RDAP-2014-02 RESOLUTION NO. RDAP- 2014- 02
A RESOLUTION OF THE DEVELOPMENT AUTHORITY OF
PEARLAND (DAP), ACCEPTING THE 2013 ANNUAL FINANCIAL
REPORT FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2013.
BE IT RESOLVED BY DAP BOARD OF DIRECTORS:
Section 1. That the Development Authority of Pearland, TX hereby
accepts the Fiscal Year 2013 Annual Financial Report as prepared by the
accounting firm of Grant Thornton, L.L.P..
PASSED, APPROVED, AND ADOPTED this 29th day of September. A.D
2014.
a,)
DAP CHAIRMAN
ATTEST:
DAP SECRETARY
GrantThornton
Grant Thornton LLP
700 Milani Street,Suite 300
Houston,TX 77002-2848
T 832.476.3600
F 713.655.8741
GrantThornton.com
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS linkd.in/GrantThorntonUS
twitter.com/GrantThomtonU S
The Honorable Mayor and Members of the City Council
City of Pearland,Texas
Report on the financial statements
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, 2013, and the
related notes to the financial statements, which collectively comprise the City's basic financial
statements as listed in the table of contents.
Management's responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of
America;this includes the design,implementation, and maintenance of internal control relevant
to the preparation and fair presentation of financial statements that are free from material
misstatement,whether due to fraud or error.
Auditor's responsibility
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 from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
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circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
City's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
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 of Pearland, Texas
as of September 30, 2013, and the respective changes in financial position and, where
applicable, cash flows thereof for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
Other matters
Required supplementary information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis on pages 6 - 16, the Schedule of Revenues, Expenditures
and Changes in Fund Balances — Budget and Actual on pages 67 - 68 schedules of funding
progress for Texas Municipal Retirement System and City of Pearland Other Post-Employment
Benefit Obligation on page 69 be presented to supplement the basic financial statements. Such
information, although not a required 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. This required supplementary information is the responsibility of
management. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of
America. These limited procedures 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.
Supplementary information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The combining and individual fund
statements and schedules are presented for purposes of additional analysis and are not a
required part of the basic financial statements. Such supplementary information is the
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responsibility of management and was derived from and relates directly to the underlying
accounting and other records used to prepare the basic financial statements. The information
has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures. These additional procedures included comparing
and reconciling the information directly to the underlying accounting and other records used to
prepare the basic financial statements or to the basic financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United
States of America. In our opinion, the supplementary information is fairly stated, in all material
respects,in relation to the basic financial statements as a whole.
Other information
The introductory section and the statistical section on pages i-xv and 117-147, respectively are
presented for purposes of additional analysis and are not a required part of the basic financial
statements. Such information has 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.
Other reporting required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report, dated
March 12, 2014, 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 the effectiveness of internal control over financial
reporting or on compliance. That report is an integral part of an audit performed in accordance
with Government Auditing Standards in considering the City's internal control over financial
reporting and compliance.
Houston,Texas
March 12,2014
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CITY OF PEARLAND,TEXAS
BALANCE SHEET
Governmental Funds
September 30, 2013
Pearland Tax
Economic Increment Development Other Total
General Capital Development Reinvestment Authority of Governmental Governmental
Fund Debt Service Projects Fund Corporation Zone#2 Pearland Funds Funds
Assets
Cash and cash equivalents $ 8,887,567 $ 3,073,485 $ 14,824,931 $ 4,685,369 $ 4,200,431 $ 8,148,177 $ 5,290,853 $ 49,110,813
Investments 8,742,291 1,496,355 744,000 8,729,962 - 248,000 - 19,960,608
Receivables, net of allowance
for uncollectibles 6,094,897 9,692,829 868,241 1,425,984 130,541 12 2,854,234 21,066,738
Due from other governments 581,579 - - - - - 172,146 753,725
Due from other funds 118,097 - - - - - - 118,097
Inventories 105,230 - - - - - - 105,230
Prepaid items 53,217 166,894 - 11,547 - - 4,162 235,820
Restricted cash - - - 665,254 - 51,061 - 716,315
Total Assets $ 24,582,878 $ 14,429,563 $ 16,437,172 $ 15,518,116 $ 4,330,972 $ 8,447,250 $ 8,321,395 $ 92,067,346
Liabilities and Fund Balances
Liabilities
Accounts payable $ 1,707,531 $ 166,894 $ 1,475,090 $ 43,493 $ 485 $ 6,639,030 $ 155,137 $ 10,187,660
Accrued expenditures 1,197,097 38,870 426,495 - - - 80,946 1,743,408
Deposits 46,475 - - 38,333 - - - 84,808
Due to other funds - - - - - - 118,097 118,097
Unavailable/unearned revenue 3,008,658 9,580,978 - 69,785 - - 2,491,869 15,151,290
Total Liabilities 5,959,761 9,786,742 1,901,585 151,611 485 6,639,030 2,846,049 27,285,263
Fund balances:
Non-spendable:
Inventories 105,230 - - - - - - 105,230
Prepaid items 53,217 166,894 - 11,547 - - 4,162 235,820
Restricted for:
Debt service - 4,475,927 - 665,254 254 - 51,061 - 5,192,242
Capital improvements - - 14,535,587 - - - - 14,535,587
Community development
programs - - - - - - 4,756,143 4,756,143
Public safety - - - - - - 715,041 715,041
Economic development - - - 14,689,704 4,330,487 1,757,159 - 20,777,350
Assigned for:
Encumbrances 1,553,390 - - - - - - 1,553,390
Unassigned:
General fund 16,911,280 - - - - - - 16,911,280
Total Fund Balances 18,623,117 4,642,821 14,535,587 15,366,505 4,330,487 1,808,220 5,475,346 64,782,083
Total Liabilities and
Fund Balances $ 24,582,878 $ 14,429 563 $ 16,437,172 $ 15,518,116 $ 4,330,972 $ 8,447,250 $ 8,321,395 $ 92,067,346
The accompanying notes are an integral part of these basic financial statements.
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CITY OF PEARLAND,TEXAS
STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended September 30, 2013
Pearland Tax
Economic Increment Development Other Total
General Capital Development Reinvestment Authority of Governmental Governmental
Fund Debt Service Projects Fund Corporation Zone#2 Pearland Funds Funds
Revenues
Property taxes $ 11,178,950 $ 25,898,494 $ - $ - $ 17,397,567 $ - $ - $ 54,475,011
Sales and use taxes 15,919,784 - - 7,871,396 - - 1,150,360 24,941,540
Franchise fees 5,758,776 - - - - - 240,378 5,999,154
Licenses and permits 2,988,859 ,988,859
- - - - -
Fines and forfeitures 3,333,675 - - - - - 199,988 3,533,663
Charges for services 12,567,693 - - 414,000 - - 12,981,693
Investment earnings 54,063 19,296 18,070 40,811 12,238 2,182 7,485 154,145
Intergovernmental 3,593,783 - - - 1,001,515 4,595,298
Other 814,956 1,946,973 4,116,743 24,326 - - 1,070,549 7,973,547
Total Revenues 52,616,756 27,864,763 7,728,596 8,350,533 17,409,805 2,182 3,670,275 117,642,910
Expenditures
Current:
General govermnent 7,098,242 - - - - 9,806 849,916 7,957,964
Public safety 26,082,178 - - - - - 122,479 26,204,657
Public works 7,502,356 - 309,833 - - - - 7,812,189
Community services 3,263,146 - - - - - 259,741 3,522,887
Parks and recreation 7,111,012 - - - - - 133,064 7,244,076
Economic development - - - 4,400,139 6,375,434 6,638,430 - 17,414,003
Debt Service:
Principal 86,254 11,950,504 - 880,000 - 2,720,000 - 15,636,758
Interest and other charges 28,232 12,667,961 - 1,165,585 - 1,671,965 - 15,533,743
Bond issuance costs - - 3'_4,993 - - - -
324,993
Capital outlay 4,088,048 - 17,487,825 - - - 525,218 22,101,091
Intergovernmental - 4,057,682 - _ -_ - - 4,057,682
Total Expenditures 55,259,468 28,676,147 18,122,651 6,445,724 6,375,434 11,040,201 1,890,418 127,810,043
Excess(deficiency)of revenues
over(under)expenditures (2,642,712) (811,384) (10,394,055) 1,904,809 11,034,371 (11,038,019) 1,779,857 (10,167,133)
Other Financing Sources(Uses)
Issuance of debt - - 12,060,000 - - - - 12,060,000
Bond premium - - 331,309 - - - - 331,309
Capital leases 1,179,413 - - - - - - 1,179,413
Transfers in 3,613,122 461,726 421,615 - - 10,997,930 20,748 15,515,141
Transfers out (1,098,667) - (1,659,245) - (10,997,930) - (827,546) (14,583,388)
Total Other Financing Sources(Uses) 3,693,868 461,726 11,153,679 - (10,997,930) 10,997,930 (806,798) 14,502,475
Net change in fund balances 1,051,156 (349,658) 759,624 1,904,809 36,441 (40,089) 973,059 4,335,342
Fund balances-beginning 17,571,961 4,992,479 13,775,963 13,461,696 4,294,046 1,848,309 4,502,287 60,446,741
Fund balances-ending $ 18,623,117 $ 4,642,821 $ 14 535,587 $ 15,366,505 $ 4,330,487 $ 1,808,220 $ 5,475,346 $ 64,782,083
The accompanying notes are an integral part of these basic financial statements.
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CITY OF PEARLAND,TEXAS
NOTES TO FINANCIAL STATEMENTS(continued)
Note 5-Long-Term Debt(continued)
A. General Obligation Bonds,Certificates of Obligation and Revenue Bonds(continued)
A summary of the terms of general obligation bonds and certificates of obligation,as of September 30,2013,
follows:
Interest Debt
Series Original Issue Matures Rate(%) Outstanding
General Obligation Bonds
Permanent Improvement and Refunding Bonds,Series 2005 37,015,000 2029 4.00-5.00 $ 20,725,000
Permanent Improvement and Refunding Bonds,Series 2006 32,165,000 2029 4.00-5.00 30,860,000
Permanent Improvement and Refunding Bonds,Series 2007 69,640,000 2032 4.00-5.00 66,625,000
Permanent Improvement,Series 2008 22,835,000 2032 4.50-5.50 21,695,000
Permanent Improvement Refunding Bonds,Series 2009 16,735,000 2034 2.50-5.00 15,375,000
Permanent Improvement,Series 2010A 12,415,000 2035 2.00-4.25 11,350,000
Permanent Improvement Refunding,Series 2010B 1,630,000 2018 2.00-4.00 1,000,000
Permanent Improvement,Series 2011 5,400,000 2036 3.00-4.125 5,200,000
Permanent Improvement Refunding Bonds,Series 2012 43,575,000 2029 3.00-5.00 43,575,000
Permanent Improvement Bond Series 2013 9,315,000 2038 3.00-4.625 9,315,000
Annexed Municipal Utility District Bonds
BC MUD I Series 2007 1,940,000 2030 3.8-4.35 1,810,000
BC MUD 4 Series 2011 2,640,000 2032 2.50-5.00 2,510,000
Total General Obligation Bonds $ 230,040,000
Certificates of Obligations
Certificates of Obligation,Series 2003 25,000,000 2014 3.60-3.75 1,035,000
Certificates of Obligation,Series 2004 21,000,000 2015 4.00 1,420,000
Certificates of Obligation,Series 2006 9,700,000 2029 4.125-6.125 8,825,000
Certificates of Obligation,Series 2007 23,250,000 2032 3.25-5.25 22,450,000
Certificates of Obligation,Series 2008 9,000,000 2032 3.875-5.00 8,480,000
Certificates of Obligation,Series 2009 8,520,000 2034 2.50-5.00 7,835,000
Certificates of Obligation,Series 2009A 12,145,000 2029 2.25-4.50 10,225,000
Certificates of Obligation,Series 2011 2,095,000 2021 2.09 1,675,000
Certificates of Obligation,Series 2013 2,745,000 2038 3.00-4.625 2,745,000
Total Certificates of Obligation $ 64,690,000
A summary of the terms of the revenue bonds recorded as long-term liabilities in the Pearland Economic
Development Corporation and Development Authority of Pearland funds as of September 30, 2013, is as
follows:
Interest Debt
Series Original Issue Matures Rate(%) Outstanding
Pearland Economic Development Corporation
Sales Tax Revenue and Refunding Bonds,Series 2005 $ 11,050,000 2026 4.0-5.0 $ 7,540,000
Sales Tax Revenue Bonds,Series 2006 10,235,000 2030 4.25-5.0 9,075,000
Sales Tax Revenue Bonds,Series 2010 7,685,000 2030 Variable-resets 6,995,000
every 6 months
Development Authority of Pearland
Tax Increment Contract Revenue and
Refunding Bonds,Series 2012 56,915,000 2028 3.07* 51,515,000
Total Revenue Bonds $ 75,125,000
*Fixed for 10 years,then rate changes to be 65%of LIBOR,not to exceed 6.0%.
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