivision, houses HMM's current 70 local employees, with room for up to 30 additional employees.
These two projects are in addition to KS Management Services and Merit Medical previously mentioned.
vi
To the Honorable Mayor,Members
of City Council, and Citizens of the
City of Pearland,Texas
In 2012, the PEDC, along with local partners in government, education, healthcare and business,
embarked upon a long-term strategic community and economic development planning process in order to
create a shared vision for the community's future growth and an action plan to achieve it. The strategic
plan process is being headed by a steering committee comprised of 23 community leaders in government,
education,healthcare and local business. At the end of the process,Pearland will have a consensus-based,
achievable roadmap to guide the community's path to short and long-term economic growth. The final
plan will be released in April of 2013.
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.
Land Use Plan/Annexation
Land use planning seeks to order and regulate the use of land in an efficient 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.
PEDC and the City of Pearland, in partnership with Gateway Planning, finalized a market-based master
plan and implementation strategy for the area formerly known as the Spectrum District that leverages the
area's unique location (the southwest corner of Beltway 8 and SH 288) and creates a de facto "master
development" context. The area is planned to be a regional employment center with destination mixed
use urban living,and concentrated retail/entertainment areas.
The key issues addressed by the plan include drainage, transportation access, linkages, and transit;
revision of the existing zoning and development standards; incorporating new development with existing
uses; involving the existing municipal management districts; and incorporating public parks and open
spaces.
The master plan and associated regulatory recommendation of a form-based code envisions a market-
based approach and identifies different "character zones" of development, each implementing a unique
neighborhood within the Lower Kirby Urban Center. This form-based code is combined with the overall
infrastructure strategy that identifies the major regional drainage and roadway improvements needed to
bring the plan together. This master plan and implementation strategy for Lower Kirby ensure that the
vision for the mixed use regional destination is feasible, but flexible to address changing market
conditions. In order to implement this vibrant vision for the Lower Kirby Urban Center, PEDC is
working with the City of Pearland and the two area Municipal Management District Boards to create a
coordinated action plan that identifies the responsibilities and roles of each of the entities.
The City's annexation of Brazoria County MUD#4 occurred December 31, 2012, pursuant to a Strategic
Partnership Agreement between the City and MUD. Brazoria County MUD #4 encompasses
approximately 600 acres and has an estimated population of 3,100. Upon annexation all assets and
obligations of the MUD transferred to the City.
vii
To the Honorable Mayor,Members
of City Council,and Citizens of the
City of Pearland, Texas
In January 2013, City Council voted to incorporate the Grand Avenue Master Plan into the City's
Comprehensive Plan. The plan is designed to facilitate future development of Grand Avenue as a focal
point for the Oldtown Site while also responding to existing growth patterns in the city. A primary
initiative for this plan is to reinvent the Oldtown Site as a modern village with a compatible mix of
residential and non-residential uses. The Plan recommends adopting form based codes that would be used
to ensure buildings and streets are coordinated in a manner that is attractive to pedestrians and encourages
outdoor activities. Using form based codes allows for more flexibility and a mix of uses as compared to
traditional zoning used throughout the city.
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 2013 — 2017 totals $346 million.
Projects include Drainage ($24M), Streets ($151M), Facilities ($23M), Parks ($36M), Water and
Wastewater($112M).
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
Road from Plum Street to McHard Road, the extension of Pearland Parkway to Dixie Farm Road,
McHard Road extension from Mykawa to Cullen, Longwood Street Reconstruction, extension of
Business Center Drive between Broadway and CR59,the widening of Max Road between Broadway and
Hughes Ranch Road, and the extension of Fite between McLean and Veterans. 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 an 11,500 square feet expansion and renovation to the Tom Reid Library,
reconstruction of Fire Station #3 to accommodate a 24/7 manned station, Fire/EMS administrative
building, traffic signal operational improvements with the takeover of TXDOT signals in 2011, Westside
Library,and renovation of Old Police Department building. 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, extension of trunk sewer on
McHard,and various lift station 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 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 and the Transportation
Improvement Program (TIP) Subcommittee. The City submitted several proposed roadway projects from
its Capital Improvement Program for possible funding in the region's Transportation Improvement
Program for 2011-2014. In 2011, The TPC and TAC selected four City of Pearland projects for funding.
viii
To the Honorable Mayor,Members
of City Council,and Citizens of the
City of Pearland,Texas
The projects are the Traffic Signal System Improvements (2012), Pearland Parkway Extension (2013),
Max Road (2014), and Fite Road (2014). These projects will receive 80% funding from state or federal
sources totaling $20,180,901 with the city providing 20% matching funds. The City continues to work
with 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. H-GAC has planned a "Call for Projects" in 2012 for the 2013-
2016 TIP. The City will submit several proposed roadway projects from its Capital Improvement
Program in this new "Call for Projects" in an effort to continue to secure state and federal funding for
projects in order to reduce the funding burden on the city taxpayers.
The City of Pearland, METRO, TxDOT, Brazoria County and Connect Transit have been working
together since 2009 to establish a Park & Ride in the Pearland Area. On November 30, 2011, METRO
closed on a 15.1 acre parcel of property along Smith Ranch Road and Country Road 403. METRO
solicited proposals for Engineering services to do the design and the plans and specifications for the
project in November of 2012. It is anticipated that the METRO Board will authorize a contract for
Engineering services in early spring of 2013. Once the design contract is let it is anticipated it will take
six (6) to eight (8) months to design the project and another twelve to fifteen months to construct the
project.
The initial phase of the project will include approximately 1,000 parking spaces. The anticipated service
area for the Pearland area Park & Ride includes Northern Brazoria County and Southern Harris County.
The service will run between the Pearland area and the Texas Medical Center/Transit Center located at
Fannin and Galen. The Texas Medical Center, the largest medical center in the world, houses 13
hospitals, 46 institutions (colleges, universities, research facilities, etc.), employs approximately 90,000
people,and services approximately 5.1 million patients annually.
The fare for service each way is estimated to be $3.25. The Park & Ride will operate Monday through
Friday(weekday service only). The service will be offered weekday mornings from 5:15 AM to 8:15 AM
and 3:15 PM to 7:00 PM weekday evenings. It is anticipated that headway times for the busses will be
twelve to fifteen minutes. METRO will provide a guaranteed ride home program during the day for those
individuals that require a ride home during the times the regular bus service is not in operation.
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 more important given the most recent state of the economy and steady yet slow
development. Based on the long-range forecast and impacts to the debt service and operating funds, the
City delayed several major capital improvement projects and slotted them in the capital improvement
plan, when the City could more afford to do them. In order to minimize the increase to the FY 2013 tax
ix
To the Honorable Mayor,Members
of City Council,and Citizens of the
City of Pearland,Texas
rate and fund City infrastructure, the City continues to identify programs and line-items that could be
reduced with little or no impact to the citizens and has looked at fees to ensure recoupment of costs
resulting in budget reductions totaling $330,227 and revenue enhancements of$522,087, in the City's
General Fund budget, for the 2013 fiscal year. Over the past three years base budget reductions to the
General Fund totaled $4.9 million. While only a few months into the 2013 fiscal year,the City is already
beginning to prepare for the 2014 budget process and up-coming forecast with the same goal of being
fiscally responsible to our citizens.
AWARDS AND ACKNOWLEDGEMENTS
The City of Pearland was awarded a Gold rating from the Scenic City Texas Organization. The rating is
based on the quality of our development codes, and the implementation and enforcement of these codes.
The result of such work leads to a city full of both scenic roadways and scenic public and private
developments.
The Scenic City Certification Program is a project of Scenic Texas. Scenic Texas has identified a direct
correlation between the success of a city's economic development efforts and the visual appearance of its
public spaces. In recognition of this link, Scenic Texas has developed the Scenic City Certification
Program to support and recognize municipalities that implement high-quality scenic standards for public
roadways and public spaces. The program recognizes Texas cities which already have strong scenic
standards and provides an incentive to others to adopt and implement the kind of stringent criteria that has
been proven to enhance economic development, improve quality of life and foster a sense of place.
The Scenic City application contained 270 possible criteria that earn points, including a high percentage
of park and open space, implementation of multi-use trails and recreation areas, strong litter enforcement
laws, street lighting standards, parking lot landscaping, utility line management, a budget that supports
these programs and their ongoing maintenance,and more.
The City of Pearland Planning Department was recently awarded the 2012 Certificate of Achievement for
Planning Excellence by the Texas Chapter of the American Planning Association. This award recognizes
the professional planning standards demonstrated by the Planning staff and the support exhibited by the
City Council and the Planning and Zoning Commission. Pearland received this award for increasing the
awareness of professional planning, enhancing neighborhood and citizen recognition of planning efforts,
encouraging the funding of professional training for Commissioners and Staff and aiding in economic
development and community image. This marks the sixth time the Planning Department has won this
award.
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, 2011. This was the 35th
consecutive year that the City has received this prestigious award.
In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable
and efficiently organized comprehensive annual financial report. This report must satisfy both generally
accepted principles and applicable legal requirements.
x
To the Honorable Mayor,Members
of City Council, and Citizens of the
City of Pearland,Texas
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.
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 su.mi di
Bill Eisen, City Manager Claire Bogard, Director of Finance
l/t'
Rick ver rd,Assistant Director of Finance
xi
CITY OF PEARLAND, TEXAS
PRINCIPAL OFFICIALS
Term
Expires
Elected Officials Position May
Tom Reid Mayor 2014
Woody Owens Council Member at Large-Position One 2013
Scott Sherman Council Member at Large-Position Two 2014
Susan Sherrouse Council Member at Large-Position Three, Mayor Pro Tem 2014
Keith Ordeneaux Council Member at Large-Position Four 2014
Greg Hill 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
Mickiel Hodge Assistant City Manager
Jon Branson Assistant City Manager
Claire Bogard Director of Finance
Matt Buchanan President,PEDC
Daniel Baum Emergency Medical Services Chief
Young Lorfing City Secretary
Danny Cameron Director of Public Works
Bonita Hall Director of Human Resources
Chris Doyle Police Chief
Michelle Smith Director of Parks and Recreation
Vance Riley Fire Chief
Andrew Fearn Head Librarian
Lata Krishnarao Director of Community Development
Trent Epperson Director of Engineering and Capital Projects
xii
CITY OF PEARLAND, TX
ORGANIZATIONAL CHART
CfTIZE'IS OF
PEARL AND
MAYOR AND
CITY COUNCIL
JNICIPA_ J IGES ;CARDS
CC', MISSION ;
CI IY MANAGER
ECCNC',i C DEVELOPMENT
ASSISTANT A:1C G ALIT
CITY MANAGER C T`= MANAGER
ENGINEER—IN 3 S. C IMUNI HUMAN
CAPITAL JEVELC}PMEN RESC J ROES
PROJECTS I
PLANNING PARKS&
ENGINEERING&TRAFFIC RECREATION
I — PERMITS&
INSPEC—IONS --I ANIMAL CONTROL
PROJECT I
MAJVAGEMENT
ENVIRONMENTAL —I PUBLIC WORKS
HEALTH
GIS F_5LK AFFAIRS
POLICE
DIREC—C R OF
EMERGENCY FINAP,
MEDICAL SERVICES
T'= =;ELFOF.
RETARY TCHhOLOY ttECHPIr1ATIG ACCOUNTING
FIFE
PURCHASING E E—
=IRE AF. — r.•_
EMERGENCY SILL!NG& I,, ;
'.ANAGEMESIT CC_LECTaTOP :,RT
Y111
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Pearland
Texas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30,2011
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports(CAFRs)achieve the highest
standards in government accounting
and financial reporting.
ti T is �we
�' I
MIR N . President
v.a* *fir 005,0407x.m
Executive Director
xiv
(This page intentionally left blank.)
Houston Office
■ 3411 Richmond Avenue
whitleypenn Suite500
Houston,Texas 77046
713.621.1515 Main
whitleypenn corn
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, 2012, 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, 2012, 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 March 11,
2013, 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 15, and budgetary comparison, required pension system, and
other post-employment benefits on pages 68 through 70 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.
An Independent
1 Member of
Dallas Fort Worth Houston N E X 1 A
1 4TItlts
To the Honorable Mayor and Members of
the City Council
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
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 fmancial 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.
GCAA - 1� a L LP
March 11,2013
2
Management's Discussion and Analysis
3
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 30,2012.
FINANCIAL HIGHLIGHTS
• The assets of the primary government of the City of Pearland exceeded its liabilities as of
September 30, 2012, by $629.2 million (net assets). Of this amount, $34.2 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 $8.6 million due to lower accounts
payable and long-term debt.
• At the close of the current fiscal year, the City of Pearland's governmental funds reported
combined ending fund balances of$40.8 million, a decrease of$6.3 million in comparison with
the prior year, approximately all of which is related to capital projects. Approximately $13.8
million of the September 30, 2012, fund balance can be attributed to unspent bond proceeds for
capital projects.
• As of September 30, 2012, the unassigned fund balance for the General Fund was $17.2 million
or 35% of total General Fund expenditures. The total fund balance for the General Fund is $17.6
million or 35%of General Fund expenditures.
• The City of Pearland's General Obligation and Certificates of Obligation debt for governmental
activities totaled $289.6 million, a net decrease of $8.7 million over the previous year. The
decrease is attributable to principal payments for 2012 with no new money being issued. The
City's debt for business activities totaled $124.4 million, a net decrease of approximately $1.4
million from the previous year principal outstanding.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City's basic financial
statements. The City's basic financial statements are comprised of three components: (1) government-
wide financial statements, (2) fund financial statements and (3) notes to the financial statements. This
report also contains other supplementary information in addition to the basic financial statements
themselves.
Government-wide Financial Statements - The government-wide financial statements are designed to
provide readers with a broad overview of the City's finances, in a manner similar to a private-sector
business.
The Statement of Net Assets presents information on all of the City's assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets may
serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
The Statement of Activities presents information showing how the City's net assets changed during the
fiscal year. All changes in net assets are reported when the underlying event giving rise to the change
occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this
statement for some items that will only result in cash flows in the future fiscal periods (e.g., uncollected
taxes and earned but unused compensated absences).
5
CITY OF PEARLAND,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
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
over resources that have been segregated for specific activities or objectives. The City, like other state
and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements. All funds of the City can be divided into two categories - governmental funds and
proprietary funds.
Governmental Funds - Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statement focus on current sources
and uses of spendable resources, as well as on balances of spendable resources available at the end of the
fiscal year. Such information may be useful in evaluating a government's near-term financing
requirements.
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 22 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.
6
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 26 of this report,
provide separate information for the Water and Sewer and Solid Waste Enterprise Funds since it is
considered to be a major fund of the City.
The basic proprietary fund financial statements can be found on pages 26 through 29 of this report.
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 68
of this report.
7
CITY OF PEARLAND,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
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 $629.2 million at the close of the most
recent fiscal year.
By far the largest portion of the City's net assets(90%)reflects its investment in capital assets (e.g., land,
buildings, machinery, and equipment), less any related debt used to acquire those assets that is still
outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets
are not available for future spending. Although the City's investment in its capital assets is reported net of
related debt, it should be noted that the resources needed to repay this debt must be provided from other
sources,since the capital assets themselves cannot be used to liquidate these liabilities.
COMPARATIVE SCHEDULE OF NET ASSETS
September 30,2012 and 2011
Amounts in(000's)
Governmental Activities Business-type Activities Totals
2012 2011 2012 2011 2012 2011
Assets
Current and other assets $ 67,257 $ 72,544 $ 48,163 $ 41,119 $ 115,420 $ 113,663
Capital assets 695,702 695,754 266,288 268,051 961,990 963,805
Total Assets 762,959 768,298 314,451 309,170 1,077,410 1,077,468
Liabilities
Other liabilities 9,078 12,205 6,996 8,169 16,074 20,374
Long-term liabilities outstanding 305,621 311,649 126,479 124,859 432,100 436,508
Total Liabilities 314,699 323,854 133,475 133,028 448,174 456,882
Net assets
Invested in capital assets,net
of related debt 410,078 413,439 158,716 156,629 568,794 570,068
Restricted 16,430 16,462 9,821 5,603 26,251 22,065
Unrestricted 21,752 14,543 12,439 13,910 34,191 28,453
Total Net Assets $ 448,260 $ 444,444 $ 180,976 $ 176,142 $ 629,236 $ 620,586
An additional portion of the City's net assets (4%)represents resources that are subject to external restrictions
on how they may be used. The remaining balance of unrestricted net assets (5%) 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 $8.7 million, which is attributed to a decrease in
liabilities.
8
CITY OF PEARLAND,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
COMPARATIVE SCHEDULE OF CHANGES IN NET ASSETS
For the Years Ended September 30,2012 and 2011
Amounts in(000's)
Governmental Activities Business-type Activities Totals
2012 2011 2012 2011 2012 2011
Revenues
Program revenues:
Charges for services $ 12,183 $ 10,356 $ 35,189 $ 35,923 $ 47,372 $ 46,279
Operating grants and
contributions 7,662 7,399 205 61 7,867 7,460
Capital grants and
contributions 18,843 10,330 8,118 4,215 26,961 14,545
Property taxes 34,305 33,451 34,305 33,451
Sales and use taxes 15,632 13,983 15,632 13,983
Franchise taxes 5,670 5,605 5,670 5,605
Investment earnings 92 157 68 116 160 273
Other 1,510 1,909 443 9 1,953 1,918
Total Revenues 95,897 83,190 44,023 40,324 139,920 123,514
Expenses
General Government 13,334 15,637 13,334 15,637
Public Safety 27,403 23,057 27,403 23,057
Public Works 28,510 31,348 28,510 31,348
Community Services 4,267 3,350 4,267 3,350
Parks and Recreation 9,264 8,043 9,264 8,043
Interest on long-term debt 11,572 13,087 11,572 13,087
Water and Sewer 29,392 29,194 29,392 29,194
Solid Waste 7,528 7,285 7,528 7,285
Total Expenses 94,350 94,522 36,920 36,479 131,270 131,001
Increase(decrease)in net
assets before transfers 1,547 (11,332) 7,103 3,845 8,650 (7,487)
Transfers 2,269 1,475 (2,269) (1,475)
Increase in net assets 3,816 (9,857) 4,834 2,370 8,650 (7,487)
Net assets-beginning 444,444 454,301 176,142 173,772 620,586 628,073
Net assets-ending $ 448,260 $ 444,444 $ 180,976 $ 176,142 $ 629,236 $ 620,586
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.
Net assets increased by $8.7 million with the most significant change occurring in contributions for
infrastructure by developers.
9
CITY OF PEARLAND,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
Governmental activities - Governmental activities increased the City's net assets by $3.8 million,
thereby accounting for 44% percent of the total increase in the net assets of the City. Key elements of
this increase are as follows:
• Property taxes, sales and use taxes, and franchise taxes totaled $34.3 million, $15.6 million, and
$5.7 million respectively. These revenues increased by $2.6 million from prior year primarily as
a result of an increase in the debt service tax rate and increased consumer spending.
• Capital Contributions totaled $18.8 million as a result of infrastructure contributed by
developers.
• The revenues were offset by expenses for general government, public safety, and public works
of$13.3 million, $27.4 million, and $28.5 million respectively. In total, these expenses were
relatively consistent with the prior year.
• The increase in net assets was also offset by interest expense on long-term debt of $11.6
million, an increase of$1.5 million from the prior year due to new issuances.
Expenses and Program Revenues-Governmental Activities
$30,000 -
$25,000
■Expenses
m $20,000
■Program Revenues
$15,000
$10,000 —
$5,000 —
4° santi
C.°tee ��� v- �`� aPi
•
Revenues by Source - Governmental Activities
Charges for services
13%
Grants and
Other contributions
2% 27%
Property taxes Sales and use taxes
36% 16%
Franchise taxes
6%
10
CITY OF PEARLAND,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
Business-type activities - Business-type activities increased the City's net assets by $4.8 million. Key
elements of this increase are as follows:
• Charges for services of$35.2 million decreased approximately $0.7 million over the prior year
primarily due to an decrease in water and sewer consumption due to rainfall.
• Capital grants and contributions of$8.1 million increased $3.9 million from the prior year due
to increased contributions from developers for impact fees.
• The revenues listed above were offset by expenses of $29.4 million and $7.5 million
respectively for Water and Sewer and Solid Waste. Expenses for Water and Sewer increased
from prior year by $0.2 million mainly due to Kirby water well being down for repairs and the
completion of Alice water plant.
Expenses and Program Revenues -Business-type Activities
$35,000
$30,000
$25,000 in Expenses
y $20,000 ■Program Revenues
o $15,000
$10,000
$5,000
$- -
Waterand Sewer Solid Waste
Revenues by Source - Business-type Activities
Other
1%
Grants and
contributions
19%
Charges for
services
80%
I
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 and ensure compliance with fmance-related legal
requirements.
Governmental Funds - The focus of the City's governmental funds is to provide information of near-term
inflows, outflows, and balances of spendable resources. Such information is useful in assessing the
City's financing requirements. In particular, unassigned 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$40.8 million.A portion of the combined
fund balance, or $17.2 million, is unassigned and available for day-to-day operations of the City; $13.8
million is restricted for capital projects; and the remaining balance is restricted for debt service and other
programs.
There was a decrease in the combined fund balance of$6.3 million from the prior year. The decrease in
fund balance includes a decrease in the capital projects fund balance of approximately $9.7 million due to
draw down of bond proceed $9.2 million, a decrease of$0.2 million in the debt service fund balance, offset
by a combined increase of approximately$468,000 in the special revenue funds.
$3.0 million increase in the General Fund is seen mainly in Charges for Services for TIRZ Administration
fees and Recreation Center/Natatorium fees, the General Fund's fund balance totaled $17.6 million at year
end.
In the Capital Projects Fund, the City spent $9.2 million on various improvement projects, leaving an
ending fund balance of$13.8 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.
12
CITY OF PEARLAND,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
GENERAL FUND BUDGETARY HIGHLIGHTS
During the year, there was a $1.0 million increase in appropriations between the original and final
amended budget. The increase in appropriations is attributable to carryover funding from prior-year
encumbrances and projects and to reflect projections during the 2011-2012 budget process.
Budget estimates for revenues and other sources combined increased by approximately $1.9 million for the
year; also to reflect carryovers and revised projections. Actual revenues of$49.4 million were $1.2 million
over the final budget mainly in sales and use tax and charges for services. Actual expenditures of$48.5
million were under budget by $3.0 million, resulting in the year-end fund balance of$17.6 million over
budget by$3.1 million.
At year-end,equipment purchases and several projects were still in progress and part of the$3.1 million will
be carried over and reappropriated in the 2012-2013 budget year.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets - At the end of fiscal year 2012, the City's governmental activities and business-type
activities had invested $695.7 million and $266.3 million, respectively, in a variety of capital assets and
infrastructure, as reflected in the following schedule. This represents a net decrease of($1.8)million, or-0.7
percent over the end of last fiscal year for the business-type activities capital assets and governmental
activities capital assets stayed relatively flat.
Governmental Activities Business-Type Activities Totals
2012 2011 2012 2011 2012 2011
Land $ 28,409 $ 28,409 $ 3,610 $ 3,610 $ 32,018 $ 32,018
Construction in progress 23,120 32,868 5,419 24,891 28,539 57,759
Infrastructure 573,752 564,903 199,511 179,648 773,263 744,551
Buildings and improvements 64,378 63,351 27,898 28,615 92,277 91,966
Machinery and equipment 6,043 6,224 1,243 1,299 7,286 7,523
Contractual water rights 28,607 29,988 28,607 29,988
Total Capital Assets $ 695,702 $ 695,754 $ 266,288 $ 268,051 $ 961,990 $ 963,805
Construction in progress at year-end represents numerous ongoing projects, the largest of which relate to
street, drainage and water/sewer projects. Additional information on the City's capital assets can be found
in Note 4 to the financial statements.
13
CITY OF PEARLAND,TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
Long-Term Debt - At the end of the current fiscal year, the City had total bonds, certificates of
obligation, notes, capital leases, and post employment liabilities outstanding of$432.1 million. Of this
amount, $239.3 million is composed of general obligation bonds, $65.4 million is composed of certificates
of obligation and$109.3 million represents revenue bonds secured solely by specified revenue sources.
Governmental Activities Business-Type Activities Totals
2012 2011 2012 2011 2012 2011
General obligation bonds $ 224,170 $ 207,105 $ 15,130 $ 9,730 $ 239,300 $ 216,835
Deferred amount for issuance
premium/(discount) 6,398 3,489 882 656 7,280 4,145
Revenue bonds 109,305 113,270 109,305 113,270
Certificates of obligation 65,425 91,150 65,425 91,150
Capital leases payable 3,407 4,032 342 421 3,749 4,453
Compensated absences 4,686 4,669 539 558 5,225 5,227
Post employment benefit liability 1,535 1,204 282 224 1,817 1,428
$ 305,621 $ 311,649 $ 126,480 $ 124,859 $ 432,102 $ 436,508
The City of Pearland's General Obligation and Certificates of Obligation debt for governmental activities
decreased to $289.6 million. The decrease is due to principal payments with no new monies issued. The
City also refunded bonds of $43.6 million, of which $21.0 million was General Obligation bonds
refunded, and $22.4 million in Certificates of Obligation. The City's debt for business activities increased
to$126.5 million,a net increase of$1.6 million from the previous year,which was a result of the addition
of$5.8 million in new Revenue Bonds offset by principal payments.
Current ratings on debt issues are as follows:
Standard
and Poors Fitch
General obligation bonds AA- AA
Revenue bonds AA- AA-
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
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.
14
CITY OF PEARLAND, TEXAS
MANAGEMENT'S DISCUSSION AND ANALYSIS(continued)
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES
Two primary factors in the 2013 budget are the improving Houston area economy and the continued
growth in population served by the City, which will include the annexation of Brazoria MUD No. 4 on
December 31, 2012. The improving regional economy will result in substantially improved revenues in
the coming fiscal year. Improved economic conditions will be most noticeable in two major revenue
sources— sales tax and building permits. Sales tax revenue for FY 2012 was up 11% over FY 2011. The
adopted budget for FY 2013 includes a total increase in sales tax of 5.4% over FY 2012 revenues. This
increase assumes an overall increase in the dollar value of sales and also incorporates additional revenue
from two major new sales tax producers, Sam's Club and Kelsey-Seybold. Building Permit revenue is
also projected to maintain the strong levels that have developed during FY 2012. The FY 2012 Adopted
Budget was based on an estimated 744 single-family permits. Due to the strengthening regional economy
during the FY 2012, housing starts were 931. The FY 2013 Adopted Budget anticipates 1,142 single-
family permits. Another economic factor that will impact revenues is an increase in property values
of$129 million or 2.6%, due to new construction. Values of existing residential properties have declined
slightly over the past few years and indications are that residential property values will stay flat. The
impact of new residential and commercial construction will more than offset home values for existing
properties for 2013.
The budget incorporates an increase of 2 cents in the property tax rate. The entire increase is related to
debt service. Of the total adopted tax rate of 70.51 cents per hundred dollars valuation, the operating tax
rate remains at 21.51 cents per hundred dollars and the debt service tax rate is 49 cents. With this
increase, the overall tax rate will have increased by 5.25 cents since the 2007 bond election. Prior to the
election, voters were informed that approval of the bond propositions could result in a tax increase of 13
cents per hundred dollars of value. Another significant factor that impacts the adopted budget is a 7.1%
increase in population. This increase in population results in increased services to meet the needs of the
new residents. This projected increase in population is a combination of two factors—newly constructed
homes and multifamily dwellings and the annexation of Brazoria MUD No. 4 on December 31, 2012.
Charges for various services and permits were also reviewed as part of the budget process to determine
their recovery for cost of service. As a result, increases in several charges and fees are included in the
General Fund FY 2013 budget as well as$330,227 in reductions.
Over the past 3 years,a total of$4.4 million in General Fund budget reductions have been taken.
The Pearland City Council approved a $58.6 million General Fund budget for FY 2013. This is a 13.7%
increase from the FY 2012 adopted budget. The increase is mainly due to new positions added in FY
2013 and an average 3% pay increase for employees. 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 fmancial report is designed to provide our citizens, customers, investors and creditors with a general
overview of City's fmances.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.
15
Basic Financial Statements
17
CITY OF PEARLAND,TEXAS
STATEMENT OF NET ASSETS
September 30,2012
Primary Government
Discretely
Presented
Governmental Business-type Component
Activities Activities Total Units
Assets
Cash and equivalents $ 27,003,079 $ 4,422,922 $ 31,426,001 $ 15,705,835
Investments 14,024,006 6,051,442 20,075,448 2,002,459
Receivables,net of allowance
for uncollectibles 16,600,651 3,492,378 20,093,029 1,674,864
Due from other governmental agencies 768,652 768,652
Inventories 134,720 134,720
Prepaid items 218,438 63,121 281,559 28,435
Restricted cash and investments 32,305,395 32,305,395 665,254
Deferred charges 8,507,030 1,827,653 10,334,683 607,575
Capital assets:
Capital assets not subject
to depreciation 51,528,815 9,028,352 60,557,167 3,220,907
Capital assets,net of
accumulated depreciation 644,173,218 _ 257,260,089 901,433,307 6,413,293
Total Capital Assets 695,702,033 266,288,441 961.990.474 9,634,200
Total Assets 762,958,609 314,451,352 1,077,409.961 30,318,622
Liabilities
Accounts payable and accrued liabilities 5,261,144 3,676,575 8,937,719 434,463
Due to other governmental agencies 91,350 91,350
Accrued interest 1,004,536 435,835 1,440,371 227,370
Unearned revenues 2,616,994 2,616,994
Customer deposits 195,698 2,791,112 2,986,810 38,333
Long-term liabilities
Due within one year 10,705,778 4,895,325 15,601,103 3,600,000
Due in more than one year 294,915,760 121,584,984 416,500,744 69,250,043
Total Liabilities 314,699,910 133,475,181 448,175,091 73,550,209
Net Assets
Invested in capital assets,net of
related debt 410,077,968 158,715,983 568,793,951 (63,215,843)
Restricted for:
Capital improvements 8,689,520 8,689,520
Debt service 11,223,863 1,131,525 12,355,388 437,884
Community development programs 4,502,287 4,502,287 19,546,372
Public safety 702,955 702,955
Unrestricted 21,751,626 12,439,143 34,190,769
Total Net Assets $ 448,258,699 $ 180,976,171 $ 629,234,870 $ (43,231,587)
See Notes to Financial Statements.
19
CITY OF PEARLAND,TEXAS
STATEMENT OF ACTIVITIES
For the Year Ended September 30,2012
Program Revenue
Charges for Operating Grants Capital Grants and
Functions/Programs Expenses Services and Contributions Contributions
Primary Government
Governmental Activities:
General Government $ 13,333,899 $ $ 6,045,268 $
Public Safety 27,402,713 4,205,641 711,306
Public Works 28,509,730 42,991 52,538 18,742,786
Community Services 4,267,485 5,854,715 310,919
Parks and Recreation 9,265,497 2,079,614 541,896 100,000
Interest on long-term debt 11,571,519
Total Governmental Activities 94,350,843 12,182,961 7,661,927 18,842,786
Business-type activities:
Water and Sewer 29,392,086 27,535,464 204,866 8,117,782
Solid Waste 7,527,713 - 7,653,933
Total Business-Type Activities 36,919,799 _ 35,189,397 204,866 8,117,782
Total Primary Government $ 131,270,642 $ 47,372,358 $ 7,866,793 $ 26,960,568
Component Units:
Pearland Economic Development
Corporation $ 3,042,464 $ 414,000 $ $
Tax Increment Reinvestment Zone#2 5,894,105
Development Authority of Pearland 17,373,755
Total Component Units $ 26,310,324 $ 414,000 $ $
General Revenues:
Taxes:
Property taxes
Sales and use taxes
Franchise taxes
Unrestricted investment earnings
Miscellaneous
Transfers
Total General Revenues and Transfers
Change in net assets
Net assets-beginning
Net assets-ending
See Notes to Financial Statements.
20
Net(Expense)Revenue and Changes in Net Assets
Primary Government
Governmental Business-type
Activities Activities Total Component Units
$ (7,288,631) $ $ (7,288,631)
(22,485,766) (22,485,766)
(9,671,415) (9,671,415)
1,898,149 1,898,149
(6,543,987) (6,543,987)
(11,571,519) _ (11,571,519)
(55,663,169) (55,663,169)
6,466,026 6,466,026
126,220 126,220
6,592,246 6,592,246
(55,663,169) 6,592,246 (49,070,923)
$ (2,628,464)
(5,894,105)
(17,373,755)
(25,896,324)
34,304,615 34,304,615 17,924,775
15,631,576 15,631,576 7,337,389
5,669,958 5,669,958
92,365 68,427 160,792 41,644
1,510,310 442,794 1,953,104 44,353
2,268,910 (2,268,910)
59,477,734 (1,757,689) 57,720,045 25,348,161
3,814,565 4,834,557 8,649,122 (548,163)
444,444,134 176,141,614 620,585,748 (42,683,424)
$ 448,258,699 $ 180,976,171 $ 629,234,870 $ (43,231,587)
21
CITY OF PEARLAND,TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30,2012
Other Total
Capital Governmental Governmental
General Fund Debt Service Projects Fund Funds - Funds
Assets
Cash and cash equivalents $ 6,617,774 $ 2,882,399 $ 13,282,463 $ 4,429,607 $ 27,212,243
Investments 9,031,025 2,000,595 2,000,386 13,032,006
Receivables,net of allowance
for uncollectibles 5,725,094 10,377,470 4,642 482,213 16,589,419
Due from other governments 608,705 159,947 768,652
Due from other funds 168,548 168,548
Inventories 134,720 134,720
Prepaid items 48,222 166,894 3,322 218,438
Total Assets $ 22,334,088 $ 15,427,358 $ 15,447,438 $ 4,915,142 $ 58,124,026
Liabilities and Fund Balances
Liabilities
Accounts payable $ 1,446,733 $ 166,894 $ 1,671,475 $ 237,844 $ 3,522,946
Accrued expenditures 1,433,509 1,433,509
Deposits 195,698 195,698
Due to other funds 168,548 168,548
Deferred revenue 1,686,187 10,267,985 6,463 11,960,635
Total Liabilities 4,762,127 10,434,879 1,671,475 412,855 17,281,336
Fund balances:
Non-spendable:
Inventories 134,720 134,720
Prepaid items 48,222 166,894 3,322 218,438
Restricted for:
Debt service 4,825,585 4,825,585
Capital improvements 13,775,963 13,775,963
Community development
programs 3,796,010 3,796,010
Public safety 702,955 702,955
Assigned for:
Encumbrances 167,016 167,016
Unassigned
General fund 17,222,003 17,222,003
Total fund balances 17,571,961 4,992,479 13,775,963 4,502,287 40,842,690
Total Liabilities and
Fund Balances $ 22,334,088 $ 15,427,358 $ 15,447,438 $ 4,915,142 $ 58,124,026
See Notes to Financial Statements.
22
CITY OF PEARLAND,TEXAS
RECONCILLATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO
THE STATEMENT OF NET ASSETS
September 30,2012
Total fund balance,governmental funds $ 40,842,690
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. 695,702,033
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. 9,343,641
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.
Bonds and capital leases payable (299,400,028)
Compensated absences (4,686,124)
Accrued interest governmental activity debt (1,004,536)
Estimated post employment benefit liability (1,535,386)
Deferred bond issuance costs 8,507,030
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. 489,379
Net Assets of Governmental Activities in the Statement of Net Assets $ 448,258,699
See Notes to Financial Statements.
23
CITY OF PEARLAND,TEXAS
STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended September 30,2012
Other Total
Capital Governmental Governmental
General Fund Debt Service Projects Fund Funds Funds
Revenues
Property taxes $ 10,861,341 $ 23,500,454 $ $ $ 34,361,795
Sales and use taxes 14,814,936 816,640 15,631,576
Franchise fees 5,669,958 146,988 5,816,946
Licenses and permits 2,320,103 2,320,103
Fines and forfeitures 3,164,068 209,967 3,374,035
Charges for services 11,890,808 11,890,808
Investment earnings 54,614 9,783 23,536 4,130 92,063
Intergovernmental 1,851,938 1,419,488 3,271,426
Other 623,824 796,087 482,784 455,800 2,358,495
Total Revenues 49,399,652 24,306,324 2,358,258 3,053,013 79,117,247
Expenditures
Current:
General government 8,241,509 172,191 449,174 8,862,874
Public safety 25,168,443 193,972 25,362,415
Public works 5,506,477 28,136 5,534,613
Community services 3,861,520 384,262 4,245,782
Parks and recreation 6,775,316 490,554 7,265,870
Debt Service:
Principal 9,373,377 9,373,377
Interest and other charges 12,400,810 12,400,810
Bond issuance costs
Capital outlay 9,025,793 416,557 9,442,350
Intergovernmental 3,992,293 3,992,293
Total Expenditures 49,553,265 25,766,480 9,197,984 1,962,655 86,480,384
Excess(deficiency)of revenues
over expenditures (153,613) (1,460,156) (6,839,726) 1,090,358 (7,363,137)
Other Financing Sources(Uses)
Issuance of debt
Refunding bonds issued 49,805,000 49,805,000
Payments to refunded bond escrow agent (54,478,177) (54,478,177)
Bond premium 3,808,801 3,808,801
Capital leases
Transfers in 3,599,482 2,157,471 152,030 5,908,983
Transfers out (397,453) (2,997,317) (622,042) (4,016,812)
Total Other Financing Sources(Uses) 3,202,029 1,293,095 (2,845,287) (622,042) 1,027,795
Net change in fund balances 3,048,416 (167,061) (9,685,013) 468,316 (6,335,342)
Fund balances-beginning 14,523,545 5,159,540 23,460,976 4,033,971 47,178,032
Fund balances-ending $ 17,571,961 $ 4,992,479 $ 13,775,963 $ 4,502,287 $ 40,842,690
See Notes to Financial Statements.
24
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 30,2012
Net change in fund balances-total governmental funds: $ (6,335,342)
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$10,462,236 exceeded depreciation of$27,702,583 in
the current period. (17,240,347)
Governmental funds report only the proceeds from the disposal of capital assets and not the
difference between the carrying value and the accumulated depreciation of the asset.This is the
amount by which the carrying value exceeded the accumulated depreciation. (105,786)
Capital assets net of related debt acquired as a result of in City development. 17,293,695
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. 18,071
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. 1,702,335
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. 347,294
Some expenses reported in the statement of activities do not require the use of current financial
resources and these are not reported as expenditures in governmental funds:
Accrued interest not reflected in Governmental funds 56,248
Amortization of bond issuance costs 8,657,350
Capital lease activity (426,496)
Post employment benefit liability (348,491)
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. 196,034
Change in net assets of governmental activities $ 3,814,565
See Notes to Financial Statements.
25
CITY OF PEARLAND,TEXAS
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
September 30,2012
Governmental
Business-type Activities-Enterprise Funds Activities-
Water and Sewer Solid Waste Internal
Fund Fund Total Service Fund
Assets
Current assets:
Cash and cash equivalents $ 3,481,057 $ 941,865 $ 4,422,922 $ 782,836
Investments 6,051,442 6,051,442
Accounts receivable,net of allowance for doubtful accounts 2,779,458 712,920 3,492,378 11,232
Prepaid items 63,121 63,121
Restricted cash and cash equivalents 28,300,088 28,300,088
Restricted investments 4,005,307 4,005,307
Total current assets 44,680,473 1,654,785 46,335,258 794,068
Non-current assets:
Deferred charges 1,827,653 1,827,653
Capital assets:
Land and improvements 3,609,542 3,609,542
Construction in progress 5,418,810 5,418,810
Contractual rights to water supply 34,511,428 34,511,428
Infrastructure 280,739,923 280,739,923
Buildings 31,256,473 31,256,473
Machinery and equipment 3,465,029 3,465,029
Less Accumulated depreciation (92,712,764) (92,712,764)
Total non-current assets 268,116,094 268,116,094
Total Assets 312,796,567 1,654,785 314,451,352 794,068
Liabilities
Current liabilities:
Accounts payable and accrued expenses 2,364,693 1,311,882 3,676,575 304,689
Accrued interest payable 435,835 435,835
Due to other governments 91,350 91,350
Customer deposits 2,791,112 2,791,112
Compensated absences-current portion 88,945 88,945
Bonds and certificates of obligation payable-current portion 4,725,000 4,725,000
Capital lease-current portion 81,380 81,380
Total current liabilities 10,578,315 1,311,882 11,890,197 304,689
Non-current liabilities:
Compensated absences 449,933 449,933
Capital lease obligation 260,984 260,984
Other post-employment benefits 282,467 282,467
Bonds and certificates of obligation payable 120,591,600 120,591,600
Total non-current liabilities 121,584,984 121,584,984
Total Liabilities 132,163,299 1,311,882 133,475,181 304,689
Net Assets
Invested in capital assets,net of related debt 158,715,983 158,715,983
Restricted for debt service 1,131,525 1,131,525
Restricted for capital projects 8,689,520 8,689,520
Unrestricted 12,096,240 342,903 12,439,143 489,379
Total Net Assets $ 180,633,268 $ 342,903 $ 180,976,171 $ 489,379
See Notes to Financial Statements.
26
411 CITY OF PEARLAND,TEXAS
STATEMENT OF REVENUES,EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
For the Year Ended September 30,2012
Governmental
Business-type Activities-Enterprise Funds Activities-
Water and Sewer Solid Waste Internal Service
Fund Fund Total Fund
Revenues
Charges for services $ 27,535,464 $ 7,653,933 $ 35,189,397 $ 6,494,646
Operating Expenses
Personnel services 4,790,448 4,790,448
Supplies and materials 2,325,113 2,325,113 35,144
I _ Contractual services 7,211,131 7,527,713 14,738,844 6,185,794
Repairs and maintenance 1,026,885 1,026,885 77,976
Other expenses 626,482 626,482
Depreciation and amortization 8,564,822 8,564,822
Total Operating Expenses 24,544,881 7,527,713 32,072,594 6,298,914
Operating income(loss) 2,990,583 126,220 3,116,803 195,732
Non-Operating Revenues(Expenses)
Earnings on investments 68,050 377 68,427 303
Miscellaneous revenue(expense) 430,038 430,038
Operating grants and contributions 204,866 204,866
Gain(loss)on disposal of capital assets 12,756 12,756
Interest expense (5,223,944) (5,223,944)
Total Non-Operating Revenues(Expenses) (4,508,234) 377 (4,507,857) 303
Income(loss)before contributions and transfers (1,517,651) 126,597 (1,391,054) 196,035
Capital contributions 8,117,782 8,117,782
Transfers in 222,811 222,811
Transfers out (2,114,982) (2,114,982)
Change in net assets 4,707,960 126,597 4,834,557 196,035
Total net assets-beginning 175,925,308 216,306 176,141,614 293,344
Total net assets-ending $ 180,633,268 $ 342,903 $180,976,171 $ 489,379
See Notes to Financial Statements.
27
CITY OF PEARLAND,TEXAS Page 1 of 2
STATEMENT OF CASK FLOWS
PROPRIETARY FUNDS
For the Year Ended September 30,2012
Governmental
Business-type Activities-Enterprise Funds Activities-
Water and Sewer Solid Waste Internal Service
Fund Fund Total Fund
Cash Flows from Operating Activities
Receipts from customers and users $ 27,578,140 $ 7,625,682 $ 35,203,822 $ 6,487,121
Disbursed for personnel services (4,782,920) (4,782,920)
Disbursed for goods and services (11,622,829) (8,581,492) (20,204,321) (6,247,156)
Net cash provided(used)by operating activities 11,172,391 (955,810) 10,216,581 239,965
Cash Flows from Noncapital Financing Activities
Transfers from funds 222,811 222,811 (61,095)
Transfers to other funds (2,114,982) (2,114,982)
Operating grants and contributions 204,866 204,866
Net cash provided by(used by)noncapital
financing activities (1,687,305) (1,687,305) (61,095)
Cash Flows from Capital and Related Financing Activities
Proceeds from the sale of equipment 12,756 12,756
Capital grants and contributions 6,041,758 6,041,758
Proceeds from the issuance of debt 14,900,000 14,900,000
Principal payments on debt (13,465,000) (13,465,000)
Interest paid (5,223,944) (5,223,944)
Acquisition and construction of capital assets (7,644,628) (7,644,628)
Net cash used by capital and related financing activities (5,379,058) (5,379,058)
Cash Flows from Investing Activities
Purchase of investments 2,040,257 2,040,257
Interest received 68,050 377 68,427 303
Net cash provided by(used by)investing activities 2,108,307 377 2,108,684 303
Net increase(decrease)in cash and equivalents 6,214,335 (955,433) 5,258,902 179,173
Cash and equivalents,beginning 25,566,810 1,897,298 27,464,108 603,663
Cash and equivalents,end $ 31,781,145 $ 941,865 _$ 32,723,010 $ 782,836
Unrestricted cash and equivalents $ 3,481,057 $ 941,865 $ 4,422,922 $ 782,836
Restricted cash and equivalents 28,300,088 28,300,088
$ 31,781,145 $ 941,865 $ 32,723,010 $ 782,836
See Notes to Financial Statements.
28
CITY OF PEARLAND,TEXAS Page 2 of 2
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended September 30,2012
Governmental
Business-type Activities-Enterprise Funds Activities-
Water and Sewer Solid Waste Internal Service
Fund Fund Total Funds
Reconciliation of operating income to net cash
provided by operating activities
Operating income(loss) $ 2,990,583 $ 126,220 $ 3,116,803 $ 195,732
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation 8,564,822 8,564,822
(Increase)decrease in accounts receivable (222,682) (28,251) (250,933) (7,525)
(Increase)decrease in prepaid expenses 49,740 49,740
Increase(decrease)in accounts payable (482,958) (1,053,779) (1,536,737) 51,758
Increase(decrease)in salaries payable 7,528 7,528
Increase(decrease)in customer deposits 265,358 265,358
Net Cash Provided by Operating Activities $ 11,172,391 $ (955,810) $ 10,216,581 $ 239,965
Summary of non-cash transactions
Contributed capital assets $ 2,076,024 $ $ 2,076,024 $
See Notes to Financial Statements.
29
CITY OF PEARLAND,TEXAS
COMBINING STATEMENT OF NET ASSETS
DISCRETELY PRESENTED COMPONENT UNITS-GOVERNMENTAL ACTIVITIES
September 30,2012
Pearland
Economic Tax Increment Development Total
Development Reinvestment Authority of Component
Corporation _ Zone#2 Pearland Units
Assets
Cash and cash equivalents $ 9,562,003 $ 4,655,490 $ 1,488,342 $ 15,705,835
Investments 2,002,459 2,002,459
Receivables-less allowance
for uncollectibles 1,314,864 360,000 1,674,864
Due from primary government
Prepaid items 28,435 28,435
Restricted cash 665,254 665,254
Deferred charges 329,660 277,915 607,575
Capital assets not subject
to depreciation 3,220,907 3,220,907
Capital assets net of
accumulated depreciation 6,413,293 6,413,293
Total Assets 23,536,875 4,655,490 2,126,257 30,318,622
Liabilities
Accounts payable and accrued
expenses 72,986 361,444 33 434,463
Accrued interest 93,983 133,385 227,368
Customer deposits 38,333 38,333
Non-current liabilities:
Due within one year 883,565 2,720,000 3,603,565
Due in more than one year 23,725,351 45,521,127 69,246,478
Total Liabilities 24,814,218 361,444 48,374,545 73,550,207
Net Assets
Invested in capital assets,net of related
debt (14,974,716) (48,241,127) (63,215,843)
Restricted-debt service 571,271 (133,385) 437,886
Restricted-economic development 13,126,102 4,294,046 2,126,224 19,546,372
Total Net Assets $ (1,277,343) $ 4,294,046 $ (46,248,288) $ (43,231,585)
See Notes to Financial Statements.
30
CITY OF PEA1ILAND,TEXAS
COMBINING STATEMENT OF ACTIVITIES
DISCRETELY PRESENTED COMPONENT UNITS-GOVERNMENTAL ACTIVITIES
For the Year Ended September 30,2012
Program
Revenues Net(Expense)and Changes in Net Assets
Pearland Tax Increment Development
Charges for Economic Reinvestment Authority of
Functions/Programs Expenses Services Development Zone#2 Pearland Totals
Component Units:
Pearland Economic
Development Corporation $ 3,042,464 $ 414,000 $ (2,628,464) $ $ $ (2,628,464)
Tax Increment
Reinvestment Zone#2 5,894,105 (5,894,105) (5,894,105)
Development Authority of
Pearland 17,373,755 (17,373,755) (17,373,755)
$ 26,310,324 $ 414,000 (2,628,464) (5,894,105) (17,373,755) (25,896,324)
General Revenues:
Taxes:
Property taxes $ $ 17,924,775 $ $ 17,924,775
Sales and use tax 7,337,389 7,337,389
Unrestricted investment earnings 34,161 5,844 1,641 41,646
Miscellaneous 44,353 44,353
Transfers between component units (12,016,051) 12,016,051
Total General Revenues and Transfers 7,415,903 5,914,568 12,017,692 25,348,163
Change in net assets 4,787,439 20,463 (5,356,063) (548,161)
Net assets,beginning (6,064,782) 4,273,583 (40,892,225) (42,683,424)
Net assets,ending $ (1,277,343) $ 4,294,046 $ (46,248,288) $ (43,231,585)
See Notes to Financial Statements.
31
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, fire 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 part-
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 fmancial 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 fmancial 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 fmancially
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 fmancial relationships with the
City.The component units do not issue separate fmancial statements.
32
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.
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.
33
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
The government-wide financial statements and all proprietary funds are reported using the economic
resources measurement focus and the accrual basis of accounting.Revenues are recognized when earned and
expenses are recorded when a liability is incurred,regardless of the timing of the related cash flows.With this
measurement focus, all assets and all liabilities associated with the operations of these activities are
included on the statements of net assets.Proprietary fund-type operating statements present increases(i.e.,
revenues) and decreases (i.e., expenses) in net total assets. Furniture and equipment capitalized in the
Proprietary Fund Types are valued at cost.
The governmental fund 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
susceptible to accrual include property taxes, sales and use taxes, franchise fees, charges for services and
interest on temporary investments. Other receipts become measurable and available when cash is received
by the government and are recognized as revenue at that time.
Under modified accrual accounting, expenditures are recognized in the accounting period in which the
liability is incurred, if measurable, except for interest on general long-term debt, which is recognized when
due. Since the governmental fund statements are presented on a different measurement focus and basis of
accounting than the government-wide statements'governmental column, a reconciliation is presented which
briefly explains the adjustments necessary to reconcile fund-based financial statements with the
governmental column of the government-wide presentation.
In the fund fmancial 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 fmanced. The
City reports the following major governmental funds:
The General Fund is used to account for all fmancial 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.
34
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 on a pay-as-you
go basis and the sale of bonds and related interest earnings for capital improvement projects. The Capital
Projects Fund is considered a major fund for reporting purposes.
The City's Business type activities consist of the following funds:
The Enterprise Funds are used to account for the operations that provide water and sewer utility services as
well as solid waste collection services to the public. The services are fmanced and operated in a manner
similar to private business enterprises where the intent of the governing body is that the costs (expenses
including depreciation) of providing goods or services to the general public on a continuing basis will be
financed or recovered primarily through user charges.
Additionally, the city maintains an Internal Service Fund used to account for the financing of goods or
services provided by one department or agency to other departments or agencies of the City on a cost-
reimbursement basis. Services provided by the Internal Service Funds include property and liability
insurance coverage and employee health benefits. The Internal Service Fund is included in governmental
activities for government-wide reporting purposes.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,generally are
followed to the extent that those standards do not conflict with or contradict guidance of the Governmental
Accounting Standards Board. Governments also have the option of following subsequent private-sector
guidance for their business-type activities and enterprise funds, subject to this same limitation. All assets,
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.
35
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)
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 defmition are reported as nonoperating revenue and expense.
D. Fund Balance Working Capital Policies
As of these fmancial statements, the City has adopted GASB Statement No. 54, which redefined how
fund balances of the governmental funds are presented in the financial statements. Fund balances are
classified as follows:
Nonspendable—Amounts that cannot be spent either because they are not in a spendable form or
because they are legally or contractually required to be maintained intact.
Restricted —Amounts that can be spent only for specific purposes because of the City Charter,
City Code, State or Federal laws,or externally imposed conditions by grantors or creditors.
Committed — Amounts than can be used only for specific purposes determined by ordinances
passed by City Council,the City's highest level of decision making authority. Commitments may
be modified or rescinded only through ordinances approved by City Council.
Assigned — Amounts that are intended to be used for a specific purposes, but do not meet the
definition of restricted or committed fund balance. Under the City's policy, amounts can be
assigned by the City's Director of Finance.
Unassigned—All amounts not included in other spendable classifications.
The City Council has authorized the Director of Finance as the official authorized to assign fund balance
to a specific purpose. The City shall maintain the fund balance and working capital of the various
operating funds at the following levels:
General Fund Unassigned Fund Balance
The City shall maintain the General Fund unassigned fund balance equivalent to 2 months of
recurring operating expenditures,based on current year expenditures. If the fund balance exceeds this
amount, funding non-recurring expenditures in the following fiscal year may be used to draw down
the balance.
36
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 -Summary of Significant Accounting Policies(continued)
D. Fund Balance Working Capital Policies(continued)
Water/Sewer Unreserved Working Capital
The City shall maintain a working capital sufficient to provide for reserves for emergencies and
revenue shortfalls. A cash equivalent operating reserve will be established and maintained at 25% of
the current year's budget appropriation for recurring operating expenses.
The cash operating reserve is derived by dividing the total cash equivalents balance by recurring
operating expenses.
Use of Fund Balance/Working Capital
Fund balance/Working Capital shall only be used for emergencies, non-recurring
expenditures/expenses or major capital purchases that cannot be accommodated through current year
savings. Should such use reduce balances below the level established as the objective for that fund,
restoration recommendations will accompany the request/decision to utilize said balances.
Debt Service Fund Total Fund Balance
The City shall maintain the debt service fund balance at 10% of annual debt service requirements OR
a fund balance reserve as required by bond ordinances,whichever is greater.
Property Insurance Fund Unrestricted Net Assets
The Property Insurance Fund accounts for uninsured and deductible claims for the City's property
and liability insurance. Claims cannot be reasonably predicted and budgeted for; therefore the fund
will maintain a balance that approximates the prior average annual expense for the last three years,
excluding extra-ordinary expenses in the fund.
Employee Benefits Fund Unrestricted Net Assets
The Employee Benefits Fund is funded through City and employee contributions. Estimated costs
shall be determined during each budget year and the contributions adjusted accordingly. There is no
minimum balance for this fund.
Economic Development Corporation
As sales tax revenue fluctuates due to changes in economic conditions, the PEDC shall maintain a
fund balance of no less than 10%of budgeted sales tax revenues.
Water/Sewer Revenue Debt Coverage Reserves
Revenues shall be maintained at 1.15 times coverage in a fiscal year where the water/sewer fund is
not issuing additional debt and 1.4 times coverage in a year where debt is anticipated to be issued.
Bond Issuance Reserves
Debt service reserves should be maintained for each bond issue as required by bond covenants.
Contingency Fund
Pursuant to the City Charter, a provision shall be made within the annual budget for a contingency
fund in an amount not more than seven percent of the total budget(General Fund) to be used in case
of unforeseen items of expenditure.
37
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 -Summary of Significant Accounting Policies(continued)
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.
The City pools cash resources of its various funds to facilitate the management of cash. Cash applicable to a
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.
G. Receivables
All receivables are reported at their gross value,and where appropriate,are reduced by the estimated portion
that is expected to be uncollectible. Trade accounts receivable in excess of 120 days comprise the trade
accounts receivable allowance for uncollectibles.
H. Due to and Due from Other Funds
Interfund receivables and payables arise from interfund transactions and are recorded by all funds affected
in the period in which the transactions are executed. These receivables and payables are classified as "due
from other funds" or "due to other funds" (or "due from component unit/primary government" or "due to
component unit/primary government" if the transactions are between the primary government and its
component unit). Interfund receivables and payables which are not expected to be paid within 12 months are
classified as loans from/loans to other funds,component units,or primary government.
I. Inventories and Prepaid Items
Inventory,which consists of fuel and auto parts for use in the City's vehicles, is stated at cost(first-in, first-
out method).Expenditures are recognized as the fuel and auto parts are consumed rather when purchased.
J. Restricted Assets
Certain proceeds of the Water and Sewer Enterprise Fund revenue bonds and certain resources set aside for
their repayment are classified as restricted assets on the balance sheet because their use is limited by applicable
bond covenants. Certain resources are also set aside for repayment of Pearland Economic Development
Corporation Bonds and are reported as restricted assets.
38
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 -Summary of Significant Accounting Policies(continued)
K. Capital Assets
Capital assets which include property, plant, equipment and infrastructure, are reported in the applicable
governmental or business-type activities columns in the government-wide financial statements. The City
defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful
life of three years or more. Such assets are recorded at historical cost or estimated historical cost if
purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of
donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend assets' lives are not capitalized.
Property,plant,and equipment are depreciated using the straight-line method over the following useful lives:
Asset Years
Buildings and improvements 10-45
Machinery and equipment 3-15
Infrastructure 10-50
L. Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused vacation, sick and holiday pay
benefits.
Employees hired prior to October 1, 2005, earn vacation leave at the rate of 15 days per year from 1 to 15
years of service,20 days per year for service of 16 to 19 years,and 25 days per year for service of 20 years or
more. Employees, who are not classified and are hired after October 1, 2005, earn vacation at a rate of 10
days per year from 1-6 years of service, 15 days per year for 7-15 years of service and 20 days for 16 and
over years of service. Effective October 1,2005,employees are no longer able to carry over unused vacation
from one year to the next with the exception of police department personnel in classified positions.
Employees are required to use their vacation in the year it is earned. Employees who are unable to use their
vacation due to departmental scheduling or staffmg problems, may, with the City Manager's approval,
receive compensation for half of the remaining balance up to a maximum of forty(40)hours.
City employees receive 11 paid holidays per year. Employees required to work on a City-observed holiday
may be paid or may elect to receive compensatory time off for the holiday. Overtime is earned at one and
one-half times the regular rate of pay for non-exempt employees. Employees may be paid or receive
compensatory time. The maximum accrual for overtime is 60 hours,except for employees involved in public
safety,who can accrue up to 120 hours.
All sick leave benefits are accumulated and paid to employees upon separation from the City not to exceed
720 hours for employees hired prior to July 24, 2006, and 360 hours for employees hired after. Vacation,
sick and holiday pay benefits are accrued when incurred in the government-wide and proprietary fund
financial statements. A liability for these amounts is reported in governmental funds only if they have
matured,for example,as a result of employee resignations and retirements.
39
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 1 -Summary of Significant Accounting Policies(continued)
M. Estimates
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 fmancial statements and the reported amounts of
revenues and expenditures during the reporting period.Actual results could differ from those estimates.
N. Comparative Data and Reclassifications
Comparative data for the prior year have been presented in certain sections of the accompanying financial
statements in order to provide an understanding of changes in the City's financial position and operations.
Also,certain amounts presented in the prior year data have been reclassified in order to be consistent with
current year's presentation.
Note 2-Deposits(Cash)and Investments
Authorization for Deposits and Investments
The Texas Public Funds Investment Act(PFIA), as prescribed in Chapter 2256 of the Texas Government
Code,regulates deposits and investment transactions of the City.
In accordance with applicable statutes, the City has a depository contract with an area bank (depository)
providing for interest rates to be earned on deposited funds and for banking charges the City incurs for
banking services received. The City may place funds with the depository in interest and non-interest
bearing accounts. State law provides that collateral pledged as security for bank deposits must have a
market value of not less than the amount of the deposits and must consist of: (1)obligations of the United
States or its agencies and instrumentalities; (2)direct obligations of the State of Texas or its agencies; (3)
other obligations, the principal and interest on which are unconditionally guaranteed or insured by the
State of Texas; and/or(4)obligations of states, agencies, counties, cities, and other political subdivisions
of any state having been rated as to investment quality by a nationally recognized investment rating firm
and having received a rating of not less than A or its equivalent. City policy requires the collateralization
level to be at least 102%of market value of principal and accrued interest.
The Council has adopted a written investment policy regarding the investment of City funds as required
by the Public Funds Investment Act (Chapter 2256, Texas Government Code). The investments of the
City are in compliance with the City's investment policy. The City's investment policy is more restrictive
than the PFIA requires. It is the City's policy to restrict its direct investments to obligations of the U.S.
Government or U.S. Government Agencies, fully collateralized certificates of deposit, 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.
40
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 2-Deposits(Cash)and Investments(continued)
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 No. 2
and Development Authority of Pearland are substantially the same as the City.
The following schedule shows the City's recorded cash and investments at year-end:
Total Fair Value
Primary Component
Government Units
Cash deposits $ 55,706,673 $ 16,371,089
Temporary Investments
FFCB discount note 5,004,430 1,000,555
FHLB discount note 6,055,222 1,001,904
FHLMC discount note 5,005,182
FNMA discount note 12,035,337
$ 83,806,844 $ 18,373,548
Quoted market prices are the basis of the fair value for U.S. Treasury and Agency securities. The amount
of increase or decrease in the fair value of investments during the current year is included in the City's
investment income as follows:
Primary Component
Government Units
Interest income $ 136,749 $ 38,899
Unrealized gain(loss)on
temporary investments 24,043 2,745
Investment earnings $ 160,792 $ 41,644
41
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 2 - Deposits (Cash) and Investments(continued)
Interest Rate Risk
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
Average Average
Total Fair Value Maturity(days) Total Fair Value Maturity(days)
Temporary Investments
FFCB discount note $ 5,004,430 549 $ 1,000,555 509
FHLB discount note 6,055,222 135 1,001,904 600
FHLMC discount note 5,005,182 346
FNMA discount note 12,035,337 203
$ 28,100,171 $ 2,002,459
Portfolio weighted average maturity 275 555
The City's investment policy specifies a maximum weighted average maturity for the portfolio of 547.5
days or 18 months based on the stated maturity date of the investments. When including cash investments
the weighted average maturity for the primary government is 107 days and for the component units is 124
days.
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
days from date of purchase. The settlement date is considered the date of purchase.
Concentration of Credit Risk
With the exception of U.S. Treasury Securities and interest-bearing checking accounts that are fully
collateralized, no more than 75 percent of the City's total investment portfolio will be invested in a single
security type. As of September 30, 2012, 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
Percentage of Percentage of
Total Total
Investment Investment
Investment Type Total Fair Value Portfolio Total Fair Value Portfolio
FFCB discount note $ 5,004,430 18% $ 1,000,555 50%
FHLB discount note 6,055,222 21% 1,001,904 50%
FHLMC discount note 5,005,182 18%
FNMA discount note 12,035,337 43%
Total $ 28,100,171 100% $ 2,002,459 100%
42
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 2-Deposits(Cash)and Investments(continued)
Credit Risk
Federal Home Loan Bank, Federal Home Loan Mortgage Corporation,Federal Farm Credit Bank and the
Federal National Mortgage Association Discount Notes were rated AA+ by Standard & Poor's, AAA by
Fitch Ratings, and Aaa by Moody's Investors Service.
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
a weighted average maturity no greater than 90 days. Investments with minimum required ratings do not
qualify as authorized investments during the period the investment does not have the minimum rating.
Restricted Assets
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.
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
Primary Component
Government Units
Revenue bond debt service $ 1,567,360 $ 665,254
Customer deposits 2,813,050
Capital improvements 27,924,985
Total $ 32,305,395 $ 665,254
43
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 3-Receivables
Receivables at September 30,2012,consisted of the following:
Primary Government:
Governmental Funds:
Other
Debt Service Capital Non-Major
General Fund Fund Projects Fund Funds Total
Receivables
Property taxes,including
penalties and interest $ 563,152 $ 885,335 $ $ $ 1,448,487
Lease receivable 9,508,179 9,508,179
Sales and other taxes 3,792,071 31,558 3,823,629
Fines and forfeitures 849,821 849,821
Interest 26,369 1,342 4,642 387 32,740
Other 504,776 450,268 955,044
Allowance for
uncollectibles (11,095) (17,386) (28,481)
$ 5,725,094 $ 10,377,470 $ 4,642 $ 482,213 $ 16,589,419
Proprietary Funds:
Water and
Sewer Fund Solid Waste Fund Total
Receivables
Customer accounts $ 2,771,892 $ 777,439 $ 3,549,331
Interest 43,363 43,363
Other 65,937 65,937
Allowance for
uncollectibles (101,734) (64,519) (166,253)
$ 2,779,458 $ 712,920 $ 3,492,378
Component Units:
Pearland Tax Increment
Economic Reinvestment Development
Development Zone Authority of
Corporation Developments Pearland Total
Receivables
Sales and other taxes $ 1,305,787 $ $ $ 1,305,787
Interest 6,275 6,275
Other 2,802 360,000 362,802
Total $ 1,314,864 $ $ 360,000 $ 1,674,864
44
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 3-Receivables(continued)
Governmental funds report deferred revenue in connection with receivables for revenues that are not
considered to be available to liquidate liabilities of the current period. At the end of the current fiscal year,
the various components of deferred revenue reported in the governmental funds were as follows:
Unavailable Unearned
Delinquent property taxes receivable-general fund $ 498,094 $
Delinquent property taxes receivable-debt service fund 759,806
Lease revenues-principal 7,235,920
Municipal fines and forfeitures 849,821
Lease interest revenues 2,272,259
Grants and revenues prior to meeting all eligibility requirements 344,735
Total Deferred Revenue for Governmental Funds $ 9,343,641 $ 2,616,994
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
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.
45
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 4-Capital Assets
A summary of changes in the primary government's capital assets for the year ended September 30, 2012,
follows:
Primary Government
Balance Balance
September 30, September 30,
2011 Increases (Decreases) 2012
Governmental Activities
Capital assets not being depreciated:
Land $ 28,408,628 $ $ $ 28,408,628
Construction in progress 32,867,609 8,312,244 (18,059,666) 23,120,187
Total capital assets not being depreciated 61,276,237 8,312,244 (18,059,666) 51,528,815
Other capital assets:
Infrastructure 771,888,616 32,315,680 804,204,296
Buildings and improvements 76,671,106 3,821,113 80,492,219
Machinery and equipment 15,396,213 1,339,442 (734,542) 16,001,113
Furniture and fixtures
Total other capital assets 863,955,935 37,476,235 (734,542) 900,697,628
Less accumulated depreciation for:
Infrastructure (206,986,038) (23,466,433) (230,452,471)
Buildings and improvements (13,319,668) (2,794,104) (16,113,772)
Machinery and equipment (9,171,994) (1,442,049) 655,876 (9,958,167)
Furniture and fixtures
Total accumulated depreciation (229,477,700) (27,702,586) 655,876 (256,524,410)
Other capital assets,net 634,478,235 9,773,649 (78,666) 644,173,218
Totals $ 695,754,472 $ 18,085,893 $ (18,138,332) $ 695,702,033
Balance Balance
September 30, September 30,
2011 Increases (Decreases) 2012
Business-type Activities
Capital assets not being depreciated:
Land and intangibles $ 3,609,542 $ $ $ 3,609,542
Construction in progress 24,891,393 4,432,206 (23,904,789) 5,418,810
Total capital assets not being depreciated 28,500,935 _ 4,432,206 (23,904,789) 9,028,352
Other capital assets:
Water and sewer system 254,701,621 26,038,302 280,739,923
Buildings and improvements 31,256,473 31,256,473
Machinery and equipment 3,334,000 236,959 (105,931) 3,465,028
Contractual water rights 34,511,428 34,511,428
Total other capital assets 323,803,522 26,275,261 (105,931) 349,972,852
Less accumulated depreciation for:
Water and sewer system (75,053,176) (6,175,936) (81,229,112)
Buildings and improvements (2,641,808) (716,274) (3,358,082)
Machinery and equipment (2,035,386) (292,154) 105,931 (2,221,609)
Contractual water rights (4,523,503) (1,380,457) (5,903,960)
Total accumulated depreciation (84,253,873) (8,564,821) 105,931 (92,712,7631
Other capital assets,net 239,549,649 17,710,440 257,260,089
Totals $ 268,050,584 $ 22,142,646 $ (23.904.789) $ 266,288,441
46
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 4-Capital Assets(continued)
Depreciation was charged to programs as follows:
General government $ 479,575
Public safety 1,894,167
Public works 22,951,248
Community services 178,278
Parks and recreation 2,199,318
Total Governmental Activity $ 27,702,586
Water and sewer $ 8,564,821
Total Business-Type Activity $ 8,564,821
The City had active construction projects as of September 30, 2012. 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 $ 15,268,041 $ 5,328,936
Building Improvements 1,037,908 2,868,262
Street Improvement 5,930,085 7,608,379
Park Improvements 884,153 86,584
Water and Sewer Improvements 5,418,810 19,467,693
Totals $ 28,538,997 $ 35,359,854
47
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5 -Long-Term Debt
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, 2012. 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
2011 Additions (Reductions) 2012 Within One Year
Governmental Activities
Bonds payable:
General obligation bonds $ 207,105,000 $ 43,575,000 $ (26,510,000) $ 224,170,000 $ 5,955,000
Certificates of obligation 91,150,000 (25,725,000) 65,425,000 3,480,000
Deferred amount for issuance
premium/(discount) 3,489,368 3,548,801 (639,900) 6,398,269
Total bonds payable 301,744,368 47,123,801 (52,874,900) 295,993,269 9,435,000
Other liabilities:
Obligations under capital leases 4,032,055 (625,296) 3,406,759 644,610
Compensated absences 4,668,853 2,486,200 (2,468,929) 4,686,124 626,168
Other post-employment benefits 1,204,166 331,220 1,535,386
Total Governmental Activities $ 311,649,442 $ 49,941,221 $ (55,969,125) $ 305,621,538 $ 10,705,778
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
Council and are not intended to service a specific bond series.
48
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5-Long-Term Debt(continued)
A. General Obligation Bonds and Certificates of Obligation(continued)
A summary of the terms of general obligation bonds and certificates of obligation, as of September 30,2012,
follows:
Series Original Issue Matures Interest Rate(%) Debt Outstanding
General Obligation Bonds
Permanent Improvement,Series 2003 15,000,000 2028 4.00-6.00 $ 390,000
Permanent Improvement and Refunding Bonds,Series 2005 37,015,000 2029 3.25-5.00 22,570,000
Permanent Improvement and Refunding Bonds,Series 2006 32,165,000 2029 4.00-5.00 31,260,000
Permanent Improvement and Refunding Bonds,Series 2007 69,640,000 2032 4.00-5.00 68,565,000
Permanent Improvement,Series 2008 22,835,000 2032 4.50-5.50 21,930,000
Permanent Improvement and Refunding Bonds,Series 2009 16,735,000 2034 2.00-5.00 15,755,000
Permanent Improvement,Series 2010A 12,415,000 2035 3.00-4.00 11,700,000
Permanent Improvement Refunding,Series 2010B 1,630,000 2018 2.00-4.00 1,215,000
Permanent Improvement,Series 2011 5,400,000 2036 2.125-4.125 5,340,000
Permanent Improvement and Refunding Bonds,Series 2012 43,575,000 2029 3.00-5.00 43,575,000
Annexed Municipal Utility District Bonds
BC MUD 1 Series 2007 1,940,000 2030 3.75-4.35 1,870,000
Total General Obligation Bonds $ 224,170,000
Certificates of Obligation
Certificates of Obligation,Series 2003 25,000,000 2023 3.00-4.50 $ 2,330,000
Certificates of Obligation,Series 2004 21,000,000 2028 4.00-5.25 1,805,000
Certificates of Obligation,Series 2006 9,700,000 2029 3.65-4.68 9,160,000
Certificates of Obligation,Series 2007 23,250,000 2032 3.25-5.25 22,700,000
Certificates of Obligation,Series 2008 9,000,000 2032 3.75-5.00 8,585,000
Certificates of Obligation,Series 2009 8,520,000 2034 2.25-5.00 8,095,000
Certificates of Obligation,Series 2009A 12,145,000 2029 2.00-4.50 10,865,000
Certificates of Obligation,Series 2011 2,095,000 2021 2.09 1,885,000
Total Certificates of Obligation $ 65,425,000
Prior Year Refunding
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.
Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's
financial statements. At September 30, 2012, approximately $57.4 million of previously refunded bonds
outstanding were considered defeased.
Current Year Refunding
On February 9, 2012, the City refunded approximately $43.405 million in general obligation bonds and $6.5
million in water and sewer bonds in order to take advantage of lower interest rates which produced $5.3
million in savings over sixteen years. Net Present Value of the refunding is 9.2%, which is well over the
City's financial policy of a minimum of 3% for a refunding. The water and sewer revenue bonds will be
folded into general obligation bonds,however will be paid from water and sewer revenues.
49
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$5.7 million.
Following is a summary of future lease payments due on this equipment:
Fiscal Year Obligations
2013 $ 843,723
2014 843,723
2015 843,723
2016 696,006
2017 516,550
2018-2019 363,422
Total 4,107,146
Less: Interest (358,809)
Obligations under capital leases $ 3,748,337
50
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5-Long-Term Debt(continued)
A. General Obligation Bonds and Certificates of Obligation(continued)
The annual requirements to amortize governmental activity general obligation bonds and certificates of
obligation outstanding at September 30,2012,were as follows:
Governmental Activities
General Obligation Certificates of Obligation
Fiscal Year Principal Interest Principal Interest
2013 $ 5,955,000 $ 9,642,072 $ 3,480,000 $ 2,726,815
2014 6,360,000 9,404,956 3,635,000 2,597,558
2015 7,340,000 9,106,827 2,660,000 2,480,111
2016 8,440,000 8,737,396 2,035,000 2,390,475
2017 8,055,000 8,366,418 2,105,000 2,308,503
2018 7,940,000 8,020,829 2,680,000 2,207,678
2019 10,425,000 7,620,587 2,920,000 2,090,441
2020 11,000,000 7,152,460 2,950,000 1,966,524
2021 11,515,000 6,662,938 3,065,000 1,838,971
2022 12,250,000 6,144,356 2,960,000 1,706,746
2023 12,820,000 5,595,767 3,080,000 1,569,654
2024 13,315,000 5,018,017 3,210,000 1,425,293
2025 13,990,000 4,436,441 3,320,000 1,273,513
2026 14,355,000 3,858,602 3,580,000 1,111,516
2027 14,980,000 3,245,078 3,730,000 953,652
2028 15,615,000 2,602,908 3,885,000 803,336
2029 16,290,000 1,917,841 4,055,000 644,684
2030 8,990,000 1,346,628 3,290,000 493,950
2031 9,180,000 921,259 3,685,000 338,925
2032 9,405,000 488,591 4,065,000 159,025
2033 2,220,000 218,131 505,000 51,750
2034 2,325,000 112,794 530,000 26,500
2035 1,070,000 36,356
2036 335,000 6,909
$ 224,170,000 $ 110,664,163 $ 65,425,000 $ 31,165,623
51
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5-Long-Term Debt(continued)
B. Enterprise Fund Debt
The following is a summary of changes in the City's total business-type long-term liabilities for the year
ended September 30,2012.
Balance Balance
September 30, September 30, Amounts Due
2011 Additions (Reductions) 2012 Within One Year
Business-type Activities
Bonds payable:
Permanent Improvement Bonds $ 9,730,000 $ 6,230,000 $ (830,000) $ 15,130,000 $ 1,110,000
Water and sewer revenue bonds 113,270,000 8,670,000 (12,635,000) 109,305,000 3,615,000
Deferred amount for issuance
premium/(discount) 655,633 347,949 (121,982) 881,600
Total bonds payable 123,655,633 15,247,949 (13,586,982) 125,316,600 4,725,000
Other liabilities:
Obligations under capital leases 421,093 (78,729) 342,364 81,380
Compensated absences 558,216 288,223 (307,561) 538,878 88,945
Other post-employment benefits 224,017 58,450 282,467
Total Business-type Activities $ 124,858,959 $ 15,594,622 $ (13,973,272) $ 126,480,309 $ 4,895,325
A summary of the terms of certificates of obligation and revenue bonds recorded in the Enterprise Funds as
of September 30,2012, is as follows:
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 $ 2,835,000
Water and Sewer System Revenue Bonds,Series 2003 9,500,000 2025 4.00-6.00 670,000
Water and Sewer System Revenue and Refunding Bonds,
Series 2006 13,845,000 2031 3.74-4.82 11,500,000
Water and Sewer System Revenue and Refunding Bonds,
Series 2007 40,135,000 2031 3.50-5.50 37,505,000
Water and Sewer System Revenue Bonds,Series 2008 14,950,000 2034 4.125-5.00 14,180,000
Water and Sewer System Revenue Bonds,Series 2009 13,130,000 2034 3.00-5.50 12,090,000
Permanent Improvement and Refunding Bonds,Series 2009 11,660,000 2018 2.00-5.00 8,900,000
Water and Sewer System Revenue Bonds,Series 2010A 14,040,000 2035 1.75-4.50 13,290,000
Water and Sewer System Refunding Bonds,Series 2010B 8,970,000 2023 1.75-4.00 8,565,000
Permanent Improvement and Refunding Bonds,Series 2012 6,230,000 2025 3.00-5.00 6,230,000
Water and Sewer System Revenue Bonds,Series 2012 8,670,000 2037 2.00-3.625 8,670,000
Total Utility System Fund $ 124,435,0
52
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5-Long-Term Debt(continued)
B. Enterprise Fund Debt(continued)
The annual requirements to amortize governmental activity revenue bonds and permanent improvement
bonds outstanding at September 30,2012,were as follows:
Revenue Bonds Permanent Improvement Bonds
Fiscal Year Principal Interest Principal Interest
2013 $ 3,615,000 $ 4,724,111 $ 1,110,000 $ 565,300
2014 3,765,000 4,584,324 1,155,000 525,325
2015 3,575,000 4,439,468 1,530,000 474,812
2016 3,725,000 4,302,208 1,560,000 427,900
2017 3,880,000 4,153,814 2,415,000 344,001
2018 4,030,000 4,005,011 2,515,000 232,188
2019 4,195,000 3,847,690 365,000 171,700
2020 4,370,000 3,683,168 370,000 157,000
2021 4,615,000 3,503,757 370,000 142,200
2022 4,810,000 3,306,021 385,000 127,100
2023 5,025,000 3,100,221 395,000 111,500
2024 4,190,000 2,884,169 1,480,000 74,000
2025 4,440,000 2,689,273 1,480,000 22,200
2026 6,155,000 2,477,948
2027 6,450,000 2,181,686
2028 6,765,000 1,867,325
2029 7,080,000 1,552,814
2030 7,375,000 1,257,306
2031 7,680,000 948,088
2032 3,710,000 625,250
2033 3,895,000 444,575
2034 4,075,000 264,300
2035 1,180,000 75,725
2036 345,000 25,556
2037 360,000 13,050
$ 109,305,000 $ 60,956,857 $ 15,130,000 $ 3,375,226
53
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5-Long-Term Debt(continued)
C. Component Unit Long-Term Debt
The following is a summary of the long-term debt transactions of the Pearland Economic Development
Corporation and the Development Authority of Pearland for the year ended September 30,2012:
Balance Balance
September 30, September 30, Amounts Due
2011 Additions (Reductions) 2012 Within One Year
Pearland Economic
Development Corporation
Sales tax revenue bonds $ 25,330,000 $ $ (840,000) $ 24,490,000 $ 880,000
Deferred amount for issuance
premium/(discount) 91,161 (10,364) 80,797
Compensated absences 43,613 25,190 (30,684) 38,119 3,565
Development Authority of
Pearland
Tax Increment Revenue Bonds 49,230,000 56,915,000 (51,910,000) 54,235,000 2,720,000
Deferred Loss on Refunding (8,649,167) 2,655,294 (5,993,873)
Deferred amount for issuance
premium/(discount) (316,381) 316,381
$ 74,378,393 $ 48,291,023 $ (49,819.373) $ 72,850,043 $ 3,603,565
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 30,2012,is as follows:
Series Original Issue Matures Interest Rate(%) Debt Outstanding
Pearland Economic Development Corporation
Sales Tax Revenue Bonds,Series 2005 $ 10,590,000 2026 2.30-4.42 $ 7,965,000
Sales Tax Revenue Bonds,Series 2006 10,235,000 2030 3.66-4.75 9,285,000
Sales Tax Revenue Bonds,Series 2010 7,685,000 2030 variable-resets every 6 7,240,000
months
Development Authority of Pearland
Tax Increment Revenue Bonds,Series 2012 56,915,000 2028 2.50-5.50 54,235,000
Total Component Unit Long-Term Debt $ 78,725,000
54
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5-Long-Term Debt(continued)
C. Component Unit Long-Term Debt(continued)
The annual requirements to amortize component unit revenue bonds outstanding at September 30,2012,were
as follows:
Revenue Bonds
Pearland Economic Development Development Authority of
Corporation Pearland
Fiscal Year Principal Interest Principal Interest
2013 $ 880,000 $ 1,173,162 $ 2,720,000 $ 1,665,014
2014 920,000 1,132,524 2,800,000 1,581,511
2015 965,000 1,090,031 2,885,000 1,495,550
2016 1,010,000 1,045,383 2,970,000 1,406,981
2017 1,060,000 995,632 3,070,000 1,315,802
2018 1,115,000 943,456 3,160,000 1,221,553
2019 1,175,000 888,202 3,255,000 1,124,541
2020 1,230,000 835,519 3,120,000 1,024,613
2021 1,285,000 779,982 3,215,000 928,828
2022 1,350,000 721,322 3,030,000 830,128
2023 1,415,000 657,996 3,130,000 737,107
2024 1,480,000 591,411 3,225,000 641,016
2025 1,555,000 521,215 3,320,000 542,008
2026 1,635,000 447,066 3,425,000 440,085
2027 1,715,000 369,033 3,530,000 334,937
2028 1,805,000 281,379 3,635,000 226,566
2029 1,895,000 192,272 3,745,000 114,972
2030 2,000,000 98,737
$ 24,490,000 $ 12,764,322 $ 54,235,000 $ 15,631,212
D. Legal Compliance
Long-term debt assumed by the City upon dissolution of annexed municipal utility district in fiscal years
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.
55
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 30,2012,is as follows:
Transfers In Transfers Out Amounts Purpose
General Fund Capital Projects Fund $ 1,944,269 Transfer of funds for capital projects costs
Non-Major
General Fund Governmental Fund 481,164 Transfer of funds for operating costs
General Fund Water and Sewer Fund 1,174,049 Transfer of funds for administrative costs
Debt Service Fund Water and Sewer Fund 434,865 Transfer of funds for debt service payments
Debt Service Fund General Fund 163,490 Transfer of funds for debt service payments
Debt Service Fund Capital Projects Fund 1,559,116 Transfer of funds for capital project costs
Water and Sewer Fund General Fund 222,811 Transfer of funds for operating costs
Non-Major
Capital Projects Fund Governmental Fund 152,030 Transfer of funds for operating costs
$ 6,131,794
A summary of interfund receivables and payables at September 30,2012, follows:
Receivable Fund Payable Fund Amount Purpose
Non-Major
General Fund Governmental Fund $ 168,548 Short-term loan to fund operations
$ 168,548
Note 7-Fund Balance/Net Assets
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 $1.3
and $46.2 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.
56
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 7-Fund Balance/Net Assets(continued)
Encumbrances
Encumbrance accounting is employed as an extension of formal budgetary integration for the General
Fund, special revenue funds, and capital projects funds. September 30, 2012, certain amounts which were
classified as restricted, committed, or assigned for specific purposes have been encumbered in the
governmental funds. Significant encumbrances included in governmental fund balances are as follows:
Encumbrances
General Fund
Assigned $ 167,016
Capital Projects
Restricted 9,201,689
Aggregate non-major funds
Restricted 140,352
Aggregate component units
Restricted 90,585
$ 9,599,642
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 ICMA
Retirement Corporation is the plan administrator. 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.
57
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 9-Employee Retirement System
Plan Description and Provisions
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
842 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-fmanced
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 2011 Plan Year 2012
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.
58
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 fmances 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
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
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 2012 was$29.9 million and the City's contributions were based on
a payroll of $28.4 million. Contributions made by employees totaled $2.0 million, and the City made
contributions of$3.5 million during the fiscal year ended September 30,2012.
Three-year trend information is presented below:
2012 2011 2010
Annual Pension Cost(APC) $ 3,518,289 $ 3,302,952 $ 2,995,119
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.
All assumptions for the December 31, 2011, valuations are contained in the 2011 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 27.2 Years-Closed Period
Asset Valuation Method Amortized cost
Actuarial Assumptions:
Investment Rate of Return 7.00%
Projected Salary Increases Varies by age and service
Includes Inflation At 3.00%
Cost-of-Living Adjustments 2.1%
59
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 9-Employee Retirement System (continued)
In order to provide a reasonable retirement benefit at a reasonable cost to employers and to provide better
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
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 new rates were first reflected in 2009.
A schedule of funding status and progress for TMRS for the most recent valuation date follows:
Unfunded
Actuarial (UAAL)as a
Actuarial Actuarial Accrued Annual Percentage of
Valuation Date Actuarial Accrued Percentage Liability Covered Covered
December 31, Value of Assets Liabilities Funded (UAAL) Payroll Payroll
2011 $ 61,822,285 $ 78,404,115 79% 16,581,830 $ 27,756,555 60%
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.
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
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
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, but there is no direct liability due from the City as it
does not pay any portion of the retiree's costs.
The costs of providing these benefits and number of retired employees are as follows:
Emp/Dep Number
Total City's Coverage of Retired
Cost Cost Cost Employees
74,932 $ $ 74.932 9
Retirees who are entitled to receive retirement benefits under the City's retirement plan may purchase
continued health benefits coverage for the retiree and the retiree's dependents, but shall pay 100% of the
premium for coverage. The retiree,however, is able to receive a lower rate by participating in the City's plan
as opposed to individually purchasing health insurance. The City's coverage is secondary to Medicare when
the person becomes eligible for these benefits.
60
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
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
period of 30 years. Calculations are based on OPEB benefits provided under the terms of the substantive plan
in effect at the time of each valuation and on the pattern of sharing of costs between the City and plan
members to that point.The results of the City's most recent actuarial valuation are as follows:
Unfunded
Actuarial (UAAL)as a
Actuarial Actuarial Accrued Percentage of
Valuation Date Accrued Liability Annual Covered
October 1, Liabilities (UAAL) Covered Payroll Payroll
2010 $ 6,994,465 $ 6,994,465 $ 26,871,670 26%
Net OPEB obligations at year-end for the last three fiscal years are as follows:
2010 2011 2012
Normal cost $ 323,138 $ 206,293 $ 190,706
Amortization of UAAL 116,541 141,837 141,837
Annual required contribution(ARC) 439,679 348,130 332,543
Interest on prior-year net OPEB obligation 23,032 41,540 57,127
Estimated increase in Net OPEB obligation 462,711 389,670 389,670
Net OPEB Obligation-beginning of year 575,801 1,038,512 1,428,182
Net OPEB obligation-end of year $ 1,038,512 $ 1,428,182 $ 1,817,852
The annual cost recorded to the general ledger for fiscal year 2012 is$389,670,which includes the estimated
normal cost of$190,706 to provide for the benefits earned by active employees. The total liability, which is
not recorded to the general ledger, is$6,994,465,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 1,2010 include using the Projected
Unit Credit actuarial costs method, a closed amortization period of 28 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. Calculations are based on the OPEB benefits provided under the terms of
the substantive plan in effect at the time of each valuation and on the pattern of sharing costs between
employer and plan members to that point.
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.
61
CITY OF PEARLAND, TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 11 -Commitments and Contingencies
Litigation and Other Contingencies
The City was involved in various lawsuits and arbitration proceedings at September 30, 2012. 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.
Reimbursements due to Developers
Pursuant to the Local Government Code,the Economic Development Corporation offers incentives to attract
and retain businesses to Pearland.The following are the current incentives.
Current Incentives Amount Prior Years FY 2012 Balance
Altus Harbor $87,500 $50,000 $ 15,000 $22,500
Braska/Neela,Inc 150,000 0 0 150,000
Cardiovascular Systems,Inc. 5,100,000 4,100,000 0 1,000,000
Hatch Mott 100,000 0 0 100,000
KS Management 2,600,000 0 0 2,600,000
KS Management Sales Tax Est. 600,000 0 0 600,000
Merit Medical Systems,Inc 888,000 0 0 888,000
Ref-Chem 340,000 0 0 340,000
SCR HH GP,LLC 300,000 180,000 0 120,000
Speed Shore 80,000 0 66,000 0
TurboCare 105,000 0 101,000 0
Zapp Precision Wire,Inc 29,500 0 0 29,500
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
ISD Suspense Account; (3) an amount sufficient to pay reasonable current and anticipated administrative
and operating costs of the Zone,as determined by the Zone Board.
62
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 11 -Commitments and Contingencies(continued)
Shadow Creek Town Center(continued)
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, 2012,the City remitted sales tax to the developer pursuant to the agreement in the
amount of$1,456,768, of which $502,699 was remitted in fiscal year 2012. To date, $1.0 million has
been reimbursed towards principal and$448,585 for interest.
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, 2012,the City believed the amounts paid
on Workers' Compensation would not change significantly from the amounts recorded.
63
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
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.
UHCL has an option to purchase the facility upon the commencement date of July 2010 until the 61'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, 2012, the future minimum
debt service lease payments to be received under the lease are as follows:
Fiscal year ending September 30, Payment
2013 $ 673,447
2014 664,384
2015 654,255
2016 643,059
2017 627,598
2018-2029 6,300,155
Total $ 9,562,898
PEDC Operating Lease
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.
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, 2012, the future minimum debt
service lease payments to be received under the lease are as follows:
Fiscal year ending September 30, Payment
2013 $ 113,384
2014 111,858
2015 110,153
2016 108,268
2017 105,665
2018-2029 1,060,718
Total $ 1,610,046
Note 15-Subsequent Events
64
CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Annexation of Brazoria County MUD No.4
On December 31, 2012 the City annexed Brazoria County Municipal Utility District No. 4 and abolished
the District. This annexation will add 600 acres and an additional 1,332 single family housing units as
well as commerical property to the City. All assets and liabilities shall transfer to the City, with the City
assuming approximately $2.5 million in debt outstanding and capital assets of$8.7 million, excluding
streets and sidewalks.All City services shall be provided to the citizens in the district.
Lease Purchase
City Council approved a Notice of Intent to reimburse itself from future capital lease proceeds on October
11, 2011 not to exceed $1,300,000. On November 12, 2012 City Council awarded the bid to Chase
Equipment Finance that provided the lowest overall interest rate of 1.29%. The amount financed via
lease/purchase is$1,179,413.39 as follows:
General Fund:
Fire Truck $ 550,000
Vactor Truck Body 88,850
Vehicles 379,263
(2)Ambulances 161,300
Total $1,179,413
The first semi-annual payment is due January 2013 in the amount of$137,552.91 with the final semi-
annual payment due July 2019 in the amount of$40,989.60. There is no penalty for pre-payment.
65
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66
Required Supplementary Information
67
CITY OF PEARLAND,TEXAS
GENERAL FUND
SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN
FUND BALANCES-BUDGET AND ACTUAL
For the year ended September 30,2012
Variance with
Final Budget-
Budgeted Amounts Positive
Original Final Actual (Negative)
Revenues
Property taxes $ 10,840,389 $ 10,748,148 $ 10,861,341 $ 113,193
Sales and use taxes 13,631,831 14,363,666 14,814,936 451,270
Franchise fees 5,361,910 5,697,733 5,669,958 (27,775)
Licenses and permits 1,741,529 2,224,046 2,320,103 96,057
Fees and forfeitures 2,851,290 2,999,214 3,164,068 164,854
Charges for services 11,292,491 11,564,231 11,890,808 326,577
Investment earnings 35,000 56,729 54,611 (2,118)
Other 307,904 525,887 623,824 97,937
Total Revenues 46,062,344 48,179,654 49,399,649 1,219,995
Expenditures
Current:
General government 7,203,370 8,574,634 8,241,509 333,125
Public safety 25,968,194 26,389,773 25,168,443 1,221,330
Public works 5,773,975 6,100,143 5,506,477 593,666
Community services 3,982,113 4,087,483 3,861,520 225,963
Parks and recreation 7,540,139 7,463,214 6,775,316 687,898
Total Expenditures 50,467,791 52,615,247 49,553,265 3,061,982
Excess(deficiency)of revenues
over expenditures (4,405,447) (4,435,593) (153,616) 4,281,977
Other Financing Sources(Uses)
Proceeds from capital leases 1,222,785 1,143,465 (1,143,465)
Transfers in 3,786,100 3,660,348 3,599,482 (60,866)
Transfers out (1,058,162) (397,453) (397,453)
Total Other Financing Sources(Uses) 3,950,723 4,406,360 3,202,029 (1,204,331)
Net change in fund balances (454,724) (29,233) 3,048,413 3,077,646
Fund balances,beginning 14,523,548 14,523,548 14,523,548
Fund balances,ending $ 14,068,824 $ 14,494,315 $ 17,571,961 $ 3,077,646
68
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
30,2012.
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,
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.
69
CITY OF PEARLAND,TEXAS
REQUIRED PENSION SYSTEM SUPPLEMENTARY INFORMATION
September 30,2012
TEXAS MUNICIPAL RETIREMENT SYSTEM(UNAUDITED)
Schedule of Funding Progress
Unfunded
Actuarial (UAAL)as a
Actuarial Actuarial Accrued Annual Percentage of
Valuation Date Actuarial Accrued Percentage Liability Covered Covered
December 31, Value of Assets Liabilities Funded (UAAL) Payroll Payroll
2011 $ 61,822,285 $ 78,404,115 79% 16,581,830 $ 27,756,555 60%
2010 54,358,041 72,195,923 75% 17,837,882 26,871,670 66%
2009 40,139,722 57,645,422 70% 17,505,700 25,519,548 69%
CITY OF PEARLAND OTHER POST-EMPLOYMENT BENEFIT OBLIGATION
Schedule of Funding Progress
Unfunded
Actuarial (UAAL)as a
Actuarial Actuarial Accrued Annual Percentage of
Valuation Date Actuarial Accrued Percentage Liability Covered Covered
October 1, Value of Assets Liabilities Funded (UAAL) Payroll _ Payroll
2010 6,994,465 0% 6,994,465 26,871,670 26%
While retirees get the benefit of an overall employee blended rate for the Other Post-Employment Benefit
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.
Trend information is designed to provide information about the progress made in accumulating sufficient
assets to pay benefits when due.
70
Other Supplementary Information
71
Combining and Individual Fund
Statements and Schedules
73
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.
Educational TV Fund—A fund created to account for the revenues and expenditures associated with the
purchase of equipment for public-access television broadcasting under rules set forth by the Federal
Communications Commission(FCC).
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.
75
CITY OF PEARLAND,TEXAS
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
September 30,2012
Hotel/Motel City-Wide Court
Tax Court Security Donations _ Technology
Assets
Cash and cash equivalents $ 1,643,314 $ 142,669 $ 71,364 $ 243,608
Receivables(net of allowance
for uncollectibles) 213,464 2,740 2,515
Prepaid items 3,322
Total Assets $ 1,860,100 $ 145,409 $ 71.364 $ 246,123
Liabilities and Fund Balances
Liabilities:
Accounts payable $ 36,271 $ 1,548 $ $ 313
Due to other funds
Deferred revenue 2,740 2,515
Total Liabilities 36.271 4,288 2,828
Fund Balance:
Non-spendable 3,322
Restricted for:
Community development
programs 1,820,507 66,190
Public safety 141,121 5,174 243,295
Total Fund Balances 1,823,829 141,121 71,364 243,295
Total Liabilities and
Fund Balances $ 1,860,100 $ 145,409 $ 71,364 $ 246,123
76
Page 1 of 2
Parks and
Regional Park Recreation
Detention Donations Police Seizure Development
$ 6 $ 100,082 $ 315,203 $ 940,911
8,350 3,545 25
$ 6 $ 108,432 $ 318.748 $ 940,936
$ $ $ 40,290 $ 81,234
40,290 81,234
6 108,432 859,702
278,458
6 108,432 278,458 859,702
$ 6 $ 108,432 $ 318,748 $ 940,936
77
CITY OF PEARLAND,TEXAS
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
September 30,2012
Juvenile
Traffic Impact Management
Sidewalk Grant Fund Improvements Fund
Assets
Cash and cash equivalents $ 205,363 $ 212 $ 591,721 $ 36,386
Receivables(net of allowance
for uncollectibles) 217,212 387 1,208
Prepaid items
Total Assets $ 205,363 $ 217,424 $ 592,108 $ 37,594
Liabilities and Fund Balances
Liabilities:
Accounts payable $ $ 20,865 $ $ 1,479
Due to other funds 168,548
Deferred revenue 1,208
Total Liabilities 189,413 2,687
Fund Balance:
Non-spendable
Restricted for:
Community development
programs 205,363 28,011 592,108
Public safety 34,907
Total Fund Balances 205,363 28,011 592,108 34,907
Total Liabilities and
Fund Balances $ 205,363 $ 217,424 $ 592,108 $ 37,594
78
Page 2 of 2
Educational
TV U of H Fund Totals
$ 53,068 $ 85,700 $ 4,429,607
31,558 1,209 482,213
3,322
$ 84,626 $ 86,909 $ 4,915,142
$ 55,844 $ 237,844
168,548
6,463
55,844 412,855
3,322
84,626 31,065 3,796,010
702,955
84,626 31,065 4,502,287
$ 84,626 $ 86,909 $ 4,915,142
79
CITY OF PEARLAND,TEXAS
COMBINING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES
NON-MAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30,2012
Hotel/Motel City-Wide ('curt
Tax Court Security Donations Tcchnolo*
Revenues
Sales and use taxes $ 816,640 $ $ $
Franchise fees
Fines and forfeitures 62,493 74,945
Investment earnings 1.471 113 51 179
Intergovernmental
Other 33,179
Total Revenues 818.1 1 1 62,606 33,230 75,124
Expenditures
Current:
General government 449,174
Public safety 14,937
Public works
Community services 61,525 7,697 41,268
Parks and recreation
Capital outlay
Total Expenditures 449,174 61,525 22,634 41,268
Excess(deficiency)of
revenues over expenditures 368,937 1,081 10,596 33,856
Other Financing
Sources(Uses)
Transfers out
Total Other Financing
Sources(Uses)
Net change in fund balances 368,937 1,081 10,596 33,856
Fund balances-beginning 1,454,892 140,040 60,768 209,439
Fund balances-ending $ 1,823,829 $ 141,121 $ 71,364 $ 243,295
80
Page 1 of 2
Parks and
Regional Park Recreation
Detention Donations Police Seizure Development
$ $ $ $
6 74 209 1,054
24,750 84,559 178,773 65,308
24,756 84,633 178,982 66,362
59,789
65,149
8,085 232,935
65,149 67,874 232,935
24,756 19,484 111,108 (166,573)
(24,750) (27,280)
(24,750) (27,280)
6 19,484 111,108 (193,853)
88,948 167,350 1,053,555
$ 6 $ 108,432 $ 278,458 $ 859,702
81
CITY OF PEARLAND, TEXAS
COMBINING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES
NON-MAJOR GOVERNMENTAL FUNDS
For the Year Ended September 30,2012
Juvenile
Traffic Impact Management
Sidewalk Grant Fund Improvements Fund
Revenues
Sales and use taxes $ $ $ $
Franchise fees
Fines and forfeitures 72,529
Investment earnings 167 704 25
Intergovernmental 1,236,628
Other 5,000
Total Revenues 167 1,241,628 704 72.554
Expenditures
Current:
General government
Public safety 119,246
Public works 1,980 26,156
Community services 198,688 57,048
Parks and recreation 208,059
Capital outlay 131,191
Total Expenditures 1,980 683,340 57,048
Excess(deficiency)of
revenues over expenditures (1,813) 558,288 704 15,506
Other Financing
Sources(Uses)
Transfers out (12,072) (557,940)
Total Other Financing
Sources(Uses) (12,072) (557,940)
Net change in fund balances (13,885) 348 704 15,506
Fund balances- beginning 219,248 �27 591,404 19,401
Fund balances-ending $ 205,363 $ 28,011 $ 592,108 $ 34,907
82
Page 2 of 2
Educational
TV U of H Fund Totals
$ $ $ 816,640
146,988 146,988
209,967
20 57 4,130
182,860 1,419,488
64,231 455,800
147,008 247,148 3,053,013
449,174
193,972
28,136
18,036 384,262
217,346 490,554
44,346 416,557
62,382 217,346 1,962,655
84,626 29,802 1,090,358
(622,042)
(622,042)
84,626 29,802 468,316
1,263 4,033,971
$ 84,626 $ 31,065 $ 4,502,287
83
CITY OF PEARLAND,TEXAS
DEBT SERVICE FUND
SCHEDULE OF REVENUES,EXPENDITURES,AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative) 2011
Revenues
Property taxes $ 23,202,520 $ 23,500,454 $ 297,934 $ 22,586,408
Investment earnings 12,215 9,784 (2,431) 29,217
Miscellaneous 796,087 796,087 805,071
Total Revenues 24,010,822 24,306,325 295,503 23,420,696
Expenditures
Debt Service:
Principal 9,372,486 9,373,377 (891) 8,217,402
Interest 12,543,037 12,400,810 142,227 13,302,477
Intergovernmental 3,992,293 3,992,293 3,954,050
Total Expenditures 25,907,816 25,766,480 141,336 25,473,929
Revenues over(under)expenditures (1,896,994) (1,460,155) 436,839 (2,053,233)
Other Financing Sources(Uses)
Proceeds from long-term debt 49,805,000 49,805,000 1,630,000
Premium on general obligation debt 3,808,801 3,808,801 55,521
Payments to refunding escrow agent (54,478,177) (54,478,177) (1,630,140)
Transfers from other funds 2,157,471 2,157,471 451,704
Total Other Financing Sources(Uses) 1,293,095 1,293,095 507,085
Net change in fund balance (603,899) (167,060) 436,839 (1,546,148)
Fund Balances-Beginning 5,159,539 5,159,539 6,705,689
Fund Balances-Ending $ 4,555,640 $ 4,992,479 $ 436,839 $ 5,159,539
84
CITY OF PEARLAND,TEXAS
SPECIAL REVENUE FUND-HOTEL/MOTEL TAX
SCHEDULE OF REVENUES,EXPENDITURES,AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2012
with comparative actual totals jor the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative) 2011
Revenues
Hotel occupancy tax $ 768,930 $ 816,640 $ 47,710 $ 652,110
Investment earnings 993 1,471 478 1,848
Other 25
Total Revenues 769,923 818,111 48,188 653,983
Expenditures
Current:
General government 445,944 449,174 (3,230) 446,973
Total Expenditures 445,944 449,174 (3,230) 446,973
Revenues over(under)expenditures 323,979 368,937 44,958 207,010
Other Financing Sources(Uses)
Transfers to other funds (170,537)
Net change in fund balance 323,979 368,937 44,958 36,473
Fund Balances-Beginning 1,454,892 1,454,892 1,418,419
Fund Balances-Ending $ 1,778,871 $ 1,823,829 $ 44,958 $ 1,454,892
85
I
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 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative) 2011
Revenues
Fines and forfeitures S 59,789 $ 62,493 $ 2,704 $ 54,323
Investment earnings 73 113 40 198
Total Revenues 59,862 62,606 2,744 54,521
Expenditures
Current:
Community services 59,018 61,525 (2,507) 4,078
Total Expenditures 59,018 61,525 (2,507) 4,078
Revenues over(under)expenditures 844 1,081 237 50,443
Other Financing Sources(Uses)
Transfers to other funds (45,706)
Net change in fund balance 844 1,081 237 4,737
Fund Balances-Beginning 140,040 140,040 135,303
Fund Balances-Ending $ 140,884 $ 141,121 $ 237 $ 140,040
86
CITY OF PEARLAND,TEXAS
SPECIAL REVENUE FUND-CITY-WIDE DONATIONS
SCHEDULE OF REVENUES,EXPENDITURES,AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative) 2011
Revenues
Investment earnings $ 35 $ 51 $ 16 $ 76
Other income 31,934 33,179 1,245 29,299
Total Revenues 31,969 33,230 1,261 29,375
Expenditures
Current:
Public safety 15,331 14,937 394 13,004
Community services 7,220 7,697 (477) 89
Total Expenditures 22,551 22,634 (83) 13,093
Revenues over(under)expenditures 9,418 10,596 1,178 16,282
Net change in fund balance 9,418 10,596 1,178 16,282
Fund Balances-Beginning 60,768 60,768 44,486
Fund Balances-Ending $ 70,186 $ 71,364 $ 1,178 $ 60,768
87
CITY OF PEARLAND,TEXAS
SPECIAL REVENUE FUND-COURT TECHNOLOGY
SCHEDULE OF REVENUES,EXPENDITURES,AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative) 2011
Revenues
Fines and forfeitures $ 73,800 $ 74,945 $ 1,145 $ 65,200
Investment earnings 105 180 75 287
Total Revenues 73,905 75,125 1,220 65,487
Expenditures
Current:
Community services 46,360 41,268 5,092 52,103
Total Expenditures 46,360 41,268 5,092 52,103
Revenues over(under)expenditures 27,545 33,857 6,312 13,384
Net change in fund balance 27,545 33,857 6,312 13,384
Fund Balances-Beginning 209,438 209,438 196,054
Fund Balances-Ending $ 236,983 $ 243,295 $ 6,312 $ 209,438
88
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 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative) 2011
Revenues
Investment earnings $ 100 $ 6 $ (94) $ 5
Other income 24,750 24,750
Total Revenues 24,850 24,756 (94) 5
Other Financing Sources(Uses)
Operating Transfers(Out) (24,750) (24,750) (4,040)
Net change in fund balance 100 6 (94) (4,035)
Fund Balances-Beginning 4,035
Fund Balances-Ending $ 100 $ 6 $ (94) $
89
CITY OF PEARLAND,TEXAS
SPECIAL REVENUE FUND-PARK DONATIONS
SCHEDULE OF REVENUES,EXPENDITURES,AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative) 2011
Revenues
Investment earnings S 40 $ 74 $ 34 $ 89
Other 86,000 84,559 (1,441) 79,861
Total Revenues 86,040 84,633 (1,407) 79,950
Expenditures
Current:
Parks and recreation 79,296 65,149 14,147 41,396
Total Expenditures 79,296 65,149 14,147 41,396
Revenues over(under)expenditures 6,744 19,484 12,740 38,554
Net change in fund balance 6,744 19,484 12,740 38,554
Fund Balances-Beginning 88,948 88,948 50,394
Fund Balances-Ending $ 95,692 $ 108,432 $ 12,740 $ 88,948
90
CITY OF PEARLAND,TEXAS
SPECIAL REVENUE FUND-POLICE SEIZURE
SCHEDULE OF REVENUES,EXPENDITURES,AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative) 2011
Revenues
Investment earnings $ 126 $ 209 $ 83 $ 299
Other 157,335 178,773 21,438 31,941
Total Revenues 157,461 178,982 21,521 32,240
Expenditures
Current:
Public safety 58,001 59,789 (1,788) 100,153
Capital outlay 8,085 8,085 11,000
Total Expenditures 66,086 67,874 (1,788) 111,153
Revenues over(under)expenditures 91,375 111,108 19,733 (78,913)
Net change in fund balance 91,375 111,108 19,733 (78,913)
Fund Balances-Beginning 167,350 167,350 246,263
Fund Balances-Ending $ 258,725 $ 278,458 $ 19,733 $ 167,350
91
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 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual _(Negative) 2011
Revenues
Investment earnings $ 635 $ 1,054 $ 419 $ 1,605
Other 57,058 65,308 8,250 54,040
Total Revenues 57,693 66,362 8,669 55,645
Expenditures
Current:
Parks and recreation 635
Capital outlay 480,717 232,935 247,782 26,107
Total Expenditures 480,717 232,935 247,782 26,742
Revenues over(under)expenditures (423,024) (166,573) 256,451 28,903
Other Financing Sources(Uses)
Transfers(to)other funds (27,280) (27,280) (139,574)
(27,280) (27,280) (139,574)
Net change in fund balance (450,304) (193,853) 256,451 (110,671)
Fund Balances-Beginning 1,053,555 1,053,555 1,164,226
Fund Balances-Ending $ 603,251 $ 859,702 $ 256,451 $ 1,053,555
92
CITY OF PEARLAND,TEXAS
SPECIAL REVENUE FUND-SIDEWALK
SCHEDULE OF REVENUES,EXPENDITURES,AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative) 2011
Revenues
Investment earnings $ 110 $ 167 $ 57 $ 306
Other (1,980) 1,980 5,803
Total Revenues (1,870) 167 2,037 6,109
Expenditures
Current:
Public works 1,980 (1,980)
Total Expenditures 1,980 (1,980)
Revenues over(under)expenditures (1,870) (1,813) 57 6,109
Other Financing Sources(Uses)
Transfers(to)other funds (12,072) (12,072) -
Total other financing sources(uses) (12,072) (12,072)
Net change in fund balance (13,942) (13,885) 57 6,109
Fund Balances-Beginning 219,248 219,248 213,139
Fund Balances-Ending $ 205,306 $ 205,363 $ 57 $ 219,248
93
CITY OF PEARLAND,TEXAS
SPECIAL REVENUE FUND-GRANT FUND
SCHEDULE OF REVENUES,EXPENDITURES,AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative) 2011
Revenues
Investment earnings $ 5 $ $ (5) $ 6
Intergovernmental 1,748,801 1,236,626 (512,175) 694,329
Other 5,000 5,000
Total Revenues 1,753,806 1,241,626 (512,180) 694,335
Expenditures
Current:
General government 525 525 18,435
Public safety 157,554 119,246 38,308 85,489
Public works 180,117 26,156 153,961
Community service 193,013 198,688 (5,675) 292,871
Parks and recreation 182,367 208,059 (25,692) 36,939
Capital outlay 421,362 131,191 290,171 157,564
Total Expenditures 1,134,938 683,340 451,598 591,298
Revenues over(under)expenditures 618,868 558,286 (60,582) 103,037
Other Financing Sources(Uses)
Transfers from other funds
Transfers(to)other funds (618,863) (557,940) 60,923 (105,786)
Total other financing
sources(uses) (618,863) (557,940) 60,923 (105,786)
Net change in fund balance 5 346 341 (2,749)
Fund Balances-Beginning 27,665 27,665 30,414
Fund Balances-Ending $ 27,670 $ 28,011 $ 341 $ 27,665
94
CITY OF PEARLAND,TEXAS
SPECIAL REVENUE FUND-TRAFFIC IMPACT IMPROVEMENTS
SCHEDULE OF REVENUES,EXPENDITURES,AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative) 2011
Revenues
Investment earnings $ 600 $ 704 $ 104 $ 790
Other 44,800
Total Revenues 600 704 104 45,590
Other Financing Sources/(Uses)
Transfers(to)other funds (750)
Total Other Financing
Sources(Uses) (750)
Net change in fund balance 600 704 104 44,840
Fund Balances-Beginning 591,404 591,404 546,564
Fund Balances-Ending $ 592,004 $ 592,108 $ 104 $ 591,404
95
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 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative) 2011
Revenues
Fines and Forfeitures $ 71,075 $ 72,529 $ 1,454 $ 60,955
Investment earnings 12 25 13 28
Total Revenues 71,087 72,554 1,467 60,983
Expenditures
Current:
Community services 54,245 57,048 (2,803)
Total Expenditures 54,245 57,048 (2,803)
Revenues over(under)expenditures 16,842 15,506 (1,336) 60,983
Other Financing Sources/(Uses)
Transfers(to)other funds (50,653)
Total other financing sources(uses) (50,653)
Net change in fund balance 16,842 15,506 (1,336) 10,330
Fund Balances-Beginning 19,401 19,401 9,071
Fund Balances-Ending $ 36,243 $ 34,907 $ (1,336) $ 19,401
96
CITY OF PEARLAND,TEXAS
SPECIAL REVENUE FUND-EDUCATIONAL TV
SCHEDULE OF REVENUES,EXPENDITURES,AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative)
Revenues
Investment earnings $ $ 20 $ 20
Franchise taxes 169,500 146,988 (22,512)
Other
Total Revenues 169,500 147,008 (22,492)
Expenditures
Current:
Community services 12,161 18,036 (5,875)
Capital outlay 54,958 44,346 10,612
Total Expenditures 67,119 62,382 4,737
Revenues over(under)expenditures 102,381 84,626 (27,229)
Net change in fund balance 102,381 84,626 (27,229)
Fund Balances-Beginning
Fund Balances-Ending $ 102,381 $ 84,626 $ (27,229)
97
CITY OF PEARLAND,TEXAS
SPECL9L REVENUE FUND-U OF H FUND
SCHEDULE OF REVENUES,EXPENDITURES,AND
CHANGES IN FUND BALANCE-BUDGET AND ACTUAL
For the Year Ended September 30,2012
with comparative actual totals for the year ended September 30,2011
2012
Variance
Positive/
Final Budget Actual (Negative) 2011
Revenues
Investment earnings $ 30 $ 57 $ 27 $ 34
Intergovernmental 185,789 182,860 (2,929) 255,783
Other 62,426 64,231 1,805 3,255
Total Revenues 248,245 247,148 (1,097) 259,072
Expenditures
Current:
Parks and recreation 248,215 217,346 30,869 261,858
Total Expenditures 248,215 217,346 30,869 261,858
Revenues over(under)expenditures 30 29,802 29,772 (2,786)
Net change in fund balance 30 29,802 29,772 (2,786)
Fund Balances-Beginning 1,263 1,263 4,049
Fund Balances-Ending $ 1,293 $ 31,065 $ 29,772 $ 1,263
98
Discretely Presented Component Units
Fund Based Financial Statements
99
CITY OF PEARLAND,TEXAS
DISCRETELY PRESENTED COMPONENT UNITS
BALANCE SHEETS-GOVERNMENTAL FUNDS
September 30,2012
Pearland
Economic Tax Increment Development Total
Development Reinvestment Authority of Component
Corporation Zone#2 Pearland Units
Assets
Cash and equivalents $ 9,562,003 $ 4,655,490 $ 1,488,342 $ 15,705,835
Investments 2,002,459 2,002,459
Receivables-less allowance for
uncollectibles 1,314,864 360,000 1,674,864
Prepaid items 28,435 28,435
Restricted cash 665,254 665,254
Total Assets $ 13,573,015 $ 4,655,490 $ 1,848,342 $ 20,076,847
Liabilities
Accounts payable and
accrued expenses $ 72,986 $ 361,444 $ 33 $ 434,463
Customer deposits 38,333 38,333
Total Liabilities 111,319 361,444 33 472,796
Fund Balance
Non-spendable:
Prepaid items 28,435 28,435
Restricted for:
Debt service 665,254 665,254
Economic development 12,768,007 4,294,046 1,848,309 18,910,362
Total Fund Balance 13,461,696 4,294,046 1,848,309 19,604,051
Total Liabilities and Fund Balance $ 13,573,015 $ 4,655,490 $ 1,848,342 $ 20,076,847
Reconciliation from fund balance to net assets
fund balance $ 13,461,696 $ 4,294,046 $ 1,848,309 $ 19,604,051
Add capital assets 9,634,200 9,634,200
Less revenue bonds payable (24,241,137) (53,957,085) (78,198,222)
Less other long-term liabilities (34,554) (34,554)
Less interest payable (93,983) (133,385) (227,368)
Net Assets $ (1.277,343) $ 4,294,046 S (46,248,288) $ (43,231,585)
100
CITY OF PEARLAND,TEXAS
DISCRETELY PRESENTED COMPONENT UNITS
STATEMENT OF REVENUES,EXPENDITURES,AND
CHANGES IN FUND BALANCE-GOVERNMENTAL FUNDS
For the Year Ended September 30,2012
Pearland
Economic Tax Increment Development Total
Development Reinvestment Authority of Component
Corporation Zone#2 Pearland Units
Revenues
Taxes:
Property taxes $ $ 17,924,775 $ $ 17,924,775
Sales and use taxes 7,337,389 7,337,389
Charges for services 414,000 414,000
Investment earnings 34,161 5,844 1,641 41,646
Other 44,353 44,353
Total Revenues 7,829,903 17,930,619 1,641 25,762,163
Expenditures
Current:
General government 12,782 12,782
Economic development 1,397,984 5,894,105 13,105,300 20,397,389
Intergovernmental 165,638 165,638
Debt Service
Principal 840,000 2,680,000 3,520,000
Interest 1,204,742 1,642,734 2,847,476
Bond issuance cost 286,458 286,458
Total Expenditures 3,608,364 5,894,105 17,727,274 27,229,743
Revenues over(under)expenditures 4,221,539 12,036,514 (17,725,633) (1,467,580)
Other Financing Sources(Uses)
Transfers from other component units 12,016,051 12,016,051
Transfers(to)other component units (12,016,051) (12,016,051)
Issuance of revenue bonds 56,915,000 56,915,000
Payment to escrow agent (54,746,730) (54,746,730)
Total other financing sources(uses) (12,016,051) 14,184,321 2,168,270
Changes in fund balance 4,221,539 20,463 (3,541,312) 700,690
Fund Balances-Beginning 9,240,157 4,273,583 5,389,621 18,903,361
Fund Balances-Ending $ 13,461,696 $ 4,294,046 $ 1,848,309 $ 19,604,051
Reconciliation from changes in fund
balance to changes in net assets
Change in fund balance $ 4,221,539 $ 20,463 $ (3,541,312) $ 700,690
Add principal payments 840,000 2,680,000 3,520,000
Less amortization (2,377,379) (2,377,379)
Changes in interest payable 1,628 50,898 52,526
Payment to escrow agent 54,746,730 54,746,730
Bond proceeds (56,915,000) (56,915,000)
Less post-employment benefit
liability expense (30,194) (30,194)
Less depreciation (245,534) (245,534)
Changes in Net Assets $ 4,787,439 $ 20,463 $ (5,356,063) $ (548,161)
101
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102
Long-Term Debt Amortization Schedules
103
CITY OF PEARLAND,TEXAS
COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT
BY MATURITY DATE
September 30,2012
Permanent Improvement Bonds,Series 2003 Permanent Improvement&Refund Bonds,Series 2005
Fiscal Year Principal Interest Total Principal Interest Total
2013 $ 390,000 $ 11,700 $ 401,700 1,845,000 999,761 $ 2,844,761
2014 1,930,000 925,414 2,855,414
2015 2,010,000 836,564 2,846,564
2016 2,115,000 733,439 2,848,439
2017 865,000 663,264 1,528,264
2018 995,000 626,064 1,621,064
2019 380,000 598,374 978,374
2020 385,000 582,643 967,643
2021 395,000 566,408 961,408
2022 405,000 549,506 954,506
2023 875,000 522,088 1,397,088
2024 1,185,000 473,650 1,658,650
2025 1,245,000 412,900 1,657,900
2026 1,310,000 349,025 1,659,025
2027 3,045,000 247,763 3,292,763
2028 1,810,000 134,000 1,944,000
2029 1,775,000 44,375 1,819,375
2030
2031
2032
2033
2034
2035
2036
$ 390,000 $ 11,700 $ 401,700 $ 22,570,000 S 9265,235 S 31 835,235
Certificates of Obligation,Series 2003 Certificates of Obligation,Series 2004
Fiscal Year Principal Interest Total Principal Interest Total
2013 $ 1,295,000 $ 61,541 $ 1,356,541 $ 385,000 $ 64,500 $ 449,500
2014 1,035,000 18,630 1,053,630 710,000 42,600 752,600
2015 710,000 14,200 724,200
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
$ 2,330,000 $ 80,171 $ 2,410,171 $ 1,805,000 $ 121,300 $ 1,926,300
104
Page 1 of 3
Certificates of Obligation,Series 2006 BCMUD#1 Bonds,Series 2007
Fiscal Year Principal Interest Total Principal Interest Total
2013 $ 335,000 $ 414,688 $ 749,688 $ 60,000 $ 77,865 $ 137,865
2014 355,000 393,557 748,557 65,000 75,585 140,585
2015 370,000 371,354 741,354 70,000 73,082 143,082
2016 395,000 349,654 744,654 75,000 70,353 145,353
2017 405,000 330,932 735,932 75,000 67,428 142,428
2018 405,000 314,074 719,074 80,000 64,428 144,428
2019 505,000 294,838 799,838 85,000 61,228 146,228
2020 470,000 274,001 744,001 90,000 57,827 147,827
2021 500,000 253,146 753,146 95,000 54,228 149,228
2022 525,000 230,912 755,912 100,000 50,333 150,333
2023 555,000 207,218 762,218 110,000 46,232 156,232
2024 585,000 181,991 766,991 115,000 41,612 156,612
2025 605,000 155,363 760,363 120,000 36,782 156,782
2026 730,000 125,325 855,325 130,000 31,622 161,622
2027 765,000 91,688 856,688 135,000 26,033 161,033
2028 805,000 56,363 861,363 145,000 20,227 165,227
2029 850,000 19,125 869,125 155,000 13,920 168,920
2030 165,000 7,178 172,178
2031
2032
2033
2034
2035
2036
S 9,160,000 $ 4,064,226 $ 13,224,226 S 1,870 000 S 875,963 $ 2,745,963
Permanent Improvement&Refund Bonds,Series 2006 Certificates of Obligation,Series 2007
Fiscal Year Principal Interest Total Principal Interest Total
2013 $ 400,000 $ 1,490,994 $ 1,890,994 $ 250,000 $ 1,022,088 $ 1,272,088
2014 410,000 1,474,794 1,884,794 300,000 1,007,650 1,307,650
2015 430,000 1,457,994 1,887,994 350,000 990,588 1,340,588
2016 445,000 1,440,216 1,885,216 400,000 970,900 1,370,900
2017 460,000 1,421,263 1,881,263 450,000 948,587 1,398,587
2018 480,000 1,401,288 1,881,288 1,005,000 910,394 1,915,394
2019 1,335,000 1,361,050 2,696,050 1,060,000 856,187 1,916,187
2020 1,485,000 1,293,888 2,778,888 1,115,000 799,094 1,914,094
2021 1,580,000 1,217,263 2,797,263 1,170,000 739,112 1,909,112
2022 1,675,000 1,135,888 2,810,888 1,230,000 676,113 1,906,113
2023 2,150,000 1,040,263 3,190,263 1,295,000 609,831 1,904,831
2024 2,150,000 932,763 3,082,763 1,360,000 540,137 1,900,137
2025 2,270,000 822,263 3,092,263 1,430,000 466,900 1,896,900
2026 2,395,000 705,638 3,100,638 1,500,000 389,988 1,889,988
2027 2,525,000 585,794 3,110,794 1,580,000 324,937 1,904,937
2028 3,690,000 438,188 4,128,188 1,660,000 272,288 1,932,288
2029 7,380,000 175,275 7,555,275 1,745,000 216,956 1,961,956
2030 1,540,000 163,575 1,703,575
2031 1,600,000 104,550 1,704,550
2032 1,660,000 35,275 1,695,275
2033
2034
2035
2036
S 31,260,000 $ 18,394,816 $ 49,654,816 $ 22,700,000 $ 12 045,150 $ 34,745,150
105
CITY OF PEARLAND,TEXAS
COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT
BY MATURITY DATE
September 30,2012
Permanent Improvement&Refund Bonds,Series 2007 Certificate of Obligation,Series 2009
Fiscal Year Principal Interest Total Principal Interest Total
2013 $ 1,940,000 $ 3,137,063 $ 5,077,063 $ 260,000 S 351,553 $ 611,553
2014 2,510,000 3,048,062 5,558,062 230,000 345,703 575,703
2015 2,685,000 2,924,025 5,609,025 235,000 339,953 574,953
2016 2,345,000 2,791,562 5,136,562 240,000 332,903 572,903
2017 2,460,000 2,671,438 5,131,438 245,000 325,703 570,703
2018 2,220,000 2,554,437 4,774,437 255,000 317,128 572,128
2019 3,830,000 2,403,188 6,233,188 320,000 307,565 627,565
2020 5,190,000 2,190,662 7,380,662 325,000 294,765 619,765
2021 5,395,000 1,952,500 7,347,500 340,000 281,765 621,765
2022 5,610,000 1,704,887 7,314,887 350,000 268,165 618,165
2023 5,005,000 1,466,050 6,471,050 365,000 253,815 618,815
2024 5,230,000 1,235,763 6,465,763 385,000 238,303 623,303
2025 3,835,000 1,034,197 4,869,197 400,000 221,363 621,363
2026 3,845,000 866,197 4,711,197 420,000 203,363 623,363
2027 4,010,000 686,850 4,696,850 440,000 183,938 623,938
2028 2,290,000 537,225 2,827,225 465,000 163,038 628,038
2029 2,370,000 426,550 2,796,550 485,000 139,788 624,788
2030 2,590,000 308,750 2,898,750 415,000 116,750 531,750
2031 2,620,000 185,012 2,805,012 410,000 96,000 506,000
2032 2,585,000 61,394 2,646,394 475,000 75,500 550,500
2033 505,000 51,750 556,750
2034 530,000 26,500 556,500
2035
2036
$ 6 �$ 32,185,812 $ 100,750.812 S 8,095,000 $ 4,935,305 5 13.030,305
Certificates of Obligation,Series 2008 Permanent Improvement Bonds,Series 2008
Fiscal Year Principal Interest Total Principal Interest Total
2013 $ 105,000 $ 404,678 $ 509,678 $ 235,000 $ 1,055,400 $ 1,290,400
2014 155,000 399,641 554,641 335,000 1,041,150 1,376,150
2015 145,000 393,828 538,828 310,000 1,025,025 1,335,025
2016 150,000 388,019 538,019 325,000 1,009,150 1,334,150
2017 160,000 381,819 541,819 340,000 992,525 1,332,525
2018 165,000 375,319 540,319 360,000 975,025 1,335,025
2019 185,000 368,319 553,319 405,000 955,900 1,360,900
2020 195,000 360,719 555,719 425,000 934,619 1,359,619
2021 205,000 352,591 557,591 445,000 911,781 1,356,781
2022 215,000 343,794 558,794 470,000 887,763 1,357,763
2023 225,000 334,388 559,388 490,000 861,950 1,351,950
2024 240,000 324,300 564,300 515,000 834,313 1,349,313
2025 250,000 313,550 563,550 545,000 805,163 1,350,163
2026 290,000 301,525 591,525 625,000 772,988 1,397,988
2027 305,000 287,375 592,375 660,000 737,650 1,397,650
2028 320,000 271,750 591,750 695,000 700,388 1,395,388
2029 335,000 255,375 590,375 730,000 664,850 1,394,850
2030 1,335,000 213,625 1,548,625 4,530,000 543,669 5,073,669
2031 1,675,000 138,375 1,813,375 4,705,000 330,109 5,035,109
2032 1,930,000 48,250 1,978,250 4,785,000 110,653 4,895,653
2033
2034
2035
2036
$ 8,585,000 $ 6,257,238 $ 14,842,238 $ 21,930,000 $ 16,150,069 $ 38,080,069
106
Page 2 of 3
Certificate of Obligation,Series 2009A Permanent Improvement Bonds,Series 2010A
Fiscal Year Principal Interest Total Principal Interest Total
2013 640,000 370,565 1,010,565 350,000 417,553 767,553
2014 640,000 356,965 996,965 355,000 410,503 765,503
2015 640,000 341,765 981,765 370,000 399,553 769,553
2016 640,000 324,965 964,965 380,000 388,353 768,353
2017 640,000 301,765 941,765 390,000 378,703 768,703
2018 640,000 275,403 915,403 400,000 366,853 766,853
2019 640,000 252,560 892,560 415,000 354,628 769,628
2020 635,000 231,361 866,361 425,000 342,028 767,028
2021 640,000 210,163 850,163 440,000 329,053 769,053
2022 640,000 187,763 827,763 455,000 315,059 770,059
2023 640,000 164,403 804,403 465,000 300,109 765,109
2024 640,000 140,562 780,562 485,000 284,065 769,065
2025 635,000 116,338 751,338 500,000 265,578 765,578
2026 640,000 91,315 731,315 520,000 246,153 766,153
2027 640,000 65,715 705,715 540,000 226,603 766,603
2028 635,000 39,898 674,898 560,000 205,558 765,558
2029 640,000 13,440 653,440 585,000 182,938 767,938
2030 610,000 159,038 769,038
2031 635,000 133,344 768,344
2032 660,000 105,825 765,825
2033 690,000 77,138 767,138
2034 720,000 47,175 767,175
2035 750,000 15,938 765,938
2036
$ 10,865,000 $ 3,484,945 S 14,149,945 $ 11,700,000 $ 5,951,739 S 17,651,739
Permanent Improvement&Refund Bonds,Series 2009
(Governmental Activities Portion)
Fiscal Year Principal Interest Total
2013 380,000 655,118 1,035,118
2014 390,000 641,568 1,031,568
2015 405,000 626,754 1,031,754
2016 420,000 615,918 1,035,918
2017 435,000 599,267 1,034,267
2018 455,000 578,154 1,033,154
2019 590,000 557,888 1,147,888
2020 615,000 537,863 1,152,863
2021 635,000 517,075 1,152,075
2022 655,000 494,490 1,149,490
2023 680,000 470,120 1,150,120
2024 705,000 444,321 1,149,321
2025 735,000 416,953 1,151,953
2026 765,000 387,505 1,152,505
2027 795,000 356,305 1,151,305
2028 825,000 323,492 1,148,492
2029 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
2033 1,235,000 95,875 1,330,875
2034 1,300,000 32,500 1,332,500
2035
2036
$ 15,755,000 $ 9,247,811 $ 25,002,831
107
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108
CITY OF PEARLAND,TEXAS
COMBINING SCHEDULE OF GOVERNMENTAL ACTIVITY LONG-TERM DEBT Page 3 of 3
BY MATURITY DATE
September30,2012
Permanent Improvement Refunding Bonds,Series 2010B Permanent Improvement Refunding Bonds,Series 2012
(Governmental Activities Portion)
Fiscal Year Principal Interest Total Principal Interest Total
2013 215,000 29,950 244,950 1,566,250 1,566,250
2014 220,000 25,600 245,600 1,566,250 1,566,250
2015 225,000 21,150 246,150 685,000 1,552,550 2,237,550
2016 225,000 14,400 239,400 1,955,000 1,489,975 3,444,975
2017 240,000 6,300 246,300 2,625,000 1,388,600 4,013,600
2018 90,000 1,350 91,350 2,690,000 1,282,300 3,972,300
2019 3,210,000 1,164,300 4,374,300
2020 2,200,000 1,056,100 3,256,100
2021 2,340,000 965,300 3,305,300
2022 2,680,000 864,900 3,544,900
i 2023 2,840,000 754,500 3,594,500
2024 2,720,000 643,300 3,363,300
2025 4,520,000 521,100 5,041,100
2026 4,540,000 385,200 4,925,200
2027 3,035,000 271,575 3,306,575
2028 5,355,000 145,725 5,500,725
2029 2,180,000 32,700 2,212,700
2030
2031
2032
2033
2034
2035
2036
$ 1,215,000 $ 98,750 $ 1,313,750 $ 43,575,000 $ 15,650,625 $ 59.225,625
Permanent Improvement Bonds,Series 2011 Certificates of Obligation,Series 2011
Fiscal Year Principal Interest Total Principal Interest _ Total
2013 140,000 200,419 340,419 210,000 37,202 247,202
2014 145,000 196,031 341,031 210,000 32,813 242,813
2015 150,000 190,131 340,131 210,000 28,424 238,424
2016 155,000 184,031 339,031 210,000 24,035 234,035
2017 165,000 177,631 342,631 205,000 19,698 224,698
2018 170,000 170,931 340,931 210,000 15,362 225,362
2019 175,000 164,031 339,031 210,000 10,973 220,973
2020 185,000 156,831 341,831 210,000 6,584 216,584
2021 190,000 149,331 339,331 210,000 2,195 212,195
2022 200,000 141,531 341,531
2023 205,000 134,456 339,456
2024 210,000 128,231 338,231
2025 220,000 121,506 341,506
2026 225,000 114,275 339,275
2027 235,000 106,506 341,506
2028 245,000 98,106 343,106
2029 250,000 88,819 338,819
2030 260,000 78,619 338,619
2031 275,000 67,919 342,919
2032 285,000 56,719 341,719
2033 295,000 45,119 340,119
2034 305,000 33,119 338,119
2035 320,000 20,419 340,419
2036 335,000 6,909 341,909
$ 5,340,000 $ 2,831,622 $ 8,171,622 $ 1.885,000 S 177,284 5 2,062,284
109
CITY OF PEARLAND,TEXAS
COMBINING SCHEDULE OF ENTERPRISE FUND LONG-TERM DEBT
BY MATURITY DATE
September 30,2012
Water&Sewer System Revenue Bonds Water&Sewer System Revenue Bonds
Series 1999 Series 2003
Fiscal Year Principal Interest Total Principal Interest Total
2013 $ 125,000 $ 130,410 $ 255,410 $ 330,000 $ 32,575 $ 362,575
2014 130,000 124,660 254,660 340,000 13,600 $ 353,600
2015 135,000 118,680 253,680
2016 145,000 112,470 257,470
2017 540,000 105,800 645,800
2018 565,000 80,960 645,960
2019 585,000 54,970 639,970
2020 610,000 28,060 638,060
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
$ 2,835,000 $ 756,010 $ 3,591,010 $ 670,000 $ 461175 $ 716,175
Water&Sewer System Revenue and Refunding Water&Sewer System Revenue and Refunding
Bonds, Series 2006 Bonds, Series 2007
Fiscal Year Principal Interest Total Principal Interest Total
2013 $ 650,000 $ 559,369 $ 1,209,369 $ 880,000 $ 1,718,413 $ 2,598,413
2014 680,000 530,119 1,210,119 920,000 1,670,013 2,590,013
2015 710,000 499,519 1,209,519 965,000 1,619,413 2,584,413
2016 745,000 467,569 1,212,569 1,010,000 1,566,338 2,576,338
2017 100,000 434,044 534,044 950,000 1,510,788 2,460,788
2018 100,000 429,744 529,744 995,000 1,458,538 2,453,538
2019 100,000 425,369 525,369 1,045,000 1,403,813 2,448,813
2020 100,000 420,869 520,869 1,095,000 1,348,950 2,443,950
2021 100,000 416,244 516,244 1,155,000 1,294,200 2,449,200
2022 100,000 411,619 511,619 1,210,000 1,236,450 2,446,450
2023 100,000 406,994 506,994 1,275,000 1,175,950 2,450,950
2024 100,000 402,369 502,369 2,295,000 1,112,200 3,407,200
2025 100,000 397,744 497,744 2,480,000 997,450 3,477,450
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
2036
2037
S 11,500,000 $ 7,248,588 $18,748,588 S 37,505.000 $ 21,066,938 $58,571,938
110
Page I of 2
Water&Sewer System Revenue Bonds,Series 2008 Water& Sewer System Revenue Bonds,Series 2009
Fiscal Year Principal Interest Total Principal Interest Total
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
2016 290,000 628,840 918,840 400,000 535,812 935,812
2017 315,000 615,790 930,790 410,000 522,813 932,813
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
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
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
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
2034 2,080,000 93,600 2,173,600 845,000 46,475 891,475
2035
2036
2037
$ 14,180,000 $ 10,348,098 $ 24,528,098 $ 12,090,000 $ 8,126,563 $ 20,216,563
PIB Refunding Portion Series 2009 PIB Refunding Bonds Series 2012-W&S Portion
(Water&Sewer Portion)
Fiscal Year Principal Interest Total Principal Interest Total
2013 $ 1,110,000 $ 327,500 $ 1,437,500 $ 237,800 $ 237,800
2014 1,155,000 287,525 1,442,525 237,800 237,800
2015 1,195,000 243,712 1,438,712 335,000 231,100 566,100
2016 1,220,000 212,000 1,432,000 340,000 215,900 555,900
2017 2,065,000 143,601 2,208,601 350,000 200,400 550,400
2018 2,155,000 45,988 2,200,988 360,000 186,200 546,200
2019 365,000 171,700 536,700
2020 370,000 157,000 527,000
2021 370,000 142,200 512,200
2022 385,000 127,100 512,100
2023 395,000 111,500 506,500
2024 1,480,000 74,000 1,554,000
2025 1,480,000 22,200 1,502,200
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
$ 8,900,000 $ 1,260,326 $ 10,160,326 $ 6,230,000 $ 2,114,900 $ 8,344,900
111
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112
CITY OF PEARLAND,TEXAS
COMBINING SCHEDULE OF ENTERPRISE FUND LONG-TERM DEBT Page 2 of 2
BY MATURITY DATE
September 30,2012
Water&Sewer Revenue Bonds,Series 2010A Water&Sel%er Refunding Bonds,Series 2010B
Principal Interest Total Principal Interest Total
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
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
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
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
2028 650,000 265,337 915,337
2029 680,000 237,713 917,713
2030 710,000 208,813 918,813
2031 740,000 177,750 177,750
2032 755,000 144,450 144,450
2033 785,000 110,475 110,475
2034 825,000 75,150 75,150
2035 845,000 38,025 3,988,025
2036
2037
$ 13,290,000 $ 7,618,778 $ 20,908,778 $ 8,565,000 $ 2,635,627 $ 11,200,627
Water and Sewer System Revenue Bonds,
Series 2012
Principal Interest Total
2013 $ 295,000 $ 237,355 $ 532,355
2014 315,000 231,455 546,455
2015 345,000 225,155 570,155
2016 355,000 218,255 573,255
2017 755,000 211,155 966,155
2018 765,000 196,055 961,055
2019 780,000 180,755 960,755
2020 800,000 165,155 965,155
2021 230,000 141,155 371,155
2022 230,000 134,255 364,255
2023 240,000 127,355 367,355
2024 230,000 120,155 350,155
2025 225,000 113,255 338,255
2026 175,000 106,505 281,505
2027 180,000 101,080 281,080
2028 185,000 95,500 280,500
2029 190,000 89,488 279,488
2030 195,000 83,312 278,312
2031 200,000 76,975 276,975
2032 300,000 70,225 370,225
2033 315,000 60,100 375,100
2034 325,000 49,075 374,075
2035 335,000 37,700 372,700
2036 345,000 25,556 370,556
2037 360,000 13,050 373,050
$ 8,670,000 $ 3,110,081 S 11,780,081
113
PEARLAND ECONOMIC DEVELOPMENT CORPORATION Page 1 of 2
COMBINING SCHEDULE OF GENERAL LONG-TERM DEBT OF
PEARLAND ECONOMIC DEVELOPMENT CORPORATIONBYMATURITYDATE
September 30,2012
Sales Tax Revenue Bonds,Series 2005 Sales Tax Revenue Bonds,Series 2006
Fiscal Year Principal Interest Total Principal Interest Total
2013 $ 425,000 $ 340,738 $ 765,738 $ 210,000 $ 444,169 $ 654,169
2014 445,000 323,738 768,738 215,000 433,669 648,669
2015 460,000 305,938 765,938 230,000 422,919 652,919
2016 480,000 287,538 767,538 240,000 411,419 651,419
2017 505,000 263,538 768,538 255,000 401,219 656,219
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
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
2029 1,320,000 128,725 1,448,725
2030 1,390,000 66,025 1,456,025
$ 7,965,000 $ 2,768,075 $ 10,733,075 $ 9,285,000 $ 5,756,000 $ 15,041,000
114
Page 2 of 2
Sales Tax Revenue Bonds,Series 2010
Fiscal Year Principal Interest Total
2013 $ 245,000 $ 388,256 $ 617,410
2014 260,000 375,117 619,807
2015 275,000 361,174 621,434
2016 290,000 346,427 622,288
2017 300,000 330,876 617,371
2018 320,000 314,788 621,940
2019 340,000 297,627 625,480
2020 355,000 279,394 622,991
2021 375,000 260,357 624,731
2022 400,000 240,247 630,441
2023 420,000 218,796 629,866
2024 440,000 196,273 628,262
2025 465,000 172,677 630,630
2026 495,000 147,741 636,711
2027 525,000 121,196 641,249
2028 550,000 93,042 639,245
2029 575,000 63,547 635,954
2030 610,000 32,712 641,377
$ 7,240,000 $ 4,240,247 $ 11,307,187
115
DEVELOPMENT AUTHORITY OF PEARLAND
COMBINING SCHEDULE OF GENERAL LONG-TERM DEBT OF
DEVELOPMENT AUTHORITY OF PEARLAND BY MATURITY DATE
September 30,2012
Tax Increment Revenue Bonds,Series 2012
Fiscal Year
Ending _ Principal Interest Total
2013 $ 2,720,000 $ 1,665,014 $ 4,385,014
2014 2,800,000 1,581,511 4,381,511
2015 2,885,000 1,495,550 4,380,550
2016 2,970,000 1,406,981 4,376,981
2017 3,070,000 1,315,802 4,385,802
2018 3,160,000 1,221,553 4,381,553
2019 3,255,000 1,124,541 4,379,541
2020 3,120,000 1,024,613 4,144,613
2021 3,215,000 928,828 4,143,828
2022 3,030,000 830,128 3,860,128
2023 3,130,000 737,107 3,867,107
2024 3,225,000 641,016 3,866,016
2025 3,320,000 542,008 3,862,008
2026 3,425,000 440,085 3,865,085
2027 3,530,000 334,937 3,864,937
2028 3,635,000 226,566 3,861,566
2029 3,745,000 114,972 3,859,972
$ 54,235,000 $ 15,631.212 $ 69,866,212
116
Statistical Section
(Unaudited)
117
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118
Unaudited Statistical Section
This part of the City of Pearland, Texas' comprehensive annual financial report presents detailed
information as a context for understanding what the information in the financial statements, note
disclosures, and required supplementary information says about the government's overall financial
health.
Contents Page
Financial Trends 120
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 130
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 138
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 143
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 145
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 financial reports for the relevant year.
119
CITY OF PEARLAND,TEXAS
NET ASSETS BY COMPONENT
Last Ten 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
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.
120
2008 2009 2010 2011 2012
$410,002 $429,054 $422,643 $413,439 $410,078
10,864 10,615 18,020 16,462 16,429
10,903 13,330 13,692 14,543 21,752
$431,769 $452,999 $454,355 $444,444 $448,259
$138,679 $146,150 $144,244 $156,629 $158,715
16,094 11,965 17,587 5,603 9,822
3,406 9,256 11,942 13,910 12,439
$158,179 $167,371 $173,773 $176,142 $180,976
$548,681 $575,204 $566,887 $570,068 $568,793
26,958 22,580 35,607 22,065 26,251
14,309 22,586 25,634 28,453 34,191
$589,948 $620,370 $628,128 $620,586 $629,235
121
CITY OF PEARLAND,TEXAS
CHANGES IN NET ASSETS
Last Ten Fiscal Years
Amounts in(000's)
(Accrual Basis ofAccounting)
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
Community Services 2,874 2,700 2,939 2,903 3,113
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
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
Program Revenue
Governmental activities
Charges for services:
General Government $ 161 $ 506 $ 185 $ $
Public Safety 1,998 2,975 3,640 2,627 2,788
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
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
122
Page 1 of 2
2008 2009 2010 2011 2012
$ 11,161 $ 12,355 $ 13,439 $ 15,637 $ 13,334
17,684 22,438 24,268 23,057 27,403
24,532 26,893 35,679 31,347 28,510
3,336 3,290 3,323 3,350 4,267
7,157 7,240 7,699 8,043 9,266
12,266 11,647 13,738 13,087 11,572
76,136 83,863 98,146 94,521 94,352
22,570 25,439 27,157 29,192 29,392
6,024 7,106 7,089 7,285 7,528
28,594 32,545 34,246 36,477 36,920
$ 104.730 $116,408 $132,392 $130,998 $131,272
$ $ $ $ $
2,959 3,524 3,296 3,679 4,206
103 35 10 18 43
5,130 4,755 4,312 4,632 5,855
936 672 906 2,027 2,080
3,951 4,913 5,215 5,488 6,045
230 420 641 407 711
551 375 207 675 53
129 202 159 366 311
115 450 424 462 542
503 279 98
15,263 26,092 29,800 10,330 18,743
261 4,653 100
30,131 46,370 45,068 28,084 38,689
21,524 26,617 24,961 28,664 27,535
6,038 6,766 7,313 7,258 7,654
315 2,464 70 61 205
5,869 6,125 8,611 4,215 8,118
33,746 41,972 40,955 40,198 43,512
$ 63,877 $ 88,342 $ 86,023 $ 68,282 $ 82,201
123
CITY OF PEARLAND,TEXAS
CHANGES IN NET ASSETS
Last Nine Fiscal Years*
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)
General Revenues and Other Changes in Net Assets
Governmental activities:
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
Franchise taxes 2,533 2,883 3,097 3,426 3,760
Investment earnings 171 1,115 1,863 2,991 4,943
Miscellaneous 742 783 828 740 1,539
Transfers 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
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.
124
Page 2 of 2
2008 2009 2010 2011 2012
$ (46,005) $(37,493) $(53,078) $(66,437) $(55,663)
5,152 9,427 6,709 3,721 6,592
$ (40,853) $(28,066) $ (46,369) $(62,716) $(49,071)
$ 29,492 $ 31,140 $ 32,963 $ 33,451 $ 34,305
12,581 14,218 13,578 13,983 15,632
4,427 5,075 5,426 5,605 5,670
4,572 1,376 253 157 92
2,911 6,294 1,028 1,854 1,510
1,330 621 1,186 1,475 2,269
$ 55,313 $ 58,724 $ 54,434 $ 56,525 $ 59,478
$ 1,669 $ 363 $ 100 $ 116 $ 68
12 23 779 9 444
(1,330) (621) (1,186) (1,475) (2,269)
351 (235) (307) (1,350) (1,757)
$ 55,664 $ 58,489 $ 54,127 $ 55,175 $ 57,721
$ 9,308 $ 21,231 $ 1,356 $ (9,912) $ 3,815
5,503 9,192 6,402 2,371 4,835
$ 14,811 $ 30,423 $ 7,758 $ (7,541) $ 8,650
125
CITY OF PEARLAND,TEXAS
FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
Amounts in(000's)
(Modified Accrual Basis of Accounting)
2003 2004 2005 2006
General fund
Non-spendable $ 52 $ 70 $ 71 $ 84
Restricted
Assigned 552
Unassigned 5,310 8,216 8,132 9,961
Total General Fund $ 5,362 $ 8,286 $ 8,203 $ 10,597
All other governmental funds restricted for:
Debt service $ 2,130 $ 3,008 $ 3,855 $ 4,658
Capital improvements 41,255 46,014 43,545 52,957
Public safety 190 284 348 453
Community development projects
Tourism 392 557 670 864
Parks and recreation 569 793 992 1,393
Capital projects-other 250 872 1,007 1,064
Other 323 909 238 247
Total other Governmental Funds $ 45,109 $ 52,437 $ 50,655 $ 61,636
126
2007 2008 2009 2010 2011 2012
$ 123 $ 181 $ 119 $ 146 $ 130 $ 182
126
581 4,698 699 117 160 167
12,932 8,647 11,401 12,599 14,108 17,222
$ 13,636 $ 13,526 $ 12,219 $ 12,862 $ 14,524 $ 17,571
0
le $ 6,552 $ 6,835 $ 7,246 $ 6,705 $ 5,160 $ 4,992
96,542 110,715 62,467 30,893 23,461 13,776
0 591 583 699 612 541 702
is 1,051 1,247 1,344 1,394 1,452 1,821
r 1,652 1,183 1,094 1,214 1,143 968
1. 1,138 1,346 1,146 962 810 797
114 629 85 79 87 215
■ $ 107,640 $ 122,538 $ 74,081 $ 41,859 $ 32,654 $ 23,271
•
III
127
CITY OF PEARLAND,TEXAS
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
Last Ten Fiscal Years
Amounts in(000's)
(Modified Accrual Basis of Accounting)
2003 2004 2005 2006
Revenues
Property taxes $ 15,120 $ 17,891 $ 19,745 $ 22,150
Sales and use taxes 6,008 6,933 8,026 9,980
Franchise fees 2,533 2,883 3,097 3,426
Licenses and permits 2,682 3,441 3,864 4,067
Fines and forfeitures 1,422 1,608 1,935 2,038
Charges for services 3,982 5,260 6,139 8,734
Investment earnings 171 1,115 1,863 2,991
Intergovernmental 2,398 3,040 2,382 7,852
Other 1,135 1,076 1,172 1,744
Total Revenues 35,451 43,247 48,223 62,982
1
Expenditures
General government 5,852 6,221 6,750 6,381
Illb
Public safety 9,650 10,142 11,081 12,8701110
Public works 8,770 8,709 10,450 9,728
Community services 2,827 2,904 2,747 3,787 II
Parks and recreation 3,358 5
Debt service: a
Principal 2,040 3,000 3,535 3,429
Interest and other charges 4,469 5,665 5,555 6,771 a
Capital outlay 23,568 18,058 28,661 36,706 .
Intergovernmental 1,084 1,684
Total Expenditures 57,176 54,699 69,863 84,714
ill
Excess of revenues over(under)expenditures (21,725) (11,452) (21,640) (21,732) al
Other Financing Sources(Uses) U
Transfers in 1,534 1,431 4,870 5,852
Transfers out (806) (907) (4,510) (4,698)
Bonds issued 34,653 184 37,015 41,959 -
Payment to Escrow Agent
Capital leases 21,000 271
Other 94 (15,926) (8,005)
Total other Financing Sources(uses) 35,381 21,802 21,720 35,108
Net change in fund balances $ 13,656 $ 10,350 $ 80 $ 13,376
Debt service as a percentage of noncapital
expenditures 19.4% 23.6% 22.1% 21.2%
128
I
1
2007 2008 2009 2010 2011 2012
$ 24,525 $ 29,200 $ 31,349 $ 32,856 $ 33,454 $ 34,362
11,025 12,581 14,218 13,578 13,983 15,632
3,760 4,427 5,075 5,426 5,605 5,817
4,030 2,992 2,079 1,807 1,721 2,320
2,048 2,086 2,325 2,475 2,895 3,374
5,250 7,512 8,885 9,328 11,687 11,891
4,938 4,568 1,375 591 156 92
14,463 3,731 7,589 3,689 2,199 3,271
1,815 5,638 8,980 982 1,560 2,358
71,854 72,735 81,875 70,732 73,260 79,117
6,293 7,388 8,412 8,527 10,866 8,863
14,598 19,604 22,310 23,784 23,926 25,362
6,278 7,536 12,051 7,108 6,505 5,535
3,102 3,426 3,386 3,839 3,376 4,246
4,908 6,605 5,789 6,305 7,539 7,266
3,228 3,160 5,482 6,200 8,217 9,373
10,197 12,382 12,080 13,635 13,543 12,401
28,530 27,777 68,615 61,317 25,703 9,442
2,169 3,434 3,250 _ 3,794 3,954 _ 3,992
79,303 91,312 141,375 134,509 103,629 86,480
(7,449) (18,577) (59,500) (63,777) (30,369) (7,363)
4,596 4,912 3,246 3,498 3,525 5,909
(3,536) (3,582) (2,625) (2,312) (2,050) (4,017)
94,559 31,835 8,520 28,962 21,637 49,805
(1,630) (54,478)
1,568 649 2,050 1,289
(40,695) 200 (54) 56 3,809
56,492 33,365 9,736 32,198 22,827 1,028
$ 49,043 $ 14,788 $ (49,764) $ (31,579) $ (7,542) $ (6,335)
26.4% 24.5% 24.1% 27.1% 27.9% 28.3%
129
CITY OF PEARLAND,TEXAS
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE
OF TAXABLE PROPERTY
Last Seven Fiscal Years
Real Property
Fiscal Less Tax Exempt Real
Year Tax Year Residential Commercial Personal Property 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
2011 2010 4,916,409,359 1,833,483,370 527,132,210 590,247,297
2012 2011 4,929,336,548 1,897,683,176 488,098,315 592,996,676
Notes:
Information not presented was not available at time of publication.
Agricultural Property and Productivity Loss in Commercial
Assessed valuation for fiscal year 2007 does not include Brazoria County Mud#1 valuation of$241,248,630
that was annexed into the City on December 31,2006.
130
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%
355,054,613 6,331,723,029 0.6651 6,331,723,029 100%
352,494,382 6,369,626,981 - 0.6851 6,369,626,981 100%
10?3 9 3 1'o A
- 1
r-rc,-,._S c e r
c,,,_S`l-
�� 73.5
131
-
CITY OF PEARLAND,TEXAS
^4 DIRECT AND OVERLAPPING PROPERTY TAX RATES
Last Ten Fiscal Years
(rate per$100 ofassessed value)
City Direct Rates Overlapping Rates
Pearland, Pasadena Alvin Harris
Jpdeoendent Independent Independent Alvin Fort Port of County
Fiscal M&0 I&S Total Schoo School School Comm Brazoria Bend Harris Houston Flood
Year Rate Rate Direct District District District College County County County Authority Control
2003 $ 0.406 $ 0.280 S 0.686 S 1.837 $ 0.255 S 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 0.238 0.408 0.517 0.400 0.015 0.033
2007 0.299 0.354 0.653 1.662 $ 1.350 $ 1.546 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 1.328 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
2011 0.215 0.450 0.665 1.419 1.350 1.304 0.200 0.403 0.500 0.388 0.021 0.029
�41...2012 0.215 0.470 0.685 1.419 1.350 1.344 0.199 0.413 0.500 0.391 0.019 0.028
Source:Brazoria County,Hams County d Fort Bend County Appraisal District.
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132
Harris Harris Brazoria/
County County Ft Bend
Hospital Dept of MUD MUD MUD MUD MUD MUD MUD MUD MUD
District Education No.1 No.17 No.18 No.19 No.23 No.26 No.28 No.34 No.35
$0.190 $ 0.006 $0.750 $0.650 $0.800 $ 0.850
0.190 0.006 0.750 0.650 0.800 0.850
0.190 0.006 0.750 0.650 0.800 0.850 0.850 $ 0.820 $ 0.850
0.192 0.006 $ 0.850 0.750 0.640 0.800 0.850 0.850 0.820 0.850
0.192 0.006 0.850 0.750 0.610 0.780 0.850 0.770 0.820 0.850
0.192 0.006 0.850 0.730 0.590 0.680 0.850 0.710 0.820 0.850 $ 0.850
0.192 0.006 0.850 0.630 0.570 0.660 0.820 0.710 0.820 0.850 0.890
0.192 0.060 0.850 0.600 0.560 0.630 0.800 0.710 0.820 0.850 1.020
0.192 0.007 0.850 0.547 0.550 0.620 0.770 0.710 0.820 0.850 1.020
0.192 0.007 0.850 0.547 0.545 0.600 0.630 0.690 0.820 0.850 1.020
133
CITY OF PEARLAND,TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
Fiscal Collected within the
Year Taxes Levied Fiscal Year of the Levy Collections Total Collections to Date
Ended for the Percentage in Subsequent Percentage
Sept 30, Fiscal Year Amount of Levy Years Amount of Levy
2003 $ 14,880,007 $ 14,575,297 97.95% $ 279,516 $ 14,854,813 99.8%
2004 18,030,473 17,633,986 97.80% 361,748 17,995,734 99.8%
2005 21,073,788 20,576,812 97.64% 473,048 21,049,860 99.9%
2006 24,284,597 23,690,031 97.55% 558,342 24,248,373 99.9%
2007 28,819,229 28,235,276 97.97% 546,638 28,781,914 99.9%
2008 35,035,569 34,461,652 98.36% 528,647 34,990,299 99.9%
2009 38,368,354 37,820,603 98.57% 463,703 38,284,306 99.8%
2010 41,081,407 40,590,543 98.81% 322,919 40,913,461 99.6%
2011 41,968,046 41,594,389 99.11% 155,198 41,749,587 99.5%
2012 43,441,792 43,110,373 99.24% 43,110,373 99.2%
Source:Brazoria County Tax Office
134
CITY OF PEARLAND,TEXAS
PRINCIPAL PROPERTY TAX PAYERS
Current Year and Nine Years Ago
2012 2003
Percentage Percentage
of Total City of Total City
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Taxpayer Value Rank Value Value Rank Value
Pearland Town Center LP $ 66,933,820 1 1.06%
Amreit SPF Shadow Creek,LP 41,006,650 2 0.65%
Pearland Investments Ltd 31,696,920 3 0.50%
Weatherford U.S.,Inc. 31,613,080 4 0.50% $ 34,843,830 1 1.48%
Villas Shadow Creek Ranch LP 29,000,460 5 0.46%
Centerpoint Energy,Inc. 26,536,120 6 0.42% 18,062,650 2 0.77%
Walmart Real Estate Bus TR 23,678,280 7 0.37% 12,115,230 3 0.51%
Shadow Kirby LTD Partnership 23,114,059 8 0.37%
MRP Shadow Creek LP 21,000,000 9 0.33%
HCA Healthcare Corp. 19,074,620 10 0.30%
Landar Mary's Creek Apts 11,113,820 4 0.47%
Southwestern Bell Telephone 9,439,220 5 0.40%
Lennar Homes of Texas 8,997,250 6 0.38%
Westlake Residential Apts 8,835,990 7 0.38%
Aggreko,Inc. 8,560,750 8 0.36%
Whispering Winds Apartments 7,705,580 9 0.33%
Texas Windmill Apts 7,624,730 10 0.32%
Total $ 313,654,009 4.95% $ 127,299,050 5.40%
Source:Brazoria County Appraisal District
135
CITY OF PEARLAND,TEXAS
TAXABLE SALES BY CATEGORY
Last Ten Calendar Years
(in thousands of dollars)
Calendar Year
2003 2004 2005 2006
Agriculture,Forestry,Fishing $ 13 $ 190 $ 283 $ 453
Mining,Quarrying,Oil and Gas 4,283 3,738 2,985 11,186
Utilities 7
Manufacturing 27,491 29,200 41,057 46,241
Wholesale Trade 11,234 13,059 24,070 30,592
Retail Trade 278,528 305,156 370,665 464,850
Transportation/Warehousing 43 54 55 155
Information 2,851 3,365 7,203 8,553
Finance, Insurance 3,403 3,505 1,811 1,722
Real Estate/Rental/Leasing 14,243 10,722 18,629 33,329
Professional/Scientific/Technical 2,743 3,516 3,538 3,893
Management of Companies/Enterprises 2,399 2,278
Admin/Support/Waste Mgmt/Remediation 10,515 17,880 13,688 8,060
Educational Services 195 95 204 110
Health Care/Social Assistance 14 9 72 56
Arts,Entertainment&Recreation 4,283 4,703 4,787 5,208
Accommodations&Food Services 54,331 65,708 80,185 95,154
Construction 14,392 13,288 13,234 18,348
Other Services(Except Public Admin) 14,500 15,108 16,921 20,390
Other 2,412 547 13 2
Total $ 445,475 $ 492,242 $ 601,677 $ 748,310
City direct sales tax rate b 1.00% 1.00% 1.00% 1.00%
Source: State Comptroller's Office.
a 2012 taxable sales thru 2nd quarter of 2012.
b The City direct sales tax rate includes the City only and not the Pearland Economic
Development Corp. (4B).
c Categories changed in 2007. Re-categorized data.
136
Calendar Year
2007 2008 2009 2010 2011 2012 a
$ 473 $ 675 $ 566 $ 180 $ 306 $ 244
9,280 10,520 3,355 3,246 3,316 1,348
3 6 6 3 187
50,134 47,447 31,243 39,582 49,474 24,733
28,782 32,999 25,954 30,730 33,163 18,754
536,352 667,470 699,338 673,724 697,252 353,081
169 138 161 282 418 200
10,086 12,567 14,413 15,672 16,896 9,180
1,038 1,469 1,811 1,404 1,260 681
44,560 52,276 38,924 46,811 48,062 28,209
4,103 5,218 5,923 6,277 7,069 5,120
1,161 2,594
9,209 12,656 11,670 10,650 11,002 5,756
110 212 144 207 314 148
63 37 52 184 252 183
8,789 9,751 9,909 11,315 11,566 6,488
107,850 127,994 146,598 155,335 172,088 96,885
16,232 17,496 14,372 15,537 17,558 9,472
20,794 23,764 23,670 25,114 29,748 15,156
$ 849,188 $ 1,025,289 $ 1,028,107 $ 1,036,253 $ 1,099,932 $ 575,638
1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
137
CITY OF PEARLAND,TEXAS
RATIOS OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
(dollars in thousands, except per capita)
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
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 15,880
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
2011 207,105 91,150 4,032 113,270 9,730 421
2012 224,170 65,425 3,407 109,305 15,130 342
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
138
Total Percentage
Primary of Personal Per
Government Income Capita
$ 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
416,727 13.5% 4,429
425,708 14.3% 4,380
417,779 13.0% 4,186
139
CITY OF PEARLAND,TEXAS
RATIO OF NET GENERAL BONDED DEBT TO ASSESSED
VALUE AND NET BONDED DEBT PER CAPITA
Last Ten Fiscal Years
(dollars in thousands,except per capita)
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
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
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% 9.4% 3,082
2011 2010 307,985 5,160 302,825 4.8% 10.2% 3,115
2012 2011 304,725 4,992 299,733 4.7% 9.3% 3,003
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
a Population and personal income data can be found in demographic and economic statistics table.
140
CITY OF PEARLAND, TEXAS
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
September 30,2012
Gross Overlapping
Taxing Jurisdiction Debt* Percent(a) Amount
Alvin Community College District $16,160,000 27.17% $ 4,390,672
Alvin ISD 314,505,000 30.89% 97,150,595
Brazoria County 89,385,000 24.19% 21,622,232
Brazoria County MUD No. 17 29,565,000 100.00% 29,565,000
Brazoria County MUD No. 18 30,260,000 97.35% 29,458,110
Brazoria County MUD No. 19 37,285,000 100.00% 37,285,000
Brazoria County MUD No.23 18,570,000 100.00% 18,570,000
Brazoria County MUD No.26 43,130,000 100.00% 43,130,000
Brazoria County MUD No.28 13,300,000 100.00% 13,300,000
Brazoria County MUD No. 34 24,800,000 100.00% 24,800,000
Brazoria County MUD No.35 9,410,000 100.00% 9,410,000
Brazoria-Fort Bend County MUD No. 1 53,015,000 73.76% 39,103,864
Fort Bend County 485,890,000 0.23% 1,117,547
Harris County 2,365,577,190 0.13% 3,075,250
Harris County Dept.of Education 7,795,000 0.13% 10,134
Harris County Flood Control District 96,470,000 0.13% 125,411
Pasadena ISD 488,300,000 0.14% 683,620
Pearland ISD 311,629,177 71.72% 223,500,446
Port of Houston Authority 731,969,397 0.13% 951,560
TOTAL ESTIMATED OVERLAPPING 597,249,440
The City $304,725,000 100.00% 304,725,000
Total Direct and Estimated Overlapping Debt $ 901,974,440
Population 99,800
Per Capita Debt-Direct and Overlapping Debt $ 9,038
Source: Individual jurisdictions and/or Texas Municipal Reports.
* Debt amounts as of September 30,2012.
(a)Overlapping percentage based on assessed property tax values
141
CITY OF PEARLAND,TEXAS
PLEDGED REVENUE COVERAGE
Amounts in(000's)
Last Ten Fiscal Years
Water&Sewer Revenue Bonds
Net
Less: Revenue Debt Service
Fiscal Gross Operating Available for
Year Revenues Expenses Debt Service Principal Interest Total Coverage
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
2008 23,507 14,827 8,680 1,230 4,011 5,241 1.66
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
2011 28,664 15,529 13,135 3,170 5,155 8,325 1.58
2012 27,969 15,946 12,023 3,305 5,016 8,321 1.44
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.
142
CITY OF PEARLAND,TEXAS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
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)
2003 47,000 $ 1,400,741 $ 29,803 35.1 14.3 12,708 4.7%
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%
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%
2009 92,600 2,941,717 31,768 34.5 14.2 20,056 6.5%
2010 94,100 3,076,788 32,697 33.4 14.2 21,269 6.9%
2011 97,200 2,974,785 30,605 33.3 14.2 20,931 6.9%
2012 99,800 3,213,184 32,196 34.8 14.2 21,721 5.6%
(A)Estimated
(B) Pearland Economic Development Corporation
(C)Texas Education Agency
143
CITY OF PEARLAND,TEXAS
PRINCIPAL EMPLOYERS
Current Year and Six Years Ago
2012 2005
Percentage Percentage
of Total City of Total City
Employer Employees Rank Employment Employees Rank Employment
Pearland ISD 2,268 1 4.97% 1,820 1 7.26%
Wal-Mart 1,150 2 2.52% 800 2 3.19%
City of Pearland 633 3 1.39% 420 3 1.67%
Kemlon 390 4 0.86% 185 6 0.74%
HEB 350 5 0.77%
Davis-Lynch 300 6 0.66%
Sam's Club 230 7 0.50%
Bass Pro Shop 225 8 0.49%
Home Depot 223 9 0.49%
Packaging Service Co, Inc. 205 10 0.45%
TutboCare 175 7 0.70%
Weatherford 250 4 1.00%
Randall's 250 5 1.00%
Super Target 150 8 0.60%
Tele-flow 140 9 0.56%
Loves 132 10 0.53%
Total 5,974 13.10% 4,322 17.23%
Sources:
2005 Pearland Economic Development Corp.
2012 Pearland Chamber of Commerce
Note: Information for the period nine years ago is not readily available.
144
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
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Function/Program
Governmental Activities
General Government 45 41 42 49 51 55 55 57 57 57
Public Safety 132 160 170 184 205 242 253 264 276 286
Public Works 41 42 43 44 47 45 47 47 45 32
Community Services 34 37 41 47 50 51 52 47 45 54
Parks and Recreation 52 55 58 52 59 68 72 99 105 108
Business Type Activities
Water&Sewer 56 62 62 76 78 77 82 82 87 91
Component Unit
Economic Development 4 4 4 4 4 5 5 6 5 5
Total 364 401 420 456 494 543 564 601 619 633
Source: City Budget
Reorganization in 2012 with 17 FTE's moving from Public Works to Community Services
145
CITY OF PEARLAND,TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
Fiscal Year
2003 2004 2005 2006 2007
Function/Program
GENERAL GOVERNMENT
Finance
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
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 5,053
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(I) 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
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
Street sweeping(miles) 145 790 790 790 583
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
146
page I of 2
2008 2009 2010 2011 2012
3,552 3,264 2,913 2,679 2,415
398 406 470 427 429
23,434 23,259 21,632 21,000 20,768
1,185 1,230 1,220 1,438 1,481
109 90 91 131 112
353 431 532 73 54
2,495 3,137 3,880 3,299 4,936
293 266 229 205 220
616 649 734 815 832
386 394 429 439 448
34,865 37,440 35,676 39,815 42,318
4,424 5,188 5,986 6,218 6,525
592 576 513 606 625
860 711 672 852 900
349 629 2,003 3,304 1,836
9 8 5 2 2
28 33 22 25 18
2,677 2,374 1,752 1,380 1,537
2,215 2,432 2,416 2,621 2,826
6,029 6,411 6,472 7,055 7,668
5,529 5,804 5,619 6,121 6,537
4,153 3,063 2,394 3,410 3,581
1,756 1,998 1,741 747 682
343,865 313,596 354,422 361,464 377,754
2,324 2,561 2,239 1,256 1,079
1,288 2,864 2,049 1,588 1,090
18,723 20,213 18,632 16,834 17,803
147
CITY OF PEARLAND,TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
Last Nine 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
Trees maintained N/A N/A 3,450 3,450 4,280
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(2) 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(3) N/A 632 1,170 1,189 1,222
Average monthly attendance(all locations)(4) 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
Inspection Services
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(5) 1,730 1,730 1,967 99* 537
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.
148
page 2 of 2
2008 2009 2010 2011 2012
210 228 245 255 251
5,000 5,004 5,800 6,327 6,157
470 851 1,301 1,331 1,380
316 275 252 249 230
180 138 139 139 138
25 25 24 21 22
9 6 9 11 2
1,083 855 307 459 486
7,607 3,623 11,823 16,116 18,378
2,947 2,868 2,532 2,685 2,220
4,296 3,529 4,206 4,346 4,326
34,773 24,834 21,753 19,244 22,416
3,629 4,274 3,433 2,860 1,952
9,878 9,249 7,874 7,869 8,696
1,309 925 969 917 1,050
'UCR method of reporting was terminated after
1,616 1,391 402 688 1,116 2009. Effective 2010, Incident Based Reporting
19,666 24,400 24,657 26,369 30,187 (IBR) is used.
6,402 7,374 8,692 8,204 10,080 ZPrior to 2009, Parkland acres included medians
and Wastewater Treatment Plants. After 2009,
reported under total acres of city property
maintained.
740 451 402 395 887 3Prior to 2010, individual music classes were
393 270 325 310 275 included in the total recreation classes held.
160 168 82 410 283 Program was cancelled.
4In FY 2010,a new facility,Recreation
2,128 2,574 3,065 3,869 2,916 Center/Natatorium,opened.
5In Water& Sewer,Distribution and Collection
1,147 1,146 634 968 1,321 fire hydrant maintenance and inspections is
contracted out. During
325,471 340,281 344,618 364,424 370,755 FY06,the contractor's services were disrupted
318,160 325,201 336,668 350,871 359,716 by a storm.
2,096 2,106 2,361 1,943 2,364
149
CITY OF PEARLAND,TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
Last Ten Fiscal Years
Fiscal Year
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Function/Program
PUBLIC SAFETY
Police
Police stations 1 1 1 1 1 1 1 I 1 1
Police vehicles 89 100 109 112 117 126 130 138 142 155
Fire
Fire stations 4 4 4 4 4 4 4 4 5 6
Fire vehicles 14 15 15 16 16 17 17 17 22 23
EMS
EMS Stations 3 3 3 3 3 3 3 3 3 4
EMS Ambulances 5 5 5 5 • 5 6 •8 8 8 8
PUBLIC WORKS
Other public works
Streets(miles)* 202 232 248 578 758 773 807 807 806 806 •
Vehicle Inventory N/A N/A N/A 342 405 360 333 355 363 385
Traffic signals 43 43 47 48 57 67 71 80 62 74
PARKS AND RECREATION
Parks and recreation
Developed acreage** 124 124 124 175 175 180 138 139 139 138
Pools N/A I 1 1 1 1 1 3 3 3
Outdoor basketball courts N/A N/A N/A 10 10 10 10 10 10 6
Soccer fields N/A N/A N/A 12 12 12 12 12 12 12
Activity buildings 2 2 3 3 3 3 3 4 4 3
Baseball/Softball Fields 4 4 4 4 4 4 4 4 4 4
WATER AND SEWER
Water Production
Water wells 8 8 9 9 10 11 11 11 11 11
Pumping stations 2 2 2 2 2 2 2 2 2 3
Ground storage tanks 10 10 13 15 15 15 15 15 15 15
Elevated towers 4 4 4 5 5 5 5 6 6 6
Wastewater
Treatment Plants 4 4 4 4 5 5 5 5 5 5
Lift Stations 74 74 78 74 78 76 78 78 80 80
Distribution and Collection
Water mains(miles) 240 250 296 361 395 410 420 433 443 448
Sanitary sewers(miles) 230 240 279 321 353 360 370 378 380 382
Sources:Various city departments.
Note:No capital asset indicators are available for the general government and community services functions.
Information not presented was not available at time of publication.
Inside city limits. Prior to FY07,street miles were measured visually. Beginning FY07,a GIS system was used to measure street miles.
Although new streets were added in FY 2011,an audit of the database resulted in the elimination of some street miles previously reported.
**Prior to 2009,Parkland acres included medians and Wastewater Treatment Plants.
150