RDAP-2013-02 - 2012-09-30 RESOLUTION NO. RDAP-2013- 2
A RESOLUTION OF THE DEVELOPMENT AUTHORITY OF
PEARLAND (DAP), ACCEPTING THE 2012 ANNUAL FINANCIAL
REPORT FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2012.
BE IT RESOLVED BY DAP BOARD OF DIRECTORS:
Section 1. That the Development Authority of Pearland, TX hereby
accepts the Fiscal Year 2012 Annual Financial Report as prepared by the
accounting firm of Whitley Penn, L.L.P..
PASSED, APPROVED, AND ADOPTED this 30th day of September. A.D
2013.
TOM REID
DAP CHAIRMAN
ATTEST:
/ 6/AL--
ED BAKER
DAP SECRETARY
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 1,024,6 13
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.
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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 $ (46,248,288) $ (43,231,585)
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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
Pea rland
Economic Tax Increment Development Total
• Development Reinvestment Authority of Component
Corporation Zone d2 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) ((2,016,051)
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)
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•
RESOLUTION NO. RDAP-2
EXHIBIT
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 $ I5,705,835
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.
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CITY OF PEARLAND,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 Awthority of
Functions/Programs Expenses Services Development Zone i12 Pearbtnd 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.
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•
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•
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 Peariaud 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
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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 Pear land for the year ended September 30,2012:
Valance Balance
September 30, September 30, Amounts Duc
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 2,720,0CC
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 Bands,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 or Pearland
Tax Increment Revenue Bonds,Series 2012 56,915,000 2028 2.50-5.50 54,235,000
Total Component Unit Long-Tenn Debt $ 78,725,000
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54
Resolution No. RDAP 2013-2
�. Houston OtTice
p �y�^q n■R 3411 Richmond Avenue
whitleypenn Suite 500
Houston,'Texas 77048
713 621 1515 Main
whi0eypenn.com
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 ln<openaont
1 Memlwr of
Dallas Fort Worth Houston
` IN r 11 NV Af10VA 1.
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.
Ainl "
March 11,2013
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